INTEREP NATIONAL RADIO SALES INC, 424B1, 1999-12-09

INTEREP NATIONAL RADIO SALES INC
424B1, 1999-12-09
RADIO BROADCASTING STATIONS

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<PAGE>

RULE NO. 424(b)(1)
REGISTRATION NO. 333-88265

[LOGO] INTEREP

5,416,667 Shares

Class A Common Stock

Interep National Radio Sales, Inc. is offering 4,429,167 shares of its Class
A common stock and Interep's Employee Stock Ownership Plan is offering an
additional 987,500 shares. This is our initial public offering, and we have
applied to have the shares offered in this prospectus approved for quotation on
the Nasdaq National Market under the symbol "IREP".

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

Investing in our Class A common stock involves risks.
See "Risk Factors" beginning on page 9.

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

<TABLE>
<CAPTION>
Per
Share Total
------ -----------
<S> <C> <C>
Public Offering Price....................................... $12.00 $65,000,004
Underwriting Discounts and Commissions...................... $ 0.84 $ 4,550,000
Proceeds to Interep......................................... $11.16 $49,429,504
Proceeds to the Selling Stockholder......................... $11.16 $11,020,500
</TABLE>

The Securities and Exchange Commission and state securities regulators have
not approved or disapproved of these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

The selling stockholder has granted the underwriters a 30-day option to
purchase up to an additional 812,500 shares of Class A common stock to cover
over-allotments.

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

Robertson Stephens

Bear, Stearns & Co. Inc.

HCFP/Brenner Securities, LLC

SPP Capital Partners, LLC

The date of this Prospectus is December 9, 1999.
<PAGE>

INSIDE FRONT COVER
[Our logo is centered horizontally just above center vertically on a blue
background with lighter coloring at the right margin. There is also a yellow
spot located two-thirds of the way from the top of the page along the left
margin.]

INSIDE GATEFOLD

[In the background, the left two-thirds of the gatefold pages is off-white
while the right third of the gatefold pages is white. In the background of the
white one-third of the gatefold pages in light gray text are the logos of the
following of our sales divisions: ABC Radio Sales and Infinity Radio Sales, and
the names of the following of our clients: Beasley Broadcast Group, Citadel,
Connoisseur, Communications, Cumulus, Emmis Communications, Entercom, Greater
Media, Inner City Radio, Radio One, Spanish Broadcasting System and
Susquehanna.

Over the off-white background the following text appears at the top of the page
beginning on the left side and spanning the foldout pages:

The largest independent national spot radio rep firm in the U.S.

Below that text, in the upper left corner is the following text:

Selling advertising for radio stations outside their local markets

With Interep, a radio station or station group avoids the cost of
maintaining a national sales staff and benefits from our relationships with
advertising agencies and national advertisers.

Below that text, occupying approximately one-quarter of the gatefold pages is a
diagram consisting of arrows that form a rectangle centered around our logo.
Above our logo is a double-ended arrow pointing to the words "RADIO STATIONS"
and our logo and below our logo is a double-headed arrow pointing to the words
"ADVERTISING AGENCIES" and our logo. In and around the rectangle, moving in a
clockwise direction from the top of the rectangle, is the following text:

1 Radio stations have "spot" time to sell. Stations contract, on an
exclusive basis, with Interep to sell air time

2 Interep sales representative sells advertising agencies the benefits of
its client stations

3 Agency books airtime through Interep

4 Ad agency pays station for air time

5 Station pays Interep a commission

In the upper right corner of the gatefold pages is the following text:

Strong relationships with advertisers and ad agencies

Interep has long-standing relationships with advertisers, advertising
agencies, and media buying services nationwide, enabling us to promote out
client stations effectively in media buying centers across the country.

Below that text is a pie chart divided into blue and green sections. The blue
section is approximately 56% of the entire pie and is labeled with the text
"56% Interep." Below the pie chart is the following text:

Estimated share of national spot advertising dollars in the top 10 markets
based on gross billings from Jan-June 1999.

In the lower left corner of the gatefold pages is the following text:

Representing leading stations and station groups

Interep is the exclusive rep firm for over 2,000 radio stations nationwide,
including many of the leading consolidators in the industry.

At the very bottom right of the gatefold pages is the following text:

2
<PAGE>

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of Class A common stock only in jurisdictions where offers and
sales are permitted. The information contained in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of delivery of
this prospectus or of any sale of our Class A common stock.

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

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 4
Risk Factors............................................................. 9
Forward-Looking Statements............................................... 16
Use of Proceeds.......................................................... 16
Dividend Policy.......................................................... 16
Capitalization........................................................... 17
Dilution................................................................. 18
Selected Consolidated Financial Data..................................... 19
Management's Discussion and Analysis of Financial Condition and Results
of Operations.......................................................... 21
Business................................................................. 29
Management............................................................... 35
Certain Transactions..................................................... 43
Principal and Selling Stockholders....................................... 44
Description of Capital Stock............................................. 46
Shares Eligible for Future Sale.......................................... 48
Underwriting............................................................. 50
Legal Matters............................................................ 52
Experts.................................................................. 52
Where You Can Find More Information...................................... 52
Index to Consolidated Financial Statements............................... F-1
</TABLE>

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

Interep is a registered trademark owned by us. This prospectus contains
other trademarks, trade names and service marks of other companies which are
the property of their respective owners.

3
<PAGE>

PROSPECTUS SUMMARY

The following summary contains basic information about our business and this
offering. It may not contain all the information that is important to you. You
should read the entire prospectus, including "Risk Factors" and our
consolidated financial statements and related notes appearing elsewhere in this
prospectus, before deciding to invest in shares of Class A common stock.

Our Business

Interep National Radio Sales, Inc. is the largest independent national spot
radio representation or "rep" firm in the United States. We are the exclusive
rep firm for over 2,000 radio stations nationwide, including radio stations of
ABC Radio, Citadel, Cumulus, Entercom, Infinity and Radio One. Our market share
was an estimated 54.2% for 1998 and 55.6% for the first six months of 1999 in
the ten largest U.S. radio markets, as measured by gross billings. We have
grown to be a leader in our industry by increasing our clients' advertising
revenues, acquiring station representation contracts and creating and acquiring
other rep firms. Recently, our business has grown dramatically due in part to
the significant consolidation that has occurred in the radio industry since the
passage of the Telecommunications Act of 1996. We have sought to align
ourselves with innovative radio station groups that are well-positioned to
capitalize on this consolidation, while still meeting the needs of hundreds of
independent stations nationwide.

National spot advertising is commercial air time that radio stations sell to
advertisers located outside of their local markets. National spot advertising
typically represents approximately 20% of a radio station's revenue. Radio
stations typically retain rep firms like us on an exclusive basis to sell
commercial air time to national and regional advertisers. By using a rep firm,
a radio station or station group avoids the cost of maintaining a national
sales staff and benefits from the rep firm's proprietary research and
relationships with advertising agencies and national advertisers.

Total U.S. radio advertising revenues were an estimated $15.41 billion in
1998, up from an estimated $9.57 billion in 1993, for a compound annual growth
rate of 10.0% during that five-year period. In the same period, annual U.S.
national spot radio advertising revenues grew from an estimated $1.15 billion
to an estimated $1.98 billion, for a compound annual growth rate of 11.5%. We
believe that our efforts have contributed to advertisers' increasing
recognition that radio is an effective advertising medium. We will continue to
expend significant efforts in promoting radio as an effective means of
implementing targeted consumer marketing on both a local and a national scale.

We have 15 full service offices and six satellite offices across the country
serving independent radio stations, regional radio station groups and national
station groups in all 50 states and in 99 of the top 100 radio markets. Our
clients include country, rock, sports, Hispanic, classical, urban, news and
talk radio stations. We have built strong relationships with our station
clients and advertising agencies, some of which date back over 40 years.

Our Advantages

We believe the following factors have contributed to our position as an
industry leader and provide a strong foundation for further growth:

. Strong Relationships with Advertisers and National Presence. Our strong
relationships with advertisers, advertising agencies and media buying
services nationwide enable us to promote our client stations effectively
in media buying centers across the country.

4
<PAGE>

. Innovative Solutions. We have pioneered a variety of solutions that have
differentiated us from our competitors, such as "unwired networks" of
unaffiliated client stations, specialized agency sales targeted at
boutique agencies, promotions and dedicated rep firms that represent
individual radio station groups.

. Highly Skilled Sales Force and Sophisticated Sales Support. We have
developed a highly skilled, professional sales force with a team-
oriented approach to sales, marketing and client relationships, through
incentive programs and extensive training.

. Experienced Senior Management Team. We have an experienced and
entrepreneurial management team, headed by our Chief Executive Officer,
Ralph C. Guild, a recognized leader and innovator in the radio industry.

. Independence. We are not owned by a radio station group. We believe that
our independence reduces perceived conflicts of interest in representing
radio stations.

. Radio Industry Focus. Because we focus on representing U.S. radio
stations, as opposed to unrelated businesses such as broadcast
television stations and cable television systems, we believe we are
better positioned to serve the needs of our clients.

Our Strategy

Our objective is to enhance our position as the leading independent national
spot radio advertising rep firm and to increase revenues and earnings. Our
strategy to achieve these goals includes the following:

. Align with Leading Radio Station Groups. We seek to align ourselves with
leaders, innovators and consolidators in the radio industry. We intend
to benefit from consolidation in the radio industry by actively pursuing
and representing innovative and leading radio station groups such as ABC
Radio, Citadel, Cumulus, Entercom, Infinity and Radio One. At the same
time, we will seek to expand our representation of independent stations.

. Develop Innovative Sales Programs. We will continue to develop
innovative strategies and solutions for our clients, such as "e-radio,"
an electronic sales and communications tool which we expect to launch in
2000. We will also strive to anticipate and meet trends in radio and
advertising as our clients evolve. For example, this year we created
Interep Interactive to focus on Internet advertising.

. Promote Radio Advertising. Using our proprietary research and databases,
our Interep Marketing Group will continue to demonstrate to advertisers
that radio can help them achieve their goals and create marketing
opportunities.

. Make Strategic Investments. We will continue to consider investments or
acquisitions in our industry and in new media to improve our market
share and to better leverage our marketing capabilities.

Our Address

We are a New York corporation founded in 1953. Our principal executive
offices are located at 100 Park Avenue, New York, New York 10017. Our telephone
number is (212) 916-0700, and our Internet address is www.interep.com.
Information contained in our website is not a part of this prospectus.

5
<PAGE>

The Offering

<TABLE>
<S> <C>
Class A common stock offered by
us............................. 4,429,167 shares

Class A common stock offered by
the selling stockholder........ 987,500 shares

Total......................... 5,416,667 shares

Class A common stock to be
outstanding after this
offering....................... 5,416,667 shares(1)

Class B common stock to be
outstanding after this
offering....................... 4,923,962 shares(1)

Total......................... 10,340,629 shares(1)

Voting........................... Class A stockholders are entitled to one vote
per share on all matters submitted to a vote
of the stockholders, while Class B
stockholders are entitled to ten votes per
share. However, in connection with amendments
of our Restated Certificate of Incorporation
which would affect the rights of the Class A
common stock or a "going private"
transaction, holders of the Class B common
stock would be entitled to only one vote per
share. Both classes vote together as a single
class on all matters, except as required by
applicable law.

Use of Proceeds.................. For general corporate and working capital
purposes, including possible acquisitions. We
will not receive any proceeds from the sale
of shares by the selling stockholder. See
"Use of Proceeds."

Nasdaq National Market Symbol.... IREP
</TABLE>
- --------
(1) Excludes 2,000,000 shares of common stock reserved for issuance under our
1999 Stock Incentive Plan. Also excludes options to acquire 4,231,439
shares of Class B common stock that were outstanding and exercisable at
September 30, 1999, with a weighted average exercise price of $3.77 per
share.

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

Except as otherwise noted, all information in this prospectus:

. gives effect to a 20.896-for-one split of our common stock, which took
place on December 8, 1999; and

. assumes no exercise of the underwriters' over-allotment option.

6
<PAGE>

Summary Consolidated Financial Data
(in thousands, except share data)

The following tables summarize the financial data for our business. You
should read this information together with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our consolidated
financial statements and related notes appearing elsewhere in this prospectus.

In the following table, EBITDA means operating income (loss) before
depreciation and amortization. The amortization of costs associated with
acquiring representation contracts is included in depreciation and
amortization. Adjusted EBITDA means EBITDA excluding contract termination
revenues. EBITDA and Adjusted EBITDA are not measures of performance calculated
in accordance with generally accepted accounting principles. However, we
believe that they are useful in evaluating an investment in our Class A common
stock because they are measures widely used in our industry to evaluate
operating performance. You should not consider EBITDA and Adjusted EBITDA in
isolation or as substitutes for net income, cash flows from operating
activities and other income or cash flow statement data prepared in accordance
with generally accepted accounting principles as a measure of liquidity or
profitability.

The consolidated balance sheet data at September 30, 1999, as adjusted,
gives effect to the sale of the shares at an initial public offering price of
$12.00 per share, after deducting underwriting discounts and commissions and
the estimated offering expenses payable by us.

<TABLE>
<CAPTION>
Nine Months
Year Ended December 31, Ended September 30,
-------------------------------- ----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Commission revenue...... $ 72,858 $ 87,096 $ 87,735 $ 62,943 $ 68,839
Contract termination
revenue............... 18,876 26,586 37,221 26,679 6,351
---------- ---------- ---------- ---------- ----------
Total revenues........ 91,734 113,682 124,956 89,622 75,190
---------- ---------- ---------- ---------- ----------
Operating expenses:
Selling, general and
administrative
expenses............ 62,877 75,676 73,482 55,199 59,079
Depreciation and
amortization........ 20,988 28,954 36,436 27,292 23,318
---------- ---------- ---------- ---------- ----------
Total operating
expenses............ 83,865 104,630 109,918 82,491 82,397
---------- ---------- ---------- ---------- ----------
Operating income
(loss)................ 7,869 9,052 15,038 7,131 (7,207)
Interest expense, net... 3,911 3,779 6,744 4,447 7,358
---------- ---------- ---------- ---------- ----------
Income (loss) before
provision (benefit)
for income taxes...... 3,958 5,273 8,294 2,684 (14,565)
Provision (benefit) for
income taxes.......... 1,885 2,359 3,446 863 (5,037)
---------- ---------- ---------- ---------- ----------
Net income (loss)....... $ 2,073 $ 2,914 $ 4,848 $ 1,821 $ (9,528)
Preferred stock dividend
requirements and
redemption premium.... 1,364 1,590 5,031 5,031 --
---------- ---------- ---------- ---------- ----------
Net income (loss)
applicable to common
stockholders.......... $ 709 $ 1,324 $ (183) $ (3,210) $ (9,528)
========== ========== ========== ========== ==========
Basic earnings (loss)
per common share...... $ 0.09 $ 0.18 $ (0.03) $ (0.47) $ (1.61)
Basic weighted average
common shares
outstanding........... 7,684,060 7,476,228 6,743,803 6,873,233 5,908,215
Diluted earnings (loss)
per common share...... $ 0.09 $ 0.17 $ (0.03) $ (0.47) $ (1.61)
Diluted weighted average
common shares
outstanding........... 7,961,057 7,663,874 6,743,803 6,873,233 5,908,215
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
September 30, 1999
-----------------------
Actual As Adjusted
--------- -----------
(unaudited)
<S> <C> <C>
Balance Sheet Data:
Working capital......................................... $ 45,716 $ 94,146
Total assets............................................ 158,075 206,505
Long-term debt ......................................... 100,000 100,000
Stockholders' equity (deficit).......................... (10,680) 37,750
</TABLE>

<TABLE>
<CAPTION>
Nine Months
Ended September
Year Ended December 31, 30,
-------------------------- -----------------
1996 1997 1998 1998 1999
-------- ------- ------- ------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Other Data:
EBITDA......................... $28,857 $38,006 $51,474 $34,423 $ 16,111
Adjusted EBITDA................ 9,981 11,420 14,253 7,744 9,760
Capital expenditures........... 1,021 792 1,270 520 2,625
Net cash flows from operating
activities................... 35,982 23,821 29,404 15,636 13,830
Net cash flows from investing
activities................... (1,021) (792) (1,270) (520) (8,303)
Net cash flows from financing
activities................... (34,060) (24,263) 3,409 14,725 (23,334)
Contract acquisition payments.. 31,427 33,991 35,609 24,563 23,404
Contract termination receipts.. 28,347 20,620 36,774 31,376 12,330
</TABLE>

8
<PAGE>

RISK FACTORS

This offering involves a high degree of risk. You should carefully consider
the risks described below before you decide to buy our Class A common stock. If
any of the following risks actually occur, our business, results of operations
and financial condition would likely suffer. In that case, the market price of
our Class A common stock could decline, and you could lose all or part of your
investment.

Risks Relating to Interep

Fluctuations in our quarterly revenues and operating results could lead to
reduced prices for our Class A common stock.

Our revenues and operating results have fluctuated significantly in the
past, and we expect that they will continue to fluctuate in the future. These
fluctuations are due to a variety of factors, many of which are outside of our
control. These factors include:

. changes in station ownership or other factors which could result in the
loss of clients;

. changes in the demand for radio advertising;

. the number, timing and significance of new services introduced by us or
our competitors;

. variations in expenses, whether related to sales and marketing or
administration;

. acquisitions of new representation contracts; and

. general economic factors.

We experience seasonal fluctuations because advertisers typically spend less
on radio advertising during the first calendar quarter. During the rest of the
year, radio advertising tends to increase as a result of holiday-related
advertising, school vacations, back-to-school sales and elections.

If we lose a client, we receive contract termination payments, which are
recognized as income immediately. This results in a significant positive impact
on our results of operations for the quarter when this occurs. Later quarters
will be negatively affected by the loss of commission revenues. Therefore, our
results of operations on a quarterly basis are not predictable and are subject
to significant fluctuations.

Accordingly, we believe that quarter-to-quarter comparisons of our operating
results are not necessarily meaningful. You should not rely on the results of
one quarter as an indication of our future performance. Further, seasonality
and fluctuations in contract termination revenue could cause our results of
operations to fall below the expectations of stock market analysts and
investors. The market price of our stock is likely to fall if we fail to meet
those expectations.

We depend heavily on our key personnel, and our inability to retain them could
adversely affect our business.

Our success will depend in part on the continued availability of our senior
management team, particularly Ralph C. Guild, our Chief Executive Officer, and
Marc G. Guild, the President of our Marketing Division. The loss of the
services of Ralph Guild, Marc Guild or any of the other members of our senior
management team could have an adverse effect on our relationship with some of
our clients and on our business. We do not have employment agreements with any
members of our senior management team except Ralph Guild and Marc Guild, and
the existence of employment agreements with them does not guarantee their
continued employment with us. Although we have entered into non-competition
agreements with Ralph Guild and Marc Guild, there is no assurance that these
agreements will be enforceable.

9
<PAGE>

We have experienced operating losses in our recent fiscal quarters.

We have experienced operating losses in four of the last eight fiscal
quarters, principally as a result of the seasonality of our business,
depreciation and amortization expenses resulting from our acquisition of radio
station representation contracts, interest charges and some one-time expenses.
The acquisition of representation contracts is an integral part of our
operating strategy, and we expect that amortization charges relating to past
and future contract acquisitions will continue to significantly affect our
reported net income or loss.

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

We generate much of our revenues from a limited number of clients. For the
year ended December 31, 1998, Infinity accounted for approximately 29% of our
commission revenues and our five largest clients accounted for approximately
44% of our total commission revenues. We would lose a significant amount of
revenues if a major client terminated its contract. In October 1999, Clear
Channel, one of our five largest clients, announced that it had agreed to
acquire AM/FM, Inc. Our principal competitor, Katz Media Group, Inc., is a
subsidiary of AM/FM, Inc. Clear Channel recently notified us that, effective
December 10, 1999, it would terminate its contract with us and engage Katz
Media Group as the exclusive representative for its 225 stations.

This offering will significantly benefit our existing stockholders.

Our Employee Stock Ownership Plan is our largest stockholder. The ESOP will
be selling 987,500 shares of the total 5,416,667 shares of Class A common stock
for sale in this offering. Therefore, a significant portion of the proceeds
from this offering will go to the ESOP and not to us. Additionally, our
existing stockholders will hold Class B common stock following this offering.
With limited exceptions, the Class B common stock has ten votes per share while
the Class A common has one vote per share. Accordingly, our existing
stockholders will retain voting control after the offering. Finally, for the
reasons described in more detail under "Dilution" below, you will suffer
immediate and substantial dilution of your investment relative to our existing
stockholders.

Our significant indebtedness may burden our operations.

We currently have $100.0 million of indebtedness outstanding under our 10%
Senior Subordinated Notes. We do not plan to use any proceeds from this
offering to reduce our indebtedness. Our significant indebtedness could have a
number of adverse consequences, including the following:

. we may be more vulnerable to general adverse economic and industry
conditions;

. we may not be able to obtain additional financing when needed;

. we will have to dedicate a substantial portion of our cash flow from
operations to payments of principal and interest, reducing the amount of
cash available to fund working capital, capital expenditures or other
general corporate purposes; and

. we may be less able to plan for, or react to, changes in our business
and industry.

The documents governing both our revolving credit facility and our
outstanding Senior Subordinated Notes significantly limit our ability to engage
in various activities. Among other things, we have only a limited ability to
incur additional indebtedness that we may need to finance our working capital
needs or to expand our operations. These agreements also significantly restrict
our ability to pay dividends to our stockholders. Our revolving credit
agreement requires that we maintain specific financial ratios and satisfy
financial condition tests. If we are unable to meet our debt service
obligations or comply with these covenants, there would be a default under
these agreements. A default, if not waived, could result in acceleration of our
repayment obligations, which would have an adverse effect on our business.

10
<PAGE>

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

We may need additional financing if we:

. decide to expand faster than planned;

. increase the pace of contract buyouts;

. need to respond to competitive pressures; or

. decide to acquire complementary businesses or technologies.

If we raise additional funds through the sale of equity or convertible debt
securities, your percentage ownership will decrease. In addition, these
transactions may dilute the value of the stock outstanding. We may have to
issue securities with more favorable rights than our Class A common stock. We
cannot assure you that we will be able to raise additional funds on terms
acceptable to us, if at all. If future financing is not available on acceptable
terms, we may not be able to fund our future needs. This would have a material
adverse effect on our business and financial condition. We currently anticipate
that the net proceeds from this offering, together with available funds and
cash from operations, will be sufficient to meet our anticipated needs for at
least the next 12 months.

Competition could harm our business.

Generally, clients may terminate their rep contracts by paying a buyout
amount. As a result, we continually compete with other rep firms not only in
acquiring new client stations, but also in preserving our existing clients. Our
only significant competitor in the radio representation business is Katz Media
Group, Inc., a subsidiary of a major radio station group owner that has
significantly greater financial and other resources. However, we also face
potential competition from national radio networks, syndicators and other
brokers of radio advertising.

As a result of the Telecommunications Act of 1996, the radio industry has
been consolidating. Because the change of ownership of a client station
frequently results in a change of rep firm, the consolidation in the radio
industry has increased the frequency of the termination of rep contracts. The
loss of a significant number of clients as a result of industry consolidation
could harm our business.

More generally, radio must also compete for a share of advertisers' total
advertising budgets with other advertising media such as television, cable,
print, outdoor advertising and the Internet. Additionally, technological
innovation may create other types of competition for radio stations and, as a
consequence, for us. If advertisers do not perceive radio as an effective
advertising medium, they may shift a greater portion of their advertising
budgets from radio to other media, adversely affecting our business.

