CHILDRENS BROADCASTING CORP, POS AM, 1997-05-23

CHILDRENS BROADCASTING CORP
POS AM, 1997-05-23
RADIO BROADCASTING STATIONS

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As filed with the Securities and Exchange Commission on May 23, 1997

Registration No. 333-18575

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________

POST-EFFECTIVE
AMENDMENT NO. 1
TO

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________________

CHILDREN'S BROADCASTING CORPORATION

(Exact name of registrant as specified in its charter)

MINNESOTA 5961 41-1663712
(State or other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification Number)
Incorporation or Classification Code
Organization) Number)

724 FIRST STREET NORTH
MINNEAPOLIS, MINNESOTA 55401
(612) 338-3300
(Address and telephone number, including area code, of
registrant's principal executive offices)

JAMES G. GILBERTSON, CHIEF OPERATING OFFICER AND TREASURER
CHILDREN'S BROADCASTING CORPORATION
724 FIRST STREET NORTH
MINNEAPOLIS, MINNESOTA 55401
(612) 338-3300

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

COPIES TO:

AVRON L. GORDON, ESQ. LANCE W. RILEY, ESQ.
BRETT D. ANDERSON, ESQ. CHILDREN'S BROADCASTING CORPORATION
BRIGGS AND MORGAN, P.A. 724 FIRST STREET NORTH
2400 IDS CENTER MINNEAPOLIS, MINNESOTA 55401
MINNEAPOLIS, MINNESOTA 55402 (612) 330-9521
(612) 334-8400
_______________

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
_______________
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: /X/

If any of the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
________________

The shares of Common Stock and Promissory Notes registered hereby may be
offered for resale by persons who receive such shares or such notes from the
Registrant in acquisitions or upon issuance of warrants, options, and other
similar securities issued by the Registrant in acquisitions.

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SUBJECT TO COMPLETION, DATED MAY 23, 1997

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there by any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.

PROSPECTUS

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CHILDREN'S BROADCASTING CORPORATION
5,000,000 SHARES COMMON STOCK
$5,000,000 PROMISSORY NOTES
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This Prospectus relates to 5,000,000 shares of Common Stock (the "Shares"),
par value $.02 per share (the "Common Stock"), of Children's Broadcasting
Corporation (the "Company") and $5,000,000 of Promissory Notes of the Company
(the "Debt Securities") that may be offered for sale and issued by the Company
from time to time, together or separately, in connection with future
acquisitions of the assets or securities of other businesses or properties in
amounts, at prices and on terms to be determined at the time of offering. The
Shares and the Debt Securities are collectively referred to herein as the
"Securities." No period of time has been fixed within which the Securities may
be offered or sold. See "Prospectus Summary -- Purpose of Offering." The
Company's Common Stock is traded on the Nasdaq National Market under the symbol
"AAHS." On May 22, 1997, the average of the high and low prices of the Common
Stock on the Nasdaq National Market System was $3.6875 per share. Current
market quotations are listed in THE WALL STREET JOURNAL and many other
newspapers of general circulation.

It is contemplated that the terms of acquisitions will be determined by
direct negotiations between the Company and the owners of the businesses or
properties to be acquired, with the Company taking into account the quality of
management, the past and potential earning power and growth of the businesses or
properties to be acquired, the market value of the Company's securities and
other relevant factors. The specific terms of the particular Securities in
respect of which this Prospectus is being delivered will be set forth in the
applicable Prospectus Supplement or Post-Effective Amendment, including, where
applicable, (i) in the case of Shares, the number of Shares and the terms of
offering thereof and (ii) in the case of Debt Securities, the title, aggregate
principal amount, denominations, maturity, any interest rate (which may be fixed
or variable) and time of payment of any interest, any terms for redemption at
the option of the Company or the holder, any terms for sinking fund payments,
any listing on a securities exchange and any other terms in connection with the
offering and sale of the Debt Securities, as well as the initial public offering
price. The Company's management anticipates that the terms of acquisitions
involving the issuance of Securities will be determined by direct negotiations
with the owners or controlling persons of the businesses being acquired and that
any Shares issued in the acquisitions will be valued at prices reasonably
related to quoted market prices for the Common Stock reported as of one or more
times during the period beginning on the date the terms of the acquisitions are
agreed upon and ending on the date the Shares are issued and delivered. No
underwriting discounts or commissions will be paid, although finders' fees may
be paid from time to time in connection with certain acquisitions. Any person
receiving finders' fees may be deemed to be an underwriter within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
may not be used in connection with public reoffers and resales by persons who
will receive Securities covered by this Prospectus and who may be deemed to be
underwriters within the meaning of Section 2(11) of the Securities Act prior to
the amendment or supplementation of this Prospectus, if required, to name such
persons as selling shareholders and to provide other information. Otherwise,
any person deemed to be an underwriter may publicly resell or reoffer such
Securities only: (i) by means of a separate Registration Statement filed with
the Securities and Exchange Commission (the "Commission"), (ii) pursuant to an
exemption from registration under the Securities Act, or (iii) pursuant to Rule
145(d) promulgated by the Commission under the Securities Act, which Rule sets
forth the conditions under which such a person will not be deemed to be an
underwriter of such public resales or reoffers. Any profits realized by persons
who may be deemed to be underwriters may be deemed to be underwriting
compensation.

The Company is subject to a variety of federal and state communications
statutes, regulations and guidelines, many of which materially affect or have
the potential to materially affect the Company's business and financial
condition, including but not limited to restricting its ability to engage in
certain acquisitions of the assets or securities of other broadcasting
businesses. See "Risk Factors -- FCC Regulation."

THE SECURITIES INVOLVE CERTAIN RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE
7 OF THIS PROSPECTUS.
________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
________________

THE DATE OF THIS PROSPECTUS IS ____________, 1997.

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THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH
PERSON TO WHOM THIS PROSPECTUS IS DELIVERED SUCH DOCUMENTS (EXCLUDING CERTAIN
EXHIBITS) UPON REQUEST DIRECTED TO THE CHIEF FINANCIAL OFFICER, CHILDREN'S
BROADCASTING CORPORATION, 724 FIRST STREET NORTH, MINNEAPOLIS, MINNESOTA 55401,
TELEPHONE (612) 338-3300. TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY SUCH
REQUEST SHOULD BE RECEIVED BY THE COMPANY AT LEAST FIVE BUSINESS DAYS PRIOR TO
THE DATE BY WHICH THE FINAL INVESTMENT DECISION IS TO BE MADE.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission. Such reports, proxy statements and other
information filed by the Company pursuant to the Exchange Act may be inspected
and copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the Commission located at Seven World Trade Center, Suite
1300, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can also
be obtained from the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a Web site that contains reports, proxy statements and
other information regarding registrants that file electronically with the
Commission at http://www.sec.gov. In addition, the Company's Common Stock is
quoted on the NASDAQ National Market System. Reports, proxy statements and
other information concerning the Company can be inspected and copied at the
Public Reference Room of the National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.

The Company has filed with the Commission a registration statement on Form
S-4 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act. This Prospectus does not
contain all of the information, exhibits and undertakings set forth in the
Registration Statement, certain parts of which are omitted as permitted by the
rules and regulations of the Commission. For further information, reference is
hereby made to the Registration Statement which may be inspected and copied in
the manner and at the sources described above.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents previously filed by the Company (File No. 0-21534)
with the Commission pursuant to the Exchange Act are incorporated into this
Prospectus by reference:

(a) The Company's Annual Report on Form 10-KSB for the year ended December
31, 1996, filed on March 31, 1997.
(b) The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1997, filed on May 14, 1997.
(c) The Company's Current Report on Form 8-K/A filed on January 31, 1997,
relating to acquisition of the assets of Radio Station WCAR-AM.
(d) The Company's Current Report on Form 8-K/A filed on January 31, 1997,
relating to acquisition of Radio Elizabeth, Inc.
(e) The Company's Current Report on Form 8-K filed on February 3, 1997,
relating to the Company acquiring an AM radio broadcast license and
certain other broadcasting equipment in the Chicago metropolitan area.
(f) The Company's Definitive Schedule 14A (Proxy Statement) filed on April
30, 1997, relating to the Company's Annual Meeting of Shareholders
scheduled for July 16, 1997.

