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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549


FORM 10-Q

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

For the quarterly period ended September 30, 2002

OR

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Numbers:

|                                |  |          
|------------------------------- |  | ---------
|ACME Intermediate Holdings, LLC |  | 333-40277
|                               
|                               
|                               
|                               
|ACME Television, LLC            |  | 333-40281

ACME INTERMEDIATE HOLDINGS, LLC

AND


ACME TELEVISION, LLC


(Exact name of registrants as specified in their charters)


|                                                               |  |                                 |  |                                      
|-------------------------------------------------------------- |  | ------------------------------- |  | -------------------------------------
|Delaware                                                       |  | ACME INTERMEDIATE HOLDINGS, LLC |  | 52-2050589                           
|Delaware                                                       |  | ACME TELEVISION, LLC            |  | 52-2050588                           
|(State or other jurisdiction of
incorporation or organization) |  |                                 |  | (I.R.S. employer
identifications no.)

2101 E. Fourth Street, Suite 202A

Santa Ana, California, 92705


(714) 245-9499


(Address and telephone number of principal executive offices)


Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) have been subject to such filing
requirements for the past 90 days.

Yes [X] No [   ]

100% of the membership units of ACME Intermediate Holdings, LLC are owned
directly or indirectly by ACME Communications, Inc. 100% of the membership
units of ACME Television, LLC are owned directly or indirectly by ACME
Intermediate Holdings, LLC. Such membership units are not publicly traded and,
therefore, have no separate, quantifiable market value.

As of November 14, 2002, ACME Intermediate Holdings, LLC and ACME Television,
LLC had 910,986 and 200, respectively, common membership units outstanding; all
such units are owned, directly or indirectly, by ACME Communications, Inc.



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TABLE OF CONTENTS



|                            |                                                                                               |                                                            |  |  |  |  |  | 
|--------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  | 
|                            |                                                                                               | Consolidated Balance Sheets                               
|                            |                                                                                               | Consolidated Statements of Operations and Members Capital
|                            |                                                                                               | Consolidated Statements of Operations and Members Capital
|                            |                                                                                               | Consolidated Statements of Cash Flows                     
|                            |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)    
|                            | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                            | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II  OTHER INFORMATION
|                            | Item 1. Legal Proceedings                                                                    
|                            | Item 6. Exhibits and Reports on Form 8-K.                                                    
|SIGNATURES                 



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##### Table of Contents



ACME INTERMEDIATE HOLDINGS, LLC

AND


ACME TELEVISION, LLC


FORM 10-Q

TABLE OF CONTENTS

|        |  |                                                                                       |  |  |                                                                                                                                 |                             |  |   |  | 
|------- |  | ------------------------------------------------------------------------------------- |  |  | ------------------------------------------------------------------------------------------------------------------------------- | --------------------------- |  | - |  | 
|ITEM    |  |                                                                                       |  |  |                                                                                                                                 |                             |  |  
|NUMBER  |  |                                                                                       |  |  |                                                                                                                                 | PAGE                       
|        |  |                                                                                       |  |  |                                                                                                                                 |                            
|        |  |                                                                                       |  |  | PART I  FINANCIAL INFORMATION                                                                                                  |                             |  |   | 
|       
|       
|       
|       
|Item 1. |  | Financial Statements                                                                  |  |  |                                                                                                                                 |                            
|       
|       
|       
|       
|        |  |                                                                                       |  |  | Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001                                                      |                             |  | 3 | 
|       
|       
|       
|       
|        |  |                                                                                       |  |  | Consolidated Statements of Operations and Members Capital for the Three Months Ended
September 30, 2002 and September 30, 2001 |                             |  | 4 | 
|       
|       
|       
|       
|        |  |                                                                                       |  |  | Consolidated Statements of Operations and Members Capital for the Nine Months Ended
September 30, 2002 and September 30, 2001  |                             |  | 5 | 
|       
|       
|       
|       
|        |  |                                                                                       |  |  | Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2002 and September 30, 2001                       |                             |  | 6 | 
|       
|       
|       
|       
|        |  |                                                                                       |  |  | Notes to Consolidated Financial Statements                                                                                      |                             |  | 7 | 
|       
|       
|       
|       
|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results Of Operations |  |  | 10                                                                                                                              |                            
|       
|       
|       
|       
|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                            |  |  | 16                                                                                                                              |                            
|       
|       
|       
|       
|Item 4. |  | Controls and Procedures                                                               |  |  | 16                                                                                                                              |                            
|       
|       
|       
|       
|        |  |                                                                                       |  |  |                                                                                                                                 | PART II  OTHER INFORMATION |  |   |  | 
|       
|       
|       
|       
|Item 1. |  | Legal Proceedings                                                                     |  |  | 16                                                                                                                              |                            
|       
|       
|       
|       
|Item 6. |  | Exhibits and Reports on Form 8-K                                                      |  |  | 16                                                                                                                              |                            

2



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##### Table of Contents






ACME Intermediate Holdings, LLC and Subsidiaries

ACME Television, LLC and Subsidiaries


Consolidated Balance Sheets


(In thousands)


|                                                   |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |        |         | 
|-------------------------------------------------- | --------------------------------------------- | -------------------------------------- | -------- | ------------------------ | ------- | ----------------------- | -------- | ------------- | ------- | --------------- | -------- | ------ | ------- |  | -------- | ------ | ------- | 
|                                                   |                                               |                                        |          | As of September 30, 2002 |         | As of December 31, 2001
|                                                   |                                               |                                        |          |                          |         |                        
|                                                   |                                               |                                        |          | ACME                     |         |                         |          |               |         | ACME            |          |        |         | 
|                                                   |                                               |                                        |          | Intermediate             |         | ACME                    |          | Intermediate  |         | ACME           
|                                                   |                                               |                                        |          | Holdings, LLC            |         | Television, LLC         |          | Holdings, LLC |         | Television, LLC
|                                                   |                                               |                                        |          |                          |         |                         |          |               |         |                
|                                                   |                                               |                                        |          | (Unaudited)              |         |                         |          |               |         |                 |          |       
|ASSETS                                             |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |       
|                                                  
|                                                  
|                                                  
|                                                  
|Current assets:                                    |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Cash and cash equivalents                     |                                        | $        | 2,492                    |         |                         | $        | 2,492         |         |                 | $        | 4,280  |         |  | $        | 4,280  |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Restricted cash                               |                                        |          | 2,895                    |         |                         |          | 2,895         |         |                 |          | 1,741  |         |  |          | 1,741  |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Accounts receivable, net                      |                                        |          | 14,743                   |         |                         |          | 14,743        |         |                 |          | 13,563 |         |  |          | 13,563 |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Current portion of programming rights         |                                        |          | 17,422                   |         |                         |          | 17,422        |         |                 |          | 14,539 |         |  |          | 14,539 |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Prepaid expenses and other current assets     |                                        |          | 2,303                    |         |                         |          | 2,303         |         |                 |          | 1,286  |         |  |          | 1,286  |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Deferred income taxes                         |                                        |          |                         |         |                         |          |              |         |                 |          | 746    |         |  |          | 746    |        
|                                                   |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |       
|                                                   |                                               | Total current assets                   |          |                          | 39,855  |                         |          |               | 39,855  |                 |          |        | 36,155  |  |          |        | 36,155  | 
|                                                  
|                                                  
|                                                  
|                                                  
|Property and equipment, net                        |                                               |                                        | 40,886   |                          |         |                         | 40,886   |               |         |                 | 36,493   |        |         |  | 36,493   |       
|                                                  
|                                                  
|                                                  
|                                                  
|Programming rights, net of current portion         |                                               |                                        | 30,077   |                          |         |                         | 30,077   |               |         |                 | 20,490   |        |         |  | 20,490   |       
|                                                  
|                                                  
|                                                  
|                                                  
|Intangible assets, net                             |                                               |                                        | 252,595  |                          |         |                         | 252,595  |               |         |                 | 252,595  |        |         |  | 252,595  |       
|                                                  
|                                                  
|                                                  
|                                                  
|Other assets                                       |                                               |                                        | 8,009    |                          |         |                         | 6,928    |               |         |                 | 8,369    |        |         |  | 7,113    |       
|                                                  
|                                                  
|                                                  
|                                                  
|Deposits                                           |                                               |                                        | 1,978    |                          |         |                         | 1,978    |               |         |                 | 848      |        |         |  | 848      |       
|                                                   |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |       
|                                                   |                                               | Total assets                           |          | $                        | 373,400 |                         |          | $             | 372,319 |                 |          | $      | 354,950 |  |          | $      | 353,694 | 
|                                                   |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |       
|LIABILITIES AND MEMBERS CAPITAL                   |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |       
|                                                  
|                                                  
|                                                  
|                                                  
|Current liabilities:                               |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Accounts payable                              |                                        | $        | 8,423                    |         |                         | $        | 8,423         |         |                 |          | 8,620  |         |  |          | 8,620  |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Accrued liabilities                           |                                        |          | 5,250                    |         |                         |          | 5,250         |         |                 |          | 13,269 |         |  |          | 13,269 |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Due to affiliates                             |                                        |          | 1,893                    |         |                         |          | 1,764         |         |                 |          | 1,161  |         |  |          | 1,033  |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Current portion of programming rights payable |                                        |          | 17,813                   |         |                         |          | 17,813        |         |                 |          | 14,121 |         |  |          | 14,121 |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Current portion of obligations under lease    |                                        |          | 3,932                    |         |                         |          | 3,932         |         |                 |          | 3,290  |         |  |          | 3,290  |        
|                                                   |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |       
|                                                   |                                               | Total current liabilities              |          |                          | 37,311  |                         |          |               | 37,182  |                 |          |        | 40,461  |  |          |        | 40,333  | 
|                                                  
|                                                  
|                                                  
|                                                  
|Programming rights payable, net of current portion |                                               |                                        | 28,668   |                          |         |                         | 28,668   |               |         |                 | 19,931   |        |         |  | 19,931   |       
|                                                  
|                                                  
|                                                  
|                                                  
|Obligations under lease, net of current portion    |                                               |                                        | 9,222    |                          |         |                         | 9,222    |               |         |                 | 9,436    |        |         |  | 9,436    |       
|                                                  
|                                                  
|                                                  
|                                                  
|Other liabilities                                  |                                               |                                        | 251      |                          |         |                         | 251      |               |         |                 | 328      |        |         |  | 328      |       
|                                                  
|                                                  
|                                                  
|                                                  
|Deferred income taxes                              |                                               |                                        | 30,533   |                          |         |                         | 30,366   |               |         |                 | 1,635    |        |         |  | 7,878    |       
|                                                  
|                                                  
|                                                  
|                                                  
|Notes payable under revolving credit facility      |                                               |                                        | 14,600   |                          |         |                         | 14,600   |               |         |                 |         |        |         |  |         |       
|                                                  
|                                                  
|                                                  
|                                                  
|10 7/8% senior discount notes                      |                                               |                                        | 175,000  |                          |         |                         | 175,000  |               |         |                 | 175,000  |        |         |  | 175,000  |       
|                                                  
|                                                  
|                                                  
|                                                  
|12% senior secured notes                           |                                               |                                        | 68,866   |                          |         |                         |         |               |         |                 | 62,424   |        |         |  |         |       
|                                                   |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |       
|                                                   |                                               | Total liabilities                      |          |                          | 364,451 |                         |          |               | 295,289 |                 |          |        | 309,215 |  |          |        | 252,906 | 
|                                                   |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |       
|Members capital                                   |                                               |                                        | 203,981  |                          |         |                         | 238,142  |               |         |                 | 191,386  |        |         |  | 225,547  |       
|                                                  
|                                                  
|                                                  
|                                                  
|Accumulated deficit                                |                                               |                                        | (195,032 | )                        |         |                         | (161,112 | )             |         |                 | (145,651 | )      |         |  | (124,759 | )     
|                                                   |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |       
|                                                   |                                               | Total members capital                 |          |                          | 8,949   |                         |          |               | 77,030  |                 |          |        | 45,735  |  |          |        | 100,788 | 
|                                                   |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |       
|                                                   |                                               | Total liabilities and members capital |          | $                        | 373,400 |                         |          | $             | 372,319 |                 |          | $      | 354,950 |  |          | $      | 353,694 | 
|                                                   |                                               |                                        |          |                          |         |                         |          |               |         |                 |          |        |         |  |          |       