Future acquisitions and strategic investments could adversely affect our
business and dilute the value of our outstanding Class A common stock.

Although we have no specific acquisition plans, we may decide to pursue
acquisitions in the future. Risks associated with acquisitions and strategic
investments include the diversion of management's attention, the loss of key
personnel, legal and tax liabilities and additional exposure to the Year 2000
issue. Acquisitions also may involve an increase in our debt or new issuances
of equity securities, which could dilute the value of the Class A common stock.
Even if we identify suitable acquisition candidates, we may fail to negotiate
favorable terms or successfully integrate any proposed acquisition into our
existing business operations, which could adversely affect us.

Our Internet Interactive business may suffer if the market for Internet
advertising fails to develop.

The success of our new Internet advertising business will depend on the
continued development of the Internet as an advertising medium. The Internet
advertising market is new and rapidly evolving. Demand and

11
<PAGE>

market acceptance for Internet advertising is uncertain. Companies doing
business on the Internet must compete with more traditional media for a share
of advertisers' total advertising budgets. Additionally, the Internet's rapid
pace of innovation and technological change may strain our resources or
distract management's attention. Even if the Internet is a successful
advertising medium, we may not be able to manage our growth effectively or
compete with larger, better known or more established Internet advertising
companies. We cannot assure you that any revenues derived from Interep
Interactive's operations will justify the cost of the business.

Year 2000 problems and other information technology issues could affect our
systems and business.

Many currently installed computer systems and software products only accept
two digits to identify the year in any date. Therefore, the year 2000 will
appear as "00," which the system might consider to be the year 1900 rather than
the year 2000. This could result in problems affecting our computer systems and
the systems of our clients, any of which could disrupt our business and impair
our operating results.

The companies that provide software to us have advised us that our software
is Year 2000 compliant. However, we may experience difficulties because of
undetected errors or defects in the technology we use. The failure of any of
our systems or systems maintained by our clients, customers and other third
parties to be Year 2000 compliant could:

. cause us to incur significant expenses to remedy any problems;

. affect the availability and effectiveness of our services; or

. otherwise seriously damage our business.

Although we are not currently aware of any material operational issues or
costs resulting from the preparation of our internal systems for the Year 2000,
a significant Year 2000-related disruption could cause dissatisfaction among
our users, advertisers or clients or could impose an unmanageable burden on our
technical support staff. Our failure to correct a material Year 2000 problem
could have a material adverse effect on our business, financial condition and
results of operations.

Risks Relating to Our Industry

A decrease in radio advertising could adversely affect our business.

Our business depends on the level of demand for radio advertising time. That
demand, in turn, depends on general and regional economic conditions that are
outside of our control. In particular, our financial performance will depend in
part on the radio broadcasting industry maintaining or increasing national
advertising revenues. Any significant decline in national spot radio
advertising would adversely affect our results of operations. There can be no
assurance as to the future levels of national spot radio advertising
expenditures.

Consolidation in the radio industry may harm our business.

As a result of the Telecommunications Act of 1996, the Federal
Communications Commission revised its ownership rules for radio stations to
increase the number of radio stations that a single entity may own. As a
result, there has been a significant increase in the concentration of ownership
of radio stations among fewer owners. This consolidation has affected our
business as well, by increasing the level and frequency of buyouts of rep
contracts. It is also possible that, as radio station groups grow larger, they
may form in-house national media representation units instead of using
independent rep firms like us. Even if they continue to use our services, they
may be able to negotiate commission rates that would be less favorable to us.

The FCC is currently considering regulatory changes that would make it
easier for television companies to own radio stations. If approved, those
changes could result in additional industry consolidation, with the attendant
risks described above. Moreover, in the future the United States Congress and
the FCC may adopt

12
<PAGE>

new laws, regulations and policies regarding a wide variety of matters that
could affect our clients and our business. We cannot predict if or when such
laws, regulations or policies might be adopted and implemented, or the effect
they would have on our industry or our future operations.

Economic downturns could impair our business.

Our results of operations depend in part upon general economic conditions
in the United States as well as other factors beyond our control, including
the advertising activity of companies and reductions in advertising budgets.
During periods in which overall economic activity slows, our revenues may fall
as a result of a decline in the number of advertisements or reductions in our
fees. Therefore, a significant national or regional economic downturn could
have an adverse effect on our business.

Risks Relating to this Offering

Our shares may experience extreme price and volume fluctuations.

We cannot predict the extent to which investor interest in our Class A
common stock will lead to the development of an active trading market or how
liquid that market might become. The initial public offering price for the
shares has been determined by negotiations between us and the representatives
of the underwriters and may not be indicative of prices that will prevail in
the public market after this offering. The market price of the Class A common
stock may decline below the initial public offering price.

The market price of our Class A common stock is likely to fluctuate for a
variety of reasons, including:

. public announcements concerning us, the radio advertising industry or
our competitors;

. fluctuations in our operating results;

. fluctuations in the advertising industry generally or the market for
broadcast radio advertising in particular;

. introductions of services by us or our competitors;

. actual or anticipated sales of common stock by existing stockholders,
whether in the market or in a public offering;

. changes in analysts' earnings estimates; and

. announcements relating to further consolidation in the radio industry.

In addition, the stock market has, from time to time, experienced significant
price and volume fluctuations that have affected the market prices for
securities generally.

In the past, following periods of volatility in the market price of a
particular company's securities, investors have often brought securities class
action litigation against that company. We may become involved in this type of
litigation. Litigation is expensive and diverts management's attention and
resources, which could have a material adverse effect on our business,
financial condition and results of operations.

After this offering, we will be controlled by a small group of our existing
stockholders, whose interests may differ from the interests of other
stockholders.

Our ESOP and Stock Growth Plan and our directors, executive officers and
employees currently beneficially own all of our outstanding common stock. Upon
completion of this offering, these shares will convert into shares of Class B
common stock. With limited exceptions, the Class B common stock is entitled to

13
<PAGE>

ten votes per share, compared to one vote per share for the Class A common
stock that we are selling in this offering. As a result, our existing
stockholders will own Class B common stock representing approximately 90.1% of
the total voting power of the outstanding common stock. Accordingly, these
stockholders will be able to determine the outcome of nearly all corporate
transactions or other matters submitted to the stockholders for approval,
including mergers, acquisitions, consolidations and the sale of all or
substantially all of our assets, and also the power to prevent or cause a
change in control.

New York law and our charter documents could inhibit a change of control that
stockholders consider favorable.

Certain provisions of our certificate of incorporation and by-laws may
discourage, delay or prevent a change of control or changes in our management
that stockholders consider favorable. Such provisions include:

. authorizing the issuance by the Board of Directors of "blank check"
preferred stock without any action by our stockholders;

. providing for a classified board of directors with staggered, three-year
terms;

. providing that directors may only be removed for cause by a two-thirds
vote of stockholders;

. limiting the persons who may call special meetings of stockholders; and

. establishing advance notice requirements for nominations for election to
the board of directors or for proposing matters that can be acted on by
stockholders at stockholder meetings.

Additionally, because our existing stockholders will continue to hold voting
control after the offering, they will be able to prevent most changes of
control. Lastly, the New York Business Corporation Law imposes limitations on
persons proposing to merge with or acquire us. If a change of control or change
in management is delayed or prevented, the market price of our Class A common
stock could decline.

We will have broad discretion as to the use of the proceeds of this offering,
which we may not use effectively.

We have not yet identified a specific use for the net proceeds we will
receive from this offering. We will have broad discretion in applying the net
proceeds of this offering and may use the proceeds in ways that are not
profitable, or in ways with which our stockholders disagree. Accordingly,
investors in this offering will be relying on our management's judgment with
only limited information about our specific intentions regarding the use of
proceeds.

Future sales of our Class A common stock after this offering could negatively
affect our stock price.

If our stockholders sell substantial amounts of our common stock in the
public market following this offering, the market price of our Class A common
stock is likely to fall. These sales might also make it more difficult for us
to sell equity securities in the future at a time and price that we deem
appropriate. After this offering, we will have outstanding 10,340,629 shares of
common stock. Of these shares, the 5,416,667 shares being offered in this
offering will be freely tradable.

Our ESOP and Stock Growth Plan, our directors, executive officers and
substantially all of our other stockholders have agreed that they will not sell
any shares of common stock without the prior written consent of BancBoston
Robertson Stephens Inc. for a period of 180 days from the date of this
prospectus. However, BancBoston Robertson Stephens Inc. may release all or any
portion of the shares subject to the lock-up agreements at any time without
notice.

14
<PAGE>

Future issuances of preferred stock may dilute the rights of our Class A common
stockholders.

Our Board of Directors will have the authority to issue up to 1,000,000
shares of preferred stock and to determine the price, privileges and other
terms of such shares. The Board of Directors may exercise this authority
without the further approval of our stockholders. The issuance of any preferred
stock in the future may adversely affect the rights of the holders of Class A
common stock.

You will suffer immediate and substantial dilution.

The initial public offering price per share will significantly exceed the
net tangible book value (deficit) per share of $(15.00). Accordingly, you will
suffer immediate and substantial dilution. This dilution will result because
existing investors paid substantially less than the initial public offering
price when they bought their shares of our common stock. The exercise of
outstanding options to purchase our common stock will result in further
dilution to new investors.

15
<PAGE>

FORWARD-LOOKING STATEMENTS

Many statements made in this prospectus under the captions "Prospectus
Summary," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" and elsewhere are forward-
looking statements that are not based on historical facts. Because these
forward-looking statements involve risks and uncertainties, there are important
factors that could cause actual results to differ materially from those
expressed or implied by these forward-looking statements, including those
discussed under "Risk Factors."

The forward-looking statements made in this prospectus relate only to events
as of the date on which the statements are made. We undertake no obligation to
update any forward-looking statement to reflect events or circumstances after
the date on which the statement is made or to reflect the occurrence of
unanticipated events.

USE OF PROCEEDS

We estimate that the net proceeds from our sale of the shares of Class A
common stock will be $48,429,500, based on an initial public offering price of
$12.00 and after deducting underwriting discounts and commissions and the
estimated offering expenses payable by us. We will not receive any proceeds
from the sale of Class A common stock by the selling stockholder.

Our principal purposes for engaging in this offering are to:

. increase our equity capital;

. create a public market for our common stock;

. facilitate future access by us to public markets; and

. provide increased visibility for us in the marketplace.

We intend to use the net proceeds from this offering for general corporate
and working capital purposes, including possible acquisitions. Accordingly, we
will have significant flexibility in applying such proceeds. Pending any use,
we will invest the net proceeds of this offering in short-term, investment-
grade, interest-bearing securities. We believe that the proceeds from this
offering, together with available funds and cash from operations, will be
sufficient to fund our anticipated needs for at least the next 12 months.

We understand that approximately $11,020,500 in net proceeds to be received
by the ESOP as the selling stockholder will be used to purchase a diversified
portfolio of liquid investments. These investments will be allocated to the
individual ESOP participants' accounts on a pro rata basis. None of our
officers and employees are direct selling stockholders, and none of them will
receive any of the net proceeds of this offering other than indirectly as a
result of such allocations and eventual benefit distributions by the ESOP. See
"Management--Employee Benefit Plans--Employee Stock Ownership Plan" and
"Principal and Selling Stockholders."

DIVIDEND POLICY

We do not intend to pay any cash dividends on our common stock in the
foreseeable future. Moreover, the terms of the documents governing our
indebtedness prohibit the payment of cash dividends on our common stock. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

16
<PAGE>

CAPITALIZATION

The following table sets forth our capitalization as of September 30, 1999
on an actual basis and on an as adjusted basis to reflect:

. the sale of the shares of Class A common stock at an initial public
offering price of $12.00 per share, after deducting underwriting
discounts and commissions and the estimated offering expenses payable by
us and

. the retirement of all outstanding treasury shares.

This table contains unaudited information and should be read in conjunction
with our consolidated financial statements and related notes appearing
elsewhere in this prospectus. This table does not include 4,231,439 shares of
our common stock subject to options outstanding as of September 30, 1999 at a
weighted average exercise price of $3.77 per share, or 2,000,000 additional
shares of our common stock that have been reserved for issuance under our stock
plans.

<TABLE>
<CAPTION>
September 30, 1999
---------------------
Actual As Adjusted
-------- -----------
(in thousands)
<S> <C> <C>
Cash and cash equivalents................................ $ 15,155 $ 63,585
======== ========
Long-term debt........................................... $100,000 $100,000
Stockholders' equity:
Preferred stock, $.01 par value: 1,000,000 shares
authorized, no shares issued and outstanding, actual
and as adjusted...................................... -- --
Class A common stock, $.01 par value: 20,000,000 shares
authorized, no shares issued and outstanding, actual;
5,416,667 shares issued as adjusted.................. -- 54
Class B common stock, $.01 par value: 10,000,000 shares
authorized, 6,976,761 shares issued, actual;
4,906,389 shares issued as adjusted.................. 70 49
Additional paid-in capital............................... 1,107 47,495
Accumulated deficit...................................... (9,848) (9,848)
Less: Treasury stock, at cost (1,082,872 shares of Class
B common stock, actual; no shares issued as adjusted).. (2,009) --
-------- --------
Total stockholders' equity (deficit)................... (10,680) 37,750
-------- --------
Total capitalization................................. $ 89,320 $137,750
======== ========
</TABLE>

17
<PAGE>

DILUTION

If you invest in our Class A common stock, your interest will be diluted to
the extent of the difference between the initial public offering price per
share of our common stock and the pro forma net tangible book value per share
of our common stock after this offering. We calculate net tangible book value
per share by dividing our total tangible assets less our total liabilities by
the number of outstanding shares of common stock.

Our net tangible book value (deficit) as of September 30, 1999 was
approximately $(88.4) million, or $(15.00) per share of common stock, based on
5,893,889 shares of common stock outstanding. After giving effect to the sale
of the shares of common stock offered by us at an initial public offering price
of $12.00 per share and after deducting underwriting discounts and commissions
and the estimated offering expenses payable by us, our pro forma net tangible
book value (deficit) as of September 30, 1999 would have been approximately
$(40.0) million, or $(3.87) per share of common stock. This amount represents
an immediate increase in pro forma net tangible book value of $11.13 per share
to existing stockholders and an immediate dilution in pro forma net tangible
book value of $15.87 per share to new investors. The following table
illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share....................... $12.00
Net tangible book value (deficit) before offering........... $(15.00)
Increase attributable to new investors...................... 11.13
-------
Pro forma net tangible book value (deficit) after offering.... (3.87)
Dilution per share to new investors........................... $15.87
======
</TABLE>

The following table sets forth as of September 30, 1999 the number of shares
of our common stock purchased, the total consideration paid to us and the
average price paid to us per share of common stock prior to this offering and
the price to be paid by the investors purchasing shares of Class A common stock
in this offering. The calculation below is based on an initial public offering
price of $12.00 per share, after deducting underwriting discounts and
commissions and the estimated offering expenses payable by us.

<TABLE>
<CAPTION>
Shares Purchased Total Consideration
------------------ ------------------- Average Price
Number Percent Amount Percent Per Share
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Current stockholders...... 5,893,889 57.1% $ 1,177,000 2.2% $ 0.20
New investors............. 4,429,167 42.9 53,150,004 97.8 12.00
---------- ----- ----------- -----
Total................... 10,323,056 100.0% $54,327,004 100.0%
========== ===== =========== =====
</TABLE>

The above information assumes no exercise of stock options after September
30, 1999. As of September 30, 1999, we had reserved 4,231,439 shares of our
common stock for issuance on exercise of outstanding options at a weighted
average exercise price of $3.77 per share. To the extent any of these options
are exercised, there will be further dilution to new investors.

Sales by the selling stockholder in this offering will reduce the number of
shares of common stock held by current stockholders to 4,923,962 shares, or
47.6% of the total number of shares of common stock to be outstanding
immediately after this offering, and will increase the number of shares held by
new investors immediately after this offering to 5,416,667 shares, or 52.4% of
the total number of shares of common stock outstanding after this offering.

18
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below for and as of each
of the years in the five-year period ended December 31, 1998 are derived from
our Consolidated Financial Statements, which have been audited by Arthur
Andersen LLP, independent public accountants. The information for and as of
each of the nine-month periods ended September 30, 1998 and 1999 has been
derived from our unaudited consolidated financial statements which, in the
opinion of management, include all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the information set forth
therein. Other data are derived from our operating records and, in the opinion
of management, reflect all adjustments necessary to present fairly such data.
The following selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and
related notes appearing elsewhere in this prospectus. Due to the seasonality of
our business, the results for the nine-month periods are not necessarily
indicative of results that may be expected for the entire year or any future
period.

19
<PAGE>

<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
---------------------------------------------------------- ----------------------
1994 1995 1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
(in thousands, except share data) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Commission revenue...... $ 66,559 $ 70,306 $ 72,858 $ 87,096 $ 87,735 $ 62,943 $ 68,839
Contract termination
revenue................ 10,918 12,194 18,876 26,586 37,221 26,679 6,351
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues........ 77,477 82,500 91,734 113,682 124,956 89,622 75,190
Operating expenses:
Selling, general and
administrative
expenses............. 58,316 62,245 62,877 75,676 73,482 55,199 59,079
Depreciation and
amortization......... 9,929 13,073 20,988 28,954 36,436 27,292 23,318
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total operating
expenses............. 68,245 75,318 83,865 104,630 109,918 82,491 82,397
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income
(loss)................. 9,232 7,182 7,869 9,052 15,038 7,131 (7,207)
Interest expense, net... 3,280 3,385 3,911 3,779 6,744 4,447 7,358
Income (loss) before
provision (benefit) for
income taxes........... 5,952 3,797 3,958 5,273 8,294 2,684 (14,565)
Provision (benefit) for
income taxes........... 422 1,843 1,885 2,359 3,446 863 (5,037)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)....... 5,530 1,954 2,073 2,914 4,848 1,821 (9,528)
Preferred stock dividend
requirements and
redemption premium..... 903 1,159 1,364 1,590 5,031 5,031 --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)
applicable to common
stockholders........... $ 4,627 $ 795 $ 709 $ 1,324 $ (183) $ (3,210) $ (9,528)
========== ========== ========== ========== ========== ========== ==========
Basic earnings (loss)
per common share....... $ 0.60 $ 0.10 $ 0.09 $ 0.18 $ (0.03) $ (0.47) $ (1.61)
Basic weighted average
common shares
outstanding............ 7,713,628 7,811,316 7,684,060 7,476,228 6,743,803 6,873,233 5,908,215
Diluted earnings (loss)
per common share....... $ 0.58 $ 0.10 $ 0.09 $ 0.17 $ (0.03) $ (0.47) $ (1.61)
Diluted weighted average
common shares
outstanding............ 7,938,030 7,995,932 7,961,057 7,663,874 6,743,803 6,873,233 5,908,215
<CAPTION>
December 31, September 30,
---------------------------------------------------------- ----------------------
1994 1995 1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
(in thousands) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents............ $ 5,208 $ 1,752 $ 2,653 $ 1,419 $ 32,962 $ 31,260 $ 15,155
Working capital......... 13,358 22,398 19,964 31,516 66,111 72,075 45,716
Total assets............ 56,375 76,881 93,930 141,030 184,508 175,458 158,075
Long-term debt
(including current
portion)............... 24,227 35,221 34,235 44,425 100,103 100,000 100,000
Redeemable preferred
stock.................. 2,639 3,970 5,334 6,924 -- -- --
Redeemable common
stock.................. 3,678 4,132 4,662 4,522 -- -- --
Stockholders' equity
(deficit).............. (2,589) (1,452) (2,684) (1,609) (1,222) (4,920) (10,680)
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
---------------------------------------------------------- ----------------------
1994 1995 1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
(in thousands) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Other Financial Data:
EBITDA.................. $ 19,161 $ 20,255 $ 28,857 $ 38,006 $ 51,474 $ 34,423 $ 16,111
Adjusted EBITDA......... 8,243 8,061 9,981 11,420 14,253 7,744 9,760
EBITDA margin........... 24.7% 24.6% 31.5% 33.4% 41.2% 38.4% 21.4%
Adjusted EBITDA margin.. 12.4% 11.5% 13.7% 13.1% 16.2% 12.3% 14.2%
Capital expenditures.... $ 1,283 $ 1,689 $ 1,021 $ 792 $ 1,270 $ 520 $ 2,625
Net cash flows from
operating activities... 15,880 14,001 35,982 23,821 29,404 15,636 13,830
Net cash flows from
investing activities... (1,746) (5,199) (1,021) (792) (1,270) (520) (8,303)
Net cash flows from
financing activities... (10,778) (12,258) (34,060) (24,263) 3,409 14,725 (23,334)
Contract acquisition
payments............... 8,970 21,273 31,427 33,991 35,609 24,563 23,404
Contract termination
receipts............... 5,594 19,071 28,347 20,620 36,774 31,376 12,330
</TABLE>

20
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

This prospectus contains forward-looking statements that involve risks and
uncertainties. Actual events or results may differ materially from those
projected in these forward-looking statements. See "Forward-Looking
Statements." The following discussion should be read in conjunction with our
consolidated financial statements and related notes appearing elsewhere in this
prospectus.

Overview

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

Our operating results generally depend on:

. increases and decreases in the size of the total national spot radio
advertising market;

. changes in our share of this market;

. acquisitions and terminations of representation contracts; and

. operating expense levels.

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

Total U.S. national spot radio advertising annual revenues have grown from
an estimated $1.15 billion to an estimated $1.98 billion during the five years
ended December 31, 1998. The performance of the national spot radio advertising
market is influenced by a number of factors, including, but not limited to,
general economic conditions, consumer attitudes and spending patterns, the
share of total advertising spent on radio and the share of total radio
advertising represented by national spot radio.

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

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

Following industry practice, we generally act as the exclusive national rep
firm for each of our client radio stations under a written contract. If a
station terminates its contract prior to the scheduled termination date, the

21
<PAGE>

station is typically obligated to make a payment to us, as required by the
contract or in accordance with industry practice. This amount is approximately
equal to the commissions we would have earned during the unexpired term of the
canceled contract, plus an additional two months of "spill-over" commissions.
"Spill-over" commissions are those earned on advertising placed or committed to
prior to the contract termination but broadcast later. In practice, a successor
rep firm enters a new contract with the station and assumes the obligation to
make the termination payments. These payments are usually made in equal monthly
installments over a period of one-half the number of months remaining under the
terminated contract. To illustrate, assume a station terminates a
representation contract with a competing rep firm and that contract has a
remaining unexpired term of 12 months. If we acquire the representation
contract, our payment obligation to the competing rep firm would be 14 months
of commissions payable in seven equal monthly installments. However, certain
contracts representing material revenues permit clients in certain
circumstances to terminate their agreements with less than 12-months' notice
and pay termination and evergreen payments over shorter periods of time.

We recognize revenues on a contract termination as of the effective date of
the termination. When a contract is terminated, we write off in full the
unamortized portion, if any, of the expense we originally incurred on our
acquisition of the contract. When we enter into a representation contract with
a new client, we amortize the contract acquisition cost in equal monthly
installments over the life of the new contract. As a result, our operating
income is affected, negatively or positively, by the acquisition or loss of
client stations.