This Prospectus is accompanied by a copy of the Registrant's latest Form
10-KSB and a copy of the Registrant's latest Form 10-QSB. Further, the Company
will provide, without charge, to each person to whom this Prospectus is
delivered, upon written or oral request of any such person, a copy of any or all
of the other foregoing documents (other than exhibits to such documents which
are not specifically incorporated by reference in such documents). Written
requests for such copies should be directed to the Company at 724 First Street
North, Minneapolis, Minnesota 55401, Attention: Chief Financial Officer.
Telephone requests may be directed to the office of the Chief Financial Officer
of the Company at (612) 338-3300.

<PAGE>

PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED BY THE MORE DETAILED INFORMATION AND
CONSOLIDATED FINANCIAL STATEMENTS APPEARING ELSEWHERE OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS.

THIS PROSPECTUS CONTAINS "FORWARD-LOOKING STATEMENTS," AS DEFINED UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (THE "LITIGATION REFORM ACT"),
THAT INVOLVE RISKS AND UNCERTAINTIES. PURCHASERS OF THE SECURITIES ARE
CAUTIONED THAT THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE
RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE
OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE FACTORS DISCUSSED HEREIN UNDER
"RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.

THE COMPANY

Children's Broadcasting Corporation is a full-time national broadcaster of
children's radio programming in the United States. The Company develops,
produces and distributes programming that is entertaining and informative, and
directed to the interests and radio listening patterns of pre-teenage children
and their families. The Company's Aahs World Radio-SM-* format provides 24-hour
programming featuring music, stories, call-in segments, quizzes and current
events features. The programming varies by time of day in order to attract that
component of its prospective audience most likely to be listening. The
programming originates at the Company's flagship station, WWTC-AM in
Minneapolis, Minnesota, and is distributed via satellite to a network of radio
stations around the country.

Since the inception of the Company, the primary sources of the Company's
revenue have been from the sale of local advertising and air time and network
revenue. A substantial portion of the Company's local advertising revenue is
derived from Company-owned stations not broadcasting the Aahs World Radio-SM-
format. These stations, which broadcast primarily family-oriented programming
in the Houston, Kansas City, Milwaukee and Minneapolis markets, were acquired by
the Company in 1994. See "Risk Factors -- Development of National Radio
Network."

The Company's growth strategy includes the acquisition of AM radio
broadcast licenses ("RBLs") in the top 15 markets, thereby securing the
network's presence and continuity in those key markets. Pursuant to that
strategy, the Company has acquired RBLs which serve the New York City, Los
Angeles, Chicago, Philadelphia, Detroit and Dallas/Fort Worth markets. During
the year ended December 31, 1996, the Company acquired RBLs covering the New
York City, Philadelphia and Detroit markets. With the January 1997 acquisition
of the RBL and certain other assets of radio station WAUR-AM in the Chicago
market, the Company distributes its programming to markets representing
approximately 40% of the U.S. population and has a presence in the top four
markets and seven of the top ten markets in the U.S.

The Company has engaged investment bankers to explore strategic
alternatives to enhance shareholder value. Such investment bankers have had and
continue to hold discussions with various potential strategic partners with a
view toward entering into a joint venture, sale or merger. There can be no
assurance that the Company will be successful in completing any transaction with
a prospective strategic partner.

The Company was incorporated under the Minnesota Business Corporation Act
on February 7, 1990. All references to the Company herein include its
subsidiaries, unless otherwise noted. The Company's executive office is located
at 724 First Street North, Minneapolis, Minnesota 55401, and its telephone
number is (612) 338-3300. Its World Wide Web site is www.netradioaahs.net.

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* Children's Broadcasting Corporation has applied for a servicemark for
Aahs World Radio-SM-.

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BROADCAST STRATEGY

The Company seeks to attract listeners and advertisers to the Aahs World
Radio-SM- programming format by continually refining its content and expanding
the distribution network. Elements of this strategy include (i) attracting a
loyal listenership by maintaining high quality, distinctive programming directed
to its target audience, (ii) reinforcing this loyalty by creating a brand
identity through the creation of characters which are integrated into its
programming, (iii) delivering this listenership base to national advertisers by
expanding its radio network to obtain U.S. population coverage, and (iv) making
opportunistic acquisitions of RBLs in key markets.

The Company derives its revenue primarily from the sale of local and
network time to advertisers. The Company believes that as its coverage of the
U.S. continues to expand, it will be able to sell national advertising time in
greater quantities and at significantly higher rates with no significant
additional operating costs. To a large extent, the Company is already incurring
the production, operating and administrative costs necessary to broadcast the
network to the entire U.S. Incremental costs as the network continues to expand
are expected to be minimal, excluding the costs of any station acquisitions or
local marketing agreements ("LMAs") which the Company may complete or into which
the Company might enter.

Aahs World Radio-SM- is a music-driven format which was developed and is
produced for pre-teens. In addition to this primary target market, the format
has also been strategically designed to appeal to parents and care givers. This
is accomplished through a blend of music, stories, call-in segments, interactive
quiz features, interviews and current events. Approximately two-thirds of Aahs
World Radio-SM- programming consists of pop-oriented music which is selected for
children on the basis of lyric content, entertainment and/or educational value.
Each selection is classified in one of several music categories and entered into
the Company's program management system to ensure that it airs under designated
conditions and only at designated times. Research conducted by the Company,
including focus groups and analysis of listener feedback, has shown that having
music as the core element of its programming is the best way to attract and
retain its target audience. The Company develops and continually conducts focus
groups and written and telephonic surveys in order to enhance its understanding
of its target audience and ensure that its programming is meeting the demands of
both kids and their parents. Management believes that non-musical programming
is appealing as well and contributes to the "personality" of the format and to
its differentiation from competing formats.

Prior to the Company's development of the Aahs World Radio-SM- format,
there were not any full-time radio formats which targeted the pre-teen market.
It is estimated that over $1.0 billion in advertising dollars is directed toward
children annually, yet only a small percentage of these advertising dollars are
currently spent on radio. The Company believes that advertisers trying to reach
children have not utilized radio due to the lack of children's programming on
the radio. By providing quality programming which is appealing to both pre-
teens and their parents and by pursuing vigorous sales and marketing efforts,
the Company believes it will be able to attract an increasing portion of the
annual advertising dollars aimed at this previously underserved market segment.

The Company believes that developing a well-recognized brand identity will
enhance its network's visibility and create opportunities for the Company to
expand beyond the scope of its broadcast operations. The Company has created
characters within its programming, including AAHSIE-TM-, the Company's animated
mascot, which it has integrated into is merchandising and Internet enterprise.
The Company has developed and intends to continue to develop strategic
relationships to assist it in its brand development efforts, and to allow the
Company to exploit business opportunities without detracting from management's
focus upon the Company's core business. Pursuant to this strategy, the Company
has entered into agreements with NetRadio Network, Inc. ("NetRadio") and
Precision Tapes, Inc. which expand the Company's interactive Internet presence
and give Aahs World Radio-SM- programming Internet distribution worldwide. The
Company distributes the full 24-hour Aahs World Radio-SM- format over the
Internet pursuant to an agreement with NetRadio.

