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AUDITED FINANCIAL STATEMENTS

AND OTHER INFORMATION

Years ended June 30, 2010 and 2009

WAMC TABLE OF CONTENTS

Page Independent Auditor's Report 1 Financial Statements

Statements of Financial Position 2 Statements of Activities 3 Statements of Cash Flows 4 Notes to Financial Statements 5-11

Other Information

Schedule of Other Support and Revenue 12 Schedule of Functional Expenses 13

UHY LLP is an independent member of Urbach Hacker Young International Limited

INDEPENDENT AUDITOR'S REPORT To the Board of Directors WAMC We have audited the accompanying statements of financial position of WAMC (a nonprofit public telecommunications entity) as of June 30, 2010 and 2009, and the related statements of activities, and cash flows, for the years then ended. These financial statements are the responsibility of WAMC's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 WAMC as of June 30, 2010 and 2009, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The Schedules of Other Support and Revenue and Functional Expenses is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

Albany, New York September 7, 2010

See notes to financial statements.

Page 2

WAMC STATEMENTS OF FINANCIAL POSITION June 30, 2010 and 2009

2010 2009

ASSETS

CURRENT ASSETS

Cash and cash equivalents 636,006$ 605,391$

Pledges receivable 109,414 56,102

Underwriting and other receivables 422,463 472,157

Other current assets 51,083 93,708

Total current assets 1,218,966 1,227,358

NET PROPERTY AND EQUIPMENT 6,053,205 6,195,818

INVESTMENTS 739,244 777,202

8,011,415$ 8,200,378$

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES

Line of credit borrowings 95,833$ 120,833$

Current maturities of long-term debt 332,897 297,941

Accounts payable 227,852 92,680

Accrued compensation 219,537 333,532

Deferred revenue 302,252 309,791

Other current liabilities 248,187 272,019

Total current liabilities 1,426,558 1,426,796

LONG-TERM DEBT, net of current maturities 2,137,841 2,463,159

NET ASSETS

Unrestricted net assets 4,447,016 4,310,423

8,011,415$ 8,200,378$

See notes to financial statements.

Page 3

WAMC STATEMENTS OF ACTIVITIES Years Ended June 30, 2010 and 2009

2010 2009 REVENUE AND OTHER SUPPORT

Programming: Member fund drives 2,530,555$ 2,760,046$

Grants: Corporation for Public Broadcasting 491,888 463,452 New York State Education Department 82,387 80,380 Programming and other grants 200,662 296,514

Total grants 774,937 840,346 Other revenues:

Underwriting 2,475,904 2,485,043 Performing arts studio 210,733 158,662 Other support and revenue 379,867 246,280

Total revenue and other support 6,371,996 6,490,377

EXPENSES Program services:

Programming and production 3,118,416 3,085,569 Broadcasting 1,063,359 1,116,316 Program information 19,141 11,191

Total program services 4,200,916 4,213,076 Supporting services:

Fund raising 1,316,018 1,388,068 Management and general 785,566 828,692

Total supporting services 2,101,584 2,216,760

Total expenses 6,302,500 6,429,836

CHANGE IN NET ASSETS BEFORE INVESTMENT TRANSACTIONS 69,496 60,541

REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENT TRANSACTIONS 67,097 (263,355)

CHANGE IN NET ASSETS 136,593 (202,814)

Net assets, beginning of year 4,310,423 4,513,237

Net assets, end of year 4,447,016$ 4,310,423$

See notes to financial statements.

Page 4

WAMC STATEMENTS OF CASH FLOWS Years Ended June 30, 2010 and 2009

2010 2009

CASH FLOWS FROM OPERATING ACTIVITIES

Change in net assets 136,593$ (202,814)$

Adjustments to reconcile change in net assets to net cash provided by operating activities:

Depreciation 363,389 397,180

Realized and unrealized (gains) losses on investment transactions (67,097) 263,355

Changes in:

Pledges receivable (53,312) (5,972)

Underwriting and other receivables 49,694 (14,338)

Other current assets 42,625 103,102

Accounts payable 135,172 (98,298)

Accrued compensation (113,995) (5,689)

Deferred revenue (7,539) 118,224

Other currrent liabilities (23,832) 21,510

Net cash provided by operating activities 461,698 576,260

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of investments (608,888) (300,323)

Proceeds from sale of investments 713,943 328,704

Acquisition/construction of property and equipment (220,776) (101,184)