We are unable to forecast any trends in contract buyout activity, or in the
amount of revenues or expenses that will likely be associated with buyouts
during a particular period. Generally, the amount of revenue resulting from the
buyout of a representation contract depends on the length of the remaining term
of the contract and the revenue generated under the contract during the 12-
month "trailing period" preceding the date of termination. The amount
recognized by us as contract termination revenue in any period is not, however,
indicative of contract termination revenue that may be realized in any future
period. Historically, the level of buyout activity has varied from period to
period. Additionally, the length of the remaining terms, and the commission
revenue generation, of the contracts which are terminated in any period vary to
a considerable extent. Accordingly, while buyout activity and the size of
buyout payments has increased since 1996, their impact on our revenues and
income is expected to be uncertain, due to the variables of contract length and
commission generation.

While the commission revenues generated under a representation contract
during a trailing period is used in calculating the buyout amount we pay to
acquire that contract, it should not be relied on as an indicator of the future
commission revenues we will generate under that contract. Our revenues will
depend on a number of factors, including the amount of national spot
advertising broadcast by the station involved. This, in turn, will be affected
by factors such as general and local economic conditions, consumer attitudes
and spending patterns, the share of total advertising spent on radio and the
share of total radio advertising represented by national spot radio.

During 1999, we entered the Internet advertising business. Revenues and
expenses from this business will be affected by the level of advertising on the
Internet generally, the prices obtained for advertising on the Internet and our
ability to obtain contracts from high-traffic Internet websites and from
Internet advertisers.

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

Our business normally follows the pattern of advertising expenditures in
general. It is seasonal to the extent that radio advertising spending increases
during the fourth calendar quarter in connection with the Christmas season and
tends to be weaker during the first calendar quarter. Radio advertising also
generally increases during the second and third quarters due to holiday-related
advertising, school vacations and back-to-

22
<PAGE>

school sales. Additionally, radio tends to experience increases in the amount
of advertising revenues as a result of special events such as presidential
election campaigns. Furthermore, the level of advertising revenues of radio
stations, and therefore our level of revenues, is susceptible to prevailing
general and local economic conditions and the corresponding increases or
decreases in the budgets of advertisers, as well as market conditions and
trends affecting advertising expenditures in specific industries.

Results of Operations

Nine Months Ended September 30, 1999 and 1998

Commission revenue. Commission revenue in the first nine months of 1999
increased to $68.8 million, or 9.4%, from $62.9 million in the comparable 1998
period. This $5.9 million increase was primarily attributable to the fact that
commissions from new representation contracts, primarily the ABC radio
stations, exceeded the loss of commission revenues from terminated contracts,
primarily Nationwide Communications, as well as a general increase in national
spot advertising on client stations. Our new Internet advertising business had
revenues of $406,000 during the nine-month period ended September 30, 1999.

Contract termination revenue. Contract termination revenue in the first nine
months of 1999 decreased to $6.4 million, or 76.2%, from $26.7 million in the
comparable 1998 period, a decrease of $20.3 million. This decrease was
primarily attributable to the fact that a substantial amount of contract
termination revenue was generated in the first quarter of 1998 as a result of
the termination of our representation contracts with stations owned by SFX
Broadcasting, when it was acquired by an affiliate of our principal competitor.
The loss of representation contracts during the first nine months of 1999 was
not as significant. The value of representation contracts acquired or
terminated during the last few years has generally tended to increase due to
the factors discussed above in "--Overview."

Selling expenses. Selling expenses for the first nine months of 1999
increased to $51.0 million from $46.9 million during the comparable 1998
period. This increase of $4.1 million, or approximately 8.7%, was primarily due
to employee compensation increases associated with the growth in commission
revenues. Costs relating to our entry into the Internet advertising business
were $1.4 million during the nine-month period ended September 30, 1999.

General and administrative expenses. General and administrative expenses
declined $0.2 million to $8.1 million for the first nine months of 1999, from
$8.3 million in the comparable 1998 period. This reduction was primarily the
result of the lower cost levels achieved through the relocation of our
accounting and finance functions to Florida in 1997.

Depreciation and amortization. Depreciation and amortization decreased to
$23.3 million, or 14.6%, for the first nine months of 1999, from $27.3 million
in the comparable 1998 period. The amortization of costs associated with
acquiring representation contracts is included in depreciation and
amortization. This decrease of $4.0 million was primarily due to the completion
of the amortization of certain representation contracts.

Operating income (loss). Operating income decreased by $14.3 million, or
201.1%, to a loss of $7.2 million for the first nine months of 1999 compared
with operating income of $7.1 million in the comparable 1998 period. This
decline was primarily due to the decrease in contract termination revenues
discussed above.

Interest expense, net. Interest expense, net increased 65.5% to $7.4 million
for the first nine months of 1999, from $4.4 million for the comparable 1998
period. This increase of approximately $2.9 million primarily resulted from
interest charges associated with the issuance of our Senior Subordinated Notes
in July 1998.

Provision (benefit) for income taxes. The provision for income taxes
decreased by $5.9 million to $(5.0) million for the first nine months of 1999
compared to $900,000 for the comparable 1998 period, primarily as a result of
the decrease in contract termination revenues in 1999 discussed above.

23
<PAGE>

Net income (loss). Our net loss of approximately $9.5 million for the first
nine months of 1999, a $11.3 million decrease from the $1.8 million net income
for the comparable 1998 period, was primarily due to the reduction in contract
termination revenues discussed above.

Years Ended December 31, 1998 and 1997

Commission revenue. Commission revenues in 1998 were $87.7 million, as
compared to $87.1 million in 1997. Revenues from new client station
representation contracts were offset in large part by the loss of
representation contracts, primarily with SFX, which was acquired by an
affiliate of a competitor, and Nationwide Communications, which was acquired by
Jacor Communications.

Contract termination revenue. Contract termination revenue increased to
$37.2 million, or 40.0%, in 1998, from $26.6 million in 1997, primarily as a
result of the termination of the SFX and Nationwide Communication
representation contracts. This $10.6 million increase reflected that the value
of representation contracts acquired or terminated during the last few years
has tended to increase due to the factors discussed above in "--Overview."
During 1998, approximately 220 client stations terminated rep contracts with
us, which generated an aggregate of approximately $9.6 million of commission
revenue during their 12-month trailing periods.

Selling expenses. Selling expenses for 1998 decreased to $61.6 million, or
approximately 2.4%, from $63.1 million in 1997. The $1.5 million improvement
was primarily due to the effect of cost reduction programs initiated by us in
1997.

General and administrative expenses. General and administrative expenses
decreased to $11.9 million, or approximately 5.4%, in 1998, from $12.5 million
in 1997. The primary cause of this improvement was the lower cost levels
achieved through the relocation of our accounting and finance functions to
Florida in 1997.

Depreciation and amortization. Depreciation and amortization increased by
$7.5 million in 1998, to $36.4 million, from $29.0 million in 1997. This 25.8%
increase was due to the amortization of new representation contracts. We
acquired representation contracts with approximately 300 new radio stations in
1998. We believe these contracts generated an aggregate of approximately $10.7
million of commission revenues during their 12-month trailing periods prior to
their acquisition.

Operating income. Operating income increased by $6.0 million, or 66.1%, to
$15.0 million in 1998, compared with $9.0 million in 1997, primarily for the
reasons discussed above.

Interest expense, net. Interest expense, net increased to $6.7 million, or
78.4% in 1998, compared to $3.8 million in 1997. This $3.0 million increase was
primarily due to the interest on the $100.0 million of Senior Subordinated
Notes issued in July 1998, offset by an $800,000 increase in interest earned on
temporary investments.

Provision for income taxes. Provision for income taxes for 1998 increased to
$3.4 million, or 46.1%, from $2.4 million for 1997. This $1.0 million increase
was the result of an increase in our pretax income.

Net Income. Our net income increased by $1.9 million, to $4.8 million, or
66.4% in 1998, from $2.9 million in 1997, for the reasons discussed above.

Years Ended December 31, 1997 and 1996

Commission revenue. Commission revenue increased $14.2 million, or 20.0%, to
$87.1 million during 1997, from $72.9 million in 1996. This increase was caused
primarily by our entry into new representation contracts during 1997 with (i)
Infinity and Jefferson-Pilot Corp. stations previously represented by a
subsidiary of CBS, (ii) Susquehanna stations and (iii) radio stations acquired
by Clear Channel, including stations formerly owned by Paxson Communications.

24
<PAGE>

Contract termination revenue. Contract termination revenue increased $7.7
million during 1997 to $26.6 million, from $18.9 million in 1996. This 40.8%
increase reflected the fact that the value of representation contracts acquired
or terminated during the last few years has tended to increase due to the
factors discussed above in "--Overview." During 1997, approximately 160 client
stations terminated rep contracts with us which generated an aggregate of
approximately $7.0 million of commission revenue during their 12-month trailing
periods.

Selling expenses. Selling expenses increased approximately 18.6% in 1997, to
$63.1 million, from $53.3 million during the prior year. This $9.8 million
increase was primarily due to the increase in commission revenues in the same
period, both due to our entry into new representation contracts, as well as an
increase in management incentive compensation of $1.5 million payable on the
achievement of specific goals.

General and administrative expenses. General and administrative expenses for
1997 were $12.5 million, an increase of $2.9 million, or 30.3%, over 1996. The
major factors in this increase were a one-time cost of $1.4 million to relocate
our accounting and finance functions to Florida as part of our cost reduction
program and the increased costs attendant on servicing new representation
contracts.

Depreciation and amortization. Depreciation and amortization increased by
$8.0 million in 1997, to $29.0 million, from $21.0 million in 1996. This 38.0%
increase was primarily due to the amortization of new representation contracts.
We acquired representation contracts with approximately 360 new stations in
1997. We believe these contracts generated an aggregate of approximately $14.0
million of commission revenues during their 12-month trailing periods prior to
their acquisition.

Operating income. Operating income increased $1.2 million, or 15.0%, to $9.0
million in 1997, from $7.9 million in 1996, primarily for the reasons discussed
above.

Interest expense, net. Interest expense, net declined approximately $100,000
to $3.8 million in 1997, from $3.9 million in 1996 due to slightly lower
average borrowings for the year.

Provision for income taxes. Provision for income taxes for 1997 increased by
$500,000, to $2.4 million, from $1.9 million in 1996 primarily as a result of
an increase in our pretax income.

Net income. Our net income increased $800,000 to $2.9 million in 1997 as
compared to $2.1 million in 1996, primarily for the reasons discussed above.

25
<PAGE>

Quarterly Results of Operations

The following table sets forth unaudited consolidated statement of
operations data for the seven quarters in the period ended September 30, 1999.
This data has been derived from our unaudited consolidated financial statements
that have been prepared on the same basis as the audited consolidated financial
statements included in this prospectus, and in the opinion of our management,
include all adjustments, consisting of normal recurring adjustments, necessary
for a fair presentation of the information when read in conjunction with the
consolidated financial statements and related notes appearing elsewhere in this
prospectus. These quarterly results have in the past been and may in the future
be subject to significant fluctuations. As a result, we believe that the
results of operations for interim periods should not be relied upon as any
indication of the results to be expected in any future period.

<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------------------------------------------
March 31, June 30, September 30, December 31, March 31, June 30, September 30,
1998 1998 1998 1998 1999 1999 1999
--------- -------- ------------- ------------ --------- -------- -------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Commission revenue...... $15,898 $22,104 $24,941 $24,792 $17,511 $24,225 $27,103
Contract termination
revenue............... 24,116 1,850 713 10,542 2,505 1,237 2,609
------- ------- ------- ------- ------- ------- -------
Total revenues........ 40,014 23,954 25,654 35,334 20,016 25,462 29,712
Operating expenses:
Selling expenses........ 13,836 14,110 18,967 14,705 14,646 16,012 20,350
General and
administrative
expenses.............. 2,597 2,749 2,940 3,578 2,599 2,587 2,885
Depreciation and
amortization.......... 9,096 8,745 9,451 9,144 9,502 6,744 7,072
------- ------- ------- ------- ------- ------- -------
Total operating
expenses............ 25,529 25,604 31,358 27,427 26,747 25,343 30,307
Operating income
(loss)................ 14,485 (1,650) (5,704) 7,907 (6,731) 119 (595)
Interest expense, net... 1,005 1,236 2,206 2,297 2,382 2,430 2,546
------- ------- ------- ------- ------- ------- -------
Income (loss) before
provision (benefit)
for income taxes...... 13,480 (2,886) (7,910) 5,610 (9,113) (2,311) (3,141)
Provision (benefit) for
income taxes.......... 5,526 (1,183) (3,480) 2,583 (3,736) (948) (353)
------- ------- ------- ------- ------- ------- -------
Net income (loss)....... 7,954 (1,703) (4,430) 3,027 (5,377) (1,363) (2,788)
Preferred stock dividend
requirements and
redemption premium.... 465 465 4,101 -- -- -- --
------- ------- ------- ------- ------- ------- -------
Net income (loss)
applicable to common
stockholders.......... $ 7,489 $(2,168) $(8,531) $ 3,027 $(5,377) $(1,363) $(2,788)
======= ======= ======= ======= ======= ======= =======
</TABLE>

Liquidity and Capital Resources

Our cash requirements have been primarily funded by cash provided from
operations and financing transactions. Cash provided by operations during the
first nine months of 1999 amounted to $13.8 million, as compared to $29.4
million, $23.8 million and $36.0 million for the years ended 1998, 1997 and
1996, respectively. These fluctuations were primarily attributable to changes
in receivables pertaining to representation contract buyouts.

26
<PAGE>

Net cash used in investing activities is primarily attributable to capital
expenditures and investments in private companies. Capital expenditures of $2.6
million, $1.3 million, $800,000 and $1.0 million for the nine months ended
September 30, 1999 and the years ended 1998, 1997 and 1996, respectively, were
primarily for computer equipment and software upgrades. Investments in private
companies amounted to $4.7 million for the nine months ended September 30,
1999, and consisted of significant minority equity positions in three Internet
advertising firms. Ralph Guild has recently agreed to acquire shares in one of
such firms from its founders at a price higher than we paid. Additionally,
during such period we acquired a radio promotion and marketing consulting
business for an initial payment of $1.0 million plus an earn-out payment of up
to $3.0 million over the next five years.

Overall cash used in financing activities of $23.3 million during the first
nine months of 1999 was primarily used for acquisitions of representation
contracts. Cash provided by (used in) financing activities during the years
ended December 31, 1998, 1997 and 1996 was $3.4 million, $(24.3) million and
$(34.1) million, respectively. The cash provided by financing activities in
1998 resulted from the issuance of the Senior Subordinated Notes described
below, offset by acquisitions of station representation contracts. Cash used in
financing activities in 1997 and 1996 was primarily used for acquisitions of
representation contracts and debt repayments, offset by increased borrowings.

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

In July 1998 we issued 10% Senior Subordinated Notes in the aggregate
principal amount of $100.0 million due July 1, 2008. Interest on the Senior
Subordinated Notes is payable in semi-annual payments of $5.0 million. The
Senior Subordinated Notes, while guaranteed by our subsidiaries, are unsecured
and are junior in right of payment to any amounts outstanding under the
revolving credit agreement described below, as well as to certain other
indebtedness. We used a portion of the net proceeds from the issuance of the
Senior Subordinated Notes to repay the then outstanding balance of our bank
debt. Additionally, we redeemed all of the outstanding shares of our Series A
preferred stock and Series B preferred stock, together with all of the
associated shares of common stock then subject to redemption.

We issued the Senior Subordinated Notes under an indenture that limits our
ability to engage in various activities. Among other things:

. we are generally not able to pay any dividends to our stockholders,
other than dividends payable in shares of common stock;

. we can only incur additional indebtedness under limited circumstances;
and

. certain types of mergers, asset sales and changes of control either are
not permitted or permit the note holders to demand immediate redemption
of their Senior Subordinated Notes.

The Senior Subordinated Notes may not be redeemed by us prior to July 1,
2003, except that we may redeem up to 30% of the Senior Subordinated Notes with
the proceeds of equity offerings such as this offering. We do not currently
plan to use the proceeds of this offering to redeem any Senior Subordinated
Notes. If certain events occurred which would be deemed to involve a change of
control under the indenture, we would be required to offer to repurchase all of
the Senior Subordinated Notes at a price equal to 101% of their aggregate
principal, plus unpaid interest.

In July 1998 we also entered into an agreement with two banks to provide us
with a $10.0 million revolving credit facility. Although we do not owe any
amounts under that agreement, it imposes a number of constraints on our
operations. In addition to covenants similar to those in the indenture
governing the Senior Subordinated Notes, the revolving credit agreement
requires that we maintain:

. a maximum leverage ratio not to exceed 5.25 to 1.0;

. a maximum senior debt leverage ratio not to exceed 2.0 to 1.0;

27
<PAGE>

. a minimum interest coverage ratio of not less than 1.6 to 1.0; and

. a minimum fixed charge coverage ratio of not less than 1.1 to 1.0.

Copies of the form of Senior Subordinated Notes, the indenture and the
revolving credit agreement, including further details regarding the
restrictions on our activities, are exhibits to our publicly available
registration statement filed with the Securities and Exchange Commission, of
which this prospectus is a part. See "Where You Can Find More Information."

We believe that the liquidity resulting from this offering and the
transactions described above, together with anticipated cash from continuing
operations, should be sufficient to fund our operations and anticipated needs
for required representation contract acquisition payments, and to make required
payments of principal and interest under our revolving credit facility and 10%
annual interest payments on the Senior Subordinated Notes, for at least the
next 12 months. We may not, however, generate sufficient cash flow for these
purposes or to repay the notes at maturity. Our ability to fund our operations
and required contract acquisition payments and to make scheduled principal and
interest payments will depend on our future performance, which, to a certain
extent, is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond our control. We may also need to
refinance all or a portion of the notes on or prior to maturity. There can be
no assurance that we will be able to effect any such refinancing on
commercially reasonable terms, if at all.

Year 2000 Assessment

Many computer systems experience problems handling dates beyond the year
1999. Therefore, some computer hardware and software will need to be modified
prior to the year 2000 in order to remain functional. During 1998, we completed
an assessment of our internal readiness to implement Year 2000 compliant
systems on a timely basis. We currently utilize software systems for our
accounting, billing and database management functions, among others, which were
developed by third parties or by us, using third-party software development
tools. These third parties have advised us that our systems are Year 2000
compliant or, in some cases, will be made Year 2000 compliant through the
installation of software patches or upgrades. We completed the programming
changes needed to make our systems Year 2000 compliant during the first quarter
of 1999 and do not believe that the related cost will have a material adverse
effect on our revenues. We estimate that our Year 2000 expenditures during 1999
will be $250,000. There can be no assurance, however, that there will not be a
delay in, or increased costs associated with, the implementation of Year 2000
changes. Our inability to implement such changes could have a material adverse
effect on our revenues.

We have not completed our assessment of the Year 2000 compliance of our
clients, nor of the possible consequences of the failure of one or more of our
clients to become Year 2000 compliant on a timely basis. It is possible that if
a substantial number of our clients failed to implement Year 2000 compliant
billing or payment systems, for example, their payments to us of commissions on
the sale of radio advertising time might be disrupted, which would adversely
affect our cash flow. We will continue to discuss these matters with our key
clients during 1999 to attempt to ascertain whether and to what extent such
problems are likely to occur. It is not clear, however, what measures, if any,
we could take to handle such eventualities while still maintaining client
relationships. We have been advised by our principal suppliers of data base
information services and payroll services that those services will be Year 2000
compliant on a timely basis. We do not believe that we have other relationships
with vendors or suppliers which, if disrupted due to the failure of such
vendors and suppliers to deal adequately with their own Year 2000 compliance
issues, would have a material adverse effect on our business.

Quantitative and Qualitative Disclosures about Market Risk

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

28
<PAGE>

BUSINESS

General

Interep is the largest independent national spot radio representation or
"rep" firm in the United States. We are the exclusive rep firm for over 2,000
radio stations nationwide, including radio stations of ABC Radio, Citadel,
Cumulus, Entercom, Infinity and Radio One. Our market share was an estimated
54.2% for 1998 and 55.6% for the first six months of 1999 in the ten largest
U.S. radio markets, as measured by gross billings. We have grown to be a
leader in our industry by increasing our clients' advertising revenues,
acquiring station representation contracts and creating and acquiring other
rep firms. Recently, our revenues have grown dramatically due in part to the
significant consolidation that has occurred in the radio industry since the
passage of the Telecommunications Act of 1996. We have sought to align
ourselves with innovative radio station groups that are well-positioned to
capitalize on this consolidation, while still meeting the needs of hundreds of
independent stations nationwide.

We have 15 full-service offices and six satellite offices across the
country serving independent radio stations, regional radio station groups and
national station groups in all 50 states and in 99 of the top 100 radio
markets. Our clients include country, rock, sports, Hispanic, classical,
urban, news and talk radio stations. We have built strong relationships with
our clients and advertising agencies, some of which date back over 40 years.

Industry Background

Popularity of Radio. Radio has been and continues to be a highly popular
medium in the United States. According to radio industry sources, nearly 96%
of all persons over age 12 listened to the radio every week. In 1998, Arbitron
estimated that the average person over age 12 listened to over 21 hours of
radio programming each week. Of particular significance to advertisers is the
fact that radio is often the medium that reaches consumers as they are making
purchasing decisions. In any 24-hour period, 68% of adults ages 18 to 34 and
60% of adults ages 35 to 64 listen to radio within one hour of making their
largest purchase of the day.

Growth of Radio Advertising. Advertisers' awareness of the effectiveness of
radio is reflected in the significant growth of the U.S. radio advertising
industry during this decade. Total U.S. radio advertising revenues were an
estimated $15.41 billion in 1998, up from an estimated $9.57 billion in 1993,
for a compound annual growth rate of 10.0% during that five-year period,
compared to an estimated compound annual growth rate of 7.6% for total U.S.
advertising revenues in the same period. While radio advertising increased at
a compound annual growth rate of 10.0% during the five years ended December
31, 1998, national spot radio advertising grew at a greater compound annual
growth rate of 11.5% during the same period.

Role of Representation Firms. Radio stations generally retain national rep
firms on an exclusive basis to sell national spot commercial air time on their
stations to advertisers outside of their local markets. The station's own
sales force handles sales of air time to local advertisers. National spot
radio advertising is placed or "spotted" in one or more broadcast markets, in
contrast to network advertising, which is broadcast simultaneously on network-
affiliated stations. National spot radio advertising typically accounts for
approximately 20% of a radio station's revenues. Generally, national spot
radio advertising time is purchased by advertising agencies or media buying
services retained by advertisers to place advertising.

A rep firm promotes the benefits of buying advertising time on its client
radio stations and arranges for the placement of specific advertisements. Rep
firms generate revenues by earning commissions on the sale of advertising time
on client stations.

Radio stations outsource their national spot advertising sales to rep firms
to gain the following advantages:

. eliminate the cost of developing and maintaining a dispersed, national
sales staff, multiple sales offices and related infrastructure;

29
<PAGE>

. avoid the distraction of managing a group of national sales
representatives;

. benefit from the rep firm's relationships with advertising agencies and
national advertisers; and

. obtain the rep firm's specialized research that enables it to sell its
advertising time more effectively.

Rep firms seek to increase national spot sales for their clients by making
it easier for advertising buyers to purchase spot air time. They do so by
providing easier access to a large number of radio stations which meet the
advertisers' needs for target audiences as well as access to the rep firms's
proprietary research and databases.

The Interep Solution

We have become a leader in our industry in part by representing large radio
station groups which have been consolidators in the radio industry, while still
meeting the needs of independent stations across the country. We now represent
over 2,000 radio stations nationwide. We believe that our market leadership
enhances our value to advertisers, increases our ability to sell air time for
clients and allows us to package radio stations creatively to meet advertisers'
special needs.