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In November 1995, the Company entered into a joint operations agreement
(the "Operations Agreement") with ABC Radio Networks, Inc. ("ABC") pursuant to
which ABC's affiliate development and national advertising sales staffs would
augment the Company's efforts to market its children's radio format to
broadcasters and advertisers. On July 25, 1996, ABC notified the Company that
ABC would terminate such agreement effective October 24, 1996. Following the
termination by ABC of the Operations Agreement, the Company filed a lawsuit in
the United States District Court for the District of Minnesota against The Walt
Disney Company ("Disney") and ABC for injunctive relief and to recover damages
for their alleged attempts to misappropriate the Company's confidential
information and trade secrets acquired through their strategic relationship with
the Company in order to unfairly compete with the Company in the children's
radio market. On November 18, 1996, ABC and Disney commenced broadcast of
"Radio Disney," a competing format directed toward children age 12 and under in
four markets across the country. See "Risk Factors -- ABC/Disney Litigation"
and " -- Competition."

FOOTHILL FINANCING

The Company entered into an agreement (the "Credit Agreement") with
Foothill Capital Corporation ("Foothill") to address the Company's working
capital requirements through the creation of three credit facilities (the
"Facilities") on November 25, 1996. The Credit Agreement provides the Company
with working capital through (a) a $11,500,000 senior secured term loan (the
"Term Loan") collateralized by the assets of the Company, payable over four
years, (b) a $1,000,000 senior secured reducing/revolving line of credit (the
"Revolving Loan") secured by the Company's accounts receivable, and (c) a
$4,000,000 acquisition facility (the "Acquisition Loan") secured by future
assets acquired by the Company. The Facilities mature on November 26, 2000.
The Company's indebtedness under the Facilities is secured by a first priority
lien on substantially all the assets of the Company and its subsidiaries, by a
pledge of its subsidiaries' stock and by a guaranty of its subsidiaries.
Additionally, the Company granted Foothill a warrant to purchase 50,000 shares
of the Company's Common Stock. The Company was required to pay various service
and commitment fees as are standard within the industry.

Funds available from the Term Loan have been and may in the future be used
for working capital needs and acquisitions, including the purchase of the RBL
and certain other assets of WAUR-AM in the Chicago market. The Revolving Loan
may be used for working capital needs and for acquisitions. Advances are not to
exceed 80% of eligible accounts receivable less certain reserves. The Term Loan
is to be repaid monthly in 42 installments of principal in the amount of 1/54 of
the Term Loan amount beginning in month seven of the Credit Agreement. The
Acquisition Loan is to be repaid monthly based upon a five-year amortization
schedule, commencing on the first month following funding. Interest rates under
the Facilities are payable at the prime rate plus 2.75%. The Credit Agreement
contains a number of restrictive covenants which, among other things, require
the Company to maintain specified financial ratios and impose certain
limitations on the Company with respect to the amount of funding available for
each acquisition under the Acquisition Loan. As of March 31, 1997 and December
31, 1996, the Company was in violation of certain of these restrictive
covenants. Foothill has waived its rights pursuant to these violations.

As of May 14, 1997, approximately $11,746,000 was borrowed pursuant to the
Credit Agreement. These proceeds have been used as follows: $1,700,000 in
connection with the acquisition of an RBL in the Chicago market, $2,900,000 to
retire preferred stock, $1,000,000 to retire debt, $720,000 for capital
expenditures, $400,000 related to loan costs, $860,000 to repay miscellaneous
interest and principal, and approximately $4,166,000 for working capital and
cash reserves.

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PURPOSE OF OFFERING

The 5,000,000 shares of Common Stock, par value $.02 per share, of the
Company and the $5,000,000 of Promissory Notes of the Company covered by this
Prospectus may be offered and issued in connection with future acquisitions of
other businesses or properties, including, but not limited to, RBLs. The
Company reasonably expects that it will offer and sell the Securities covered by
this Prospectus within two years from the initial effective date of the
Registration Statement of which this Prospectus is a part. The consideration
offered by the Company in such acquisitions, in addition to the Securities
offered by this Prospectus, may include cash, debt or other securities,
guarantees or assumptions by the Company of liabilities of the business being
acquired, or a combination thereof. In connection with acquisitions, the
Company may enter into contracts that provide for future payments and non-
competition agreements with former owners and key executive personnel of
companies to be acquired. The Company has not received and does not expect to
receive any cash proceeds (other than working capital of acquired companies) in
connection with any such issuances.

It is not expected that underwriting discounts or commissions will be paid
by the Company except that finder's fees may be paid to persons from time to
time in connection with specific acquisitions. Any person receiving such fees
may be deemed to be an underwriter within the meaning of the Securities Act.

USE OF PROCEEDS

This Prospectus relates to Securities that the Company may issue from time
to time in connection with proposed acquisitions by the Company or one or more
of its subsidiaries. The Company will receive no proceeds from this Offering
other than the value of the assets and securities acquired by the Company in the
proposed acquisitions.

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RISK FACTORS

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS, IN ADDITION TO THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS, IN
CONNECTION WITH AN INVESTMENT IN THE SECURITIES OFFERED HEREBY.

WHEN USED BELOW AND ELSEWHERE IN THIS PROSPECTUS, INCLUDING DOCUMENTS
INCORPORATED HEREIN BY REFERENCE, THE WORDS "BELIEVES," "ANTICIPATES" AND
"INTENDS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY "FORWARD-LOOKING
STATEMENTS" AS DEFINED IN THE LITIGATION REFORM ACT. SUCH STATEMENTS ARE
SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE PROJECTED. POTENTIAL PURCHASERS OF THE SECURITIES
ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS,
WHICH SPEAK ONLY AS OF THE DATE HEREOF.

ACQUISITIONS. One of the Company's strategies used to expand its national
network of radio stations broadcasting Aahs World Radio-SM- is to acquire RBLs
in key markets. To date, the Company has acquired 13 RBLs, 12 of which are
currently owned and operated. The Company has acquired RBLs through the
acquisition of securities or assets of radio stations and intends to continue to
acquire RBLs in the future. Unless the acquisition is of an existing affiliate,
the Company will generally convert an acquired RBL to the Aahs World Radio-SM-
format. Although the Company believes it has identified a number of potential
acquisitions, there can be no assurance that the Company will be successful in
acquiring additional RBLs. The Company expects to face competition in acquiring
additional RBLs as it seeks to build its national radio network. In the event
the Company is unable to continue to acquire RBLs, the Company may not achieve
market penetration levels required by major advertisers and the Company's
ability to attract national advertising and maximize the rates charged for
advertising and air time could be materially adversely affected. See "--
Development of National Radio Network."

COMPANY DEVELOPMENT; HISTORY OF OPERATING LOSSES. Since inception, the
Company has experienced substantial net losses as a result of its efforts to
develop its national radio network. The Company is continuing to develop its
radio network and is generally subject to the risks attendant to a new or
emerging business venture. The Company has incurred net losses since its
inception in 1990 and has not generated positive cash flow sufficient to fund
its ongoing operations. For the two years ended December 31, 1995 and 1996, and
the three months ended March 31, 1997, the Company incurred net losses of
$6,108,000, $9,868,000 and $2,780,000 respectively. The Company has not
generated positive cash flow from operations and has had frequent working
capital shortages. The Company expects to continue to incur operating losses
throughout 1997 and that it will continue to experience negative cash flow from
operations. Working capital requirements have been met by short-term borrowings
from investors, including affiliates of the Company, and from the proceeds of
public offerings of the Company's Common Stock, and through the use of the
Facilities. The Company continues to seek additional sources of financing for
its working capital needs and for acquisitions. If the Company should be unable
to obtain working capital when required, its operations and prospects would be
materially and adversely affected. In connection with their audit reports on
the Company's financial statements as of and for the years ended December 31,
1995 and 1996, Ernst & Young LLP and BDO Seidman, LLP, the Company's independent
auditors as of such dates, expressed substantial doubt about the Company's
ability to continue as a going concern because of recurring losses and negative
cash flow from operations. As of March 31, 1997, the Company had an accumulated
deficit of $29,084,000 and had used approximately $19,979,000 of cash to fund
its losses. See "Prospectus Summary -- Recent Financing."