See the notes to the consolidated financial statements

3



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##### Table of Contents






ACME Intermediate Holdings, LLC and Subsidiaries

ACME Television, LLC and Subsidiaries


Consolidated Statements of Operations and Members Capital


(Unaudited)


(In thousands)


|                                                |                                 |                         |        |                                          |        |                 |        |               |        |                 |        |        |        |   |         |        |        |  
|----------------------------------------------- | ------------------------------- | ----------------------- | ------ | ---------------------------------------- | ------ | --------------- | ------ | ------------- | ------ | --------------- | ------ | ------ | ------ | - | ------- | ------ | ------ | -
|                                                |                                 |                         |        | For the Three Months Ended September 30,
|                                                |                                 |                         |        |                                         
|                                                |                                 |                         |        | 2002                                     |        | 2001           
|                                                |                                 |                         |        |                                          |        |                
|                                                |                                 |                         |        | ACME                                     |        |                 |        |               |        | ACME            |        |        |        |  
|                                                |                                 |                         |        | Intermediate                             |        | ACME            |        | Intermediate  |        | ACME           
|                                                |                                 |                         |        | Holdings, LLC                            |        | Television, LLC |        | Holdings, LLC |        | Television, LLC
|                                                |                                 |                         |        |                                          |        |                 |        |               |        |                
|Net revenues                                    |                                 | $                       | 20,035 |                                          |        | $               | 20,035 |               |        | $               | 16,693 |        |        | $ | 16,693  |       
|                                               
|                                               
|                                               
|                                               
|Operating expenses:                             |                                 |                         |        |                                          |        |                 |        |               |        |                 |        |        |        |   |         |       
|                                               
|                                               
|                                               
|                                               
|                                                | Station operating expenses      |                         |        | 15,979                                   |        |                 |        | 15,979        |        |                 |        | 13,237 |        |   |         | 13,237 |       
|                                               
|                                               
|                                               
|                                               
|                                                | Depreciation and amortization   |                         |        | 1,325                                    |        |                 |        | 1,325         |        |                 |        | 4,953  |        |   |         | 4,953  |       
|                                               
|                                               
|                                               
|                                               
|                                                | Corporate expenses              |                         |        | 884                                      |        |                 |        | 884           |        |                 |        | 787    |        |   |         | 787    |       
|                                               
|                                               
|                                               
|                                               
|                                                | Equity-based compensation       |                         |        | 115                                      |        |                 |        | 115           |        |                 |        | 132    |        |   |         | 132    |       
|                                               
|                                               
|                                               
|                                               
|                                                | LMA fees                        |                         |        | 70                                       |        |                 |        | 70            |        |                 |        |       |        |   |         |       |       
|                                                |                                 |                         |        |                                          |        |                 |        |               |        |                 |        |        |        |   |         |       
|                                                |                                 | Operating income (loss) |        |                                          | 1,662  |                 |        |               | 1,662  |                 |        |        | (2,416 | ) |         |        | (2,416 | )
|                                               
|                                               
|                                               
|                                               
|Other income (expenses):                        |                                 |                         |        |                                          |        |                 |        |               |        |                 |        |        |        |   |         |       
|                                               
|                                               
|                                               
|                                               
|                                                | Interest income                 |                         |        | 29                                       |        |                 |        | 29            |        |                 |        | 38     |        |   |         | 38     |       
|                                               
|                                               
|                                               
|                                               
|                                                | Interest expense                |                         |        | (7,892                                   | )      |                 |        | (5,635        | )      |                 |        | (7,315 | )      |   |         | (5,349 | )     
|                                               
|                                               
|                                               
|                                               
|                                                | Gain on disposal of assets, net |                         |        | 1                                        |        |                 |        | 1             |        |                 |        |       |        |   |         |       |       
|                                               
|                                               
|                                               
|                                               
|                                                | Other expense                   |                         |        | (69                                      | )      |                 |        | (69           | )      |                 |        | (49    | )      |   |         | (49    | )     
|                                                |                                 |                         |        |                                          |        |                 |        |               |        |                 |        |        |        |   |         |       
|Net loss before income taxes                    |                                 |                         | (6,269 | )                                        |        |                 | (4,012 | )             |        |                 | (9,742 | )      |        |   | (7,776  | )     
|                                               
|                                               
|                                               
|                                               
|Income tax benefit (expense)                    |                                 |                         | 888    |                                          |        |                 | 721    |               |        |                 | 3,208  |        |        |   | 2,461   |       
|                                                |                                 |                         |        |                                          |        |                 |        |               |        |                 |        |        |        |   |         |       
|                                                |                                 | Net loss                |        | $                                        | (5,381 | )               |        | $             | (3,291 | )               |        | $      | (6,534 | ) |         | $      | (5,315 | )
|                                               
|                                               
|                                               
|                                               
|Parents contributions                          |                                 |                         | 115    |                                          |        |                 | 115    |               |        |                 | 7,732  |        |        |   | 7,732   |       
|                                               
|                                               
|                                               
|                                               
|Members Capital at the
beginning of the period |                                 |                         | 14,215 |                                          |        |                 | 80,206 |               |        |                 | 52,073 |        |        |   | 104,619 |       
|                                                |                                 |                         |        |                                          |        |                 |        |               |        |                 |        |        |        |   |         |       
|Members Capital at the
end of the period       |                                 | $                       | 8,949  |                                          |        | $               | 77,030 |               |        | $               | 53,271 |        |        | $ | 107,036 |       
|                                                |                                 |                         |        |                                          |        |                 |        |               |        |                 |        |        |        |   |         |       

See the notes to the consolidated financial statements.