We believe the following factors have contributed to our position as an
industry leader and provide a strong foundation for further growth:

Strong Relationships with Advertisers; National Presence. Our strong
relationships with advertisers, advertising agencies and media buying services
nationwide enable us to promote our client stations effectively. We work
closely with advertisers to help them develop and refine radio advertising
strategies and to support their purchases of advertising time on our client
stations. Our sales force across the country is strategically located to
provide effective coverage of all major media buying centers.

Innovative Solutions. We have pioneered a variety of innovative solutions
for the industry. For example, we were the first to package and market
unaffiliated portfolios of client stations by grouping them together as
"unwired networks" to meet advertisers' particular needs. Unwired networks
enable radio advertisers and advertising agencies to target specific groups or
markets by placing advertisements on as few as two stations or as many as all
of the over 2,000 stations represented by us. We use promotions and specialized
agency sales targeted at boutique agencies. We also developed the use of
dedicated rep firms, such as ABC Radio Sales, Clear Channel Radio Sales and
Infinity Radio Sales, for the representation of individual radio station
groups. A dedicated rep firm allows a client to benefit from our comprehensive
services while still projecting its corporate identity to advertisers.

Highly Skilled Sales Force and Sophisticated Sales Support. We have
developed a highly skilled, professional sales force. We instill in our sales
force a team-oriented approach to sales, marketing and client relationships
through incentive programs and the continuous, in-house training programs of
the Interep Radio University. We support our sales efforts with sophisticated
media research, including a proprietary nationwide database. This research
enables us to profile for advertisers the relevant characteristics of the
audiences of our client stations, to assist them in reaching their target
audiences. We have also enhanced our services to clients and advertisers alike
through the growing use of technology, such as networked and mobile computing
and computerized databases with remote client access.

Experienced Senior Management Team. We have an experienced and
entrepreneurial management team, headed by our Chief Executive Officer, Ralph
C. Guild, a recognized leader and innovator in the radio industry. Our senior
sales managers have an average of over 25 years of industry experience and
significant equity ownership in Interep. Our executive officers include Marc G.
Guild, President, Marketing Division, William J. McEntee, Jr., Chief Financial
Officer, Stewart Yaguda, President of Interep Marketing Group, and Charles
Parra, Chief Technology Officer.

30
<PAGE>

Independence. We are not owned by a radio station group. We believe that our
independence reduces perceived conflicts of interest in representing radio
stations.

Radio Industry Focus. Because we focus on representing U.S. radio stations,
as opposed to unrelated businesses such as television stations and cable
television systems, we believe we are better positioned to serve the needs of
our clients.

Strategy

Our objective is to enhance our position as the leading independent national
spot radio advertising rep firm in the United States and to increase revenues
and earnings. Our strategy to achieve these goals includes the following:

Align with Leading Radio Groups. We intend to continue to expand our market
share by developing new clients and seeking strategic alliances with innovative
and leading station groups. The relaxed restrictions on ownership of multiple
radio stations resulting from the Telecommunications Act of 1996 have led to
significant concentration of ownership of radio stations. We intend to benefit
from consolidation in the radio industry by actively pursuing and representing
radio station groups that we believe will acquire additional radio stations,
such as ABC Radio, Citadel, Cumulus, Entercom, Infinity and Radio One. To the
extent that new government regulations or economic conditions create an
environment for further industry consolidation, we will further seek to
accelerate the growth of our client base through new alliances with radio
broadcast industry innovators and consolidators.

Develop Innovative Sales Programs. We will continue to develop innovative
strategies and solutions for our clients, such as "e-radio," an electronic
sales and communications tool. We will also strive to anticipate and meet
trends in radio and advertising as our clients evolve. For example, we created
Interep Interactive in 1999 to focus on the Internet. Interep Interactive sells
Internet advertising by serving as an intermediary between website operators
and advertisers in need of suitable websites to communicate their message.
Interep Interactive also provides online marketing research on a secure basis
to clients and advertisers. Our Interep Marketing Group works closely with
Interep Interactive to cross-market Internet advertising with radio to
advertisers and to reach potential radio advertisers that currently advertise
over other media.

Promote Radio Advertising. We will continue to use our proprietary databases
of demographic and socioeconomic profiles of radio audiences in promoting the
use of radio for advertising. In 1991, we established our Interep Marketing
Group to advance the ongoing growth of radio advertising by focusing on
advertisers that do not use or underutilize radio advertising. The Interep
Marketing Group sales force works with these advertisers to demonstrate how
radio can help them achieve their goals and create marketing opportunities. We
believe that the Interep Marketing Group has contributed to the growth of radio
advertising revenues in the aggregate and, by extension, our own growth.

Make Strategic Investments. We recently completed strategic investments in
three Internet advertising representation companies. We will continue to
consider strategic investments or acquisitions in our industry and in new media
to improve our market share and to better leverage our marketing capabilities.

31
<PAGE>

Organization

We are organized into eight rep firms and five geographic regions. The rep
firms focus on servicing client stations while the regional offices coordinate
selling efforts to advertisers. Some of the rep firms, such as McGavren Guild,
Allied Radio Partners and D&R Radio, have long histories and are the product of
consolidations of smaller rep firms. Others, such as Infinity Radio Sales,
Clear Channel Radio Sales and ABC Radio Sales, were established more recently
for the purpose of representing a single station group as a dedicated unit. Our
rep firms are:

<TABLE>
<CAPTION>
Year
Acquired
Representation Firm or Formed
- ------------------- ---------
<S> <C>
McGavren Guild........................................................ 1953
Allied Radio Partners................................................. 1977
D&R Radio............................................................. 1981
Caballero Spanish Media............................................... 1995
Clear Channel Radio Sales............................................. 1996
Infinity Radio Sales.................................................. 1997
ABC Radio Sales....................................................... 1998
Public Radio Network.................................................. 1999
</TABLE>

The rep firms operate through our 15 strategically located full-service
offices in Atlanta, Boston, Chicago, Dallas, Detroit, Los Angeles, Miami,
Minneapolis, New York, Philadelphia, Portland, San Antonio, San Francisco,
Seattle and St. Louis, plus six satellite offices.

Clients

We represent over 2,000 radio stations. We represent many of the largest and
most successful radio station groups in the United States. In the ten largest
U.S. radio markets, as measured by gross billings, our market share was an
estimated 54.2% for 1998 and 55.6% for the six months ended June 30, 1999. For
the year ended December 31, 1998, other than Infinity, no station or station
group accounted for more than 10% of our commission revenues. Our clients
include stations affiliated with such prominent radio station groups as:

ABC Radio Entercom Radio One
Blue Chip Exel Communications Saga Communications
Broadcasting Greater Media Sinclair Broadcast
Beasley Broadcast Infinity Group
Group Inner City Radio Spanish Broadcasting
Citadel Jefferson Pilot System
Cumulus Susquehanna
Emmis Broadcasting

We will attempt to expand our market share by increasing our representation
of stations in the top 100 radio markets, where we already have a significant
presence, and by selectively expanding into smaller markets where appropriate.

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

32
<PAGE>

Sales Support

In order to sell air time for our clients, we have established strong
relationships with advertisers, advertising agencies and media buying services.
Our Interep Marketing Group helps advertisers develop effective radio
advertising strategies with the objective of influencing and facilitating their
purchases of radio advertising air time. We support our sales efforts with
sophisticated media research, using a proprietary database of demographic and
socioeconomic profiles of every major U.S. radio market to help advertisers
refine their radio advertising strategies. By showing correlations between
buying patterns for various products and services and specific demographic and
socioeconomic characteristics, we help advertisers reach their target
audiences. In this way, our sales force helps advertisers plan radio
advertising schedules using selected stations that we represent. We also
provide concept development and sales promotion services, such as advertising
support, merchandising and sales incentive programs, that enable us to suggest
promotional campaigns, including partnerships with other advertising media.

We believe that the overall demand for national spot radio advertising is
enhanced by our packaging and selling of advertising time on unwired networks.
By placing advertising with these networks, an advertiser can reach a large,
targeted audience more efficiently than if it were to place advertising with
many stations one at a time. An advertising agency or media buying service
derives additional benefits from our unwired networks as we often perform
research, scheduling, billing, payment and pre-analysis and post-analysis
functions relating to the advertising time purchase.

We use an extensive in-house training program for our work force called the
Interep Radio University. We require that most of our professional employees
spend approximately two weeks each year in our in-house training programs,
which use our own personnel as well as instructors from leading marketing and
management education programs.

Competition

Our success depends on our ability to acquire and retain representation
contracts with radio stations. The media representation business is highly
competitive, both in the competition for clients and in the sale of air time to
advertisers. Our only significant competitor in the national spot radio
representation industry is Katz Media Group, Inc., a subsidiary of AM/FM, Inc.,
a major radio station group owner, which has agreed to be acquired by Clear
Channel. Clear Channel recently notified us that, effective December 10, 1999,
it would terminate its contract with us and engage Katz Media Group as the
exclusive representative for its 225 stations. We also compete with other
independent and network media representatives, direct national advertisers,
national radio networks, syndicators and other brokers of radio advertising.
Moreover, on behalf of our clients, we compete for advertising dollars with
other media such as broadcast and cable television, newspapers, magazines,
outdoor and transit advertising, Internet advertising, point-of-sale
advertising and yellow pages directories. Certain of our competitors have
greater financial and other resources than we do, and such resources may
provide them with a competitive advantage in competing for client stations or
advertising expenditures.

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

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

. the number of stations and the inventory of air time represented;

. strong relationships with advertisers;

33
<PAGE>

. the experience of management and the training and motivation of sales
personnel;

. past performance;

. ability to offer unwired networks;

. use of technology; and

. research and marketing services for clients and advertisers.

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

Employees

As of September 30, 1999, we employed approximately 702 employees, of which
approximately 657 were sales-related personnel. None of our employees are
represented by a union. We believe that our relations with our employees are
excellent.

Properties

We lease approximately 128,000 square feet of office space in 15 cities
throughout the United States. Our principal executive offices are located at
100 Park Avenue, New York, New York, where we occupy 38,400 square feet under a
lease which expires in March 2005. We believe that our office premises are
adequate for our foreseeable needs.

Litigation

From time to time we are involved in litigation incidental to the conduct of
our business. We are not a party to any lawsuit or proceeding which, in the
opinion of management, is likely to have a material adverse effect on our
business.

34
<PAGE>

MANAGEMENT

Directors and Executive Officers

The following table sets forth certain information regarding our directors
and executive officers, as of September 30, 1999:

<TABLE>
<CAPTION>
Name Age Positions
---- --- ---------
<S> <C> <C>
Ralph C. Guild.......... 71 Chairman of the Board and Chief Executive Officer; Director
Marc G. Guild........... 48 President, Marketing Division; Director
William J. McEntee,
Jr.................... 56 Vice President and Chief Financial Officer
Stewart Yaguda.......... 43 President, Interep Marketing Group
Charles Parra........... 35 Chief Technology Officer
Leslie D. Goldberg...... 56 Director
Jerome S. Traum......... 64 Director
</TABLE>

All directors are elected for three-year terms, and all executive officers
are appointed for terms of one year.

Ralph C. Guild has been Chairman of the Board and Chief Executive Officer
since 1986 and has served as a director since 1967. He has been employed by us
or our predecessors since 1957 in various capacities. In November 1991, Mr.
Guild became one of the first inductees into the Broadcasting Hall of Fame. Mr.
Guild serves on the Boards of Trustees of the Museum of Television & Radio, the
Center for Communications and the University of the Pacific. In April 1998, Mr.
Guild received the Golden Mike Award from the Broadcasters Foundation for
outstanding contributions to the radio industry.

Marc G. Guild has been President, Marketing Division since November 1989 and
has served as a director since 1989. He was our Executive Vice President of
Network Sales/Operations from 1986 to 1989. Mr. Guild has been employed by us
or our predecessors since 1975 in various capacities. As President, Marketing
Division, Mr. Guild plays a key role in Interep's sales and marketing programs,
the Interep Radio University and our research and technology divisions and also
oversees our regional executives. Mr. Guild serves on the Board of Directors of
the International Radio and Television Foundation. Marc Guild is the son of
Ralph Guild.

William J. McEntee, Jr. has been Vice President and Chief Financial Officer
since March 1997. Mr. McEntee serves in such positions pursuant to a Services
Agreement between us and Media Financial Services, Inc. See "Certain
Transactions and Relationships." Mr. McEntee was Chief Financial Officer at
Sudbrink Broadcasting in West Palm Beach, Florida from 1971 through 1994. Mr.
McEntee owned and managed WCEE-TV in Mt. Vernon, Illinois from 1994 until he
sold the station in 1996. Mr. McEntee currently owns WIOJ-AM in Jacksonville,
Florida. He is a certified public accountant and formerly served as an audit
manager for Arthur Andersen & Co.

Stewart Yaguda has been President, Interep Marketing Group since April 1992.
Mr. Yaguda was a director of marketing for Ciba-Geigy Corp., an international
pharmaceuticals company, from 1985 to 1992, where he was responsible for the
marketing of over-the-counter drugs. From 1981 to 1985, he was a product
manager at Nabisco Brands. As President, Interep Marketing Group, Mr. Yaguda is
responsible for attracting new advertisers to radio and expanding the
advertising budgets of existing radio advertisers.

Charles Parra has been Chief Technology Officer since September 1997. From
July 1995 to August 1997, he was our Director of Information Technology. Mr.
Parra was a project manager for the information systems group at Russell
Reynolds Associates, a New York-based executive search firm, from 1993 through
1995. From 1990 to 1993, Mr. Parra was a technical specialist for Sharp
Electronics.

Leslie D. Goldberg served as President from August 1986 to the end of 1995
and has served as a director since 1986. He has been employed by us since 1968
in various capacities. Mr. Goldberg serves on the Board of Directors of the
Radio Advertising Bureau.

35
<PAGE>

Jerome S. Traum has served as a director since 1994. Mr. Traum has been a
partner with the New York law firm of Moses & Singer LLP since June 1995.
Before that, he was of counsel to the New York law firm of Proskauer Rose Goetz
& Mendelsohn, beginning in 1991. Previously, he was a general partner of The
Blackstone Group, an investment banking firm.

We intend to have at least two independent directors on our Board of
Directors following completion of this offering. Two of our four current
directors, Ralph Guild and Marc Guild, are our employees. Our employment
agreements with each of these directors provide that we will use our best
efforts to cause them to be members of the Board of Directors so long as their
employment continues.

Committees of the Board of Directors

Our Board of Directors will establish an Audit Committee and a Compensation
Committee prior to the completion of this offering. The Audit Committee will
recommend the annual engagement of our auditors, with whom the Audit Committee
will review the scope of audit and non-audit assignments, related fees, the
accounting principles that we will use in financial reporting, our internal
financial auditing procedures and the adequacy of our internal control
procedures. The Compensation Committee will determine officers' salaries and
bonuses and will administer our Stock Incentive Plan. The Audit Committee and
the Compensation Committee will each include one or both of the independent
directors referred to above.

Compensation Committee Interlocks and Insider Participation

For the fiscal year ended December 31, 1998, the entire Board of Directors
determined executive officer compensation. Two members of our Board of
Directors, Ralph Guild and Marc Guild, are also our employees and have
participated in certain transactions with us in the past. See "Certain
Transactions."

Director Compensation

Upon the completion of this offering, each director who is not an employee
will be entitled to a fee of $1,000 for each day of attendance at any meeting
of the Board of Directors or any committee thereof, plus reimbursement of
related reasonable out-of-pocket expenses. Other directors do not receive
compensation for their services as directors but are reimbursed for any
reasonable out-of-pocket expenses incurred in connection with attending such
meetings.

36
<PAGE>

Executive Compensation

The following table shows compensation for services rendered in all
capacities to us for the year ended December 31, 1998 by the following
executive officers: the Chief Executive Officer and our four most highly
compensated executive officers other than the Chief Executive Officer.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Annual
Compensation
-----------------
Other Annual All Other
Name and Principal Position Salary Bonus Compensation Compensation(1)
- --------------------------- -------- -------- ------------ --------------
<S> <C> <C> <C> <C>
Ralph C. Guild................ $910,659 $215,000 $104,583(2) $19,141
Chairman of the Board and
Chief Executive Officer
Marc G. Guild................. 315,659 126,000 -- 19,141
President, Marketing Division
William J. McEntee, Jr........ 111,223 -- -- 9,855
Vice President and Chief
Financial Officer(3)
Stewart Yaguda................ 125,659 65,000 27,500(4) 19,141
President, Interep Marketing
Group
Charles Parra................. 108,865 5,000 -- 11,840
Chief Technology Officer
</TABLE>
- --------
(1) Includes amounts contributed by us on behalf of Messrs. Ralph Guild, Marc
Guild, McEntee, Yaguda and Parra to the Stock Growth Plan of $14,341,
$14,341, $8,777, $14,341 and $11,135, respectively and to the 401(k) Plan
of $4,800, $4,800, $1,078, $4,800 and $705, respectively.
(2) Represents payments under a supplemental income agreement. See "--
Employment Contracts."
(3) Mr. McEntee serves in such capacities pursuant to a Services Agreement
between us and Media Financial Services, Inc. See "Certain Transactions."
Mr. McEntee began his employment with us on March 1, 1997.
(4) Represents contributions to a compensation deferral arrangement.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information regarding stock options granted
during 1998 to our executive officers:
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
for Option Term
---------------------------
Number of Percent of
Securities Total Options/
Underlying SARs Granted
Option/SARs to Employees Exercise or
Name Granted(#) in Fiscal Year Base Price Expiration Date 5% 10%
---- ----------- -------------- ----------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Ralph C. Guild.......... 626,880 19.0% $3.80 June 2008 $ 1,908,731 $ 4,449,561
1,253,759 38.1% 4.02 July 2008 3,543,862 8,625,523
52,240 1.6% 4.20 December 2008 138,011 349,747
Marc G. Guild........... 104,480 3.2% 3.80 June 2008 318,122 741,594
208,960 6.3% 4.02 July 2008 590,644 1,437,587
William J. McEntee,
Jr.................... 104,480 3.2% 3.80 June 2008 318,122 741,594
313,440 9.5% 4.02 July 2008 885,966 2,156,381
Stewart Yaguda.......... 208,960 6.3% 4.02 July 2008 590,644 1,437,587
Charles Parra........... -- -- -- -- -- --
</TABLE>
- --------
See footnotes to "Principal and Selling Stockholders."

37
<PAGE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES

The following table sets forth, as to each executive officer who holds
options, the status of their options at the end of fiscal 1998. In determining
the fair market value of the common stock, for which no trading market has
existed to date, our Board of Directors relied on independent appraisals. No
options were exercised by any of them during fiscal 1998.

<TABLE>
<CAPTION>
Number of In-the-Money
Unexercised Options/ Options/SARs at
SARs at Fiscal Year End Fiscal Year End
Number of ----------------------- -----------------------
Shares Acquired Value Non- Non-
Name on Exercise Realized($) Exercisable exercisable Exercisable exercisable
---- --------------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ralph C. Guild.......... -- -- 1,253,759 1,306,000 $1,396,000 --
Marc G. Guild........... -- -- 208,960 208,960 191,450 $38,600
William J. McEntee,
Jr.................... -- -- 104,480 313,440 42,100 57,900
Stewart Yaguda.......... -- -- -- 208,960 -- 38,600
Charles Parra........... -- -- -- -- -- --
</TABLE>

Employee Benefit Plans

1999 Stock Incentive Plan. We established our 1999 Stock Incentive Plan to
help us attract, retain and motivate key personnel. The Stock Incentive Plan
provides them with incentives for making significant contributions to our
growth and profitability through the grant of stock options and stock
appreciation rights. Officers, key employees, consultants and directors are
eligible to participate in the Stock Incentive Plan. Key employees are those
who hold positions of responsibility or whose performance, in the judgment of
the Compensation Committee of the Board of Directors, can have a significant
effect on the growth and profitability of the Company. All our employees are
currently eligible to participate in the Stock Incentive Plan.

The Compensation Committee of the Board of Directors administers the Stock
Incentive Plan. The Committee has sole authority, among other things, to grant
awards, select the recipients of awards and determine the exercise price, term,
number of shares covered, vesting and other terms and conditions of each award.
The Committee will at all times have at least two directors who are not also
our officers or employees. Members of the Committee may receive awards.

We may grant awards under the Stock Incentive Plan in the form of non-
qualified stock options, incentive stock options, as defined under Section 422
of the Internal Revenue Code of 1986, as amended, and stock appreciation
rights. A maximum of 2,000,000 shares of common stock are available for awards
under the Stock Incentive Plan. Common stock subject to awards will normally be
Class A shares, but may be Class B shares if so determined by the Committee.
Shares that are related to awards that are forfeited, canceled or terminated,
or that expire unexercised or are settled in a manner so that the shares are
not issued, will again be available for new awards. As of the date hereof, we
have granted no options and no stock appreciation rights under the Stock
Incentive Plan.

The exercise price of the shares covered by awards under the Stock Incentive
Plan may not be less than the fair market value of those shares at the time of
grant. An option holder may pay the exercise price in cash, shares of common
stock or combinations of cash and stock, as determined by the Committee. The
Committee may permit payments to be deferred on such terms as the Committee
requires, or an option may be exercised through a same-day sale program without
any outlay by the option holder. To permit us to satisfy any tax payment
obligation resulting from an option exercise, we have the right to withhold an
appropriate number of the shares otherwise receivable by an option holder on
exercise or to require him or her to pay us an amount sufficient to satisfy
such tax obligation.

38
<PAGE>

Stock appreciation rights provide holders with the right to receive a
payment from us, in cash or stock, equal to the excess of the fair market value
of the shares covered by the right on the date of exercise over the exercise
price established on the date of grant.

No award will be exercisable within the first six months after its grant.
Generally, the recipient of an award may exercise it only while in our employ,
except that under some circumstances the Committee may permit exercise by
recipients who have retired or become disabled or who otherwise have had their
employment terminated. In addition, if a recipient dies while employed by us,
his or her estate, heirs or beneficiaries may, subject to restrictions and
limitations imposed by the Committee, exercise options held by the recipient at
the time of death. The Committee may also provide for the acceleration of
vesting and exercisability of awards and the extension of exercise periods if
we are subject to a change in control. Options are not transferable except by
will or by operation of law.

If a stock split, stock dividend, combination or reclassification of shares,
recapitalization, merger, consolidation or similar event occurs, we will make
proportional adjustments to the number of shares of common stock reserved for
issuance under the Stock Incentive Plan and issuable under outstanding options
and to the exercise prices of outstanding options.

The Stock Incentive Plan will terminate in November 2009, and no awards may
be granted under it after such termination. The Board of Directors may
terminate the Stock Incentive Plan at any time or may amend it from time to
time as it deems proper and in the best interests of the Company, provided that
no such amendment may impair any outstanding option or, without approval of our
stockholders, (i) increase the number of shares that may be issued under the
Stock Incentive Plan, (ii) materially increase the benefits to participants
under the Stock Incentive Plan, (iv) reduce the option price of an option
(except pursuant to the adjustment provisions of the Stock Incentive Plan) or
(v) extend the period during which any option may be granted under the Stock
Incentive Plan.

Employee Stock Ownership Plan. We established our Employee Stock Option Plan
in 1975 to provide employees with a stock ownership interest in our company.
The ESOP is a stock bonus plan qualified under Section 401(a) of the Code. The
assets of the ESOP are held in trust and are invested primarily in our common
stock. Our Board of Directors appoints trustees for the ESOP, who are
responsible for the administration of the ESOP and its investments. The
trustees are Ralph Guild, Leslie Goldberg and Marc Guild.