The Company raised a total of $12,500,000 of capital through the Credit
Agreement with Foothill in November 1996. Additionally, as a part of the Credit
Agreement the Company may borrow an additional $4,000,000 to acquire future
assets. The Company believes the Credit Agreement will meet the working capital
needs of the Company and provide adequate resources for acquisitions until the
fall of 1997. Beyond the fall of 1997, the Company's ability to obtain funding
to meet its future capital requirements will depend upon a number of factors
including, but not limited to, (i) the ability of the Company to generate cash
flow from operations, (ii) the acceptance of the Company's children's radio
format, (iii) the relative profitability of the

<PAGE>

format on a local and national basis and (iv) the general availability of debt
and equity financing to the Company. The Company continues to seek additional
sources for its working capital and long-term capital requirements, including
debt and equity financing and strategic partnership activities.

SUBSTANTIAL LEVERAGE; ADDITIONAL FINANCING REQUIREMENTS. As of March 31,
1997, the Company's consolidated indebtedness approximated 51% of the sum of its
shareholders' equity and consolidated indebtedness, assuming full funding under
the Facilities, which occurred on April 23, 1997. Based on current interest
rates, the debt service obligations associated with the Credit Agreement
necessitate payments of principal and interest of approximately $3,000,000 in
1997. Further, substantially all assets of the Company serve to secure this
loan. This degree of leverage increases the Company's vulnerability to adverse
general economic and broadcasting industry conditions and to increased
competitive pressures, including pressure from better capitalized competitors.
Issuance of additional debt, including the Debt Securities, would increase this
degree of leverage and the Company's vulnerability to such market conditions.
In the event that the Company should default on its obligations under the Credit
Agreement, all or substantially all of its assets would be at risk. There can
be no assurance that the Company will be able to repay or refinance such
indebtedness when due, or that the Company would be able to sell all or any
portion of its assets or raise additional capital to make required payments on
maturing indebtedness. Furthermore, the Company was in violation of certain
covenants contained in the Credit Agreement as of March 31, 1997 and December
31, 1996. An inability to make payments when due or to comply with covenants
and restrictions associated with such indebtedness could give Foothill the right
to foreclose on properties securing payment obligations, which would have a
material adverse effect upon the Company. Foothill has waived its rights
pursuant to the aforementioned covenant violations. Part of the Company's
strategy for development and expansion of its network includes acquiring RBLs
and/or operating radio properties in key U.S. markets. It is the Company's
desire to purchase RBLs in each of the top 15 markets; however, there can be no
assurance that the Company will be able to complete suitable acquisitions on
terms favorable or acceptable to the Company. In the event the Company purchases
additional RBLs, the limitations on the Credit Agreement may require the Company
to seek additional financing for acquisitions and to fund future operations.
There can be no assurance that such additional financing will be available to
the Company when required, or if available, that it would be on terms acceptable
or favorable to the Company. Additional financing could require the sale of
equity securities, which could result in significant dilution to the Company's
shareholders.

DEVELOPMENT OF NATIONAL RADIO NETWORK. Since late 1992, the Company has
been developing a network of affiliated and owned or operated radio stations to
carry its satellite-transmitted programming to domestic radio markets. The
Company's affiliation agreements have terms varying from one to three years.
There can be no assurance that the Company will be able to retain existing
affiliates or attract additional affiliates. Since the inception of the
network, the Company has gained and lost affiliates. As of May 14, 1997, the
Company had 30 affiliates. In cases where the Company deems it appropriate, it
intends to seek affiliates by entering into affiliation agreements or LMAs,
through which third-party owned stations broker broadcast time to the Company,
or by acquiring stations in key markets. In addition, the Company could
encounter substantial delays, expenses or other unforeseen difficulties in
completing the establishment of its network in the major markets. The Company
also risks the potential loss of strategic alliances which it has developed in
connection with its strategy to develop the Company's brand, to assist in growth
of the Company's network, and to pursue related business opportunities.
Furthermore, the signal of the Company's affiliates and of its owned and
operated stations may not cover households in certain portions of the markets in
which such stations broadcast. In addition, the Company's management has
limited experience in the development or operation of a national radio network.

The success and viability of the Company's network will depend upon its
ability to generate substantial revenue from network advertisers. For the

<PAGE>

year ended December 31, 1996, and the quarter ended March 31, 1997, the
Company's network generated revenue totaling $1,594,000 and $206,000,
respectively. Since the inception of the Company, the primary sources of the
Company's revenue have been from the sale of local advertising and air time and
network revenue. A substantial portion of the Company's local advertising
revenue is derived from Company-owned stations not broadcasting the Aahs World
Radio-SM- format. For the years ended December 31, 1995 and 1996, and the
quarter ended March 31, 1997, approximately 42%, 38% and 40%, respectively, of
the Company's revenue was derived from its radio stations which do not carry the
Aahs World Radio-SM- format: KTEK-AM, Houston, Texas, KCNW-AM, Kansas City,
Kansas, WZER-AM, Milwaukee, Wisconsin and KYCR-AM, Minneapolis, Minnesota. For
the years ended December 31, 1995 and 1996, and the quarter ended March 31,
1997, the Company derived approximately 13%, 12% and 14%, respectively, of its
revenue from KTEK-AM; approximately 9%, 9% and 8%, respectively, of its revenue
from KCNW-AM; approximately 11%, 8% and 8%, respectively, of its revenue from
WZER-AM; and approximately 9%, 9% and 10%, respectively, of its revenue from
KYCR-AM. If the Company converts any of these stations to the Aahs World
Radio-SM- format, its revenue may be negatively affected until a new advertising
base is developed for the Aahs World Radio-SM- format in those markets. No
assurance can be given that the Company will be able to acquire additional
stations in major markets or to increase the number of network affiliates to a
level which would enable it to increase network advertising, even if desired
additional acquisitions are made or affiliate relationships are created, or that
the Company will be able to generate sufficient advertising revenue to operate
profitably in the future.

One of the Company's primary methods of expansion has been to acquire RBLs
through the acquisition of assets of broadcasters in such major markets as New
York City, Los Angeles, Chicago, Philadelphia, Detroit and Dallas/Fort Worth.
The Company's expansion strategy is to acquire additional RBLs which would
enable it to broadcast in each of the top 15 U.S. markets. Such strategy is
designed to achieve market penetration levels required by major advertisers who
may be reluctant or unwilling to purchase advertising time until the Company's
geographic penetration is extended. The Company believes additional market
penetration will improve its ability to maximize the rates charged for
advertising and air time.

ACCEPTANCE OF RADIO FORMAT. The Company produces and distributes a 24-hour
children's radio format. There can be no assurance that the Company's
programming will gain acceptance by listeners and advertisers. In addition, the
Company's primary target audience is not rated by a recognized radio rating
service, such as Arbitron. Such ratings are generally used by potential
advertisers in making advertising decisions. The Company is working with
research companies to attempt to develop such ratings for the pre-teen market.
However, there can be no assurance that such ratings can be developed or that
the Company will be able to attract additional national advertisers.

RISKS RELATED TO ACQUISITION OF RADIO ELIZABETH. On June 4, 1996, the
Company acquired all of the issued and outstanding stock of Radio Elizabeth,
Inc. ("REI"), which holds a Federal Communications Commission ("FCC") license
for WJDM-AM Radio Station licensed to Elizabeth, New Jersey on the 1530 kHz
frequency. REI, in addition to its license for operation on 1530 kHz, presently
has issued to it a special temporary authorization ("STA") for operation on 1660
kHz at 10 kw power, which provides coverage of a significant portion of the New
York City market. WJDM has been broadcasting the Company's Aahs World Radio-SM-
programming in the nation's largest city radio market since February 1, 1996,
over its 1660 kHz frequency. The STA frequency is located in a portion of the
spectrum referred to as the expanded band ("Expanded Band") recently allocated
by the FCC and assigned to certain AM broadcasters in order to implement
Congressional policy. REI and other Expanded Band licensees are expected to be
allowed to operate on both their original frequencies and the Expanded Band
frequencies for a period of five years, after which time the licensee must elect
which frequency on which it will continue broadcasting. Most radio receivers
produced prior to 1990 cannot receive Expanded Band frequencies. There can be
no assurance that REI will ever receive a permanent license to an Expanded Band
frequency, and failure to obtain such a license would leave the Company
broadcasting from only the existing licensed frequency, which at 1 kw power does
not cover the New York City market, thereby resulting in a substantial
diminution of the value of the Company's investment in REI.