4



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##### Table of Contents






ACME Intermediate Holdings, LLC and Subsidiaries

ACME Television, LLC and Subsidiaries


Consolidated Statements of Operations and Members Capital


(Unaudited)


(In thousands)


|                                                |                                 |                         |         |                                         |         |                 |         |               |         |                 |         |         |         |   |         |         |         |  
|----------------------------------------------- | ------------------------------- | ----------------------- | ------- | --------------------------------------- | ------- | --------------- | ------- | ------------- | ------- | --------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                                                |                                 |                         |         | For the Nine Months Ended September 30,
|                                                |                                 |                         |         |                                        
|                                                |                                 |                         |         | 2002                                    |         | 2001           
|                                                |                                 |                         |         |                                         |         |                
|                                                |                                 |                         |         | ACME                                    |         |                 |         |               |         | ACME            |         |         |         |  
|                                                |                                 |                         |         | Intermediate                            |         | ACME            |         | Intermediate  |         | ACME           
|                                                |                                 |                         |         | Holdings, LLC                           |         | Television, LLC |         | Holdings, LLC |         | Television, LLC
|                                                |                                 |                         |         |                                         |         |                 |         |               |         |                
|Net revenues                                    |                                 | $                       | 57,783  |                                         |         | $               | 57,783  |               |         | $               | 52,069  |         |         | $ | 52,069  |        
|                                               
|                                               
|                                               
|                                               
|Operating expenses:                             |                                 |                         |         |                                         |         |                 |         |               |         |                 |         |         |         |   |         |        
|                                               
|                                               
|                                               
|                                               
|                                                | Station operating expenses      |                         |         | 46,881                                  |         |                 |         | 46,881        |         |                 |         | 41,253  |         |   |         | 41,253  |        
|                                               
|                                               
|                                               
|                                               
|                                                | Depreciation and amortization   |                         |         | 3,777                                   |         |                 |         | 3,777         |         |                 |         | 14,822  |         |   |         | 14,822  |        
|                                               
|                                               
|                                               
|                                               
|                                                | Corporate expenses              |                         |         | 2,729                                   |         |                 |         | 2,729         |         |                 |         | 2,607   |         |   |         | 2,607   |        
|                                               
|                                               
|                                               
|                                               
|                                                | Equity-based compensation       |                         |         | 346                                     |         |                 |         | 346           |         |                 |         | 397     |         |   |         | 397     |        
|                                               
|                                               
|                                               
|                                               
|                                                | LMA fees                        |                         |         | 74                                      |         |                 |         | 74            |         |                 |         |        |         |   |         |        |        
|                                                |                                 |                         |         |                                         |         |                 |         |               |         |                 |         |         |         |   |         |        
|                                                |                                 | Operating income (loss) |         |                                         | 3,976   |                 |         |               | 3,976   |                 |         |         | (7,010  | ) |         |         | (7,010  | )
|                                               
|                                               
|                                               
|                                               
|Other income (expenses):                        |                                 |                         |         |                                         |         |                 |         |               |         |                 |         |         |         |   |         |        
|                                               
|                                               
|                                               
|                                               
|                                                | Interest income                 |                         |         | 50                                      |         |                 |         | 50            |         |                 |         | 211     |         |   |         | 211     |        
|                                               
|                                               
|                                               
|                                               
|                                                | Interest expense                |                         |         | (23,396                                 | )       |                 |         | (16,778       | )       |                 |         | (21,773 | )       |   |         | (16,006 | )      
|                                               
|                                               
|                                               
|                                               
|                                                | Loss on disposal of assets, net |                         |         | (15                                     | )       |                 |         | (15           | )       |                 |         | (10     | )       |   |         | (10     | )      
|                                               
|                                               
|                                               
|                                               
|                                                | Other expense                   |                         |         | (223                                    | )       |                 |         | (223          | )       |                 |         | (144    | )       |   |         | (144    | )      
|                                                |                                 |                         |         |                                         |         |                 |         |               |         |                 |         |         |         |   |         |        
|Net loss before income taxes                    |                                 |                         | (19,608 | )                                       |         |                 | (12,990 | )             |         |                 | (28,726 | )       |         |   | (22,959 | )      
|                                               
|                                               
|                                               
|                                               
|Income tax benefit (expense)                    |                                 |                         | (29,773 | )                                       |         |                 | (23,363 | )             |         |                 | 9,471   |         |         |   | 7,280   |        
|                                                |                                 |                         |         |                                         |         |                 |         |               |         |                 |         |         |         |   |         |        
|                                                |                                 | Net loss                |         | $                                       | (49,381 | )               |         | $             | (36,353 | )               |         | $       | (19,255 | ) |         | $       | (15,679 | )
|                                               
|                                               
|                                               
|                                               
|Parents contributions                          |                                 |                         | 12,595  |                                         |         |                 | 12,595  |               |         |                 | 7,997   |         |         |   | 7,997   |        
|                                               
|                                               
|                                               
|                                               
|Members Capital at the beginning of the period |                                 |                         | 45,735  |                                         |         |                 | 100,788 |               |         |                 | 64,529  |         |         |   | 114,718 |        
|                                                |                                 |                         |         |                                         |         |                 |         |               |         |                 |         |         |         |   |         |        
|Members Capital at the end of the period       |                                 | $                       | 8,949   |                                         |         | $               | 77,030  |               |         | $               | 53,271  |         |         | $ | 107,036 |        
|                                                |                                 |                         |         |                                         |         |                 |         |               |         |                 |         |         |         |   |         |        

See the notes to the consolidated financial statements.

5



---



##### Table of Contents






ACME Intermediate Holdings, LLC and Subsidiaries

ACME Television, LLC and Subsidiaries


Consolidated Statements of Cash Flows


(Unaudited)


|                                                                                |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |         |        |  
|------------------------------------------------------------------------------- | ------------------------------------------------------------ | ----------------------------------------------------- | ----- | ------------------------- | ------- | ------------------ | ----- | -------------- | ------- | ----------- | ------ | ------- | ------ | - | ------ | ------- | ------ | -
|                                                                                |                                                              |                                                       |       | For the Nine Months Ended
|                                                                                |                                                              |                                                       |       |                          
|                                                                                |                                                              |                                                       |       | September 30, 2002        |         | September 30, 2001
|                                                                                |                                                              |                                                       |       |                           |         |                   
|                                                                                |                                                              |                                                       |       | ACME                      |         | ACME               |       | ACME           |         | ACME       
|                                                                                |                                                              |                                                       |       | Intermediate              |         | Television,        |       | Intermediate   |         | Television,
|                                                                                |                                                              |                                                       |       | Holdings, LLC             |         | LLC                |       | Holdings, LLC  |         | LLC        
|                                                                                |                                                              |                                                       |       |                           |         |                    |       |                |         |            
|                                                                                |                                                              |                                                       |       |                           |         |                    |       | (In thousands) |         |             |        |        
|Cash flows from operating activities:                                           |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Net loss                                                     |                                                       | $     | (49,381                   | )       |                    | $     | (36,353        | )       |             | $      | (19,255 | )      |   | $      | (15,679 | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Adjustments to reconcile net loss to net cash
provided by operating activities: |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Depreciation and amortization                                |                                                       |       | 3,777                     |         |                    |       | 3,777          |         |             |        | 14,822  |        |   |        | 14,822  |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Amortization of program rights                               |                                                       |       | 12,140                    |         |                    |       | 12,140         |         |             |        | 10,487  |        |   |        | 10,487  |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Amortization of debt issuance costs                          |                                                       |       | 1,578                     |         |                    |       | 1,403          |         |             |        | 940     |        |   |        | 940     |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Amortization of discount on 12% senior secured notes         |                                                       |       | 6,442                     |         |                    |       |               |         |             |        | 5,648   |        |   |        |        |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Loss on disposal of assets, net                              |                                                       |       | 15                        |         |                    |       | 15             |         |             |        | 10      |        |   |        | 10      |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Equity-based compensation                                    |                                                       |       | 346                       |         |                    |       | 346            |         |             |        | 397     |        |   |        | 397     |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Deferred taxes                                               |                                                       |       | 29,644                    |         |                    |       | 23,234         |         |             |        | (9,516  | )      |   |        | (7,325  | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Changes in assets and liabilities:                                              |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | (Increase) decrease in accounts receivables, net             |                                                       |       | (1,180                    | )       |                    |       | (1,180         | )       |             |        | 1,406   |        |   |        | 1,406   |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Increase in prepaid expenses                                 |                                                       |       | (1,017                    | )       |                    |       | (1,017         | )       |             |        | (384    | )      |   |        | (384    | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Decrease in other assets                                     |                                                       |       | 35                        |         |                    |       | 35             |         |             |        | 16      |        |   |        | 16      |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Increase in accounts payable                                 |                                                       |       | 2,670                     |         |                    |       | 2,670          |         |             |        | 140     |        |   |        | 140     |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Increase (decrease) in accrued liabilities                   |                                                       |       | (8,011                    | )       |                    |       | (8,011         | )       |             |        | 4,416   |        |   |        | 4,416   |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Payments on programming rights payable                       |                                                       |       | (12,255                   | )       |                    |       | (12,255        | )       |             |        | (10,486 | )      |   |        | (10,486 | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Increase (decrease) in due to affiliates                     |                                                       |       | 731                       |         |                    |       | 731            |         |             |        | 104     |        |   |        | (15     | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Increase (decrease) in other liabilities                     |                                                       |       | (10                       | )       |                    |       | (11            | )       |             |        | 27      |        |   |        | 27      |       
|                                                                                |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|                                                                                |                                                              | Net cash used in operating activities                 |       |                           | (14,476 | )                  |       |                | (14,476 | )           |        |         | (1,228 | ) |        |         | (1,228 | )
|                                                                                |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|Cash flows from investing activities:                                           |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Purchase of property and equipment                           |                                                       |       | (11,052                   | )       |                    |       | (11,052        | )       |             |        | (4,653  | )      |   |        | (4,653  | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Proceeds from the sale of assets                             |                                                       |       |                          |         |                    |       |               |         |             |        | 230     |        |   |        | 230     |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Purchases of and deposits for station interests              |                                                       |       | (290                      | )       |                    |       | (290           | )       |             |        | (89     | )      |   |        | (89     | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Purchase of minority interest in automobile website          |                                                       |       | (871                      | )       |                    |       | (871           | )       |             |        |        |        |   |        |        |       
|                                                                                |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |         |       
|                                                                                |                                                              | Net cash used in investing activities                 |       |                           | (12,213 | )                  |       |                | (12,213 | )           |        |         | (4,512 | ) |        |         | (4,512 | )
|                                                                                |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|Cash flows from financing activities:                                           |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Increase in revolving credit facility                        |                                                       |       | 14,600                    |         |                    |       | 14,600         |         |             |        |        |        |   |        |        |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Payment of financing costs on credit facility                |                                                       |       | (1,222                    | )       |                    |       | (1,222         | )       |             |        |        |        |   |        |        |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Cash restricted as collateral under capital lease facilities |                                                       |       | (1,154                    | )       |                    |       | (1,154         | )       |             |        |        |        |   |        |        |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Capital lease obligations                                    |                                                       |       | 3,334                     |         |                    |       | 3,334          |         |             |        | 2,966   |        |   |        | 2,966   |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Payments of capital lease obligations                        |                                                       |       | (2,906                    | )       |                    |       | (2,906         | )       |             |        | (1,743  | )      |   |        | (1,743  | )     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Capital contribution from parent                             |                                                       |       | 12,249                    |         |                    |       | 12,249         |         |             |        | 7,600   |        |   |        | 7,600   |       
|                                                                                |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|                                                                                |                                                              | Net cash provided by financing activities             |       |                           | 24,901  |                    |       |                | 24,901  |             |        |         | 8,823  |   |        |         | 8,823  |  
|                                                                                |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|                                                                                | Net increase (decrease) in cash                              |                                                       |       | (1,788                    | )       |                    |       | (1,788         | )       |             |        | 3,083   |        |   |        | 3,083   |       
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Cash at beginning of period                                  |                                                       |       | 4,280                     |         |                    |       | 4,280          |         |             |        | 10,347  |        |   |        | 10,347  |       
|                                                                                |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|Cash at end of period                                                           |                                                              | $                                                     | 2,492 |                           |         | $                  | 2,492 |                |         | $           | 13,430 |         |        | $ | 13,430 |        
|                                                                                |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|Cash payments for:                                                              |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                              | Interest                                              |       | $                         | 20,890  |                    |       | $              | 20,890  |             |        | $       | 10,252 |   |        | $       | 10,252 |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                              | Taxes                                                 |       | $                         | 187     |                    |       | $              | 187     |             |        | $       | 45     |   |        | $       | 45     |  
|                                                                                |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|Non-cash transactions:                                                          |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                              | Program rights in exchange for program rights payable |       | $                         | 24,622  |                    |       | $              | 24,622  |             |        | $       | 23,155 |   |        | $       | 23,155 |  
|                                                                                |                                                              |                                                       |       |                           |         |                    |       |                |         |             |        |         |        |   |        |        