The ESOP trustees generally determine the manner in which the shares owned
by the ESOP are voted. ESOP participants, however, direct the trustees as to
the voting of the shares allocated to them on matters specified in the Code
such as a merger, recapitalization, liquidation, dissolution or asset sale. If
a participant fails to direct the trustees as to the voting of his or her
shares, the trustees will vote the shares as they deem appropriate.

Each of our employees becomes eligible to participate in the ESOP after one
year with a minimum of 1,000 hours of service. As of December 31, 1998, the
ESOP had 419 participants. ESOP participation is mandatory and non-contributory
for all eligible employees. A participant becomes fully vested in his or her
ESOP account in stages over five years of service or on his or her total and
permanent disability or death. If a participant's employment ends before he or
she is fully vested, any non-vested portion of his or her account is forfeited
and reallocated among the remaining participants.

While we may make annual cash or stock contributions to the ESOP, we have
not done so since 1994 and do not currently intend to do so. Interep loaned
$1.9 million to the ESOP in 1996 to fund distributions from the ESOP in
connection with the termination of employment of participants. As of December
31, 1998, the ESOP had repaid the loan in full.

Distributions to terminated employees of vested amounts in their accounts
have in the past generally been made in cash. After this offering, we expect
that most, if not all, distributions will be made in our Class A common stock
to the extent that an employee's account is invested in Class B common stock,
with the remainder to be made in the form of cash.

39
<PAGE>

Stock Growth Plan. We established the Stock Growth Plan in 1995 to provide
employees with a stock ownership interest in our company. The Stock Growth Plan
is a stock bonus plan qualified under Section 401(a) of the Code. The assets of
the Stock Growth Plan are held in trust and are invested primarily in common
stock. The trustees of the Stock Growth Plan are appointed by our Board of
Directors and are responsible for the administration of the Stock Growth Plan
and its investments. The trustees are Ralph Guild, Leslie Goldberg and Marc
Guild.

Each of our employees who is regularly scheduled to work at least 20 hours
per week is eligible to participate in the Stock Growth Plan. As of December
31, 1998, the Stock Growth Plan had 594 participants. Stock Growth Plan
participation is mandatory for all eligible employees. All Stock Growth Plan
participants are at all times fully vested in their accounts.

We make regular payments to the Stock Growth Plan following each payroll
period in amounts determined by our Board of Directors, subject to certain
limitations under the Code. These payments are primarily in the form of cash
(although payments in shares of common stock are permitted). These cash
payments are used to purchase shares of common stock from the ESOP. These
purchases fulfill the Stock Growth Plan's purpose of investing in our company
while providing liquidity for the ESOP.

The Stock Growth Plan trustees generally determine the manner in which the
shares owned by the Stock Growth Plan are voted. Participants, however, direct
the trustees as to the voting of the shares allocated to them on matters
specified in the Code such as a merger, recapitalization, liquidation,
dissolution or asset sale. If a participant fails to direct the trustees as to
the voting of his or her shares, the trustees will vote the shares as they deem
appropriate.

Distributions to terminated employees of their accounts have in the past
generally been made in cash. After this offering, we expect that most, if not
all, distributions will be made in our Class A common stock, except to the
extent the employee's account has a cash balance.

401(k) Plan. We maintain a 401(k) Plan, which allows employees to save a
portion of their salaries on a tax-deferred basis. Each of our employees
becomes eligible to participate in the 401(k) Plan after one year of service.
As of December 31, 1998, the 401(k) Plan had 560 participants. The assets of
the 401(k) Plan are held in trust. The trustee of the 401(k) Plan is appointed
by our Board of Directors, and the current trustee is Fidelity Management Trust
Company.

Each eligible employee may make a pre-tax contribution from salary in an
amount not greater than 15% of his or her total compensation during each
calendar year. For 1998, the limit under the Code for pre-tax contributions was
$10,000.

If a participant makes a pre-tax contribution, we make a matching
contribution equal to a percentage of the first 6% of the participant's
compensation. That percentage is determined annually by our Board of Directors.
The percentage for 1998 was 50%. We may also make discretionary contributions
to be allocated among all participants in proportion to their relative total
compensation. To share in the allocation of matching contributions and
discretionary contributions, a participant must be employed on the last day of
the relevant year. To share in discretionary contributions in any year, a
participant must also complete at least 1,000 hours of service in that year.
These requirements do not apply, however, if a participant's employment ends
during the year due to retirement, death or disability. In any year, combined
company and employee contributions (together with contributions to the ESOP and
the Stock Growth Plan) allocated to a participant may not exceed the lesser of
$30,000 or 25% of a participant's total taxable compensation for the year.

The portion of a participant's account balance attributable to pre-tax
contributions is at all times fully vested and non-forfeitable, while the
portion attributable to contributions made by us vests in 20% increments on the
completion of each year of service. Participants direct the investment of their
accounts. The 401(k) Plan currently offers participants the choice of four
mutual funds provided through Fidelity Investments.

40
<PAGE>

A 401(k) participant's account will be distributed to him or her after he or
she leaves our employ, attains retirement age, dies or becomes disabled. In
addition, on attaining age 59, a participant may elect to withdraw the balance
in his or her account. A participant may also apply for an earlier hardship
withdrawal of his or her pre-tax contributions in certain circumstances.
Subject to certain limitations imposed by the 401(k) Plan and federal law, a
participant is also permitted to borrow from the 401(k) Plan.

Employment Contracts

Ralph Guild is employed as our Chairman of the Board and Chief Executive
Officer under an employment agreement. The term of this agreement runs through
February 29, 2004 and is automatically extended for an additional year each
March 1 unless either we or Ralph Guild notifies the other on or before
February 1 of the same year of our or his election not to extend the agreement.
Ralph Guild receives a base salary of not less than $925,000 per year, plus any
bonus, incentive or other types of additional compensation which our Board of
Directors determines to pay. Further, he is entitled to receive annual
incentive compensation based on increases in our Adjusted EBITDA. If Adjusted
EBITDA for any year is greater than the Adjusted EBITDA for the previous year,
Ralph Guild will be entitled to a bonus equal to a percentage of his base
salary equal to two times the percentage increase of Adjusted EBITDA for such
year over the higher of Adjusted EBITDA for the prior year and the highest
Adjusted EBITDA for any prior year back to 1998. If we elect not to extend the
term of the agreement, we are required to retain Ralph Guild as a consultant
for an additional two years at a fee equal to his base salary in effect at such
time.

The agreement provides for continued payment of Ralph Guild's base salary
through the balance of its term, plus two years, if (i) Ralph Guild terminates
his employment with us by reason of our material breach of the agreement, (ii)
Ralph Guild is not re-appointed as Chairman of the Board and Chief Executive
Officer or ceases to be elected as a director, other than by his own choice or
for reasons justifying termination of his employment by us for cause, or (iii)
there is a change in control of our Board of Directors. Ralph Guild may not
compete with us during the term of the employment agreement and thereafter for
as long as he is receiving compensation under the agreement. The agreement also
provides (i) in the case of Ralph Guild's permanent disability, for payments to
Ralph Guild equal to 75% of his then current salary, less any income disability
benefits to which he may be entitled, for the balance of his employment term
and (ii) in the case of Ralph Guild's death, at the option of his estate or his
designated beneficiary, for a death benefit equal to either the present value
at the time of his death of the entire amount of the salary that would have
been payable to him for the balance of his employment term or the payment of
his then current salary over the balance of his employment term.

Ralph Guild also has a supplemental income agreement pursuant to which we
pay him $104,583 per year, payable in monthly installments, through 2008. We
maintain a whole life insurance policy on Ralph Guild for the purpose of
funding the supplemental income agreement.

Marc Guild is employed as our President, Marketing Division under an
employment agreement. The term of this agreement runs through January 1, 2001
and is automatically extended for an additional year each January 1 unless
either we or Marc Guild notifies the other on or before December 1 of the
preceding year of our or his election not to extend the agreement. Under the
agreement, Marc Guild receives a base annual salary of $320,000 and an
incentive amount of $80,000 per year, which is payable by us only if we achieve
certain financial or other goals set by Marc Guild and us at the beginning of
each year. The agreement provides for continued payments of base salary through
the balance of its term if (i) there is a change in control of our company,
(ii) Marc Guild is not re-appointed to his office with us or ceases to be a
director, other than by reason of his own choice or the termination of his
employment for cause or (iii) Marc Guild's termination of his employment by
reason of a material breach by us of the agreement. The agreement also provides
(i) in the case of Marc Guild's permanent disability, for payments to him equal
to 75% of his then current salary, less any income disability benefits that he
may receive or to which he may be entitled, for the duration of the term of the
agreement and (ii) in the case of Marc Guild's death, at the option of his
estate or his designated

41
<PAGE>

beneficiary, for a death benefit equal to the present value at the time of
death of the entire amount of the salary that would have been payable to him
for the balance of his employment term or the payment of his then current
salary over the balance of his employment term.

Indemnification Agreements

We are a party to an indemnification agreement with each of our directors
and certain of our executive officers. These agreements entitle these persons
to be indemnified, which may include advancement of expenses, to the fullest
extent permitted by law for all expenses, judgments, fines, penalties and
settlement payments incurred by an indemnitee in actions brought against him or
her in connection with any act taken in his or her capacity as a director or
executive officer. Under these agreements, each decision as to indemnification
will be made by a majority of the disinterested members of our Board of
Directors, if such members constitute a quorum of the full Board, or otherwise
by independent legal counsel selected by our Board.

42
<PAGE>

CERTAIN TRANSACTIONS

In July 1998, we redeemed all of the 1,389 shares of the Series B preferred
stock and the 232,990 shares of the common stock held by our Compensation
Deferral Plan for $2.6 million, of which $1.4 million was attributable to the
face value of the shares of the Series B preferred stock and the balance was
attributable to the common stock. Following that redemption, we terminated the
Compensation Deferral Plan and paid cash distributions to its 15 participants
out of the proceeds of the redemption, including $1.1 million to Ralph Guild,
$100,000 to Marc Guild and $100,000 to Mr. Yaguda.

Pursuant to a services agreement between Media Financial Services, Inc. and
us, we retained Media Financial, for a five-year term commencing June 1, 1997,
to provide financial and accounting services for us and our subsidiaries. These
services include the preparation of monthly, quarterly and annual financial
statements, the preparation and filing of federal, state and local tax returns
and all billing, accounts receivable, accounts payable and collections
functions. Under the services agreement, Mr. McEntee, who is the President and
sole stockholder of Media Financial, is in charge of all services rendered by
Media Financial to us and also serves as our Vice President and Chief Financial
Officer for an annual salary of $120,000. For its services, we paid Media
Financial a fee of approximately $2.5 million in the first year of the services
agreement. Its annual fees for the second, third, fourth and fifth years will
be approximately $2.7 million, $2.8 million, $3.0 million and $3.1 million,
respectively.

Since December 1979, we have leased a building from a trust of which Ralph
Guild is the income beneficiary, Marc Guild is the trustee and Marc Guild, Adam
Guild and their siblings are residual beneficiaries. We use the building from
time to time for training sessions and management meetings. The lease expires
on December 31, 2009 and provides for base annual rentals increasing from
$78,000 in 1999 to $102,000 over the remaining term of the lease, subject to
adjustment for actual usage. In each of 1996, 1997 and 1998, total lease
expense was $74,000. We also lease an apartment in New York City from a limited
partnership of which Marc Guild, Adam Guild and their siblings are limited
partners. The apartment is for the use of our visiting employees, including
Ralph Guild, when they are working in the New York office. The lease expires on
January 31, 2009 and provides for annual rent of $120,000, subject to increase
for up to 50% of any increases in applicable real estate taxes and common
charges. We believe the terms of these lease arrangements are at least
comparable to, if not more favorable to us than, the terms which would have
been obtained in transactions with unrelated parties. We intend to continue
these or other arrangements in the future as long as we believe each
transaction is more beneficial to us than using an unrelated provider. Adam
Guild and Phillip Brown, who are Ralph Guild's son and son-in-law,
respectively, are also employees.

In June 1998, we disposed of our non-radio rep firm subsidiary, Corporate
Family Network, Inc., or CFN. The results of operations of CFN had resulted in
immaterial losses since its inception. We sold CFN to Ralph Guild for a
purchase price of $200,000, which was our estimate of the net fair market value
of CFN, payable $50,000 in cash and $150,000 by execution and delivery by Mr.
Guild of a promissory note payable in three annual installments of $50,000 each
and bearing interest at a fluctuating rate equal to the prime rate of
BankBoston, N.A., plus one percent.

43
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information concerning the beneficial
ownership of our shares of common stock held on September 30, 1999, and as
adjusted to reflect the sale of the shares of Class A common stock offered by
this prospectus, by (i) each person known to us to own beneficially more than
5% of the common stock, (ii) the selling stockholder, (iii) each of our
directors, (iv) each of the executive officers and (v) all directors and
executive officers as a group. As of September 30, 1999 there were 5,893,889
shares of common stock outstanding. All of the shares indicated will be
converted into shares of Class B common stock prior to the closing of this
offering, except that shares to be sold by the selling stockholder in this
offering will automatically convert into shares of Class A common stock on sale
to the underwriters. See "Description of Capital Stock" and "Underwriting."

The number and percentage of shares beneficially owned are determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Shares of common stock subject to options that are currently
exercisable, or exercisable within 60 days of September 30, 1999, are deemed to
be beneficially owned by the person holding the options for the purpose of
computing that person's percentage ownership, but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person. Unless otherwise indicated in the footnotes, each person or entity has
sole voting and investment power (or shares these powers with his or her
spouse) with respect to the shares shown as beneficially owned.

<TABLE>
<CAPTION>
Shares Shares Percent of
Beneficially Shares to be Beneficially Total Voting
Owned Sold in Owned After Power After
Prior to Offering Offering Offering Offering
----------------- ------------ ----------------- ------------
Name Number Percent Number Percent
---- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
ESOP (1)................ 3,511,925 59.6% 987,500 2,524,425 24.4% 46.3%
Stock Growth Plan (1)... 1,808,965 30.7 1,808,965 17.5 33.2
Ralph C. Guild (2)(3)... 3,473,623 41.1 3,285,839 25.5 41.0
Marc G. Guild (2)(4).... 608,031 9.6 576,206 5.4 9.8
William J. McEntee, Jr.
(5)................... 420,804 6.7 420,804 3.9 7.2
Stewart Yaguda (6)...... 228,519 3.7 226,432 2.1 4.0
Charles Parra........... 7,460 * 7,346 * *
Leslie D. Goldberg (7).. 52,240 * 52,240 * *
Jerome S. Traum......... -- -- -- --
All Directors and
Executive Officers as
a Group (7 Persons)
(1)(3)(4)(5)(6)(7).... 4,790,677 50.2 4,568,867 32.6 53.4
</TABLE>
- --------
* Less than 1%
(1) The shares shown in this table as being owned beneficially by Messrs. Ralph
Guild, Marc Guild, McEntee, Yaguda and Parra and by all directors and
executive officers as a group include shares owned by the ESOP and the
Stock Growth Plan and allocated to plan accounts maintained for such
persons. As of September 30, 1999, the combined number of shares allocated
by such plans to such persons and all directors and executive officers as a
group was as follows: Ralph Guild, 680,770 shares, Marc Guild, 126,797
shares, William J. McEntee, Jr., 2,884 shares, Stewart Yaguda, 19,559
shares, Charles Parra, 7,460 shares, and all directors and executive
officers as a group, 837,470 shares. ESOP and Stock Growth Plan
participants have the right to direct the votes of the shares allocated to
them with respect to certain significant matters submitted to a vote of
stockholders, although the trustees of the ESOP and Stock Growth Plan have
the authority to vote all shares held by such plans in their discretion
with regard to all other matters, including the election of directors.
Messrs. Ralph Guild, Goldberg and Marc Guild are the trustees of the ESOP
and the Stock Growth Plan. See "Management--Executive Compensation."
(2) Ralph Guild and Marc Guild are father and son and each disclaims beneficial
ownership of the other's holdings.

44
<PAGE>

(3) Includes options granted to Ralph Guild (i) in 1988 to purchase 208,960
shares of common stock at an exercise price of $1.56 per share, (ii) in
1991 to purchase 208,960 shares at an exercise price of $2.77 per share,
(iii) in 1995 to purchase 208,960 shares at an exercise price of $3.91 per
share, (iv) in June 1998 to purchase 626,880 shares at an exercise price of
$3.80 per share, (v) in July 1998 to purchase 1,253,759 shares at an
exercise price of $4.02 per share and (vi) in December 1998 to purchase
52,240 shares at an exercise price of $4.20. All of such options are
currently exercisable. The options referred to in clauses (i), (ii) and
(iii) expire in December 2005 and the options referred to in clauses (iv),
(v) and (vi) expire in June 2008, July 2008 and December 2008,
respectively. All of the exercise prices referred to in Notes 3 through 7
were equal to the value per share of common stock as determined by an
independent appraisal as of the time of the grant of the options.
(4) Includes options granted to Marc Guild in (i) 1991 to purchase 104,480
shares of common stock at the exercise price of $2.77 per share, (ii) June
1998 to purchase 104,480 shares at the exercise price of $3.80 per share
and (iii) July 1998 to purchase 208,960 shares at the exercise price of
$4.02 per share, all of which options are fully exercisable. These options
expire in December 2005, June 2008 and July 2008, respectively.
(5) Includes options granted to Mr. McEntee in (i) June 1998 to purchase
104,480 shares of common stock at the exercise price of $3.80 per share and
(ii) July 1998 to purchase 313,440 shares at the exercise price of $4.02
per share, all of which options are fully exercisable. Such options will
expire in June 2008 and July 2008, respectively.
(6) Includes options granted to Mr. Yaguda in July 1998 to purchase 208,960
shares of common stock at the exercise price of $4.02 per share, which
options are fully exercisable and will expire in July 2008.
(7) Includes options granted to Mr. Goldberg in December 1998 to purchase
52,240 shares of common stock at an exercise price of $4.20 per share which
options are fully exercisable and will expire in December 2008.

The address for the ESOP, the Stock Growth Plan and Messrs. Marc Guild,
Yaguda and Parra is Interep National Radio Sales, Inc., 100 Park Avenue, New
York, New York 10017. Ralph Guild's address is 10 South Lake Trail, Palm Beach,
Florida 33480. Mr. Goldberg's address is 200 Keller Lane, North Salem, New York
10560. Mr. McEntee's address is 2090 Palm Beach Lakes Boulevard, West Palm
Beach, Florida 33409. Mr. Traum's address is Moses & Singer LLP, 1301 Avenue of
the Americas, New York, New York 10019.

45
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The following description of our capital stock is qualified in its entirety
by reference to our Restated Certificate of Incorporation, which is an exhibit
to the registration statement contained in this prospectus.

Immediately after the completion of this offering, our authorized capital
stock will consist of 20,000,000 shares of Class A common stock, 10,000,000
shares of Class B common stock and 1,000,000 shares of preferred stock. The par
value per share of each such class and series will be $.01. Immediately after
the completion of this offering, there will be outstanding 5,416,667 shares of
Class A common stock, 4,923,962 shares of Class B common stock and no shares of
preferred stock.

Class A Common Stock and Class B Common Stock

Holding Restrictions and Conversion. Only qualified holders, that is,
members of our Board of Directors, our active employees, the controlled
affiliates, spouses, estates or personal representatives of directors and
employees, and our employee benefit plans, including the ESOP and the Stock
Growth Plan, may hold Class B common stock. Class B shares convert into an
equal number of Class A shares automatically when the shares are no longer
beneficially owned by qualified holders. In addition, at the option of a holder
of Class B shares, such shares may be converted into Class A shares at any
time. The Class B shares being sold by the ESOP in this offering will
automatically convert into shares of Class A common stock on sale to the
underwriters. Class B shares converted into Class A shares will be canceled and
restored to the status of authorized but unissued shares.

Voting Rights. Generally, the Class A shares and Class B shares vote as a
single class on matters submitted to a vote of the stockholders, including the
election of directors. Each Class A share is entitled to one vote and each
Class B share is entitled to ten votes, except for certain amendments of our
Restated Certificate of Incorporation, certain "going private" transactions
involving the ESOP, Ralph Guild, our executive officers acting as a group or
any of their affiliates or as otherwise required by applicable law.

Under New York law, the affirmative vote of the holders of a majority of the
outstanding Class A shares would be required to approve any amendment to the
Restated Certificate of Incorporation that would adversely modify or change the
powers, preferences or rights of the shares of such class. Further, while both
classes of our common stock would vote as a single class with respect to any
"going private" transaction (i.e., a "Rule 13e-3 Transaction" as such term is
defined in Rule 13e-3 under the Exchange Act) involving Ralph Guild, our
executive officers acting as a group, the ESOP or any of their affiliates, each
Class B share would be entitled to only one vote with respect to any such
transaction. Ralph Guild, management as a group or the ESOP would be able to
exercise a substantial influence on any proposed "going private" transaction.
None of them, however, has any present intention to effect such a transaction,
and there is no agreement among any of them or any other stockholders as to how
they would vote their shares of common stock if any such transaction were
proposed in the future.

Immediately after the completion of this offering, Class B stockholders will
be able to control virtually all matters requiring stockholder approval,
including the election of directors, and will be able to effect an amendment to
the Restated Certificate of Incorporation, subject to New York law as noted
above, or a merger, a sale of all or substantially all of our assets or other
significant corporate transactions (other than a "going private" transaction)
without the approval of the Class A stockholders.

Dividends. Class A stockholders and Class B stockholders are entitled to
receive dividends as declared from time to time by the Board of Directors out
of funds legally available for the payment of dividends. Under our revolving
credit agreement, we are not permitted to make distributions to our
stockholders, other than dividends payable solely in common stock. In addition,
we do not intend to declare dividends in the foreseeable future. Dividends may
be paid to either the Class A stockholders or the Class B stockholders only if
the same dividend is paid to holders of the other class of common stock, except
that stock dividends will be made in the corresponding class of common stock.

46
<PAGE>

Liquidation and Merger. In the event of our liquidation, dissolution or
winding up, Class A stockholders and Class B stockholders will share with each
other on a ratable basis as a single class in the assets available for
distribution after payment of all creditors and payments due in respect of any
of our senior securities, including the preferred stock. On any merger or
consolidation, the Class A stockholders and the Class B stockholders are
entitled to receive equal per share payments or distributions, although they
may receive different securities in the surviving corporation if the provisions
differentiating the rights of their respective classes of common stock in the
surviving corporation are substantially identical to the provisions currently
differentiating their rights.

Other Provisions. Class A shares and Class B shares have no cumulative
voting rights or preemptive rights to subscribe to any additional securities
that we may issue. There are no redemption or sinking fund provisions
applicable to the Class A shares or Class B shares, nor is either such class
subject to calls or assessments by us. We may not subdivide or combine shares
of either class of our common stock without at the same time combining or
subdividing shares of the other class in the same proportion.

Preferred Stock

We are authorized to issue up to 1,000,000 shares of preferred stock. Our
Board of Directors is authorized, without further stockholder approval, to
provide for the issuance of shares of preferred stock from time to time in
different series and to fix before issuance the powers, designations,
preferences and relative rights of each series, the qualifications, limitations
or restrictions thereof, including the number of shares included in each series
and the dividend rights and rates, conversion rights, voting rights, terms of
redemption (including sinking fund provisions), redemption price or prices and
liquidation preferences. The issuance of preferred stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, may have the effect of discouraging, delaying or preventing
a change in control.