ABC/DISNEY LITIGATION. In November 1995, the Company entered into an
Operations Agreement with ABC pursuant to which ABC's affiliate development and
national advertising sales staffs would augment the Company's efforts to market
its children's radio format to broadcasters and advertisers. On July 25, 1996,
ABC notified the Company that ABC would terminate such agreement effective
October 24, 1996. Following

<PAGE>

the termination by ABC of the Operations Agreement, the Company filed a lawsuit
in the United States District Court for the District of Minnesota against Disney
and ABC for injunctive relief and to recover damages for their alleged attempts
to misappropriate the Company's confidential information and trade secrets
acquired through their strategic relationship with the Company in order to
unfairly compete with the Company in the children's radio market. As a result
of the termination by ABC of its Operations Agreement with the Company, the
Company has had to rebuild its own affiliate development and national
advertising sales staff and is in the process of rebuilding that capability.
The Company has commenced rebuilding of its national sales and affiliate
development organizations and has hired eight individuals to staff its national
sales and affiliate development departments. The Company expects to have its
national sales and affiliate development programs in place during the first half
of 1997. The Company is, however, unable to determine the full impact of
damages it has sustained as a result of the actions by ABC, which are the basis
of the Company's claims in the ABC/Disney litigation. Further, there can be no
assurance that the Company will be able to rebuild its national sales and
affiliate development organizations or that it will prevail in the ABC/Disney
litigation or recover any of the damages sought. Such litigation is costly to
the Company and legal fees and costs associated with the litigation have reduced
and may continue to reduce the Company's working capital. Further, the Company
has issued and may in the future issue securities to finance the litigation
which could result in substantial dilution to the Company's existing
shareholders. In November 1996, the Company registered 200,000 shares of Common
Stock on behalf of its litigation counsel.

COMPETITION. The Company currently derives the majority of its revenue
from the sale of local radio advertising time on its owned and operated stations
to advertisers in their respective metropolitan markets and faces substantial
competition from other radio and television stations as well as other media in
those markets. Factors contributing to the Company's ability to attract local
advertisers include the success of a station in attracting listeners and the
perceived quality of the Company's programming. There can be no assurance that
the Company can successfully compete for listeners and advertising revenues with
other radio and television networks and other entertainment organizations. The
Company may also experience competition from developing technologies in the
radio industry.

In addition to the Company's current competition for local advertising, the
Company also competes for network advertising. On information and belief,
Disney has commenced broadcasting of its own children's radio programming in
four U.S. markets, thereby entering into direct competition with the Company.
Further, other entertainment organizations, including but not limited to radio
syndicators and radio stations, many of which have greater resources than the
Company, could develop a children's radio format similar to Aahs World
Radio-SM-. Although radio stations must be licensed by the FCC, there are no
significant impediments to the entry of new competitors into the Company's
markets. While the Company continues to seek protection for its original
programming, where appropriate, under applicable copyright and trademark laws,
the Aahs World Radio-SM- format can be and has been imitated by others seeking
to enter the children's radio field.

VOLATILITY OF MARKET PRICE OF COMMON STOCK. The market price of the
Company's Common Stock has been subject to significant fluctuations in response
to numerous factors, including variations in the annual or quarterly financial
results of the Company or its competitors, changes by financial research
analysts in their estimates of the earnings of the Company or its competitors,
conditions in the economy in general or in the radio industry in particular,
unfavorable publicity or changes in applicable laws and regulations (or judicial
or administrative interpretations thereof) affecting the Company or the radio
industry. During fiscal year 1996, the market price of the Company's Common
Stock ranged from a high of $14.00 on January 31 and February 22, 1996 to a low
of $3.25 on November 20, 1996. During the first four months of 1997, the
Company's Common Stock has ranged from $6.63 on January 13, 1997 to $3.19 on
April 7, 1997. There can be no assurance that purchasers of the Company's
Common Stock can sell such stock at or above the prices at which it was
purchased.

IMPACT OF SALE OF SHARES; SHARES ELIGIBLE FOR FUTURE SALE. As of May 14,
1997, the Company had 6,031,501 shares of Common Stock outstanding and had
warrants and options outstanding to purchase an

<PAGE>

additional 2,634,213 shares of Common Stock exercisable at prices ranging from
$2.00 to $13.80 per share. Between July 1996 and February 1997, the Company
registered 3,234,277 shares of Common Stock for secondary offerings. The sale
of such shares, the Common Stock offered pursuant to this Prospectus, and the
sale of additional Common Stock which may become eligible for sale in the public
market from time to time upon exercise of warrants and stock options could have
the effect of depressing the market prices for the Company's Common Stock.

RELIANCE ON CURRENT MANAGEMENT. The Company is dependent on the management
services of its current management team. If the Company were to lose the
services of these individuals, its business could be adversely affected. Most
of the members of the Company's current senior management team are not subject
to employment contracts with the Company. The Company does not maintain
insurance on the lives of its key employees.

POTENTIAL CONFLICTS OF INTEREST. The Company leases certain broadcast and
office facilities from its President, Christopher T. Dahl, and another director,
Richard W. Perkins, and the WWTC and KYCR radio transmission tower site from Mr.
Dahl. The Company also shares with Community Airwaves Corporation ("CAC"), a
corporation owned by the Company's President, Christopher T. Dahl, a director,
Richard W. Perkins, and a shareholder, Russell Cowles II, certain management
services which are provided by another entity, Radio Management Corporation,
owned by Messrs. Dahl, Perkins and Cowles. The management services consist of
administrative, legal and accounting services. Such arrangements present
potential conflicts of interest in connection with the pricing of services
provided. In addition, CAC may acquire interests in additional stations. Such
ownership could, under current FCC regulations, limit the markets in which the
Company could acquire additional RBLs. In addition, the Company has entered
into an agreement with CAC whereby the Company is required to obtain the consent
of CAC for any acquisition of an FM station or of an AM station located outside
the largest 125 U.S. markets.

FCC REGULATION. Although the RBLs of the stations owned by the Company are
already granted, the continuation of any RBL acquired by the Company depends
upon its compliance with the laws, rules and regulations of the FCC. The FCC
can revoke licenses for serious misconduct, subject to the right to an
evidentiary hearing, or it may fail to renew a license or impose monetary fines
for breach of its rules. Neither the Company nor CAC has ever been denied any
FCC license or renewal, or had a fine imposed by the FCC. In recent years, a
number of competing applications and formal and informal objections have been
filed with respect to broadcast renewal applications. Even though the vast
majority of all license renewal applications are granted, and under the
Telecommunication Act of 1996 (the "1996 Act") competing applications in license
renewal proceedings are no longer allowed, there can be no assurance that
renewal of the Company's licenses will be granted. Furthermore, approvals are
required for the transfer of ownership. Three directors and attributable
shareholders of the Company have interests in AM and FM radio stations unrelated
to the Company. Under current FCC regulations, these interests are attributed
to the Company and may limit the markets in which the Company can acquire
stations. The 1996 Act eliminated the limit upon the number of stations that
can be under common ownership or control nationally. Local ownership was
substantially relaxed according to market size. See "Risk Factors -- Risks
Related to Acquisition of Radio Elizabeth."