See the notes to the consolidated financial statements.

6



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##### Table of Contents






ACME INTERMEDIATE HOLDINGS, LLC AND SUBSIDIARIES

ACME TELEVISION, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001


(1) Formation and Description of the Business

Reorganization of Parent

ACME Communications, Inc. was formed on July 23, 1999, in preparation for
and in conjunction with an initial public offering of its stock.

On September 27, 1999, the Board of Advisors of ACME Television Holdings,
LLC the parent company of ACME Intermediate Holdings, LLC (ACME Intermediate)
and its wholly-owned subsidiary ACME Television, LLC (ACME Television) and
its members and the Board of Directors of ACME Communications, Inc. and its
stockholder approved a merger and reorganization (the Reorganization),
whereby ACME Communications, Inc., became the direct parent of ACME Television
Holdings, LLC. As a result of the Reorganization, ACME Communications, Inc. is
the ultimate parent of ACME Intermediate and its wholly owned subsidiary ACME
Television. All transactions contemplated as part of the Reorganization closed
on October 5, 1999. References to ACME Parent herein refer to ACME
Communications, Inc.

Formation

ACME Intermediate was formed on August 8, 1997. Upon formation, ACME
Intermediate received a contribution from ACME Parent, of ACME Parents
wholly-owned subsidiaries  ACME Television of Oregon, LLC (ACME Oregon) and
ACME Television of Tennessee, LLC (ACME Tennessee) and certain other net
assets. This Contribution of $25,455,000 (including cash of $2,380,000) was
made in exchange for membership units in ACME Intermediate and was treated as a
transaction between entities under common control, similar to a pooling of
interests. Accordingly, the transaction was recorded at historical cost and
ACME Intermediate has reflected the results of operations of the contributed
entities for the year ended December 31, 1997. In addition, on September 30,
1997, ACME Parent made an additional contribution of $21,746,000 in exchange
for membership units in ACME Intermediate.

ACME Television was formed on August 8, 1997. Upon formation, ACME
Television received a contribution from ACME Parent through ACME Intermediate
of ACME Parents wholly owned subsidiaries  ACME Oregon and ACME Tennessee and
certain other net assets. This Contribution of $25,455,000 (including cash of
$2,380,000) was made in exchange for membership units in the Company and was
treated as a transaction between entities under common control, similar to a
pooling of interests. Accordingly, the transaction was recorded at historical
cost and ACME Television has reflected the results of operations of the
contributed entities for the year ended December 31, 1997. In addition, on
September 30, 1997, ACME Intermediate made an additional contribution of
$60,061,000 in exchange for membership units in ACME Television.

ACME Parent owns directly or indirectly, 100% of the outstanding member
units of ACME Intermediate. ACME Intermediate owns, directly or indirectly,
100% of the outstanding member units of ACME Television.

Description of the Business

ACME Intermediate is a holding company with no independent operations
other than through its wholly-owned subsidiary, ACME Television. ACME
Television, through its wholly-owned subsidiaries, owns and operates a
television production company and the following ten commercially licensed
broadcast television stations located throughout the United States:

7



---



##### Table of Contents



|        |  |         |    |        |  |                                   |  |             |    |        |  |         |  |  |  | 
|------- |  | ------- | -- | ------ |  | --------------------------------- |  | ----------- | -- | ------ |  | ------- |  |  |  | 
|        |  |         |    |        |  |                                   |  |             |    | U.S.   |  |         |  | 
|        |  |         |    |        |  |                                   |  |             |    | Market |  | Network
|Station |  | Channel |    | Market |  | Rank*                             |  | Affiliation
|        |  |         |    |        |  |                                   |  |            
|KPLR    |  |         | 11 |        |  | St. Louis, MO                     |  |             | 22 |        |  | WB     
|       
|       
|       
|       
|KWBP    |  |         | 32 |        |  | Portland, OR                      |  |             | 23 |        |  | WB     
|       
|       
|       
|       
|KUWB    |  |         | 30 |        |  | Salt Lake City, UT                |  |             | 36 |        |  | WB     
|       
|       
|       
|       
|KWBQ    |  |         | 19 |        |  | Albuquerque-Santa Fe, NM          |  |             | 49 |        |  | WB     
|       
|       
|       
|       
|KASY    |  |         | 50 |        |  | Albuquerque-Santa Fe, NM          |  |             | 49 |        |  | UPN    
|       
|       
|       
|       
|WBDT    |  |         | 26 |        |  | Dayton, OH                        |  |             | 58 |        |  | WB     
|       
|       
|       
|       
|WBXX    |  |         | 20 |        |  | Knoxville, TN                     |  |             | 63 |        |  | WB     
|       
|       
|       
|       
|WIWB    |  |         | 14 |        |  | Green Bay-Appleton, WI            |  |             | 69 |        |  | WB     
|       
|       
|       
|       
|WTVK    |  |         | 46 |        |  | Ft. Myers-Naples, FL              |  |             | 70 |        |  | WB     
|       
|       
|       
|       
|WBUI    |  |         | 23 |        |  | Champaign-Springfield-Decatur, IL |  |             | 82 |        |  | WB     



---

|* |  | Based on Nielsen Media Research estimate of television households, September 2002.
|- |  | ----------------------------------------------------------------------------------

In March 2002, we entered into a court-approved asset purchase agreement
to buy substantially all of the broadcast assets of station WHPN, the UPN
affiliate that served the Madison, Wisconsin marketplace, for a cash purchase
price of $5.6 million, $200,000 of which we deposited into escrow earlier this
year. We began operating the station under an interim local marketing
agreement (LMA) on April 1, 2002. The affiliation was switched to The WB
Television Network (The WB) at the end of August 2002 and the call letters
changed to WBUW. We expect to close the transaction during the fourth quarter
of 2002. Net costs associated with the LMA for the three and nine months ended
September 30, 2002 were $70,000 and $74,000, respectively.

In August 2002, we founded ACME Television Productions, LLC, (ATP) a
wholly owned subsidiary which produces our new daily morning news program, The
Daily Buzz. All of our stations began broadcasting The Daily Buzz in
September 2002. During the fourth quarter, we began to license the show to
certain cable programmers in smaller markets. We expect to continue to market
the program, subject to demand, to both other cable and broadcast stations as
well as sell barter advertising time in the show to national advertisers.

We also own the rights to acquire construction permits to build four other
stations  three to be new WB Network affiliates in Lexington, KY, Richmond, VA
and Flint-Saginaw-Bay Cities, MI and the fourth to be a second station,
operated as an independent, in Portland, OR. The acquisition of these
construction permits is dependent on the Federal Communications Commission
approving the underlying applications. The aggregate purchase price for these
four construction permits is approximately $18.4 million.

(2) Presentation of Interim Financial Statements

Financial statements are presented for each of ACME Intermediate Holdings,
LLC and its wholly-owned subsidiary, ACME Television, LLC. Unless the context
requires otherwise, references to the Company refers to both ACME
Intermediate and ACME Television. Segment information is not presented since
all of our revenue is attributed to a single reportable segment  television
broadcasting.