Anti-Takeover Protections

As a New York corporation, we are subject to the provisions of Section 912
of the New York Business Corporation Law. Section 912 provides, with certain
exceptions, that a New York corporation may not engage in a "business
combination" (e.g., merger, consolidation, recapitalization or disposition of
stock) with any "interested stockholder" for a period of five years from the
date that such person became an interested stockholder unless (i) the
transaction resulting in a person becoming an interested stockholder, or the
business combination was approved by the board of directors of the corporation
prior to that person becoming an interested stockholder, (ii) the business
combination is approved by the holders of a majority of the outstanding voting
stock not beneficially owned by such interested stockholder, or (iii) the
business combination meets certain valuation requirements for the stock of the
New York corporation. An "interested stockholder" is defined as any person that
is the beneficial owner of 20% or more of the outstanding voting stock of the
New York corporation or is an affiliate or associate of the corporation who at
any time during the five years prior was the beneficial owner, directly or
indirectly, of 20% or more of the then outstanding voting stock. These
provisions are likely to impose greater restrictions on an unaffiliated
stockholder than on the ESOP, the Stock Growth Plan and members of management.

Transfer Agent

Our transfer agent is American Stock Transfer and Trust Company.

47
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has not been any public market for our common
stock. Sales of substantial amounts of Class A common stock in the public
market could adversely affect the prevailing market price of the Class A common
stock.

Immediately after completion of this offering, we will have 10,340,629
shares of common stock outstanding (11,153,129 shares if the underwriters'
over-allotment option is exercised in full), based on 5,911,462 shares
outstanding as of October 31, 1999. Of these shares, the 5,416,667 shares of
Class A common stock offered hereby (6,229,167 shares if the underwriters'
over-allotment option is exercised in full) will be eligible for sale in the
public market after the completion of this offering without restrictions under
the Securities Act, except by persons who may be deemed to be "affiliates," as
such term is defined in Rule 144 under the Act. All of the remaining 4,923,962
shares of our common stock to be outstanding immediately after this offering
will be shares of Class B common stock, which by their terms convert into an
equal number of shares of Class A common stock either at the option of the
holder thereof or automatically when they are no longer beneficially owned by
qualified holders. See "Description of Capital Stock." In addition, there is an
aggregate of 4,231,439 shares of Class B common stock issuable on exercise of
outstanding employee stock options and 2,000,000 shares of common stock
reserved for issuance on exercise of awards under the Stock Incentive Plan
which may be granted in the future. All such shares will be "restricted
securities" for purposes of Rule 144 under the Act and may not be resold in a
public distribution except in compliance with the registration requirements of
the Act or pursuant to an exemption therefrom.

The ESOP, the Stock Growth Plan, each other holder of approximately 1% or
more of the shares of Class B common stock outstanding after completion of this
offering (including the holders of options exercisable into such shares and
employee benefit plan participants with respect to shares allocated to their
plan accounts) and each of our executive officers and directors have entered
into contractual "lock-up" agreements. These agreements provide that the
holders will not offer, sell, contract to sell or grant any option to purchase
or otherwise dispose of the shares of common stock owned by them for a period
of 180 days from the date of this prospectus without the prior written consent
of BancBoston Robertson Stephens Inc., except that the ESOP and the Stock
Growth Plan may distribute shares to participants who cease to be employed by
us. If a plan participant receives shares from either plan on termination,
those shares will be subject to any lock-up the participant may have entered
into individually. Otherwise, as a result of these contractual restrictions,
notwithstanding possible earlier eligibility for sale under the provisions of
Rules 144, 144(k) or 701, shares subject to lock-up agreements will not be
saleable until such agreements expire.

Prior to the closing of this offering, we will enter into an agreement with
the ESOP and the Stock Growth Plan granting certain piggy-back and demand
registration rights which will entitle such plans to require us to register the
shares held by them for resale under the Securities Act of 1933. These rights
are subject to limitations. The piggy-back rights are not exercisable until one
year after completion of this offering while the demand rights are exercisable
one year later. During the first two years after completion of this offering,
the ESOP and Stock Growth Plan may only sell shares:

. to each other;

. under Rule 144;

. in response to a tender offer made by a third party for 100% of our
stock; and

. on exercise of their piggy-back rights.

Thereafter, the ESOP and Stock Growth Plan may sell shares:

. on exercise of their demand and piggy-back rights;

. under Rule 144; and

. otherwise, but subject to the requirement of obtaining the approval of a
majority of our independent directors in certain circumstances.

48
<PAGE>

We intend to file a registration statement on Form S-8 under the Securities
Act to register all shares of Class B common stock subject to outstanding stock
options and common stock issuable under our 1999 Stock Incentive Plan.

Prior to the closing of this offering, the ESOP will agree to limit its
purchases of Class A common stock so that it does not increase its holdings by
more than one-third of the outstanding Class A common stock in any three-year
period, unless our independent directors approve the purchase of a greater
amount.

Shares held by the ESOP or the Stock Growth Plan may eventually be
distributed to participants in such plans in connection with the termination of
employment of participants who request that their plan accounts be distributed
to them in the form of shares, rather than cash. In such event, and following
the expiration of the lock-up agreements, such shares (which would
automatically be converted into shares of Class A common stock), as well as any
shares issued on exercise of employee stock options, would also be available
for sale in the public market pursuant either to Rule 701 under the Act or,
with respect solely to the ESOP, Securities and Exchange Commission Release No.
33-6281 (January 15, 1981). Rule 701 and that release permit resales of such
shares in reliance on Rule 144 but without compliance with certain
restrictions, including the holding period requirement, of Rule 144.

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person (or persons whose shares are aggregated),
including one of our affiliates who has beneficially owned "restricted
securities" for at least one year would be entitled to sell within any three-
month period a number of shares that does not exceed the greater of 1% of the
outstanding shares of Class A common stock or the reported average weekly
trading volume of the Class A common stock during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain manner-
of-sale provisions and notice requirements and to the availability of current
public information about us. Under Rule 144(k), a person who is not deemed to
have been an affiliate at any time during the 90 days preceding a sale and who
has beneficially owned the shares proposed to be sold for at least two years,
is entitled to sell such shares without complying with the manner-of-sale,
current public information, volume limitation or notice provisions of Rule 144.
Sales of "restricted securities" by an affiliate, even after a three-year
holding period, must continue to be made in compliance with Rule 144.

49
<PAGE>

UNDERWRITING

The underwriters named below, acting through their representatives,
BancBoston Robertson Stephens Inc., Bear, Stearns & Co. Inc., HCFP/Brenner
Securities, LLC and SPP Capital Partners, LLC, have severally agreed with us,
subject to the terms and conditions of the underwriting agreement, to purchase
from us and the ESOP the number of shares of Class A common stock set forth
opposite their names below. The underwriters are committed to purchase and pay
for all of the shares if any are purchased.

<TABLE>
<CAPTION>
Number
Underwriters of Shares
------------ ---------
<S> <C>
BancBoston Robertson Stephens Inc. ............................... 2,600,000
Bear, Stearns & Co. Inc. ......................................... 2,058,334
HCFP/Brenner Securities, LLC...................................... 487,500
SPP Capital Partners, LLC......................................... 270,833
---------
Total........................................................... 5,416,667
=========
</TABLE>

We have been advised that the underwriters propose to offer the shares of
Class A common stock to the public at the public offering price located on the
cover page of this prospectus and to dealers at that price less a concession of
not in excess of $0.50 per share, of which $0.10 may be reallowed to other
dealers. After the initial public offering, the public offering price,
concession and reallowance to dealers may be reduced by the representatives. No
reduction in this price will change the amount of proceeds to be received by us
as indicated on the cover page of this prospectus.

Over-Allotment Option. The ESOP has granted to the underwriters an option
exercisable during the 30-day period after the date of this prospectus, to
purchase up to 812,500 additional shares of Class A common stock at the same
price per share as we and the ESOP will receive for the 5,416,667 shares that
the underwriters have agreed to purchase. To the extent that the underwriters
exercise this option, each of the underwriters will have a firm commitment to
purchase approximately the same percentage of additional shares that the number
of shares of Class A common stock to be purchased by it shown in the above
table represents as a percentage of the 5,416,667 shares offered by this
prospectus. If purchased, the additional shares will be sold by the
underwriters on the same terms as those on which the 5,416,667 shares are being
sold. The ESOP will be obligated, under this option, to sell shares to the
extent the option is exercised. The underwriters may exercise the option only
to cover over-allotments made in connection with the sale of the 5,416,667
shares of Class A common stock offered by this prospectus.

The following table shows the per share and total underwriting discounts and
commissions to be paid by us to the underwriters. This information is presented
assuming either no exercise or full exercise by the underwriters of their over-
allotment option.

<TABLE>
<CAPTION>
Without With
Over-Allotment Over-Allotment
Per Share Option Option
--------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Assumed public offering
price.................... $12.00 $65,000,000 $74,750,000
Underwriting discounts and
commissions.............. 0.84 4,550,000 5,232,500
Proceeds, before expenses,
to us.................... 11.16 49,429,500 49,429,500
Proceeds to the ESOP....... 11.16 11,020,500 20,088,000
</TABLE>

The expenses of the offering payable by us are estimated at $1,000,000.
BancBoston Robertson Stephens Inc. expects to deliver the shares of Class A
common stock to purchasers on December 14, 1999.

50
<PAGE>

Indemnity. The underwriting agreement contains covenants of indemnity among
the underwriters, the ESOP and us against certain civil liabilities, including
liabilities under the Securities Act of 1933 and liabilities arising from
breaches of representation and warranties contained in the underwriting
agreement.

Future Sales. Each of our executive officers, directors and each holder of
approximately 1% or more of Class B Common Stock outstanding immediately prior
to this offering, including the ESOP and Stock Growth Plan, has agreed with the
representatives, for a period of 180 days after the date of this prospectus,
not to offer to sell, contract to sell or otherwise sell, dispose of, loan,
pledge or grant any rights with respect to any shares of Class A common stock,
any options or warrants to purchase any shares of Class A common stock, or any
securities convertible into or exchangeable for shares of Class A common stock
owned as of the date of this prospectus or acquired directly from us by these
holders or with respect to which they have or may acquire the power of
disposition, without the prior written consent of BancBoston Robertson Stephens
Inc., except that the ESOP and the Stock Growth Plan may distribute shares to
participants who cease to be employed by us. If a plan participant receives
shares from either plan on termination, those shares will be subject to any
lock-up the participant may have entered into individually. However, BancBoston
Robertson Stephens Inc. may, in its sole discretion and at any time without
notice, release all or any portion of the securities subject to lock-up
agreements. There are no agreements between the representatives and any of our
stockholders providing consent by the representatives to the sale of shares
prior to the expiration of the 180-day lock-up period other than a limited
number of shares being sold through a directed share program, as discussed
below. In addition, we have generally agreed that, during the 180-day lock-up
period, we will not, without the prior written consent of BancBoston Robertson
Stephens Inc., (a) consent to the disposition of any shares held by
stockholders prior to the expiration of the 180-day lock-up period or (b)
issue, sell, contract to sell or otherwise dispose of, any shares of Class A
common stock, other than our sale of shares in the offering, our issuance of
Class A common stock upon the exercise of currently outstanding options and
warrants, and our issuance of incentive awards under our stock incentive plan.
See "Shares Eligible for Future Sale."

Directed Shares. We have requested that the underwriters reserve up to five
percent of the shares of common stock for sale at the initial public offering
price to directors, officers, employees and other individuals designated by us.

The underwriters have informed us that they do not intend to confirm sales
to any accounts over which they exercise discretionary authority.

No Prior Public Market. Prior to this offering, there has been no public
market for the Class A common stock. Consequently, the initial public offering
price for the Class A common stock offered by this prospectus has been
determined through negotiations among the ESOP, the representatives and us.
Among the factors considered in these negotiations were prevailing market
conditions, our financial information, market valuations of other companies
that we and the representatives believe to be comparable to us, estimates of
our business potential, the present state of our development and other factors
deemed relevant.

Stabilization. The representatives have advised us that, under Regulation M
under the Securities Exchange Act of 1934, some participants in the offering
may engage in transactions, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids, that may have the effect of
stabilizing or maintaining the market price of the Class A common stock at a
level above that which might otherwise prevail in the open market. A
"stabilizing bid" is a bid for or the purchase of the Class A common stock on
behalf of the underwriters for the purpose of fixing or maintaining the price
of the Class A common stock. A "syndicate covering transaction" is the bid for
or purchase of the Class A common stock on behalf of the underwriters to reduce
a short position incurred by the underwriters in connection with the offering.
A "penalty bid" is an arrangement permitting the representatives to reclaim the
selling concession otherwise accruing to an underwriter or syndicate member in
connection with the offering if the Class A common stock originally sold by the
underwriter or syndicate member is purchased by the representatives in a
syndicate covering transaction

51
<PAGE>

and has therefore not been effectively placed by the underwriter or syndicate
member. The representatives have advised us that these transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.

Affiliates. Certain affiliates of BancBoston Robertson Stephens Inc.,
HCFP/Brenner Securities, LLC and SPP Capital Partners, LLC were initial
purchasers in our offering of our Senior Subordinated Notes in July 1998, for
which they received customary compensation. An affiliate of BancBoston
Robertson Stephens Inc. and a joint marketing partner of SPP Capital Partners
are lenders in our revolving credit agreement.

LEGAL MATTERS

The validity of the shares of Class A common stock offered and certain legal
matters will be passed on for us by Salans Hertzfeld Heilbronn Christy &
Viener, New York, New York. Certain legal matters will be passed on for the
underwriters by Hale and Dorr LLP. Certain legal matters will be passed on for
the ESOP by Rosenman & Colin LLP.

EXPERTS

Arthur Andersen LLP, independent public accountants, has audited our
financial statements and schedules as of December 31, 1998 and 1997 and for the
three years ended December 31, 1998 as indicated in its audit report that is
included in this prospectus. These financial statements and schedules are
included in this prospectus in reliance on Arthur Andersen LLP's report, which
is given on its authority as an expert in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

In February 1999, we filed a registration statement on Form S-4 with the
Securities and Exchange Commission with respect to our issuance and sale of 10%
Senior Subordinated Notes. Since March 1999, we have filed an annual report on
Form 10-K and quarterly reports on Form 10-Q with the Securities and Exchange
Commission. We have also filed with the Commission a registration statement on
Form S-1 under the Securities Act with respect to the Class A common stock
being offered. This prospectus, which is a part of the registration statement,
does not contain all of the information set forth in the registration statement
and its exhibits and schedules. For further information with respect to us and
the Class A common stock offered hereby, please refer to the registration
statement and its exhibits and schedules. Statements in this prospectus
concerning the contents of any agreement or other document may not be complete.
Please refer to the exhibit or schedule for a more complete description of the
matter involved. Each statement in this prospectus relating to those documents
is qualified in its entirety by the content of those exhibits or schedules.

The registration statement, including its exhibits and schedules, may be
inspected, without charge, at the public reference facilities of the Commission
at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's regional offices located at the Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of this material can also be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549 on payment of
prescribed fees. The Commission also maintains a website that contains the
registration statement which we filed with the Commission. The address of the
website is http://www.sec.gov.

We intend to furnish holders of our Class A common stock with annual reports
containing, among other information, audited consolidated financial statements
certified by an independent public accounting firm, and we intend to make
available quarterly reports containing unaudited condensed financial
information for the first three quarters of each fiscal year. We intend to
furnish these other reports as we may determine or as may be required by law.

52
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants.................................. F-2
Consolidated Balance Sheets as of December 31, 1998 and 1997 ............. F-3
Consolidated Statements of Operations for the Years Ended December 31,
1998, 1997 and 1996 ..................................................... F-4
Consolidated Statements of Shareholders' Deficit for the Years Ended
December 31, 1998, 1997
and 1996................................................................. F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1998, 1997 and 1996 ..................................................... F-6
Notes to Consolidated Financial Statements................................ F-7
Schedule II--Valuation and Qualifying Accounts............................ F-19
Consolidated Balance Sheet as of September 30, 1999 (unaudited) .......... F-20
Consolidated Statements of Operations for the Three and Nine Months Ended
September 30, 1999
and 1998 (unaudited)..................................................... F-21
Consolidated Statements of Shareholders' Deficit for the Nine Months Ended
September 30,
1999 (unaudited)......................................................... F-22
Consolidated Statements of Cash Flows for the Nine Months Ended September
30, 1999
and 1998 (unaudited)..................................................... F-23
Notes to Unaudited Interim Consolidated Financial Statements.............. F-24
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Interep National Radio Sales, Inc.:

We have audited the accompanying consolidated balance sheets of Interep
National Radio Sales, Inc. (a New York corporation) and subsidiaries as of
December 31, 1998 and 1997, and the related consolidated statements of
operations, shareholders' deficit and cash flows for each of the three years in
the period ended December 31, 1998. These financial statements and the schedule
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Interep National Radio
Sales, Inc. and subsidiaries as of December 31, 1998 and 1997, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted
accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

Arthur Andersen LLP

New York, New York
March 12, 1999
except for Note 14, as
to which the date is December 8, 1999

F-2
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands except share information)

<TABLE>
<CAPTION>
December 31,
------------------
1998 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 32,962 $ 1,419
Receivables, less allowance for doubtful accounts of
$1,626 and $1,220 in 1998 and1997, respectively.......... 35,104 31,196
Representation contract buyouts receivable................ 11,447 10,946
Current portion of deferred representation contract
costs.................................................... 33,742 38,698
Prepaid expenses and other current assets................. 1,207 678
-------- --------
Total current assets.................................... 114,462 82,937
-------- --------
Fixed assets, net.......................................... 4,311 4,335
Deferred costs on representation contract purchases........ 45,702 36,270
Station contract rights, net............................... 1,681 2,922
Representation contract buyouts receivable................. 6,920 6,974
Other assets............................................... 11,432 7,592
-------- --------
Total assets............................................ $184,508 $141,030
======== ========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Capitalized lease obligations............................. $ 103 $ 291
Accounts payable and accrued expenses..................... 16,537 24,698
Accrued interest ......................................... 4,972 155
Representation contract buyouts payable................... 20,219 21,691
Accrued employee-related liabilities...................... 6,520 4,586
-------- --------
Total current liabilities............................... 48,351 51,421
-------- --------
Long-term debt........................................... . 100,000 44,134
-------- --------
Representation contract buyouts payable.................... 26,706 23,885
-------- --------
Other noncurrent liabilities............................... 10,673 11,753
-------- --------
Commitments and contingencies
Common and preferred stock subject to redemption:
Series A cumulative redeemable preferred stock, $.01 par
value--subject to mandatory redemption, 25,000 shares
authorized, 7,441 issued and outstanding in1997
(redemption value of $7,441 in 1997)..................... -- 6,174
Series B cumulative redeemable preferred stock, $.01 par
value--5,000 shares authorized, 1,323 issued and
outstanding in 1997 (redemption value of $1,323 in
1997).................................................... -- 750
Common stock subject to redemption--1,193,516 shares
issued and outstanding in 1997
(stated at redemption value)............................. -- 4,522
-------- --------
Total common and preferred stock subject to redemption.. -- 11,446
Shareholders' deficit:
Class A common stock, $.01 par value--20,000,000 shares
authorized, no shares issued............................. -- --
Class B common stock, $.01 par value--10,000,000 shares
authorized, 6,976,761 shares issued in both
1998 and 1997............................................ 70 70
Additional paid-in-capital................................ 1,107 582
Accumulated deficit....................................... (320) (137)
Receivable from Employee Stock Ownership Plan............. (82) (182)
Treasury stock, at cost--1,079,716 and 730,419 shares in
1998 and 1997, respectively.............................. (1,997) (1,942)
-------- --------
Total shareholders' deficit............................. (1,222) (1,609)
-------- --------
Total liabilities and shareholders' deficit............. $184,508 $141,030
======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.

F-3
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

<TABLE>
<CAPTION>
For the Year Ended
December 31,
--------------------------
1998 1997 1996
-------- -------- -------
<S> <C> <C> <C>
Commission revenues................................ $ 87,735 $ 87,096 $72,858
Contract termination revenue....................... 37,221 26,586 18,876
-------- -------- -------
Total revenues................................... 124,956 113,682 91,734
-------- -------- -------
Operating expenses:
Selling expenses................................... 61,618 63,135 53,251
General and administrative expenses................ 11,864 12,541 9,626
Depreciation and amortization expense.............. 36,436 28,954 20,988
-------- -------- -------
Total operating expenses......................... 109,918 104,630 83,865
-------- -------- -------
Operating income................................... 15,038 9,052 7,869
Interest expense, net.............................. 6,744 3,779 3,911
-------- -------- -------
Income before provision for income taxes........... 8,294 5,273 3,958
Provision for income taxes......................... 3,446 2,359 1,885
-------- -------- -------
Net income......................................... 4,848 2,914 2,073
Preferred stock dividend requirements and
redemption premium................................ 5,031 1,590 1,364
-------- -------- -------
Net (loss) income applicable to common
shareholders...................................... $ (183) $ 1,324 $ 709
======== ======== =======
Basic (loss) earnings per share.................... $ (0.03) $ 0.18 $ 0.09
======== ======== =======
Diluted (loss) earnings per share.................. $ (0.03) $ 0.17 $ 0.09
======== ======== =======
</TABLE>

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

F-4
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
(in thousands, except per share data)

<TABLE>
<CAPTION>
Class B
Common Stock Treasury Stock
---------------- ----------------
Additional
Paid-in Accumulated Receivable
Shares Amount Capital Deficit from ESOP Shares Amount
--------- ------ ---------- ----------- ---------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1,
1996................... 6,746,905 $67 $ 841 $(1,780) $(188) 81,765 $ 392
Net income.............. -- -- -- 2,073 -- -- --
Treasury stock
purchases.............. -- -- -- -- -- 384,403 1,344
Accretion of preferred
stock.................. -- -- -- (640) -- -- --
Accrued dividends in-
kind on preferred
stock.................. -- -- -- (724) -- -- --
Increase of receivable
from ESOP.............. -- -- -- -- (67) -- --
Revaluation of common
stock subject to
redemption............. -- -- -- (530) -- -- --
--------- --- ------ ------- ----- --------- ------
Balance, December 31,
1996................... 6,746,905 67 841 (1,601) (255) 466,168 1,736
Net income.............. -- -- -- 2,914 -- -- --
Treasury stock
purchases.............. -- -- -- -- -- 264,251 206
Accretion of preferred
stock.................. -- -- -- (793) -- -- --
Accrued dividends in-
kind on preferred
stock.................. -- -- -- (797) -- -- --
Reduction of receivable
from ESOP.............. -- -- -- -- 73 -- --
Revaluation of common
stock subject to
redemption............. -- -- -- 140 -- -- --
Exercise of stock
options................ 229,856 3 (259) -- -- -- --
--------- --- ------ ------- ----- --------- ------
Balance, December 31,
1997................... 6,976,761 70 582 (137) (182) 730,419 1,942
Net income.............. -- -- -- 4,848 -- -- --
Treasury stock
purchases.............. -- -- -- -- -- 150,347 302
Accretion of preferred
stock.................. -- -- -- (492) -- -- --
Accrued dividends in-
kind on preferred
stock.................. -- -- -- (442) -- -- --
Reduction of receivable
from ESOP.............. -- -- -- -- 100 -- --
Earned compensation,
executive stock
options................ -- -- 753 -- -- -- --
Redemption of preferred
stock and common stock
subject to redemption.. -- -- (228) (4,097) -- 198,950 (247)
--------- --- ------ ------- ----- --------- ------
Balance, December 31,
1998................... 6,976,761 $70 $1,107 $ (320) $ (82) 1,079,716 $1,997
========= === ====== ======= ===== ========= ======
</TABLE>

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

F-5
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
For the Year Ended
December 31,
----------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income..................................... $ 4,848 $ 2,914 $ 2,073
Adjustments to reconcile income to net cash
provided by operating activities:
Depreciation and amortization.................. 36,436 28,954 20,988
Stock option compensation expense.............. 753 -- --
Changes in assets and liabilities--
Receivables.................................... (3,908) (4,487) (1,450)
Representation contracts buyout receivable..... (447) (5,966) 9,471
Prepaid expenses and other current assets...... (529) 243 654
Other noncurrent assets........................ (5,259) 954 (5,211)
Accounts payable and accrued expenses.......... (8,161) (809) 9,984
Accrued interest............................... 4,817 13 (482)
Accrued employee-related liabilities........... 1,934 2,457 (383)
Other noncurrent liabilities................... (1,080) (452) 338
-------- -------- --------
Net cash provided by operating activities.... 29,404 23,821 35,982
-------- -------- --------
Cash flows from investing activities:
Additions to fixed assets...................... (1,270) (792) (1,021)
-------- -------- --------
Net cash used in investing activities........ (1,270) (792) (1,021)
-------- -------- --------
Cash flows from financing activities:
Station representation contracts payments...... (35,609) (33,991) (31,427)
Debt repayments.............................. . (61,572) (6,100) (1,820)
Borrowings in accordance with credit
agreement..................................... 17,250 16,519 1,341
Issuance of senior subordinated notes.......... 100,000 -- --
Redemption of preferred stock and common stock
subject to redemption......................... (16,705) -- --
Sales and issuances of stock, net of issuance
costs......................................... -- (256) --
Purchases of treasury stock.................... (55) (206) (1,344)
Other, net..................................... 100 (229) (810)
-------- -------- --------
Net cash provided by (used in) financing
activities.................................. 3,409 (24,263) (34,060)
-------- -------- --------
Net increase (decrease) in cash and cash
equivalents................................... 31,543 (1,234) 901
Cash and cash equivalents, beginning of
period........................................ 1,419 2,653 1,752
-------- -------- --------
Cash and cash equivalents, end of period....... $ 32,962 $ 1,419 $ 2,653
======== ======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest paid.................................. $ 2,387 $ 3,220 $ 3,274
Income taxes paid, net......................... 341 235 628
Non-cash investing and financing activities:
Station representation contracts acquired...... $ 36,958 $ 67,168 $ 39,342
======== ======== ========
</TABLE>

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

F-6
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except share information)

1. Summary of Significant Accounting Policies

Principles of Consolidation

Revenue Recognition

The Company is a national representation ("rep") firm serving radio
broadcast clients throughout the United States. Commission revenue is derived
from sales of advertising time for radio stations under representation
contracts. Commissions and fees are recognized in the month the advertisement
is broadcast. In connection with its unwired network business, the Company
collects fees for unwired network radio advertising and, after deducting its
commissions, remits the fees to the respective radio stations. Since it is
common practice in the industry for rep companies not to pay a station until
the corresponding receivable is paid, and since the receivable and payable are
equal, except for the commissions, fees payable to stations have been offset
against the related receivable from advertising agencies in the accompanying
consolidated balance sheets.