ANTI-TAKEOVER PROVISIONS. The Board of Directors, without any action by
the Company's shareholders, has the authority to issue the remaining
undesignated and unissued authorized shares and to fix the powers, preferences,
rights and limitations of such shares or any class or series thereof, without
shareholder approval. Persons acquiring such shares could have preferential
rights with respect to voting, liquidation, dissolution or dividends over
existing shareholders. The Company is subject to certain provisions of the
Minnesota Business Corporation Act which limit the voting rights of shares
acquired in "control share acquisitions" and restrict certain "business
combinations." Such provisions, as well as the ability to issue undesignated
shares, could have the effect of deterring or delaying a takeover or other
change in control of the Company, deny shareholders the receipt of a premium on
their Common Stock and depress the market price of the Company's Common Stock.

<PAGE>

RESTRICTIONS ON RESALES BY AFFILIATES. The Securities are freely
transferable, except that Securities received by persons who are deemed to be
"affiliates" (as such term is defined in Rule 144 under the Securities Act)
of a business to be acquired by the Company prior to such acquisition may be
resold by them only in transactions permitted by the resale provisions of Rule
145 under the Securities Act (or Rule 144 in the case of such persons who
become affiliates of the Company after the issuance of the Securities) or as
otherwise permitted under the Securities Act. Persons who may be deemed to be
affiliates of a business to be acquired, or the Company, generally include
individuals or entities that control, are controlled by, or are under common
control with, such party and may include certain officers, directors and
principal shareholders of such party. In accordance with Rule 145, an
affiliate receiving Securities may not sell such Securities except pursuant
to the volume limitation, manner of sale and other requirements specified
therein or pursuant to an effective registration statement under the
Securities Act.

The regulations relating to resales by affiliates under Rule 145
generally require that (i) there shall be available adequate current public
information with respect to the issuer of the securities; (ii) the amount of
securities sold, together with all sales of restricted and other securities
of the same class, for the account of such person, within the preceding three
months, shall not exceed the greater of (a) one percent of the shares or
other units of the class outstanding as shown by the most recent report or
statement published by the issuer, or (b) the average weekly reported volume
of trading in such securities during the four calendar weeks preceding the
transaction; and (iii) the securities shall be sold in "brokers'
transactions" or in transactions directly with a "market maker," and the
person selling the securities shall not (a) solicit or arrange for the
solicitation of orders to buy the securities in anticipation of or in
connection with such transactions, or (b) make any payment in connection with
the offer or sale of the securities to any person other than the broker who
executes the order to sell the securities.

CONTROL BY PRINCIPAL SHAREHOLDERS. Approximately 24% of the Company's
outstanding Common Stock is beneficially owned by the Company's current officers
and directors. Accordingly, such persons may be able to significantly influence
the Company's business and affairs. This concentration of ownership may have
the effect of delaying, deferring or preventing a change in control of the
Company.

NO ASSURANCE AS TO LIQUIDITY ON THE NASDAQ NATIONAL MARKET SYSTEM. The
Common Stock is currently listed on the Nasdaq National Market System. There
can be no assurance that the Common Stock will be actively traded on such market
or that, if active trading does develop, it will be sustained.

ABSENCE OF DIVIDENDS. The Company has not paid any cash dividends since
its inception and does not anticipate paying cash dividends in the foreseeable
future. The Company presently expects to retain its earnings to finance the
development and expansion of its business. The declaration or payment by the
Company of dividends, if any, on its Common Stock in the future is subject to
the discretion of the Board of Directors and will depend on the Company's
earnings, financial condition, capital requirements and other relevant factors.
The declaration or payment by the Company of dividends is also subject to the
Company's Credit Agreement with Foothill. Without Foothill's prior written
consent, the Company cannot declare or pay any cash dividends.

<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth certain selected historical consolidated
financial information for the Company. The income statement and balance sheet
data for the Company included in the selected consolidated financial data for
each of the five years in the period ended December 31, 1996 are derived from
the audited consolidated financial statements of the Company for such five-year
period. The selected financial data for the three-month periods ended March 31,
1996 and 1997 are derived from the unaudited consolidated financial statements
of the Company for such periods. All financial data derived from unaudited
financial statements reflect, in the opinion of the Company's management, all
adjustments (consisting of only normal recurring adjustments) necessary for a
fair presentation of such data. Results for the three-month period ended March
31, 1997 are not necessarily indicative of the results that may be expected for
any other interim period or for the year as a whole. The data set forth in the
table should be read in conjunction with the consolidated financial statements
of the Company, and the related notes thereto, incorporated herein by reference.
See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>

THREE MONTHS ENDED
YEARS ENDED DECEMBER 31 MARCH 31
------------------------------------------------------------------ ------------------------
1992 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (IN THOUSANDS, EXCEPT
SHARE AND PER SHARE DATA)
STATEMENT OF OPERATIONS
DATA:

<S> <C> <C> <C> <C> <C> <C> <C>
Net Revenue:
Owned, operated and
LMA stations(1) $ 734 $ 2,263 $ 3,799 $ 4,047 $ 4,061 $ 858 $ 944
Network 7 253 589 1,059 1,594 358 207
---------- ---------- ---------- ---------- ---------- ---------- ----------

Total net revenue 741 2,516 4,388 5,106 5,655 1,216 1,151

Operating Expenses:
Owned, operated and
LMA stations(1) 1,309 3,175 5,070 4,955 5,036 1,010 1,339
Network 369 1,413 1,541 2,490 3,525 840 932
Corporate 195 1,007 1,692 1,521 2,774 442 887
Depreciation and
amortization 77 192 516 937 1,501 242 459
Amortization and
write off of
deferred expense -- -- -- 103 2,288 290 --
Total operating
expenses 1,950 5,787 8,819 10,006 15,124 2,824 3,617
---------- ---------- ---------- ---------- ---------- ---------- ----------

Loss from operations (1,209) (3,271) (4,431) (4,900) (9,469) (1,608) (2,466)
Interest expense, net
of interest income 47 (24) 88 1,208 399 268 314
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net loss $ (1,256) $ (3,247) $ (4,519) $ (6,108) $ (9,868) $ (1,876) $ (2,780)
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net loss per share $ (1.27) $ (1.39) $ (1.69) $ (2.22) $ (1.99) $ (0.51) $ (0.47)
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Weighted average
number of shares 991,000 2,330,500 2,703,500 2,815,500 5,149,000 3,739,000 5,905,000

BALANCE SHEET DATA:

Working capital (deficit) $ (1,128) $ 1,366 $ (3,472) $ (4,421) $ (5,489) $ 13,807 $ (9,492)
Total assets 1,110 8,603 10,485 13,327 28,607 28,100 30,563
Total debt and capital
leases (including
current portion) 1,001 225 3,835 5,809 9,669 2,438 13,724
Shareholders' equity
(deficit) (441) 7,540 3,070 3,487 16,587 22,038 14,483
</TABLE>

- --------------------
(1) Includes stations owned and operated by the Company as well as stations
owned by third parties but operated under a LMA.

<PAGE>

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED SHARES

The Company's Articles of Incorporation authorize it to issue up to 50
million shares with a par value of $.02 per share. As of May 14, 1997,
6,031,501 shares of Common Stock were issued and outstanding and 2,659,213
shares of Common Stock were reserved for issuance pursuant to options,
restricted stock grants and warrants. The remaining shares are undesignated.

COMMON STOCK

Except for the non-voting shares, no share of Common Stock is entitled to
preference over any other share and each share of Common Stock is equal to any
other share in all respects. The holders of Common Stock, other than non-voting
shares, are entitled to one vote for each share held of record at each meeting
of shareholders. The non-voting shares may become shares with full voting
rights at such time as they are transferred by the current holder. In any
distribution of assets, whether voluntary or involuntary, holders are entitled
to receive pro rata the assets remaining after creditors have been paid in full
and after any liquidation preference of any other class of stock has been
satisfied. The outstanding Common Stock is and the stock offered by the Company
hereby upon payment therefor will be, fully paid and nonassessable.