The accompanying consolidated financial statements for the three and nine
month periods ended September 30, 2001 and 2002 are unaudited and have been
prepared in accordance with accounting principles generally accepted in the
United States of America, the instructions to this Form 10-Q and Article 10 of
Regulation S-X. In our opinion, such financial statements include all
adjustments (consisting of normal recurring accruals) considered necessary for
the fair presentation of the financial position and the results of operations,
and cash flows for these periods. As permitted under the applicable rules and
regulations of the Securities and Exchange Commission (SEC), these financials
statements do not include all disclosures and footnotes normally included with
annual consolidated financial statements, and accordingly, should be read in
conjunction with the consolidated financial statements and the notes thereto,
included in the our Annual Report on Form 10-K for the year ended December 31,
2001, filed with the SEC on April 1, 2002. The results of operations presented
in the accompanying consolidated financial statements are not necessarily
indicative of the results that may be expected for the year ending December 31,
2002.

8



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##### Table of Contents



Certain amounts previously reported in 2001 have been reclassified to
conform to the 2002 financial statement presentation.

(3) Long-Lived Assets, Goodwill and Intangible Assets  Adoption of Statements 142 and 144

We adopted the provisions of Statement of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other Intangible Assets effective January 1,
2002. Under SFAS No. 142, we will no longer amortize goodwill or intangible
assets. In connection with the transitional goodwill impairment evaluation, SFAS
142 required us to perform an assessment of whether there was any indication
that goodwill was impaired at the date of adoption. We performed the
assessment on a consolidated basis and determined that there was not an
indication of impairment. In addition, we determined that our intangible
assets, comprised of FCC licenses, represented intangible assets with an
indefinite life. We evaluated each asset for impairment in accordance with
SFAS No. 142, based on the fair value of the intangibles. Based on this
evaluation, we did not record any impairment of FCC licenses. The evaluation
of impairment of goodwill and FCC licenses must be done at least annually and
more frequently if events or circumstances indicate that the assets may be
impaired. As of December 31, 2001 and September 30, 2002, we had $106.3
million in unamortized goodwill and $165.0 million in unamortized broadcast
licenses.

Following is a reconciliation of the September 30, 2001 reported net loss
to the net loss as it would have been if SFAS No. 142 had been effective on
January 1, 2001:

|                  |                                 |                   |        |                            |        |                           |        |       |        |      |         |   |         |   |         |        |         |  
|----------------- | ------------------------------- | ----------------- | ------ | -------------------------- | ------ | ------------------------- | ------ | ----- | ------ | ---- | ------- | - | ------- | - | ------- | ------ | ------- | -
|                  |                                 |                   |        | ACME Intermediate, LLC    
|                  |                                 |                   |        |                           
|                  |                                 |                   |        | For the Three Months Ended |        | For the Nine Months Ended
|(In thousands)    |                                 | September 30,     |        | September 30,             
|                  |                                 |                   |        |                           
|                  |                                 |                   |        | 2002                       |        | 2001                      |        | 2002  |        | 2001
|                  |                                 |                   |        |                            |        |                           |        |       |        |     
|                  |                                 |                   |        | (Unaudited)                |        | (Unaudited)              
|Reported net loss |                                 | $                 | (5,381 | )                          |        | $                         | (6,534 | )     |        | $    | (49,381 | ) |         | $ | (19,255 | )     
|                 
|                 
|                 
|                 
|Add back:         |                                 |                   |        |                            |        |                           |        |       |        |      |         |   |         |   |         |       
|                 
|                 
|                 
|                 
|                  | Goodwill amortization           |                   |        |                           |        |                           |        | 1,312 |        |      |         |  |         |   |         | 3,998  |        
|                 
|                 
|                 
|                 
|                  | Broadcast licenses amortization |                   |        |                           |        |                           |        | 2,529 |        |      |         |  |         |   |         | 7,523  |        
|                 
|                 
|                 
|                 
|                  | Income tax expense              |                   |        |                           |        |                           |        | (967  | )      |      |         |  |         |   |         | (2,875 | )      
|                  |                                 |                   |        |                            |        |                           |        |       |        |      |         |   |         |   |         |       
|                  |                                 | Adjusted net loss |        | $                          | (5,381 | )                         |        | $     | (3,660 | )    |         | $ | (49,381 | ) |         | $      | (10,609 | )
|                  |                                 |                   |        |                            |        |                           |        |       |        |      |         |   |         |   |         |       

|                  |                                 |                   |        |                            |        |                           |        |       |        |      |         |   |         |   |         |        |        |  
|----------------- | ------------------------------- | ----------------- | ------ | -------------------------- | ------ | ------------------------- | ------ | ----- | ------ | ---- | ------- | - | ------- | - | ------- | ------ | ------ | -
|                  |                                 |                   |        | ACME Television, LLC      
|                  |                                 |                   |        |                           
|                  |                                 |                   |        | For the Three Months Ended |        | For the Nine Months Ended
|(In thousands)    |                                 | September 30,     |        | September 30,             
|                  |                                 |                   |        |                           
|                  |                                 |                   |        | 2002                       |        | 2001                      |        | 2002  |        | 2001
|                  |                                 |                   |        |                            |        |                           |        |       |        |     
|                  |                                 |                   |        | (Unaudited)                |        | (Unaudited)              
|Reported net loss |                                 | $                 | (3,291 | )                          |        | $                         | (5,315 | )     |        | $    | (36,353 | ) |         | $ | (15,679 | )     
|                 
|                 
|                 
|                 
|Add back:         |                                 |                   |        |                            |        |                           |        |       |        |      |         |   |         |   |         |       
|                 
|                 
|                 
|                 
|                  | Goodwill amortization           |                   |        |                           |        |                           |        | 1,312 |        |      |         |  |         |   |         | 3,998  |       
|                 
|                 
|                 
|                 
|                  | Broadcast licenses amortization |                   |        |                           |        |                           |        | 2,529 |        |      |         |  |         |   |         | 7,523  |       
|                 
|                 
|                 
|                 
|                  | Income tax expense              |                   |        |                           |        |                           |        | (967  | )      |      |         |  |         |   |         | (2,875 | )     
|                  |                                 |                   |        |                            |        |                           |        |       |        |      |         |   |         |   |         |       
|                  |                                 | Adjusted net loss |        | $                          | (3,291 | )                         |        | $     | (2,441 | )    |         | $ | (36,353 | ) |         | $      | (7,033 | )
|                  |                                 |                   |        |                            |        |                           |        |       |        |      |         |   |         |   |         |       

Prior to January 1, 2002, we recorded deferred tax liabilities relating to
the difference in the book basis and tax basis of goodwill and intangibles.
The reversals of those deferred tax liabilities were utilized to support the
realization of deferred tax assets (primarily consisting of net operating loss
carryforwards) and the corresponding deferred tax benefits recorded. As a
result of the adoption of SFAS No. 142, those deferred tax liabilities will no
longer reverse on a scheduled basis and can no longer be utilized to support
the realization of deferred tax assets. Accordingly, we recorded a one-time,
non-cash charge totaling $29.2 and 22.3 million for ACME Intermediate and ACME
Television, respectively, to deferred income tax expense in the first quarter
of 2002 to establish a valuation allowance against its deferred tax assets.

We also adopted the provisions of SFAS No. 144 Accounting for the
Impairment or Disposal of Long-Lived Assets effective January 1, 2002. SFAS
144 requires us to evaluate long-lived assets for impairment when certain
conditions exist, including a current period operating loss combined with a
history of operating losses. In evaluating whether there is an impairment, the
carrying value of the assets is compared to the sum of the undiscounted cash
flows expected to result from the use and eventual disposition of the assets.
We evaluate long-lived assets at the station level. As of September 30, 2002,
we have not recorded any impairment related

9



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##### Table of Contents



to long-lived assets. Future adverse changes in market conditions, changes in
technology and other factors could reduce the expected future cash flows and
result in an impairment charge.

(4) Revolving Credit Facility

In February 2002, we completed our new revolving credit facility with
Foothill Capital Corporation, as both agent and lender. In June 2002, GE
Capital became a co-lender under the agreement and maximum borrowings under the
facility were increased to $40 million. The new facility is secured by all of
our television station assets and expires May 31, 2004. Under this agreement,
we have the option to borrow at an interest rate determined by either a base
rate (Wells Fargo Banks prime rate) plus 3 percentage points, or at the LIBOR
rate plus 4.25 percentage points. The financial covenants, which are quarterly
tests beginning March 31, 2002, included in the new facility are (a) minimum
EBITDA, (b) maximum total leverage, (c) minimum net tangible worth and (d)
maximum capital expenditures (annual basis only). In addition to the financial
covenants, the facility contains negative covenants, which, among other
restrictions, require the lenders approval for certain station acquisitions
and dispositions. At September 30, 2002 we had borrowings under the facility
of $14.6 million, bearing an implicit average interest rate of 6.1%, and had
$25.4 million available under the facility. We were in compliance with all
covenants at September 30, 2002.

Costs associated with the procuring of bank credit facilities, including
loan fees and related professional fees, are included in long-term other assets
and are amortized over the term of the facilities. Approximately $292,000 in
capitalized costs that related to the prior facility were expensed in the first
quarter of 2002.




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

Forward -Looking Statements:

This Quarterly Report on Form 10-Q includes forward-looking statements. In
addition, when used in this Quarterly Report on Form 10-Q, the words
anticipate, may, could,
should, believe, expect, or might and similar
expressions are intended to identify forward-looking statements. Such
statements are subject to a number of risks and uncertainties. Actual results
in the future could differ materially and adversely from those described in the
forward-looking statements as a result of various important factors, including
(but not limited to) the impact of changes in national and regional economies,
including advertising demand, pricing fluctuations in local and national
advertising, volatility in programming costs, the inability to close the
Madison acquisition, the inability to secure Federal Communications Commission
approval for construction permits, the possibility of borrowing limitations
under our credit facilities, the inability to make interest payments on the
Companys long-term debt, potential preemptions of regular programming for
national news events and the other risk factors set forth in the Companys 2002
Form 10-K filed with the SEC on April 1, 2002. The Company undertakes no
obligation to publicly update or release any revisions to these
forward-looking statements that may be made to reflect any future events or
circumstances after the date of this Quarterly Report on Form 10-Q.