In accordance with industry practice, commissions are recognized based on
the standard broadcast calendar that ends on the last Sunday in each reporting
period. The broadcast calendar for the calendar years ended December 31, 1998,
1997 and 1996 had 52 weeks.

Representation Contract Termination Revenue and Contract Acquisition Costs

The Company's station representation contracts usually renew automatically
from year to year unless either party provides written notice of termination at
least twelve months prior to the next automatic renewal date. In accordance
with industry practice, in lieu of termination, an arrangement is normally made
for the purchase of such contracts by a successor representative firm. The
purchase price paid by the successor representation firm is generally based
upon the historic commission income projected over the remaining contract
period plus two months (the "Buyout Period").

Costs of obtaining station representation contracts are deferred and
amortized over the Buyout Period. Such amortization is included in the
accompanying consolidated statements of operations as a component of
depreciation and amortization expense. Amounts which are to be amortized during
the next year are included as current assets in the accompanying consolidated
balance sheets. Income earned from the loss of station representation contracts
(contract termination revenue) is recognized on the effective date of the
buyout agreement.

In addition, costs incurred as a result of commission rate reductions are
deferred and amortized over the remaining life of the existing representation
agreement. Such amortization is included in the accompanying consolidated
statements of operations as a component of depreciation and amortization
expense.

Fixed Assets, net

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

F-7
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands except share information)

Depreciation and Amortization Expense

A summary of depreciation and amortization expense for the years ended
December 31, 1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Depreciation and amortization of office
facilities.................................. $1,294 $1,587 $1,796
Amortization of contract acquisition costs... 32,482 24,603 16,562
Amortization of intangible assets............ 2,660 2,764 2,630
------- ------- -------
$36,436 $28,954 $20,988
======= ======= =======
</TABLE>

Cash and Cash Equivalents

Cash equivalents consist of cash in excess of daily requirements which are
invested in overnight deposits.

Station Contract Rights, Net

Station contract rights consist of costs of purchased businesses in excess
of net tangible assets acquired and are stated at cost less accumulated
amortization. These costs are being amortized using the straight-line method
over 5 years. Amortization expense for 1998, 1997 and 1996 was $959, $978 and
$1,206, respectively, and is included in the above table. Other intangible
assets include noncompete agreements which are being amortized over their
contractual lives of two to four years.

Recoverability of intangible assets is assessed regularly (at least
annually) and impairments, if any, are recognized in operating results if a
permanent diminution in value were to occur based upon an undiscounted cash
flow analysis. The Company has determined that no such impairment exists.

Employee Stock Ownership Plan

The Company has an Employee Stock Ownership Plan ("ESOP") for eligible
employees. Cash contributions made by the Company to the ESOP are recorded as
compensation expense and stock repurchases made by the Company from the ESOP
are recorded in treasury stock. Any outstanding receivable to the Company from
the ESOP is recorded as a reduction to shareholders' equity and shares of the
Company's stock owned by the ESOP are treated as outstanding common stock.

Earnings (Loss) per Share

Basic earnings (loss) per share (EPS) for each of the respective years have
been computed by dividing the net income (loss) applicable to common
shareholders by the weighted average number of common shares outstanding
during the year. Basic EPS has been computed using the weighted average shares
of common stock outstanding of 6,743,803, 7,476,228 and 7,684,060 for the
years ended December 31, 1998, 1997 and 1996, respectively. Diluted EPS
reflects the potential dilution that could occur if the outstanding options to
purchase common stock were exercised. Diluted EPS has been computed using the
weighted average shares of common stock outstanding of 6,743,803, 7,663,874
and 7,961,057 for the years ended December 31, 1998, 1997 and 1996,
respectively.

Income Taxes

Income taxes are recognized during the year in which transactions enter
into the determination of financial statement income, with deferred taxes
being provided for temporary differences between amounts of assets and
liabilities recorded for tax and financial reporting purposes.

F-8
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands except share information)

Use of Estimates

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

2. New Accounting Pronouncements

In 1998, the Company adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 establishes new
rules for the reporting and displaying of comprehensive income and its
components. The Company has no material items of comprehensive income for the
periods presented.

In 1998, the Company adopted Statement of Financial Accounting Standards No.
131, "Disclosure about Segments of an Enterprise and Related Information". The
Statement requires the Company to report segment financial information
consistent with the presentation made to the Company's management for decision
making purposes. The Company is managed as one segment and all revenues are
derived solely from radio representation operations and related activities. The
Company's management decisions are based on operating cash flow of $29,404,
$23,821, and $35,982 in 1998, 1997 and 1996, respectively, general and
administrative expenses of $11,864, $12,541 and $9,626 in 1998, 1997, and 1996,
respectively, and EBITDA (income before interest, taxes, depreciation and
amortization) of $51,474, $38,006, and $28,857 in 1998, 1997, and 1996,
respectively.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). The Statement establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet and measured at its fair value. This Statement also requires
that changes in the derivative's fair value be recognized currently in
earnings. To date, the Company has not, and has no present intention, to invest
in any derivative instruments or participate in any hedging activities.
Accordingly, the adoption of SFAS 133 will not have any effect on the Company.

3. Fixed Assets

Fixed assets are comprised of the following:

<TABLE>
<CAPTION>
December 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
Furniture and equipment............................. $ 11,318 $ 10,159
Leasehold improvements.............................. 5,889 5,778
Equipment held under lease.......................... 3,461 3,461
-------- --------
20,668 19,398
Less-Accumulated depreciation and amortization...... (16,357) (15,063)
-------- --------
Fixed assets, net................................... $ 4,311 $ 4,335
======== ========
</TABLE>

4. Accounts Payable

The Company utilizes a cash management system whereby overnight investments
are determined daily. Included in accounts payable are $7,218 and $5,580 of
book overdrafts as of December 31, 1998 and 1997, respectively, which result
from this cash management program.

F-9
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands except share information)

5. Employee Stock Plans

Employee Stock Ownership Plan

Under the terms of the Company's nonleveraged Employee Stock Ownership Plan
("ESOP") and Trust ("ESOT"), the Company may make annual contributions to the
ESOT in the form of either cash or Class B common stock of the Company for the
benefit of eligible employees. In lieu of contributions, the Company may
repurchase shares of Class B common stock from the ESOP or advance money to the
plan from time to time. The amount of annual funding is at the discretion of
the Board of Directors of the Company except that the minimum amount must be
sufficient to enable the ESOT to meet its current obligations. No cash
contributions were made by the Company in 1998, 1997 and 1996 and consequently
no compensation cost was incurred during 1998, 1997 or 1996. In lieu of
contributions during 1998, 1997 and 1996, the Company loaned money to the ESOP.
At December 31, 1998 and 1997, $82 and $182, respectively, of this advance
remained outstanding and is recorded as a reduction of shareholders' equity.
The ESOP intends to repay the Company through the proceeds of the sale of
company stock to the Interep Radio Store Stock Growth Plan (the "Stock Growth
Plan"). Substantially all assets of the ESOT consist of Class B common shares
of the Company, and the ESOT currently has no alternative method to fund its
payment to participants except through Company funding (see the Stock Growth
Plan below).

Pursuant to the ESOP, as amended, employees of the Company and each of its
subsidiaries are eligible to participate, subject to certain uniform
requirements. Upon leaving the Company, employees may sell the shares back to
the ESOT at the then fair market value of the Company's Class B common stock;
related distributions are made in quarterly installments over a period not to
exceed five years, depending upon the former employee's total account balance.
The portion of the vested liability relating to terminated employees as of
December 31, 1997 was $4,480 and is payable over a one to five-year period. As
discussed in Note 9, the independent appraisal as of December 31, 1998 has not
yet been completed.

The Company has purchased life insurance policies on certain of its
executives for which Interep is the beneficiary. Proceeds from these policies
will be used to partially fund payments under the ESOP for these executives.
Such policies had a cash surrender value of $2,839 and $2,405 as of December
31, 1998 and 1997, respectively, with no offsetting loans.

As of December 31, 1998 and 1997, the Company's ESOP owned 4,172,594 and
4,667,390 Class B common shares, respectively, representing approximately 70.8%
and 75%, respectively, of the Company's total shares outstanding, before
consideration of common stock equivalents. All shares owned by the ESOP as of
December 31, 1998 and 1997 were allocated and earned.

Stock Growth Plan

On January 1, 1995, the Company established the Stock Growth Plan, a
qualified stock bonus plan through which a portion of qualified employee
compensation is allocated to the plan. Participation in the Stock Growth Plan
is mandatory and non-contributory for all eligible employees. Stock Growth Plan
participants are at all times fully vested in their accounts without regard to
age or years of service. The Company, through employee withholdings, makes
regular quarterly cash contributions to the Stock Growth Plan. For the years
ended December 31, 1998, 1997 and 1996, the Company recorded compensation
expense of $2,521, $2,886 and $1,882, respectively in relation to these
contributions. Contributions to the Stock Growth Plan are used to repurchase
shares of Interep Class B common stock from the ESOP, the Interep Radio Store
Wealth Attainment Plan (the "401(k) Plan") and shares held by terminated
employees. Shares owned by the Stock Growth Plan are recorded as outstanding
stock of the Company. Distributions to participants will be made in cash upon

F-10
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands except share information)

termination of employment over a period not to exceed three years. The Stock
Growth Plan purchased 494,796, 508,713 and 477,243 shares from the ESOP in
1998, 1997 and 1996, respectively. The weighted average fair value of stock
purchased by the plan during 1998, 1997 and 1996 was $4.01, $3.94 and $3.85,
respectively, based on independent appraisals.

Stock Options

A summary of the stock options outstanding during the years ended December
31, 1998, 1997 and 1996 is set forth below:

<TABLE>
<CAPTION>
Number of Weighted
Shares Subject Average
to Option Exercise Price
-------------- --------------
<S> <C> <C>
Outstanding at December 31, 1995.......... 1,445,647 $2.98
Exercised during 1996..................... (208,960) 2.77
--------- -----
Outstanding and exercisable at December
31, 1996................................. 1,236,687 3.01
Exercised during 1997..................... (229,856) 2.77
--------- -----
Outstanding and exercisable at December
31, 1997................................. 1,006,831 3.07
Granted during 1998, at prices less than
fair market value........................ 3,291,119 3.99
Redeemed during 1998...................... (66,511) 3.91
--------- -----
Outstanding at December 31, 1998.......... 4,231,439 3.77
--------- -----
Options exercisable at December 31, 1998.. 1,776,159 3.38
--------- -----
</TABLE>

The following table summarizes information regarding the stock options
outstanding at December 31, 1998, pursuant to the terms of the Plan:

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------------------------------------------------
Exercise Remaining Exercise
At December 31, 1998 Price Contractual Life At December 31, 1998 Price
------------------------ -------- ---------------- -------------------- --------
<S> <C> <C> <C> <C>
208,960............... $1.56 7 Years 208,960....... $1.56
313,440............... 2.77 7 Years 313,440....... 2.77
417,920............... 3.91 7 Years 417,920....... 3.91
835,839............... 3.80 9.5 Years 835,839....... 3.80
----------------
1,985,119............... 4.02 9.5 Years 1,776,159
================
470,161............... 4.20 10 Years
------------------------
4,231,439
========================
</TABLE>

Compensation expense of $753 was recognized in 1998, which represents the
difference between fair market value and the option exercise price on the date
of grant. Under generally accepted accounting principles this also resulted in
a credit to additional paid in capital.

In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 123, "Accounting for Stock-Based Compensation." The Company
adopted the disclosure provisions of FASB Statement No. 123 in 1996, but opted
to remain under the expense recognition provisions of Accounting Principles
Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," in
accounting for stock option plans. Had compensation expense for stock options
granted under the Plan been determined based on

F-11
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands except share information)

fair value at the grant dates consistent with the disclosure method required in
accordance with FASB Statement No. 123, the Company's net income for 1998 would
have been decreased to the proforma amounts shown below:

<TABLE>
<CAPTION>
Net income Per share
---------- ---------
<S> <C> <C>
As reported.............................................. $4,848 $0.72
Pro forma................................................ 3,139 0.47
</TABLE>

There would have been no impact on 1997 or 1996 reported results as all
options granted in previous years vested 100% on the grant dates, and no
options were granted in 1997 or 1996.

The weighted average fair value of options granted in 1998 of $1.91 was
estimated as of the date of grant using the Black-Scholes stock option pricing
model, based on the following weighted average assumptions: weighted average
risk free interest rate of 5.55%, dividend yield of 0%, volatility of 0% and
expected term of 10 years.

6. Employee Benefit Plans

Managers' Incentive Compensation Plans

The Company maintains various managers' incentive compensation plans for
substantially all managerial employees. The plans provide for incentives to be
earned based on attainment of threshold operating profit and market share goals
established each year, as defined. The Company provided approximately $5,071,
$4,551 and $3,030 for such compensation during 1998, 1997 and 1996,
respectively.

401(k) Plan

The Company has a defined contribution plan, the 401(k) Plan, which covers
substantially all employees who have completed one year of service with the
Company. Under the terms of the 401(k) Plan, the Company may contribute a
matching contribution percentage determined by, and at the discretion of, the
Board of Directors but not in excess of the maximum amount deductible for
federal income tax purposes. Company contributions vest to the employees at 20%
per year over a five-year period. The Company provided $892, $728 and $641 in
the form of cash in 1998, 1997 and 1996, respectively.

As of December 31, 1996, the 401(k) Plan owned 439,422 Class B common
shares, representing approximately 6% of the Company's total shares
outstanding, before consideration of common stock equivalents. During 1996, the
Company repurchased 82,497 Class B common shares, from the 401(k) Plan relating
to terminated employees. During 1997, the ESOP purchased all remaining shares
held by the 401(k) Plan.

Deferred Compensation Plans

Certain of Interep's subsidiaries maintain deferred compensation plans which
cover employees selected at the discretion of management. Participants are
entitled to deferred compensation and other benefits under these plans. In
1998, 1997, and 1996, the Company provided compensation expense of $72, $14 and
$14, respectively related to these plans. The Company did not provide any
compensation expense in 1998. All amounts due under these plans were fully
vested as of December 31, 1998 and are recorded as liabilities on the Company's
consolidated balance sheet; however, they remain subject to further
appreciation/depreciation upon changes in value (as defined).

F-12
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands except share information)

The Company has agreements with several of its employees to provide
supplemental income benefits. The benefits under these plans were fully vested
as of December 31, 1998. The Company provided $226, $262 and $476 in 1998, 1997
and 1996, respectively, for these plans which principally represented interest
on the vested benefits.

In 1994, the Company established a compensation deferral plan for key
executives. Participants made a one-time election to defer certain of their
compensation and have such amounts contributed to a tax-deferred trust in the
form of Series B Cumulative Redeemable Preferred Stock (the "Series B Preferred
Stock") and Interep common stock. No contributions were made in 1998, 1997 or
1996. The Company redeemed all of the outstanding Series B Preferred Stock and
redeemable common stock during 1998. Distribution to participants out of the
trust are being made in cash. As of December 31, 1998, the Company has $1,424
classified as accrued employee-related liabilities on the accompanying
consolidated balance sheet relating to the redemption.

Other

The Company has life insurance policies on certain of its executives for
which Interep is the beneficiary. Proceeds from these policies will be used to
partially fund certain of the retirement benefits under these supplemental
agreements. Such policies had cash surrender values of $1,229 and $1,115 as of
December 31, 1998 and 1997, respectively, and offsetting loans of $793 and
$673, respectively.

7. Income Taxes

Interep and its subsidiaries file a consolidated federal tax return.
However, for state tax purposes, separate tax returns are filed in various
jurisdictions where losses on certain subsidiaries are not available to offset
income on other subsidiaries, and tax benefits on such losses may not be
realized. As a result, the consolidated tax provisions are determined
considering this tax reporting structure and may not fluctuate directly with
consolidated pretax income.

Components of the provisions for income taxes are as follows:

<TABLE>
<CAPTION>
Year Ended December
31,
--------------------
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Current:
Federal............................................. $ 240 $ -- $ --
State............................................... 252 412 400
Deferred............................................ 2,954 1,947 1,485
------ ------ ------
Total provision................................... $3,446 $2,359 $1,885
====== ====== ======
</TABLE>

A reconciliation of the U.S. federal statutory tax rate to the effective tax
rate on the income before income taxes for the periods ended December 31, 1998,
1997 and 1996, is as follows:

<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Provision computed at the federal statutory rate
of 34%.......................................... $2,820 $1,793 $1,346
State and local taxes, net of federal income tax
benefit......................................... 292 272 264
Nondeductible travel and entertainment expense... 303 249 298
Nondeductible insurance premiums................. (102) 45 (23)
Other............................................ 133 -- --
------ ------ ------
Total.......................................... $3,446 $2,359 $1,885
====== ====== ======
</TABLE>

F-13
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands except share information)

Temporary differences and carryforwards which gave rise to deferred tax
assets and liabilities at December 31, 1998 and 1997, are as follows:

<TABLE>
<CAPTION>
December 31,
-------------
1998 1997
------ ------
<S> <C> <C>
Deferred tax assets:
Depreciation and amortization............................... $1,460 $1,349
Accruals not currently deductible for tax purposes.......... 3,190 2,603
Consolidated net operating loss carryforward................ -- 2,543
Other....................................................... 884 --
------ ------
5,534 6,495
------ ------
Deferred tax liabilities:
Buyout receivable........................................... 7,347 6,093
Unamortized representation contracts........................ 6,167 4,410
Other....................................................... 344 1,362
------ ------
Net deferred tax liability.................................. $8,324 $5,370
====== ======
</TABLE>

As of December 31, 1998, the Company had $492 of accrued taxes on its books.
As of December 31, 1997, the Company has a refund receivable of $110. The
Company utilized all net operating loss carryforwards in 1998.

8. Long-Term Debt

Long-term debt at December 31, 1998 and 1997, includes the following:

<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Senior subordinated notes(a)............................ $100,000 $ --
Borrowings under revolving credit facility(b)........... -- 44,000
-------- -------
100,000 44,000
Capitalized lease obligations(c)........................ 103 425
-------- -------
100,103 44,425
Less-Current portion.................................... 103 291
-------- -------
$100,000 $44,134
======== =======
</TABLE>
- --------
(a) On July 2, 1998, the Company issued (the "Offering") $100,000,000 aggregate
principal amount of 10.0% Senior Subordinated Notes (the "Notes") due on
July 1, 2008. The Notes are general unsecured obligations of the Company,
and the indenture agreement for the Notes stipulates, among other things,
restrictions on incurrence of additional indebtedness, payment of
dividends, repurchase of equity interests(as defined), creation of liens
(as defined), transactions with affiliates (as defined), sale of assets or
certain mergers and consolidations. The Notes bear interest at the rate of
10.0% per annum, payable semiannually in arrears on January 1 and July 1 of
each year, commencing on January 1, 1999. The Notes are subject to
redemption at the option of the Company, in whole or in part, at any time
after July 1, 2003. In addition, at any time and from time to time prior to
July 1, 2001, the Company may redeem up to an aggregate of 30% in principal
amount of Notes originally issued under the indenture agreement at a
redemption price equal to 110.0% of the principal amount thereof, plus
accrued and unpaid interest and liquidated damages, if any, with the net
cash proceeds of one or more equity offerings (as defined). All of

F-14
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands except share information)

the Company's now existing subsidiaries are guarantors of these Notes and
all guarantor subsidiaries are wholly owned by the Company. The guarantee
is full, unconditional, joint and several with other guarantor
subsidiaries. The Company has no other assets or operations separate from
its investment in the subsidiaries.

A portion of the net proceeds of the Offering were used to refinance bank
indebtedness and to redeem all of the outstanding shares of Series A and
Series B cumulative redeemable preferred stock and all of the outstanding
shares of the common stock subject to redemption.

In addition, on July 2, 1998, the Company entered into a $10.0 million
revolving credit facility (the "New Credit Facility") with BankBoston, N.A.
("BankBoston") and Summit Bank ("Summit"). The term of the New Credit
Facility is six years. The lenders under the New Credit Facility are
BankBoston, Summit and any other lenders reasonably acceptable to the
Company, with BankBoston acting as administrative agent. The New Credit
Facility requires the Company to pay a commitment fee at a rate per annum
equal to .375% to .50%, depending upon certain financial ratios, of the
unutilized amount available under the facility. As of December 31, 1998,
there was no amount outstanding under the New Credit Facility. The Company
capitalized $4,389 of the costs incurred in the Offering of which, $205 has
been expensed in 1998.