The Board of Directors of the Company has the authority to issue the
remaining unissued authorized shares and to fix the powers, preferences, rights
and limitations of such shares or any class or series thereof, without
shareholder approval. Persons acquiring such shares could have preferential
rights with respect to voting, liquidation, dissolution or dividends over
existing shareholders. Shares could also be issued to deter or delay a takeover
or other change in control of the Company.

Holders of Common Stock have no preemptive rights to purchase additional
securities which may be offered by the Company. There is no cumulative voting
for the election of directors. Accordingly, the owners of a majority of
outstanding voting shares may elect all of the directors if they choose to do
so. All shares of Common Stock are entitled to participate equally in all
dividends when, as and if declared by the Board of Directors out of funds
legally available therefor.

NON-VOTING COMMON STOCK

The Company issued 189,041 shares of non-voting Common Stock in April 1992.
All non-voting stock was issued in order to avoid attribution of interests under
FCC regulations, and is convertible to voting stock on a share for share basis
if such conversion would not result in FCC attribution of interests.

CONVERTIBLE PREFERRED STOCK

The Company's Articles of Incorporation authorize the Company's Board of
Directors, without further shareholder action, to issue shares of preferred
stock in one or more series and to fix the voting rights, liquidation
preferences, dividend rights, repurchase rights, conversion rights, redemption
rights and terms, including sinking fund provisions and certain other rights and
preferences, of the preferred stock.

Although there is no current intention to do so, the Board of Directors of
the Company may, without shareholder approval, issue shares of a class or series
of preferred stock with voting and conversion rights which could adversely
affect the voting power or dividend rights of the holders of Common Stock and
may have the effect of delaying, deferring or preventing a change in control of
the Company.

<PAGE>

MINNESOTA ANTI-TAKEOVER LAWS

The Company is governed by the provisions of Section 302A.671 and 302A.673
of the Minnesota Business Corporation Act Sections 302A.671 and 302A.673 of the
Minnesota Business Corporation Act may deny shareholders the receipt of a
premium on their Common Stock and may also have a depressive effect on the
market price of the Company's Common Stock. In general, Section 302A.671
provides that the shares of a corporation acquired in a control share
acquisition have no voting rights unless voting rights are approved in a
prescribed manner. A "control share acquisition" is an acquisition, directly or
indirectly, of beneficial ownership of shares that would, when added to all
other shares beneficially owned by the acquiring person, entitle the acquiring
person to have voting power of 20% or more in the election of directors. In
general, Section 302A.673 prohibits a public Minnesota corporation from engaging
in a "business combination" with an "interested shareholder" for a period of
four years after the date of the transaction in which the person became an
interested shareholder, unless the business combination is approved in a
prescribed manner.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock of the Company is
Norwest Bank Minnesota, National Association, St. Paul, Minnesota.

DESCRIPTION OF DEBT SECURITIES

The terms of the Debt Securities offered by any Prospectus Supplement or
Post-Effective Amendment will be described in the Prospectus Supplement or Post-
Effective Amendment relating to such Debt Securities. Reference is made to the
Prospectus Supplement or Post-Effective Amendment relating to the particular
series of Debt Securities offered thereby for a description of the following
terms or additional provisions of the Debt Securities: (1) the title of the
Debt Securities; (2) whether the Debt Securities are senior Debt Securities or
subordinated Debt Securities; (3) any limit on the aggregate principal amount
of the Debt Securities; (4) the price or prices (expressed as a percentage of
the aggregate principal amount thereof) at which the Debt Securities will be
issued; (5) the date or dates on which the Debt Securities will mature; (6) the
rate or rates per annum at which the Debt Securities will bear interest, if any,
and the date from which any such interest will accrue; (7) the interest payment
dates on which any such interest on the Debt Securities will be payable; (8) the
date, if any, after which and the price or prices at which the Debt Securities
may, pursuant to any optional or mandatory redemption provisions, be redeemed,
in whole or in part; (9) the denominations in which the Debt Securities will be
issuable; (10) any index used to determine the amount of payments of the
principal of (and premium, if any) and interest on the Debt Securities and the
manner in which such amounts shall be determined; (11) the terms pursuant to
which the Debt Securities are subject to defeasance; and (12) any other terms of
the Debt Securities. The Debt Securities will not be issued pursuant to an
indenture between the Company and a trustee. The debt securities will be issued
pursuant to an exemption from compliance with the Trust Indenture Act of 1939.
Persons acquiring Debt Securities will not, therefore, have the benefits, if
any, available to holders of debt securities under the Trust Indenture Act of
1939. Any such Prospectus Supplement or Post-Effective Amendment will also
describe any special provisions for the payment of additional amounts with
respect to the Debt Securities.

LEGAL MATTERS

The validity of the Securities offered hereby and certain legal matters
pertaining to the Company, including matters incorporated herein by reference
relating to the regulation of the Company by the FCC and related matters, were
passed upon on behalf of the Company by Lance W. Riley, Esq., Secretary and
General Counsel to the Company.

<PAGE>

EXPERTS

The consolidated financial statements as of December 31, 1996 of Children's
Broadcasting Corporation, incorporated by reference in this Prospectus have been
audited by BDO Seidman, LLP, independent certified public accountants, as set
forth in their reports thereon (which contain an explanatory paragraph with
respect to substantial doubt about the Company's ability to continue as a going
concern and management's plans described in Note 2 to the consolidated financial
statements). Such consolidated financial statements are incorporated by
reference herein in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.

The consolidated financial statements as of December 31, 1995 of Children's
Broadcasting Corporation, incorporated by reference in this Prospectus have been
audited by Ernst & Young LLP, independent certified public accountants, as set
forth in their reports thereon (which contain an explanatory paragraph with
respect to substantial doubt about the Company's ability to continue as a going
concern and management's plans described in Note 2 to the consolidated financial
statements). Such consolidated financial statements are incorporated by
reference herein in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.

The financial statements of Radio Elizabeth, Inc. for the eleven months
ended March 31, 1996 and 1995 and for the years ended April 30, 1993, 1994 and
1995, incorporated by reference in this Prospectus have been audited by Smolin,
Lupin & Co., P.A., Certified Public Accountants, independent auditors, as set
forth in their report thereon. Such financial statements are incorporated by
reference herein in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.

The financial statements of Wolpin Broadcasting Company as of December 31,
1994 and 1995 and for each of the three years in the period ended December 31,
1995, incorporated by reference in this Prospectus, have been audited by
Kleiman, Carney & Greenbaum, Certified Public Accountants, independent auditors,
as set forth in their report thereon. Such financial statements are
incorporated by reference herein in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

Certain information relating to executive compensation, principal
securities holders, certain relationships and related transactions, and other
matters concerning the Company is included or incorporated by reference in the
Company's Annual Report on Form 10-KSB filed with the Commission and
incorporated herein by reference. A copy of the Company's most recent Annual
Report on Form 10-KSB and a copy of the Company's most recent Quarterly Report
on Form 10-QSB accompany this Prospectus.

<PAGE>

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

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER DESCRIBED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDERS. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE UNDER THIS PROSPECTUS SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR SINCE THE DATE OF ANY DOCUMENTS
INCORPORATED HEREIN BY REFERENCE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES, OR AN OFFER OR SOLICITATION IN ANY STATE TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH STATE.