The following discussion should be read in conjunction with our
consolidated financial statements and related notes included elsewhere in this
report on Form 10-Q.

Overview

Our ten owned and operated television stations are regionally diverse and
range in size (based on television households) from the 22nd through the 82nd
largest markets in the nation. All but one of our stations are affiliates of
The WB. Our second station in the Albuquerque  Santa Fe marketplace is a UPN
affiliate. KPLR  St. Louis, our only VHF station, has been broadcasting in
that market for over 40 years and is considered a mature television station.
Our other nine stations (our Developing Stations) have only been on the air,
or achieving measurable ratings, for 2-5 years. In addition we currently
operate, under an LMA, the WB affiliate in Madison, WI. We expect to complete
our acquisition of this station in the fourth quarter of 2002.

We derive revenues primarily from the sale of advertising time to local,
regional and national advertisers. Our revenues depend on popular programming
that attracts audiences in the demographic groups targeted by advertisers,
allowing us to sell advertising time at satisfactory rates. Our revenues also
depend significantly on factors such as the national and local economy and the
level of local competition.

10



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Our revenues are generally highest during the fourth quarter of each year,
primarily due to increased expenditures by advertisers in anticipation of
holiday season consumer spending and an increase in viewership during this
period. We generally pay commissions to advertising agencies on local, regional
and national advertising and to national sales representatives on national
advertising. Our revenues reflect deductions from gross revenues for
commissions payable to advertising agencies and national sales representatives.

Our primary ongoing operating expenses are programming costs, employee
compensation, advertising and promotion expenditures and depreciation.
Programming expense consists primarily of amortization of broadcast rights
relating to syndicated programs as well as news production costs and music
licensing fees. Changes in employee compensation expense result primarily from
increases in total staffing levels, from adjustments to fixed salaries based on
individual performance and inflation and from changes in sales commissions paid
to our sales staff based on levels of advertising revenues. Advertising and
promotion expenses consist primarily of media and related production costs
resulting from the promotion of our stations and programs. This amount is net
of any reimbursement received or due to us for such advertisement and promotion
from The WB, UPN or from other program suppliers.

Results of Operations

The following table sets forth our calculation of broadcast cash flow and
EBITDA along with a summary of our statement of cash flow data for the periods
indicated:

|                                   |                                |                                  |       |                                 |       |             |        |        |       |   |       |         |        |   |        |         |        | 
|---------------------------------- | ------------------------------ | -------------------------------- | ----- | ------------------------------- | ----- | ----------- | ------ | ------ | ----- | - | ----- | ------- | ------ | - | ------ | ------- | ------ | 
|Other Operating Data:              |                                |                                  |       |                                 |       |             |        |        |       |   |       |         |        |   |        |        
|                                   |                                | Three Months ended September 30, |       | Nine Months ended September 30,
|                                   |                                |                                  |       |                                 |       |            
|Broadcast cash flow and EBITDA(1): |                                | 2002                             |       | 2001                            |       | 2002        |        | 2001  
|                                   |                                |                                  |       |                                 |       |             |        |       
|                                   |                                |                                  |       | (Unaudited)                     |       | (Unaudited)
|Operating Income (loss)            |                                | $                                | 1,662 |                                 |       | $           | (2,416 | )      |       | $ | 3,976 |         |        | $ | (7,010 | )      
|                                  
|                                  
|                                  
|                                  
|Add back:                          |                                |                                  |       |                                 |       |             |        |        |       |   |       |         |        |   |        |        
|                                  
|                                  
|                                  
|                                  
|                                   | Equity-based compensation      |                                  |       | 115                             |       |             |        | 132    |       |   |       | 346     |        |   |        | 397     |       
|                                  
|                                  
|                                  
|                                  
|                                   | Depreciation and amortization  |                                  |       | 1,325                           |       |             |        | 4,953  |       |   |       | 3,777   |        |   |        | 14,822  |       
|                                  
|                                  
|                                  
|                                  
|                                   | LMA Fees                       |                                  |       | 70                              |       |             |        |       |       |   |       | 74      |        |   |        |        |       
|                                  
|                                  
|                                  
|                                  
|                                   | Amortization of program rights |                                  |       | 4,123                           |       |             |        | 3,411  |       |   |       | 12,140  |        |   |        | 10,487  |       
|                                  
|                                  
|                                  
|                                  
|                                   | Corporate expenses             |                                  |       | 884                             |       |             |        | 787    |       |   |       | 2,729   |        |   |        | 2,607   |       
|                                  
|                                  
|                                  
|                                  
|                                   | Adjusted program payments (1)  |                                  |       | (4,171                          | )     |             |        | (3,426 | )     |   |       | (12,255 | )      |   |        | (10,486 | )     
|                                   |                                |                                  |       |                                 |       |             |        |        |       |   |       |         |        |   |        |        
|                                   |                                | Broadcast cash flow              |       |                                 | 4,008 |             |        |        | 3,441 |   |       |         | 10,787 |   |        |         | 10,817 | 
|                                  
|                                  
|                                  
|                                  
|Less:                              |                                |                                  |       |                                 |       |             |        |        |       |   |       |         |        |   |        |        
|                                  
|                                  
|                                  
|                                  
|                                   | Corporate expenses             |                                  |       | 884                             |       |             |        | 787    |       |   |       | 2,729   |        |   |        | 2,607   |       
|                                   |                                |                                  |       |                                 |       |             |        |        |       |   |       |         |        |   |        |        
|                                   |                                | EBITDA                           |       | $                               | 3,124 |             |        | $      | 2,654 |   |       | $       | 8,058  |   |        | $       | 8,210  | 
|                                  
|                                  
|                                  
|                                  
|Broadcast cash flow margin (1)     |                                |                                  | 20.0  | %                               |       |             | 20.6   | %      |       |   | 18.7  | %       |        |   | 20.8   | %      
|                                  
|                                  
|                                  
|                                  
|EBITDA margin (1)                  |                                |                                  | 15.6  | %                               |       |             | 15.9   | %      |       |   | 13.9  | %       |        |   | 15.8   | %      
|                                  
|Cash
flows provided by (used in):  |                                |                                  |       |                                 |       |             |        |        |       |   |       |         |        |   |        |        
|                                  
|                                  
|                                  
|                                  
|                                   | Operating activities           |                                  |       |                                 |       |             |        |        |       |   | $     | (14,476 | )      |   | $      | (1,228  | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Investing activities           |                                  |       |                                 |       |             |        |        |       |   | $     | (12,213 | )      |   | $      | (4,512  | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Financing activities           |                                  |       |                                 |       |             |        |        |       |   | $     | 24,901  |        |   | $      | 8,823   |       



---

|(1) |  | We define:
|--- |  | ----------



| |  |  | broadcast cash flow as operating income, plus equity-based
compensation, depreciation and amortization, LMA fees, amortization of
program rights, and corporate expenses, less program payments  the
latter as adjusted to reflect reductions for liabilities relating to
expired rights or rights that have been written-off in connection with
acquisitions;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | EBITDA as broadcast cash flow less corporate expenses;                                                                                                                                                                                                                                                                                                         
|
| |  |  | broadcast cash flow margin as broadcast cash flow as a percentage of net revenues; and                                                                                                                                                                                                                                                                         
|
| |  |  | EBITDA margin as EBITDA as a percentage of net revenues.                                                                                                                                                                                                                                                                                                       



| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have included broadcast cash flow, broadcast cash flow margin, EBITDA and
EBITDA margin data because management believes that these measures are useful
to an investor to evaluate our ability to service debt and to assess the
earning ability of our stations

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| |                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | operations. However, you should not consider these items in isolation or as
substitutes for net income, cash flows from operating activities and other
statement of operations or cash flows data prepared in accordance with
accounting principles generally accepted in the United States of America.
These measures are not necessarily comparable to similarly titled measures
employed by other companies.

Quarter and Nine Months ended
September 30, 2002 vs. September 30, 2001

Net revenues increased 20% to $20.0 million for the third quarter of 2002
compared to $16.7 million for the same period a year ago while year-to-date net
revenues were up 11% to $57.8 million for 2002 compared to $52.1 million for
the first nine months of 2001. This double-digit revenue growth was driven by
a combination of strengthening advertiser demand in our markets and
ratings-driven increased market share performance at our Developing Stations.
We accomplished this growth without any significant benefit of the political
advertising in our markets as politicians continue to pass up the opportunity
to campaign for our typically younger aged viewers.

Station operating expenses increased 21% to $16.0 million for the third
quarter of 2002 compared to $13.2 million for the same period a year ago and
increased 14% to $46.9 million for the nine-month period ended September 30,
2002 compared with $41.3 million for the corresponding period in 2001. These
increases are primarily due to increased programming expense which was up 30%
for the quarter and 19% for the nine-month period compared to 2001 due to our
continued investment in, and upgrade to, our program schedule, which also
included the addition of our new morning news show The Daily Buzz launched in
September 2002. Sales and related expenses were up 5% for the quarter and 16%
for the nine-month period as compared to the same periods in 2001, principally
due to increased Nielsen rating service charges and sales incentive programs.
Engineering expenses increased 12% for the quarter and 11% for the nine-month
period due to costs associated with our new digital facilities. Also, last
years third quarter expenses benefited from the reversal (due to the combined
adverse effects of a major advertising recession and 9/11) of the first two
quarters incentive compensation accruals.