(b) In 1997, the Company entered into an Amended and Restated Revolving Line
of Credit Agreement (the "Credit Agreement") which provided for borrowings
of up to $55,000. The Credit Agreement replaced the 1995 secured senior
financing facility. Unamortized debt issue costs relating to the 1995
secured senior financing facility of $186 were written off in conjunction
with the refinancing. The Credit Agreement was terminated in 1998 and was
replaced by the Notes and New Credit Facility. Unamortized debt issue
costs relating to the 1997 Credit Agreement of $709 were written off in
conjunction with the refinancing.

The weighted average interest rate charged to the Company under the 1997
Credit Agreement was 7.6% in 1998 and 8.8% in both 1997 and 1996.

(c) Certain of the Company's office furniture and equipment is rented under
lease arrangements expiring between 1998 and 2000. Such leases have been
capitalized, and the discounted obligations have been reflected as
liabilities in the accompanying consolidated balance sheets. Amortization
of capital lease assets is included in depreciation expense. Future
payments under these leases are as follows:

<TABLE>
<S> <C>
1999................................................................ 197
2000................................................................ 13
Thereafter.......................................................... --
----
210
Less--Amount representing interest.................................. 107
----
Present value of net minimum lease payments......................... $103
====
</TABLE>

9. Common and Preferred Stock Subject to Redemption

On June 29, 1998, the Company redeemed all of the outstanding shares of its
Series A Preferred Stock, at face value plus accrued dividends, and certain
associated shares of its common stock, for a total purchase price of $14.1
million. Also on that date, the Company redeemed all of the outstanding shares
of its Series B Preferred Stock, at face value plus accrued dividends, and
certain associated shares of Common Stock, from certain members of management,
for a total purchase price of $2.6 million. The excess of the purchase price
over the carrying amount of the redeemable stock at June 29, 1998 of $4,325
has been charged to additional paid in capital to the extent applicable with
the remainder charged to retained earnings.

F-15
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands except share information)

Accretion of the Series A Preferred Stock in 1998, 1997 and 1996 was $457,
$735 and $590, respectively. Accretion of the Series B Preferred Stock in 1998,
1997 and 1996 was $35, $58 and $50, respectively. Dividends-in-kind on the
Series A Preferred Stock in 1998, 1997 and 1996 were $372, $676 and $615,
respectively (consisting of 372, 676 and 615 shares, respectively). Dividends-
in-kind on the Series B Preferred Stock for 1998, 1997 and 1996 were $70, $121
and $109, respectively (consisting of 70, 121 and 109 shares, respectively).

The Company has traditionally repurchased the shares of its common stock
held by departing employees outside the ESOP at a price equal to the then
independently appraised value. The purchase price is payable in quarterly
installments, including interest at rates prevailing for U.S. Treasury
securities, over a one to five-year period depending upon the total value of
the shares. During 1998, 1997 and 1996, in connection with employee
terminations, the Company repurchased 67,849, 264,251 and 384,403 shares of
common stock, respectively, at a price equal to the then fair market value of
the shares. The independent appraisal as of December 31, 1997 and 1996 was
$3.80 and $3.79, respectively.

10. Related Party Transactions

Since December 1979, the Company has leased from a trust, of which one of
its executives is an income beneficiary and one of its executives is the
trustee, a building which is used by the Company for training sessions and
management meetings. The current lease expires on December 31, 2009 and
provides for a base annual rental which is adjusted each year to reflect
inflation and actual usage. Total lease expense was $74 in 1998, 1997 and 1996.

At December 31, 1998 and 1997, an executive was indebted to Interep in the
total amount of $201 and $170, respectively (including accrued interest), which
is evidenced by a promissory note payable to Interep. This note bears variable
interest at the lowest rate permitted for federal income tax purposes, which
was 4.33% and 5.68% at December 31, 1998 and 1997, respectively, and is due in
equal annual installments of principal and interest through December 31, 1999.

As of December 31, 1998, an executive was indebted to Interep in the total
of $489 by execution of promissory notes payable to the Company in annual
installments of $200 and bearing interest at a fluctuating rate equal to the
prime commercial lending rate plus 1%.

From June 1997 to December 1997, Interep was indebted to an executive of the
Company for amounts up to $2,000 plus interest. The interest expense incurred
is included in the consolidated statements of operations for 1997.

In 1997, the Company entered into an agreement with Media Financial
Services, Inc., an affiliate of one of the Company's executives, whereby Media
Financial Services provides financial and accounting services to the Company.
The fee for these services amounted to approximately $2,600 and $1,435 in 1998
and 1997, respectively.

The Company believes the terms of the arrangements relating to the building
rental, indebtedness and accounting services are at least comparable to, if not
more favorable for the Company, than the terms which would have been obtained
in transactions with unrelated parties.

11. Commitments and Contingencies

At December 31, 1998, the Company was committed under operating leases,
principally for office space, which expire at various dates through 2009.
Certain leases are subject to rent reviews and require payment of

F-16
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands except share information)

expenses under escalation clauses. Rent expense was $4,292, $4,266 and $4,145
in 1998, 1997 and 1996, respectively. The noncash portion of rent expense was
$114, $85 and $89 for 1998, 1997 and 1996, respectively. Future minimum rental
commitments under noncancellable leases are as follows:

<TABLE>
<S> <C>
1999............................................ $4,114
2000............................................ 4,121
2001............................................ 4,124
2002............................................ 4,217
2003............................................ 3,996
Thereafter...................................... 9,692
</TABLE>

The Company has employment agreements with certain of its officers and
employees for terms ranging from three to six years with annual compensation
aggregating approximately $1,680. These agreements include escalation clauses
(as defined) and provide for certain additional bonus and incentive
compensation.

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

The Company has long term representation contract buyouts payable due over
the next five years, as follows:

<TABLE>
<S> <C>
December 31,
1999........................................... $20,219
2000........................................... 12,308
2001........................................... 7,394
2002........................................... 2,684
2003........................................... 1,468
Thereafter..................................... 2,852
</TABLE>

12. Supplemental Information

Interest expense is shown net of interest income of $864, $109 and $138 in
1998, 1997 and 1996, respectively.

One broadcast group (a different group in 1996) contributed approximately
29.0%, 28.7% and 13.1% of the Company's total revenues in 1998, 1997 and 1996,
respectively. No other client group contributed revenues in excess of 10% in
1998, 1997 or 1996.

In 1998 and 1997, contract buyout receivables from one group of radio rep
firms represented $16,926 and $17,425, respectively, of the Company's total
contract buyout receivables.

In 1997, the Company relocated its accounting department from New York to
Florida. Severance and relocation costs in connection with this move totaled
$1,350.

13. Fair Value of Financial Instruments

The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments." The estimated fair

F-17
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands except share information)

value amounts have been determined by the Company using available market
information and appropriate valuation methodologies. However, considerable
judgment is necessarily required in interpreting market data to develop the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.

<TABLE>
<CAPTION>
December 31, 1998
-------------------
Carrying Estimated
Amount Fair Value
-------- ----------
<S> <C> <C>
Assets:
Cash and cash equivalents............................ $32,962 $32,962
Liabilities:
Long-term debt....................................... 100,000 100,000
</TABLE>

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:

Cash and Cash Equivalents

The carrying amount approximates fair value because of the short maturity of
those instruments.

Long-Term Debt

The fair value of long-term debt is estimated based on financial instruments
or financial instruments with similar terms, credit characteristics and
expected maturities.

The fair value estimates presented herein are based on pertinent information
available to the Company as of December 31, 1998. Although the Company is not
aware of any factors that would significantly affect the estimated fair value
amounts, such amounts have not been comprehensively reevaluated for purposes of
these financial statements since that date, and current estimates of fair value
may differ significantly from the amounts presented herein.

14. Subsequent Event

On November 5, 1999, the board of directors approved a stock split of
20.8959855 for every one share outstanding to stockholders of record as of
December 8, 1999. The stock split will be effected prior to the date of the
offering. The stockholders also approved an increase in the authorized Class B
common stock to 10,000,000 shares and a decrease in its par value to $.01 as
well as the authorization of 20,000,000 shares of Class A common stock. All
share and per share numbers have been retroactively adjusted to reflect these
changes.

F-18
<PAGE>

Schedule II

INTEREP NATIONAL RADIO SALES, INC.

VALUATION AND QUALIFYING ACCOUNTS
(in thousands except share information)

<TABLE>
<CAPTION>
Additions
Balance at charged Balance at
beginning to costs and end of
of period expenses Deductions period
---------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
December 31, 1996
Allowance for Doubtful Accounts
Current receivables........... $ 880 $ 223 $(120) $ 983
December 31, 1997
Allowance for Doubtful Accounts
Current receivables........... $ 983 $ 755 $(518) $1,220
December 31, 1998
Allowance for Doubtful Accounts
Current receivables........... $1,220 $1,227 $(821) $1,626
</TABLE>

F-19
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED BALANCE SHEET
(in thousands except share information)
(Unaudited)

<TABLE>
<CAPTION>
September 30,
1999
-------------
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents...................................... $ 15,155
Receivables, less allowance for doubtful accounts of $1,106.... 29,238
Representation contract buyouts receivable..................... 8,090
Current portion of deferred representation contract costs...... 30,856
Prepaid expenses and other current assets...................... 1,122
--------
Total current assets......................................... 84,461
--------
Fixed assets, net................................................ 5,958
Deferred costs on representation contract purchases.............. 45,946
Station contract rights, net..................................... 944
Representation contract buyouts receivable....................... 4,298
Other assets.......................... .......................... 16,468
--------
Total assets........................ ........................ $158,075
========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' DEFICIT
<S> <C>
Current liabilities:
Accounts payable and accrued expenses.......................... $ 14,184
Accrued interest .............................................. 2,500
Representation contract buyouts payable........................ 17,225
Accrued employee-related liabilities........................... 4,836
--------
Total current liabilities.................................... 38,745
--------
Long-term debt................................................. . 100,000
--------
Representation contract buyouts payable.......................... 24,477
--------
Other noncurrent liabilities..................................... 5,533
--------
Commitments and contingencies
Shareholders' deficit:
Class A common stock, $.01 par value-20,000,000 shares
authorized, no shares issued.................................. --
Class B common stock, $.01 par value-10,000,000 shares
authorized, 6,976,761 shares issued........................... 70
Additional paid-in-capital..................................... 1,107
Accumulated deficit............................................ (9,848)
Treasury stock, at cost--1,082,872 shares...................... (2,009)
--------
Total shareholders' deficit.................................. (10,680)
--------
Total liabilities and shareholders' deficit.................. $158,075
========
</TABLE>

The accompanying Notes to Unaudited Interim Consolidated Financial Statements
are an integral part of this balance sheet.

F-20
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)

<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
---------------------- ---------------------
1999 1998 1999 1998
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Commission revenue............. $ 27,103 $ 24,941 $ 68,839 $ 62,943
Contract termination revenue... 2,609 713 6,351 26,679
---------- ---------- ---------- ---------
Total revenues............... 29,712 25,654 75,190 89,622
---------- ---------- ---------- ---------
Operating expenses:
Selling expenses............... 20,350 18,967 51,008 46,913
General and administrative
expenses...................... 2,885 2,940 8,071 8,286
Depreciation and amortization
expense....................... 7,072 9,451 23,318 27,292
---------- ---------- ---------- ---------
Total operating expenses..... 30,307 31,358 82,397 82,491
---------- ---------- ---------- ---------
Operating income (loss)........ (595) (5,704) (7,207) 7,131
Interest expense, net.......... 2,546 2,206 7,358 4,447
---------- ---------- ---------- ---------
(Loss) Income before (benefit)
provision for income taxes.... (3,141) (7,910) (14,565) 2,684
(Benefit) provision for income
taxes......................... (353) (3,480) (5,037) 863
---------- ---------- ---------- ---------
Net (loss) income.............. (2,788) (4,430) (9,528) 1,821
---------- ---------- ---------- ---------
Preferred stock dividend
requirements and redemption
premium....................... -- 4,101 -- 5,031
---------- ---------- ---------- ---------
Net loss applicable to common
shareholders.................. $ (2,788) $ (8,531) $ (9,528) $ (3,210)
========== ========== ========== =========
Basic loss per share........... $ (0.47) $ (0.75) $ (1.61) $ (0.47)
========== ========== ========== =========
Diluted loss per share......... $ (0.47) $ (0.75) $ (1.61) $ (0.47)
========== ========== ========== =========
</TABLE>

The accompanying Notes to the Unaudited Interim Consolidated Financial
Statements
are an integral part of these statements.

F-21
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT
(in thousands except share information)
(Unaudited)

<TABLE>
<CAPTION>
Class B
Common Stock Additional Treasury Stock
---------------- Paid-in Accumulated Receivable ----------------
Shares Amount Capital Deficit from ESOP Shares Amount
--------- ------ ---------- ----------- ---------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1,
1999................... 6,976,761 $70 $1,107 $ (320) $(82) 1,079,716 $1,997
Net loss................ -- -- -- (9,528) -- -- --
Treasury stock
purchases.............. -- -- -- -- -- 3,156 12
Reduction of receivable
from ESOP.............. -- -- -- -- 82 -- --
--------- --- ------ ------- ---- --------- ------
Balance, September 30,
1999................... 6,976,761 $70 $1,107 $(9,848) $-- 1,082,872 $2,009
========= === ====== ======= ==== ========= ======
</TABLE>

The accompanying Notes to the Unaudited Interim Consolidated Financial
Statements are an integral part of this statement.

F-22
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the
Nine Months
Ended September
30,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income...................................... $ (9,528) $ 1,821
Adjustments to reconcile (loss) income to net cash
provided by operating activities:
Depreciation and amortization.......................... 23,318 27,292
Net loss on investments................................ 64 --
Changes in assets and liabilities--
Receivables.......................................... 5,866 (2,007)
Representation contracts buyout receivable........... 5,979 4,697
Prepaid expenses and other current assets............ 85 (997)
Other noncurrent assets.............................. (202) (4,805)
Accounts payable and accrued expenses................ (2,456) (14,239)
Accrued interest..................................... (2,472) 2,340
Accrued employee-related liabilities................. (1,684) (1,055)
Other noncurrent liabilities......................... (5,140) 2,589
-------- --------
Net cash provided by operating activities.......... 13,830 15,636
-------- --------
Cash flows from investing activities:
Additions to fixed assets.............................. (2,625) (520)
Increase in other investments.......................... (4,678) --
Cash paid for acquisitions............................. (1,000) --
-------- --------
Net cash used in investing activities.............. (8,303) (520)
-------- --------
Cash flows from financing activities:
Station representation contracts payments.............. (23,404) (24,563)
Debt repayments........................................ -- (61,384)
Borrowings in accordance with credit agreement......... -- 17,250
Issuance of Senior Subordinated Notes.................. -- 100,000
Redemption of Preferred Stock & Common Stock subject to
redemption............................................ -- (16,705)
Purchases of treasury stock............................ (12) (55)
Other, net............................................. 82 182
-------- --------
Net cash used in financing activities.............. (23,334) 14,725
-------- --------
Net (decrease) increase in cash and cash equivalents..... (17,807) 29,841
Cash and cash equivalents, beginning of period........... 32,962 1,419
-------- --------
Cash and cash equivalents, end of period................. $15,155 $31,260
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest paid.......................................... $ 9,972 $ 2,235
Income taxes paid...................................... 1,191 144
Non-cash investing and financing activities:
Station representation contracts acquired.............. $ 18,182 $ 27,763
======== ========
</TABLE>

The accompanying Notes to the Unaudited Interim Consolidated Financial
Statements
are an integral part of these statements.

F-23
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except share information)

1. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Interep
National Radio Sales, Inc. ("Interep"), together with its subsidiaries
(collectively, the "Company") and have been prepared in accordance with the
rules and regulations of the Securities and Exchange Commission. Accordingly,
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. All significant intercompany transactions and
balances have been eliminated.

The consolidated financial statements of September 30, 1999 and 1998 are
unaudited; however, in the opinion of management, such statements include all
adjustments necessary for a fair presentation of the results for the periods
presented. The interim financial statements should be read in conjunction with
the audited financial statements and notes thereto included in the Company's
Consolidated Financial Statements for the year ended December 31, 1998, which
are available upon request of the Company. Due to the seasonal nature of the
Company's business, the results of operations for the interim periods are not
necessarily indicative of the results that might be expected for future interim
periods or for the full year ended December 31, 1999.

Revenue Recognition

Representation Contract Termination Revenue and Contract Acquisition Costs

F-24
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands except share information)

Earnings (Loss) Per Share

Basic earnings (loss) per share (EPS) for each of the respective periods
have been computed by dividing the net income (loss) applicable to common
shareholders by the weighted average number of common shares outstanding during
the period. Basic EPS has been computed using the weighted average shares of
common stock outstanding of 5,907,859 and 5,911,014 for the three months ended
September 30, 1999 and 1998, respectively, and 5,908,215 and 6,873,233 for the
nine months ended September 30, 1999 and 1998, respectively. Diluted EPS
reflects the potential dilution that could occur if the outstanding options to
purchase common stock were exercised. Diluted EPS has been computed using the
weighted average shares of common stock outstanding of 5,907,859 and 5,911,014
for the three months ended September 30, 1999 and 1998, respectively, and
5,908,215 and 6,873,233 for the nine months ended September 30, 1999 and 1998,
respectively.

2. New Accounting Pronouncements

3. Segment Disclosures

In 1998, the Company adopted Statement of Financial Accounting Standards No.
131, "Disclosure about Segments of an Enterprise and Related Information". The
Statement requires the Company to report segment financial information
consistent with the presentation made to the Company's management for decision
making purposes. The Company is managed as one segment and all revenues are
derived solely from radio representation operations and related activities. The
Company's management decisions are based on consolidated cash flow, (defined as
operating income before depreciation, amortization, and management fees),
general and administrative expenses of $8,071 and $8,286 for the nine months
ended September 30, 1999 and 1998, respectively, and EBITDA (income before
interest, taxes, depreciation and amortization) of $16,111 and $34,423,
respectively.

F-25
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share information)

4. Summarized Consolidating Financial Statements

The following summarized consolidating financial statements as of September
30, 1999 and December 31, 1998 and for the three and nine months ended
September 30, 1999 and 1998 present the financial position, the results of
operations and cash flows for the Company and the guarantor subsidiaries of the
Company, and the eliminations necessary to arrive at the information for the
Company on a consolidated basis.

The guarantor subsidiaries are wholly-owned subsidiaries of the Company and
have fully and unconditionally guaranteed the Company's 10.0% Senior
Subordinated Notes (the "Notes") due 2008 on a joint and several basis. The
Company has not presented separate financial statements and other disclosures
concerning the guarantor subsidiaries of the Company because management has
determined that such information is not material to investors.

<TABLE>
<CAPTION>
At September 30, 1999
--------------------------------------------
Consolidated
Company Guarantors Elimination Company
-------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Current assets.................... $ 21,523 $62,938 $ -- $ 84,461
Noncurrent assets................. 50,172 28,798 (5,356) 73,614
Current liabilities............... 17,833 20,912 -- 38,745
Noncurrent liabilities............ 104,219 25,791 -- 130,010
</TABLE>

<TABLE>
<CAPTION>
At December 31, 1998
--------------------------------------------
Consolidated
Company Guarantors Elimination Company
-------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Current assets.................... $ 46,026 $68,436 $ -- $114,462
Noncurrent assets................. 15,266 60,136 (5,356) 70,046
Current liabilities............... 19,395 28,956 -- 48,351
Noncurrent liabilities............ 108,259 29,120 -- 137,379
</TABLE>

<TABLE>
<CAPTION>
For the three months ended
September 30, 1999
-------------------------------------
Consolidated
Company Guarantors Company
-------- ---------- ------------
<S> <C> <C> <C> <C>
Commission revenue........................ $ 505 $26,598 $27,103
Contract termination revenue.............. -- 2,609 2,609
Operating (loss) income................... (10,058) 9,463 (595)
Net (loss) income......................... (12,349) 9,561 (2,788)
</TABLE>

<TABLE>
<CAPTION>
For the three months ended
September 30, 1998
-------------------------------------
Consolidated
Company Guarantors Company
-------- ---------- ------------
<S> <C> <C> <C> <C>
Commission revenue........................ $ 203 $24,738 $24,941
Contract termination revenue.............. -- 713 713
Operating (loss) income................... (10,844) 5,140 (5,704)
Net (loss) income......................... (9,682) 5,252 (4,430)
</TABLE>

F-26
<PAGE>

INTEREP NATIONAL RADIO SALES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands except share information)

<TABLE>
<CAPTION>
For the nine months ended
September 30, 1999
-------------------------------------
Consolidated
Company Guarantors Company
-------- ---------- ------------
<S> <C> <C> <C> <C>
Commission revenue........................ $ 892 $67,947 $68,839
Contract termination revenue.............. -- 6,351 6,351
Operating (loss) income................... (26,881) 19,674 (7,207)
Net (loss) income......................... (28,914) 19,386 (9,528)
</TABLE>

<TABLE>
<CAPTION>
For the nine months ended
September 30, 1998
-------------------------------------
Consolidated
Company Guarantors Company
-------- ---------- ------------
<S> <C> <C> <C> <C>
Commission revenue........................ $ 613 $62,330 $62,943
Contract termination revenue.............. -- 26,679 26,679
Operating (loss) income................... (26,787) 33,918 7,131
Net (loss) income......................... (32,423) 34,244 1,821
</TABLE>

5. Acquisitions

On September 30, 1999, the Company acquired substantially all of the assets
of Morrison and Abraham, Inc., a promotion and marketing consulting service to
the radio broadcasting industry, for approximately $1 million paid upon closing
and a maximum of $3 million to be paid contingent upon certain future
performance measures over the next five years. The Company is in the process of
completing the allocation of purchase price to the net assets acquired based on
their estimated fair values. As of September 30, 1999 the $1 million is
included in Other Assets in the accompanying consolidated balance sheet.

6. Subsequent Event

On November 5, 1999, the board of directors approved a stock split of
20.8959855 for every one share outstanding to stockholders of record as of
December 8, 1999. The stock split will be effected prior to the date of the
offering. The stockholders also approved an increase in the authorized Class B
common stock to 10,000,000 shares and a decrease in its par value to $.01 as
well as the authorization of 20,000,000 shares of Class A common stock. All
shares and per share numbers have been retroactively adjusted to reflect these
changes.

F-27
<PAGE>

INSIDE BACK COVER
[The inside back cover includes a light blue map of the United States centered
on the page on a dark blue background. The approximate location of each of our
15 major sales offices is indicated by a red dot on the map of the United
States.

Above the map, centered on the page is the following text:

Offices in All Major Media Buying Centers

Below the map, centered on the page is the following text:

15 MAJOR SALES OFFICES:

<TABLE>
<CAPTION>
Atlanta, GA Los Angeles, CA Portland, OR
<C> <C> <S>
Boston, MA Miami, FL St. Louis, MO
Chicago, IL Minneapolis, MN San Antonio, TX
Dallas, TX New York, NY San Francisco, CA
Detroit, MI Philadelphia, PA Seattle, WA]
</TABLE>

<PAGE>

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[LOGO] INTEREP

Interep National Radio Sales, Inc.

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