Net cash used in investing activities (115,721) (72,803)

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of line of credit borrowings, net (25,000) (4,167)

Principal payments on long-term debt (290,362) (244,396)

Net cash used in financing activities (315,362) (248,563)

Increase in cash and cash equivalents 30,615 254,894

Cash and cash equivalents, beginning of year 605,391 350,497

Cash and cash equivalents, end of year 636,006$ 605,391$

SUPPLEMENTAL DISCLOSURES OF CASH FLOW

INFORMATION Cash payments for interest 169,958$ 189,043$

WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009

Page 5

NOTE 1: ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization - WAMC is a nonprofit public telecommunications entity, organized in 1981, with broadcasting coverage in New York State and western New England. As a publicly supported radio station, WAMC receives substantially all of its support and revenue from listeners, underwriters, fees for the production of programming, and under various federal and state grants. Basis of Accounting - WAMC's financial statements are prepared in accordance with generally accepted accounting principles and the principles of accounting and financial reporting for public telecommunications entities issued by the Corporation for Public Broadcasting (CPB). Under CPB accounting principles, the statement of activities is intended to present functional type expenditure classifications, which reflect both program and supporting services. The specific program and supporting services functional classifications, as presented in the financial statements, are defined by CPB. Financial Statement Presentation - The financial statements of WAMC follow generally accepted accounting principles which establish standards for financial reporting by not-for-profit organizations and require that resources be classified for accounting and reporting purposes into certain net asset categories according to externally (donor) imposed restrictions. Accordingly, when applicable, WAMC records contributions received as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. Cash and Cash Equivalents - WAMC considers all highly liquid debt instruments (such as money market accounts) to be cash equivalents. WAMC places its cash with high quality credit institutions. Cash balances, however, are generally in excess of FDIC insurance limits. Receivables - Receivables, which are principally comprised of on-air acknowledgements of corporate underwriting, are periodically evaluated by management for collectibility. Management has elected to record bad debt expense using the direct write-off method. At such time as underwriting and other receivables are determined to be uncollectible, such amounts are written-off to bad debts. Generally accepted accounting principles require that the allowance method be used to reflect bad debt expense. However, the effect of the use of the direct write-off method is not materially different from the results that would have been obtained had the allowance method been followed. Pledges receivable, as more fully disclosed under Note 2, principally arise from member fund drives. When applicable, multi-year pledges are stated at fair value, using the present value of estimated future cash flows discounted at an appropriate rate. Other Current Assets - Other current assets are principally comprised of amounts paid to National Public Radio and other program producers (for programming to be provided subsequent to the end of the fiscal year) and certain prepaid insurance costs. Property and Equipment - As more fully disclosed under Note 3, property and equipment, including broadcast licenses acquired through the acquisition of property and equipment, is recorded at cost or, if donated, at fair value determined at date of acquisition. The carrying amounts of assets, and the related accumulated depreciation, are removed from the accounts at the time of asset disposition. Depreciation of property and equipment is computed utilizing the straight-line method over the estimated useful lives of the assets, ranging from 5 to 40 years. Maintenance costs and repairs are charged to expense as incurred. Investments – Investments in marketable securities are reported at fair value. Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Realized and unrealized gains and losses are included in the change in net assets for the year.

WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009

Page 6

NOTE 1: ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments (Continued) - Interest, dividends and other investment income are included in the Statements of Activities as a component of other support and revenue. Accrued Compensation - The liability account “accrued compensation” includes salaries and related benefit costs earned by employees, but not yet paid, as of WAMC's year end. Barter Transactions - WAMC provides certain broadcast services (principally underwriting) in exchange for certain vendor equipment, merchandise and services. The estimated fair value of the vendor equipment, merchandise or services received and the corresponding obligation to provide broadcast services are both recorded in the financial statements. Deferred barter costs are expensed or capitalized as they are used, consumed or received. Deferred barter revenue, a component of deferred revenue in the Statements of Financial Position, is recognized as the related underwriting is aired. Revenue and Other Support - WAMC receives substantially all of its support and revenue from listeners, underwriters, through the production of programming, and under various federal and state grants. Member contributions, grants, production of programming and underwriting revenues are recorded as revenue in the period earned. Rental Property Activities - WAMC owns certain commercial rental property in Albany, New York. For financial statement reporting purposes, the Statements of Activities reflect rental property income (a component of other support and revenue) net of related rental expense. Rental property income approximated $106,100 and $106,600 for the years ended June 30, 2010 and 2009, respectively. Rental property expenses, inclusive of depreciation expense, approximated $65,800 and $63,700 for the years ended June 30, 2010 and 2009, respectively. Future minimum rental revenue to be received under short and long-term leases is expected to approximate $53,000 in 2011, $36,000 in 2012, $27,000 in 2013 and $3,600 in 2014. Income Taxes - WAMC is exempt from income taxes under Section 501-c (3) of the Internal Revenue Code. Effective July 1, 2009, WAMC adopted certain new guidance regarding accounting for uncertainty in income taxes. The income tax positions taken by WAMC for any years open under the various statutes of limitations are that WAMC continues to be exempt from income taxes and that WAMC earns revenues from certain activities which are considered unrelated business income under the Internal Revenue Code. In both 2010 and 2009, however, unrelated business income (net of applicable expenses) resulted in no tax expense. The adoption of this guidance did not impact WAMC’s financial position or results of operations. WAMC believes that there are no other tax positions taken or expected to be taken that would significantly increase or decrease unrecognized tax benefits within 12 months of the reporting date. None of WAMC’s federal or state income tax returns is currently under examination by the Internal Revenue Service (IRS) or state authorities. However fiscal years 2007 and later remain subject to examination by the IRS and various state authorities. Estimates and Assumptions - 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. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009

Page 7

NOTE 1: ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Subsequent Events - Subsequent events have been evaluated through September 7, 2010, the date the financial statements were available to be issued. Reclassifications - Certain 2009 financial statement line items have been reclassified to conform with the current year’s presentation. NOTE 2: PLEDGES RECEIVABLE Pledges receivable principally include contributions and other commitments from various businesses, foundations, and individuals received in connection with WAMC’s member fund drives. During the years ended June 30, 2010 and 2009, WAMC completed three member fund drives in each year – one in October, one in February, and one in June. The timing of the June fund drives is such that $109,414 and $56,102 was recognized as pledges receivable at June 30, 2010 and 2009, respectively, with such pledges being collected in July of the following fiscal year. NOTE 3: PROPERTY AND EQUIPMENT Property and equipment is comprised of the following:

June 30 2010 2009

Land 615,780$ 615,780$ Buildings and improvements 4,763,173 4,727,842 Studio and other broadcast equipment 4,477,579 4,428,984 Furniture and office equipment 694,215 676,220 Transportation equipment 80,929 80,929

10,631,676 10,529,755 Less accumulated depreciation 4,578,471 4,333,937

Net property and equipment 6,053,205$ 6,195,818$

Depreciation expense was $363,389 and $397,180 for the years ended June 30, 2010 and 2009, respectively. NOTE 4: INVESTMENTS WAMC follows Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, which provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:

WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009

Page 8

NOTE 4: INVESTMENTS (Continued)

 Level 1 inputs are unadjusted quoted market prices in active markets that are accessible at the measurement date for identical assets.

 Level 2 inputs are inputs (other than quoted prices included in Level 1) that are observable for the asset, either

directly or indirectly.  Level 3 inputs are unobservable and cannot be corroborated by observable market data.

The asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at June 30, 2010 and 2009.

Common stocks, corporate bonds and U.S. government securities: Valued at the closing price reported on the active market on which the individual securities are traded. Mutual funds: Valued at the net asset value (NAV) of shares held by the plan at year end.

All of WAMC’s investments at both June 30, 2010 and 2009 were classified utilizing Level 1 inputs. The following table sets forth WAMC’s investments:

Fair Unrealized Fair Unrealized Market Cost Gain Market Cost Gain Value Basis (Loss) Value Basis (Loss)

Equity Securities 415,965$ 496,412$ (80,447)$ 438,888$ 555,643$ (116,755)$

Debt Securities 206,751 209,074 (2,323) 243,744 264,195 (20,451)

Mutual Funds 116,528 156,570 (40,042) 94,570 150,370 (55,800)

739,244$ 862,056$ (122,812)$ 777,202$ 970,208$ (193,006)$

June 30, 2010 June 30, 2009

Realized and unrealized gains and losses on investment transactions, as presented in the Statements of Activities, are comprised of the following:

2010 2009

Realized losses 3,097$ 108,349$

Unrealized (gains) losses (70,194) 155,006

Net (gains) losses (67,097)$ 263,355$

Year Ended June 30

WAMC’s equity and debt securities, mutual funds, and other investments are exposed to a variety of market uncertainties, including interest rate and credit risks. The level of risk is such that it is possible that changes in the values of WAMC’s investments could occur in the near term and such changes could materially affect the future amounts reported in the financial statements of WAMC.

WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009

Page 9

NOTE 5: LINE OF CREDIT BORROWINGS WAMC periodically borrows working capital under a secured line of credit agreement with First Niagara Bank which provides for maximum borrowings of $200,000. The agreement, which is reviewed periodically by the bank, provides for borrowings at .25% under the prime lending rate, but In no event less than 4.0% (currently 4.0%). WAMC also periodically borrows under an acquisition line of credit agreement with First Niagara Bank which provides for maximum borrowings of $1,000,000 which may be utilized to facilitate the acquisition of broadcasting property and equipment. The agreement provides for borrowings at interest rates similar to the line of credit. Borrowings require interest only payments for the first twenty-four months and are then amortized over a five year period. Outstanding equipment obligations advanced under this credit agreement are included in Long-Term Debt, in the amount of $278,710 and $311,900 at June 30, 2010 and 2009, respectively. (See Note 6.) NOTE 6: LONG-TERM DEBT Long-term debt is comprised of the following:

June 30 2010 2009

First Niagara Bank, term note dated December 2004, payable in monthly installments of $13,256, including interest at a fixed rate of 6.2%, maturing in December 2011. $ 230,815 $ 370,395

First Niagara Bank, term note dated July 2005, payable in monthly principal installments of $4,400, plus variable interest at .25% under the prime lending rate, but in no event less than 4.0% (currently 4.0%), maturing in July 2012. 110,208 163,108

First Niagara Bank, mortgage note dated December 2005, payable in monthly installments of $16,066, including interest at a fixed rate of 6.8% (subsequent to year end, in July 2010, the interest rate was reduced to 5.5% through maturity), with a balloon payment approximating $1,415,000 due in January 2016. 1,851,005 1,915,697

First Niagara Bank, various equipment acquisition notes, requiring interest only payments for the first 24 months with interest (adjusted monthly) at .25% under the monthly prime lending rate, but in no event less than 4.0% (currently 4.0%), then amortized over 60 installments, currently approximating $5,300, maturing on various dates in 2014 and 2015. 278,710 311,900

Total 2,470,738 2,761,100 Less current portion (332,897) (297,941)

Long-term portion 2,137,841$ 2,463,159$ The First Niagara Bank term notes and other obligations are collateralized by substantially all of WAMC’s buildings, equipment and other pledgible assets.

WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009

Page 10

NOTE 6: LONG-TERM DEBT (Continued) Future principal maturities of the First Niagara Bank obligations are as follows:

Years Ending June 30 Amount

2011 332,897$ 2012 271,112 2013 145,714 2014 146,839 2015 119,580 2016 1,454,596

2,470,738$

Total interest expense approximated $167,300 and $189,800 for the years ended June 30, 2010 and 2009, respectively. NOTE 7: LEASE OBLIGATIONS WAMC leases various properties in connection with their utilization of towers and transmitters at locations in New York and Massachusetts. Leases expire at various dates between 2011 and 2018. The approximate future minimum rental obligations are as follows:

Years Ending June 30 Amount

2011 140,000$ 2012 96,000 2013 76,000 2014 43,000 2015 42,000

Thereafter 44,000

441,000$

Total rental expense under all operating leases was approximately $187,100 and $184,900 for the years ended June 30, 2010 and 2009, respectively. NOTE 8: RETIREMENT PLAN WAMC participates in a salary reduction defined contribution retirement plan sponsored by TIAA-CREF, which covers all full-time employees. Through December 31, 2008, it was the policy of WAMC to contribute 7% of each eligible employee’s salary into the plan. Beginning January 1, 2009, the plan was amended to provide that WAMC contribute 3.5% of each eligible employee’s salary and match each employee’s elective deferrals up to 3.5% of total salary. WAMC’s policy is to fund retirement expense accrued. Total retirement expense for the years ended June 30, 2010 and 2009 was approximately $116,100 and $121,900, respectively. Participant plan contributions are made on a tax-deferred basis in accordance with Section 403(b) of the Internal Revenue Code.

WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009

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NOTE 9: NET ASSETS Unrestricted net assets are comprised of the following:

June 30 2010 2009

Board Designated First Amendment Fund 381,645$ 444,755$

Unrestricted 4,065,371 3,865,668

Total unrestricted net assets 4,447,016$ 4,310,423$

In 2005, WAMC’s Board of Trustees established the First Amendment Fund to promote and preserve the First Amendment and the right of free speech that it guarantees by providing a source of funding to support WAMC if special situations or needs should arise. Use of the First Amendment Fund is at the discretion of the Board of Trustees and, as such, the net assets in the Fund are classified as unrestricted – board designated. NOTE 10: DEFERRED GIVING ARRANGEMENTS WAMC enters into deferred giving agreements with donors to accept and administer various charitable gift annuities. WAMC manages and invests these assets until the agreement expires and the assets are distributed. Split-interest agreements provide for payments to the donors or their beneficiaries based upon either the income earned on related investments or specified annuity amounts. Assets held under these arrangements approximated $374,000 and $361,000 at June 30, 2010 and 2009, respectively, and are reported as investments in the accompanying Statements of Financial Position (see Note 4). Contribution revenue is recognized at the date the trust or annuity contract is established after recording liabilities for the present value of the estimated future payments expected to be made to the donors and/or other beneficiaries. The liabilities for these arrangements, which approximated $239,200 and $263,000 at June 30, 2010 and 2009, respectively, are adjusted annually for amortization of the discount and other changes in the estimate of future payments. Such liabilities are reported as a component of other current liabilities in the accompanying Statements of Financial Position.

SUPPLEMENTARY INFORMATION

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WAMC SCHEDULES OF OTHER SUPPORT AND REVENUE Years Ended June 30, 2010 and 2009

2010 2009

Interest and dividend income 32,253$ 47,647$

Administrative support 10,950 10,800

Income from rental property (net) 40,554 44,243

First Amendment Fund gifts 1,375 4,280

Corporate matching gifts 52,850 58,260

Other contributions 165,433 42,241

Transmitter sublease income 12,000 12,000

Other revenue 64,452 26,809

379,867$ 246,280$

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WAMC SCHEDULE OF FUNCTIONAL EXPENSES (WITH COMPARATIVE TOTALS FOR JUNE 30, 2009) Year Ended June 30, 2010

Total June 30 June 30 Program Fund 2010 2009 Services Raising Totals Totals

Salaries 1,000,534$ 352,204$ 7,634$ 1,360,372$ 966,038$ 179,886$ 2,506,296$ 2,664,532$

Other payroll related expenses 262,056 105,037 2,049 369,142 154,946 33,456 557,544 589,456

Donated services - 10,800 - 10,800 - - 10,800 10,800

Professional and consulting services 100,784 59,394 - 160,178 10,856 56,316 227,350 155,468

Office supplies 8,673 3,096 - 11,769 14,946 18,722 45,437 36,083

Telephone 37,312 40,102 - 77,414 10,698 26,411 114,523 82,133

Rentals - 139,557 - 139,557 7,526 8,457 155,540 161,268

Building supplies and expense - 7,605 - 7,605 12,888 58,764 79,257 71,364

Travel 47,210 2,245 - 49,455 24,165 17,095 90,715 49,287

Program acquisition and production costs 1,343,910 - - 1,343,910 - - 1,343,910 1,377,221

Printing and publications - - 2,725 2,725 - - 2,725 2,651

Utilities 34,037 81,887 - 115,924 189 47,829 163,942 207,313

Insurance 54,931 14,535 1,362 70,828 20,766 11,564 103,157 92,673

Depreciation (net of rental properties) 141,677 145,638 - 287,314 - 29,565 316,879 350,784

Postage and shipping 3,812 1,102 1,521 6,435 32,146 8,060 46,641 44,714

Premiums - - - - 15,984 - 15,984 21,964

Repairs and maintenance - 87,034 - 87,034 - - 87,034 60,671

Dues and subscriptions 8,381 3,115 - 11,496 2,491 4,494 18,481 17,215

Computer networking 56,758 9,066 3,850 69,674 20,365 12,839 102,878 81,407

Interest and other bank charges - - - - - 246,391 246,391 254,106

Other expenses 18,341 943 - 19,284 22,015 25,717 67,016 98,726

3,118,416$ 1,063,359$ 19,141$ 4,200,916$ 1,316,018$ 785,566$ 6,302,500$ 6,429,836$

Supporting ServicesProgram Services

Production Broadcasting Program

Information

Programming and

Management and

General