Depreciation and amortization decreased 73% to $1.3 million in the third
quarter of 2002 compared to $5.0 million in the same period a year ago and for
the nine month period depreciation and amortization decreased 75% to $3.8
million compared to $14.8 million for the same period in 2001, due to our
adoption of SFAS No. 142. Under SFAS No. 142, our goodwill and other
intangible assets are no longer amortized. This reduced our depreciation and
amortization expense by $3.8 million and $11.5 million for the
three and nine-month periods ended September 30, 2002, respectively.
Depreciation expense relating to fixed assets increased $214,000 (19%) for the
three months and $477,000 (14%) for the nine months ended September 30, 2002
compared to the same periods in 2001 because of our capital expenditures to
convert to digital broadcasting, upgrade existing equipment and launch The
Daily Buzz.

Corporate expenses increased 12% to $884,000 for the third quarter of 2002
as compared to $787,000 for the same period a year ago. On a year to date
basis, corporate expenses increased 5% to $2.7 million in 2002 compared to $2.6
million in 2001. Both the increase in the third quarter and the increase for
the nine-month period are due primarily to increased insurance expenses and
increased investor relations expenses offset by a reduction in professional
fees and incentive compensation provisions.

Equity-based compensation of $115,000 in the third quarter of 2002 and
$132,000 in the third quarter of 2001 and $346,000 and $397,000 for the
nine-months ended September 30, 2002 and 2001, respectively, relates to stock
options issued upon the conversion of our long-term incentive plan awards
during ACME Parents IPO in September of 1999. These options were issued at a
price below market value at the date of grant and therefore generate
compensation expense over the life of the option. The decrease of $17,000 for
the quarter and $51,000 year to date in 2002 is due to stock options that were
forfeited by former employees.

ACME Televisions interest expense for the third quarter of 2002 was $5.6
million and was $5.3 million in the third quarter of 2001 and for the nine
month period was $16.8 million in 2002 and $16.0 million in 2001. This third
quarter 2002 increase was primarily due to interest expense on borrowings under
our revolving credit facility and increased interest expense on our capital
lease facilities. Interest expense for the nine-month period also includes the
accelerated amortization of prepaid financing costs associated with our former
credit facility that was terminated in February 2002 (see Liquidity and
Capital Resources below).

ACME Intermediates interest expense for the third quarter of 2002 was
$7.9 million and was $7.3 million for the previous year and for the nine month
period interest expense was $23.4 million in 2002 and $21.8
million in 2001. In addition to the higher interest expense at ACME
Television, interest expense also increased

12



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##### Table of Contents



relating to the higher accreted
principal balance for ACME Intermediates 12% senior secured notes compared to
a year ago.

ACME Intermediate and ACME Televisions income tax benefits for the third
quarter of 2002 were $888,000 and $721,000, respectively, compared to income
tax benefits of $3.2 and $2.5 million, respectively, in the corresponding
quarter of 2001. For the nine month period ACME Intermediates income tax
expense was $29.8 million for 2002 and the benefit was $9.5 million for 2001.
ACME Televisions income tax expense was $23.4 million for the nine month
period ended September 30, 2002 and the benefit was $7.3 million for the same
period in 2001. The tax benefits recorded in the three months ended September
30, 2002 reflect an adjustment to both ACME Intermediates and ACME
Televisions effective tax rates for 2002. The tax expense recorded by both
companies for the nine months ended September 30, 2002 relates primarily to the
implementation of SFAS No. 142 on January 1, 2002. Prior to January 1, 2002,
we recorded deferred tax liabilities relating to the difference in the book
basis and tax basis of goodwill and intangibles. The reversals of those
deferred tax liabilities were utilized to support the realization of deferred
tax assets (primarily consisting of net operating loss carryforwards) and the
corresponding deferred tax benefits recorded. As a result of the adoption of
SFAS 142, those deferred tax liabilities will no longer reverse on a scheduled
basis and can no longer be utilized to support the realization of deferred tax
assets. Accordingly, in the first quarter of 2002 we recorded one-time,
non-cash charges totaling $29.2 million and $22.3 million for ACME Intermediate
and ACME Television, respectively, to deferred income tax expense to establish
a valuation allowance against its deferred tax assets.

Broadcast cash flow (as defined) for the third quarter increased 16% to
$4.0 million compared to $3.4 million in the same period a year ago due to our
revenue growth. On a year-to-date basis, broadcast cash flow remained flat at
$10.8 million as the growth in our revenues has started to equal the growth in
our expenditures.

EBITDA (as defined) increased 18% to $3.1 million for the third quarter of
2002 compared to $2.7 million EBITDA for the third quarter of 2001 on the
strength of increased broadcast cash flow. On a year-to-date basis, EBITDA
decreased 2% to $8.1 million compared to $8.2 million in the same period a year
ago. This nine-month decrease reflects our increased corporate expenses.

ACME Televisions net loss for the third quarter of 2002 was $3.3 million
compared to a net loss for the third quarter of 2001 of $5.3 million. For the
nine month period, ACME Televisions net loss was $36.4 million in 2002 and
$15.7 million in 2001. The $2.0 million decreased net loss for the third
quarter is primarily the result of increased operating income (which includes
the $3.8 million decrease in amortization expense resulting from the adoption
of SFAS No. 142) partially offset by increased interest expense and a reduction
in our income tax benefit. The $20.7 million increase in ACME Televisions net
loss for the nine month period is primarily attributable to the deferred tax
expense (compared to the deferred tax benefits in the prior year period) which
include the one-time tax charge of $22.3 million we recognized in January 2002
upon our adoption of SFAS No. 142, offset by reduced amortization of
intangibles ($11.5 million reduction), which also resulted from the adoption of
SFAS No. 142, and increased interest expense. ACME Intermediates higher net
loss for the quarter and nine-month periods ended September 30, 2002, compared
to ACME Televisions, reflect the interest and income tax expense related to
ACME Intermediates 12% senior secured notes.

Liquidity and Capital Resources

Cash flow used in operating activities was $14.5 million for the nine
months ended September 30, 2002 compared to cash flow used in operating
activities of $1.2 million for the first nine months of 2001. This increase in
the use of cash relates primarily to the timing of the cash interest payment on
our 10 7/8% Senior Discount Notes. The payment, which is due on September
30th, was paid on October 1st in 2001 due to September 30th falling on a
Sunday. Interest expense was also higher for the nine months ended September
30, 2002 compared to the prior year due to higher revolver and capital lease
debt during 2002.

Cash flow used in investing activities during the first nine months of
2002 was $12.2 million compared to $4.5 million used during the first nine
months of 2001. The $7.7 million increase is attributable to the purchases of
broadcast and other equipment while we continue to improve technical facilities
at our stations, a minority investment in an automobile-related website and the
deposit made in connection with our pending purchase of WBUW, Madison,
Wisconsin.

13



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##### Table of Contents



Cash flow provided by financing activities was $24.9 million for the nine
months of 2002 compared to $8.8 million used in financing activities in 2001.
This $16.1 million increase is primarily attributable to the $12.2 million
contribution from ACME Parent. The remainder relates to our borrowings on our
credit facility offset by payment of financing costs and decreased net
borrowings on our capital lease facilities (net of repayments and cash placed
on deposit to secure such borrowings).

In February 2002, we completed our new revolving credit facility with
Foothill Capital Corporation, as both agent and lender. In June 2002, GE
Capital became a co-lender under the agreement and maximum borrowings under the
facility were increased to $40 million. The new revolving facility is secured
by all of our television station assets and expires May 31, 2004. Under this
agreement, we have the option to borrow at an interest rate determined by
either a base rate (Wells Fargo Banks prime rate) plus 3 percentage points, or
at the LIBOR rate plus 4.25 percentage points. The financial covenants, which
are quarterly tests beginning March 31, 2002, included in the new facility are
(a) minimum EBITDA, (b) maximum total leverage, (c) minimum net tangible worth
and (d) maximum capital expenditures (annual basis only). In addition to the
financial covenants, the facility contains negative covenants, which, among
other restrictions, require the lenders approval for certain, station
acquisitions and dispositions. At September 30, 2002 we had borrowings under
the facility totaling $14.6 million, bearing an implicit average interest rate
of 6.1%, and had $25.4 million available under the facility. We were in
compliance with all covenants at September 30, 2002.

In March 2002, upon posting an additional $1.1 million of restricted cash
as collateral, we borrowed the final $3.3 million of our most recent capital
lease facility. Borrowings under our various capital lease facilities are
generally paid over four to five years. At September 30, 2002, amounts due
under all capital lease facilities totaled $13.2 million bearing an implicit
average interest rate of 8.4% per annum.

We expect to incur approximately $1.0 million in additional capital
expenditures in 2002 as we conclude our transition to digital broadcasting and
defer the expected upgrade of the Madison, WI station we anticipate purchasing,
until 2003. We expect that our capital expenditures after 2002, apart from
those related to any pending and future acquisitions, will approximate $3.5
million per year.

Effective
October 1, 2000, ACME Televisions $175 million 10 7/8% Senior
Discount Notes due September 30, 2004 began accruing cash interest. The
interest payment on these notes amounts to approximately $9.5 million every six
months and the payments are due on March 31st and September 30th. ACME
Intermediates $71.6 million 12% Senior Secured Notes began accruing cash
interest on October 1, 2002, with the first semi-annual payment of
approximately $4.3 million due on March 31, 2003.

At September 30, 2002, the Company had $5.4 million of cash, $2.9 million
of which is restricted to collateralize capital lease obligations, and working
capital of $2.5 million and $2.7 million for ACME Intermediate and ACME
Television, respectively.