_____________________

TABLE OF CONTENTS

_____________________

Page
----

Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents
by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Broadcast Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Foothill Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Purpose of Offering. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . 13
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . 14
Description of Debt Securities . . . . . . . . . . . . . . . . . . . . . . 15
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . 16

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

CHILDREN'S BROADCASTING
CORPORATION

5,000,000 SHARES
COMMON STOCK

$5,000,000
PROMISSORY NOTES

____________________

PROSPECTUS
____________________

May _____, 1997

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

<PAGE>

PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Registrant is a Minnesota corporation. Reference is made to Minnesota
Statutes Section 302A.521 which provides that a Minnesota business corporation
shall indemnify any director, officer, employee or agent of the corporation made
or threatened to be made a party to a proceeding, by reason of the former or
present official capacity (as defined) of the person, against judgments,
penalties, fines, settlements and reasonable expenses incurred by the person in
connection with the proceeding if certain statutory standards are met.
"Proceeding" means a threatened, pending or completed civil, criminal,
administrative, arbitration or investigative proceeding, including one by or in
the right of the corporation. Section 302A.521 contains detailed terms
regarding such right of indemnification and reference is made thereto for a
complete statement of such indemnification rights.

Article 6.2 of the Company's Amended and Restated Bylaws, as amended,
provides that directors, officers, employees and agents, past or present, of the
Company, and persons serving as such of another corporation or entity at the
request of the Company, shall be indemnified by the Company for such expenses
and liabilities, in such manner, under such circumstances, and to such extent as
permitted under Minnesota Statutes 302A.521.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

* 3.1 Articles of Incorporation, as amended and restated.
** 3.2 By-laws, as amended and restated.
4 The form or forms of Debt Securities which may be issued by the
Registrant will be filed as an exhibit to a Current Report of
the Registrant on Form 8-K.
*** 5 Opinion of Lance W. Riley, Esq.
*** 23.1 Consent of Lance W. Riley, Esq. (included in Exhibit 5).
23.2 Consent of BDO Seidman, LLP.
23.3 Consent of Ernst & Young LLP.
23.4 Consent of Smolin, Lupin & Co., P.A., Certified Public
Accountants.
23.5 Consent of Kleiman, Carney & Greenbaum, P.C., Certified Public
Accountants.
*** 24 Power of Attorney (included on signature page to Registration
Statement).
______________________

* Incorporated by reference from the Registrant's Annual Report on Form 10-
KSB for the year ended December 31, 1996, filed on March 31, 1997.
** Incorporated by reference from the Registrant's Registration Statement on
Form S-18 (Registration No. 33-44412C).
*** Previously filed.

ITEM 22. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.

(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase

II-1

<PAGE>

or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement.

(iii) To include any additional or changed material information on
the plan of distribution.

(2) That, for the purpose of determining liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering.

(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the provisions summarized in Item 15
above, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by
a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel, the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

(c) The undersigned Registrant hereby undertakes that (1) for purposes of
determining any liability under the Securities Act of 1933, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance on Rule 430A and contained in the form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective and (2)
for the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(d) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.

(e) The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.

II-2

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis and State of
Minnesota, on May 22, 1997.

CHILDREN'S BROADCASTING CORPORATION

By /s/ Christopher T. Dahl
------------------------------------
Christopher T. Dahl, President
and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on the dates and
in the capacities indicated.

Signature Title Date
--------- ----- ----

/s/ Christopher T. Dahl President, Chief Executive May 22, 1997
- ------------------------------ Officer and Director
Christopher T. Dahl (Principal Executive Officer)

/s/ James G. Gilbertson Chief Operating Officer and May 22, 1997
- ------------------------------ Treasurer (Principal
James G. Gilbertson Accounting Officer and
Principal Financial Officer)

* Director
- ------------------------------
Richard W. Perkins

* Director
- ------------------------------
Rodney P. Burwell

* Director
- ------------------------------
Mark A. Cohn

*By:/s/ James G. Gilbertson May 22, 1997
--------------------------
James G. Gilbertson
Attorney-In-Fact

II-3

<PAGE>

EXHIBIT INDEX

Number Description
------ -----------

* 3.1 Articles of Incorporation, as amended and restated.

** 3.2 By-laws, as amended and restated.

4 The form or forms of Debt Securities which may be issued by
the Registrant will be filed as an exhibit to a Current
Report of the Registrant on Form 8-K.

*** 5 Opinion of Lance W. Riley, Esq.

*** 23.1 Consent of Lance W. Riley, Esq. (included in Exhibit 5).

23.2 Consent of BDO Seidman, LLP.

23.3 Consent of Ernst & Young LLP.

23.4 Consent of Smolin, Lupin & Co., P.A., Certified Public
Accountants.

23.5 Consent of Kleiman, Carney & Greenbaum, P.C., Certified
Public Accountants.

*** 24 Power of Attorney (included on signature page to
Registration Statement).

______________________

* Incorporated by reference from the Registrant's Annual Report on Form
10-KSB for the year ended December 31, 1996, filed on March 31, 1997.

** Incorporated by reference from the Registrant's Registration Statement
on Form S-18 (Registration No. 33-44412C).

*** Previously filed.

<PAGE>

EXHIBIT 23.2

Consent of BDO Seidman, LLP

We consent to the reference to our firm under the captions "Risk Factors
- --Company Development; History of Operating Losses" and "Experts" in
Post-Effective Amendment No. 1 to the Registration Statement on Form S-4 of
Children's Broadcasting Corporation for the registration of 5,000,000 shares
of common stock and $5,000,000 of debt securities and to the incorporation by
reference therein of our report dated February 28, 1997, except for Note 8
which is dated March 27, 1997, with respect to the consolidated financial
statements of Children's Broadcasting Corporation included in its Annual
Report (Form 10-KSB) for the year ended December 31, 1996.

/s/ BDO Seidman, LLP
BDO Seidman, LLP

Milwaukee, Wisconsin
May 22, 1997

<PAGE>

EXHIBIT 23.3

Consent of Ernst & Young LLP

We consent to the reference to our firm under the captions "Risk Factors --
Company Development; History of Operating Losses" and "Experts" in
Post-Effective Amendment No. 1 to the Registration Statement (Form S-4
No. 333-18575) of Children's Broadcasting Corporation for the registration of
5,000,000 shares of its common stock and $5,000,000 of debt securities and to
the incorporation by reference therein of our report dated January 31, 1996,
with respect to the consolidated financial statements of Children's
Broadcasting Corporation included in its Annual Report (Form 10-KSB) for the
year ended December 31, 1996, filed with the Securities and Exchange
Commission.

Minneapolis, Minnesota /s/ Ernst & Young LLP
May 22, 1997

<PAGE>

EXHIBIT 23.4

[Smolin, Lupin & Co., P.A. letterhead]

Children's Broadcasting Corporation
724 First Street North, 4th Floor
Minneapolis, Minnesota 55401

Gentlemen:

We consent to the reference to our firm under the caption "Experts" and to
the use of our reports for the eleven months ended March 31, 1996 and 1995,
and the reports for the years ended April 30, 1993, 1994, and 1995, with
respect to the financial statements of Radio Elizabeth, Inc. incorporated by
reference in the Post-Effective Amendment No. 1 to Registration Statement on
Form S-4 of Children's Broadcasting Corporation for the registration of
shares of its common stock and debt securities.

/s/SMOLIN, LUPIN & CO., P.A.
- ----------------------------------------

SMOLIN, LUPIN & CO., P.A.

West Orange, New Jersey
May 20, 1997

<PAGE>

EXHIBIT 23.5

[Kleiman, Carney & Greenbaum, P.C. letterhead]

May 21, 1997

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference of our firm under the caption "Experts" and to
the use of our reports dated January 19, 1996, February 2, 1996 and May 30,
1996, with respect to the financial statements of Wolpin Broadcasting Company
incorporated by reference in the Post-effective Amendment No. 1 to
Registration Statement on Form S-4 and related Prospectus of Children's
Broadcasting Corporation for the registration of shares of its common stock
and debt securities.

Very truly yours,

KLEIMAN, CARNEY & GREENBAUM

/s/ MARK CARNEY
------------------------------

MARK CARNEY
Certified Public Accountant

Farmington Hills, Michigan
May 21, 1997