We
believe that existing unrestricted cash balances, funds generated
from operations and borrowings under our credit facility will be
sufficient to satisfy our cash requirements for existing operations
until September 30, 2003. However, these sources of funds may
not be adequate to make the entire interest payment of approximately
$13.8 million on our Senior Discount and Senior Secured Notes on
September 30, 2003. The Company believes it should be able to
find alternative sources of debt or equity financing of liquidity
through the sale of selected assets. There is no guarantee that the
Company will be able to complete the sale of selected assets or
complete additional debt or equity transactions, if at all,
on terms which are acceptable to the Company. The Companys next
interest payment following September 30, 2003 of approximately
$13.8 million is due on March 31, 2004. Although the Company
currently does not expect to generate adequate pre-interest operating
cash flow to fund that interest payment, the Company expects that
funds from any transaction described above that is successfully
completed would satisfy that payment.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in
the United States. The preparation of these financial statements requires us
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, we evaluate our estimates, including
those related to broadcast rights, bad debts, intangible assets, income taxes,
and contingencies and litigation. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and

14



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##### Table of Contents



liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions. We
believe the following critical accounting policies affect the more significant
judgments and estimates used in the preparation of our consolidated financial
statements.

Revenue Recognition

We record revenue from the sale of airtime related to advertising and
contracted time at the time of broadcast and maintain an allowance for doubtful
accounts for the estimated losses that may result from the inability of our
customers to make required payments. We utilize information available to us,
including the timing of payments and the financial condition of our customers,
to estimate the allowance for doubtful accounts. If the financial condition of
our customers were to deteriorate, resulting in an impairment of their ability
to make payments, additional allowances may be required. We do not have a
significant concentration of accounts receivable from any single customer or
industry segment.

Under
many of our syndicated programming agreements, the Company provides advertising time to the
supplier as full or partial consideration for the program rights. We
record revenue and corresponding expenses associated with such barter
agreements based on the estimated value of the advertising time
exchanged. This barter revenue and expense was $1.8 million and
$5.1 million for the three and nine-months ended
September 30, 2002, respectively. The corresponding barter
revenue and expense for the three and nine-months ended
September 30, 2001 was $1.4 million and $4.4 million,
respectively.

Programming Rights

Our programming rights are stated, on a gross basis, at the lower of
amortized cost or estimated realizable value. We evaluate estimated realizable
value of programming rights based on current usage and revenue performance and
projected future revenue and usage of such programs. Changes in our
programming schedule could impact the estimated realizable value of
programming. For the quarter and nine-month periods ended September 30, 2001
programming rights impairment charges totaled $150,000 and $196,000,
respectively. For both the quarter and nine-month periods ended September 30,
2002 programming rights impairment charges totaled $100,000.

Long-Lived Assets, Goodwill and Intangible Assets

We evaluate long-lived assets in accordance with SFAS No. 144. SFAS 144
requires us to evaluate long-lived assets for impairment when certain
conditions exist, including a current period operating loss combined with a
history of operating losses. In evaluating whether there is an impairment, the
carrying value of the assets is compared to the sum of the undiscounted cash
flows expected to result from the use and eventual disposition of the assets.
We evaluate long-lived assets at the station level. As of September 30, 2002,
we have not recorded any impairment related to long-lived assets. Future
adverse changes in market conditions, changes in technology and other factors
could reduce the expected future cash flows and result in an impairment charge.

We evaluate goodwill and intangibles in accordance with SFAS No. 142. In
connection with the transitional goodwill impairment evaluation, SFAS 142
required us to perform an assessment of whether there was any indication that
goodwill was impaired at the date of adoption (January 1, 2002). We performed
the assessment on a consolidated basis and determined that there was not an
indication of impairment. In addition, we determined that our intangible
assets, comprised of FCC licenses, represented intangible assets with an
indefinite life. We evaluated each asset for impairment in accordance with
SFAS No. 142, based on the fair value of the intangibles. Based on this
evaluation, we did not record any impairment of FCC licenses. The evaluation
of impairment of goodwill and FCC licenses must be done at least annually and
more frequently if events or circumstances indicate that the assets may be
impaired.

Accounting for Income Taxes

Prior to January 1, 2002, we recorded deferred tax liabilities relating to
the difference in the book basis and tax basis of goodwill and intangibles.
The reversals of those deferred tax liabilities were utilized to support the
realization of deferred tax assets (primarily consisting of net operating loss
carryforwards) and the corresponding deferred tax benefits recorded. As a
result of the adoption of SFAS No. 142, those deferred tax liabilities will no
longer reverse on a scheduled basis and can no longer be utilized to support
the realization of deferred tax assets. Accordingly, we recorded a one-time,
non-cash charge totaling $29.2 million and $22.3 million for ACME Intermediate
and ACME Television, respectively, to deferred income tax expense in the
quarter ended March 31, 2002 to establish a valuation allowance against our
deferred tax assets. If we were to determine that we would be able to realize
a deferred tax asset in the future that is in excess of the net recorded
amount, we would record an adjustment to the valuation allowance and a tax
benefit.

15



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##### Table of Contents






Item 3.Quantitative and Qualitative Disclosures About Market Risk

Our credit facility has a variable interest rate. Accordingly, our
interest expense could be materially affected by future fluctuations in the
applicable interest rate. At September 30, 2002, we had borrowings of $14.6
million, bearing an implicit average interest rate of 6.1%, and $25.4 million
available under the credit facility.

We are also exposed to risk from a change in interest rates to the extent
we are required to refinance existing fixed rate indebtedness at rates higher
than those prevailing at the time the existing indebtedness was incurred. We
have senior discount notes totaling $175 million and senior secured discount
notes totaling $71.6 million due in the years 2004 and 2005, respectively.
Effective October 1, 2000, the senior discount notes began accruing cash
interest. The interest payment on these notes amounts to approximately $9.5
million every six months. Effective October 1, 2002, the senior secured notes
began accruing cash interest with the first semi-annual interest payment of
approximately $4.3 million due on March 31, 2003. Based upon the quoted market
price, the fair value of the senior discount notes and senior secured discount
notes was $171.5 and $63.0 million, respectively, as of September 30, 2002.

Item 4.Controls and Procedures

Our management, including our Chief Executive Officer and our Chief
Financial Officer , have evaluated our disclosure controls and procedures
within the 90 days proceeding the date of this filing. Under the Securities
and Exchange Commission (SEC) rules, disclosure controls and procedures are
defined as those controls or other procedures of an issuer that are designed
to ensure that information required to be disclosed by the issuer in the
reports filed or submitted by it under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SECs rules
and form. Based on the evaluation of our disclosure controls and procedures,
our CEO and CFO concluded that such controls and procedures were effective as
of November 11, 2002, the date of the conclusion of the evaluation.

Further, there were no significant changes in the internal controls or in
other factors that could significantly affect these controls after November 11,
2002, the date of the conclusion of the evaluation of disclosure controls and
procedures.




PART II  OTHER INFORMATION




Item 1.Legal Proceedings

We currently and from time to time are involved in litigation incidental
to the conduct of our business. We maintain comprehensive general liability and
other insurance, which we believe to be adequate for the purpose. We are not
currently a party to any lawsuit or proceeding that management believes would
have a material adverse affect on its financial condition or results of
operations.




Item 6.Exhibits and Reports on Form 8-K.



|(a) |  | Exhibits.
|--- |  | ---------



| |      
| | -----
| | None.



|(b) |  | Reports on Form 8-K.
|--- |  | --------------------



| |      
| | -----
| | None.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.

|                        |  |                                  |  |                               
|----------------------- |  | -------------------------------- |  | ------------------------------
|                        |  | ACME INTERMEDIATE HOLDINGS, LLC.
|                        |  |                                  |  |                               
|Date: November 14, 2002 |  | By:                              |  | /s/    THOMAS D. ALLEN        
|                        |  |                                  | 
|                        |  |                                  |  | Thomas D. Allen               
|                        |  |                                  |  | Executive Vice President / CFO
|                        |  |                                  |  | (Principal accounting officer)
|                        |  |                                  |  |                               
|                        |  |                                  |  |                               
|                        |  | ACME TELEVISION, LLC.           
|                        |  |                                  |  |                               
|Date: November 14, 2002 |  | By:                              |  | /s/    THOMAS D. ALLEN        
|                        |  |                                  | 
|                        |  |                                  |  | Thomas D. Allen               
|                        |  |                                  |  | Executive Vice President / CFO
|                        |  |                                  |  | (Principal accounting officer)

17



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##### Table of Contents



I, Jamie Kellner, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of ACME
Intermediate Holdings, LLC;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
|
| | b) evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors:



| |                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
|
| | b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.     The registrants other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002

/s/    Jamie Kellner
Chief Executive Officer and Chairman of the Board

18



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##### Table of Contents



I, Thomas D. Allen, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of ACME
Intermediate Holdings, LLC;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
|
| | b) evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors:



| |                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
|
| | b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.     The registrants other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002

/s/  Thomas D. Allen
Executive Vice President and Chief Financial Officer

19



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##### Table of Contents



I, Jamie Kellner, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of ACME Television,
LLC;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
|
| | b) evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors:



| |                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
|
| | b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.     The registrants other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002

/s/  Jamie Kellner
Chief Executive Officer and Chairman of the Board

20



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##### Table of Contents



I, Thomas D. Allen, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of ACME Television,
LLC;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
|
| | b) evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors:



| |                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
|
| | b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.     The registrants other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002

/s/  Thomas D. Allen
Executive Vice President and Chief Financial Officer

21