8-K

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


                                  July 3, 1996
                Date of Report (Date of earliest event reported)


                       CHILDREN'S BROADCASTING CORPORATION
             (Exact name of registrant as specified in its charter)


        Minnesota                     0-21534                   41-1663712
(State or other jurisdiction    (Commission File No.)      (IRS Employer ID No.)
    of incorporation)


              724 First Street North, Minneapolis, Minnesota 55401
                    (Address of principal executive offices)


                                 (612) 338-3300
              (Registrant's telephone number, including area code)




ITEM 5.  OTHER EVENTS

        Children's Broadcasting Corporation (the "Company") is filing Cautionary
Statements pursuant to the Private Securities Litigation Reform Act of 1995 (the
"Act") for use as a reference to a readily available written document in
connection with forward-looking statements, as defined in the Act.


ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

         The following is an Exhibit to this Report:

         99.  Cautionary Statements


                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.


July 8, 1996                         CHILDREN'S BROADCASTING CORPORATION



                                   By: /s/ James G. Gilbertson
                                           James G. Gilbertson
                                           Chief Operating Officer,
                                           Chief Financial Officer and Treasurer



                                  EXHIBIT INDEX

      Exhibit
       Number     Description of Exhibit

         99       Cautionary Statements for purposes of safe harbor provisions
                  of the Private Securities Litigation Reform Act of 1995.

EX-99

                                   EXHIBIT 99


                       CAUTIONARY STATEMENTS FOR PURPOSES
                     OF THE "SAFE HARBOR" PROVISIONS OF THE
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995


         The Company desires to take advantage of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995 (the "Act") and is
filing this Form 8-K in order to do so. Many of the following important factors
have been discussed in the Company's prior SEC filings.

         The Company wishes to caution readers that the following important
factors, among others, in some cases, have affected, and in the future could
affect, the Company's actual results, and could cause the Company's actual
consolidated results for the financial periods ending June 30, 1996 and the
fiscal quarters thereafter through and including 1997, to differ materially from
those expressed in any forward-looking statements made by or on behalf of the
Company. The following factors are in addition to any other cautionary
statements, written or oral, which may be made or referred to in connection with
any forward-looking statements. The following factors may have a material
adverse effect on the business, financial condition, liquidity, results of
operations or prospects, financial or otherwise, of the Company.

        COMPANY DEVELOPMENT; HISTORY OF OPERATING LOSSES. 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 three years ended December
31, 1993, 1994, 1995 and the three months ended March 31, 1996, the Company
incurred net losses of $3,247,000, $4,519,000, $6,107,000 and $1,876,000,
respectively, and anticipates that it will continue to operate at a loss from
operations for the remainder of 1996. Due to such losses, and because the
Company has not generated positive cash flow from operations, the Company has
had frequent working capital shortages. 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. The Company is seeking sources of financing for its future working
capital needs and for future acquisitions, although it has no current
commitments for such financing. Such arrangements could include debt financing
involving the leveraging of the Company's radio station properties under
agreements with asset-based or other lenders. If the Company should be unable to
obtain working capital when required, its operations and prospects would be
materially and adversely affected. At March 31, 1996, the Company had working
capital of approximately $13,100,000, approximately $11,000,000 of which was
committed by the Company to fund planned acquisitions. See "Risk Factors - Risks
Related to Acquisition of Radio Elizabeth."

         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. Under the terms of the Stock Purchase Agreement entered into in
January 1996 between the Company and the sole shareholder of REI, John Quinn
("Seller"), the aggregate consideration for the acquisition was $11,500,000,
$10,000,000 of which was to be paid in cash and the remainder over ten years
pursuant to the terms of a Non-Competition and Consultancy Agreement. On June 1,
1996, pursuant to an agreement of the parties to amend the purchase terms, the
Company and the Seller entered into a Securities Agreement ("Securities
Agreement") pursuant to which the Seller agreed to accept 270,468 shares of the
Company's Common Stock in lieu of $2,500,000 of the cash portion of the purchase
price, and the Company issued such shares in accordance with the Securities
Agreement. In accordance with the Securities Agreement, the Seller or any
subsequent holders were granted certain rights exercisable prior to September 1,
1996 with respect to registration of such shares. To secure the obligation, the
Company escrowed $2,500,000. The Seller has subsequently requested registration
of the shares issued to him, and the Company intends to proceed to file a
Registration Statement under the Act with respect to the shares. If the Company
fails to complete such registration by July 31, 1996, the Seller will have the
right to exchange such shares for the $2,500,000 held in escrow.

         The FCC granted its consent to the transfer of control of REI to the
Company by action taken on April 11, 1996. On May 16, 1996, a "Petition for
Reconsideration or to Set Aside Grant of Application Pending Action on Request
for Declaratory Ruling" was filed by Press Broadcasting Company, Inc. Because of
this filing, the FCC consent to the transfer of control is not a final action,
and is thus subject to possible rescission, review or further appeal. In
recognition of this possibility, the parties entered into an Unwind Agreement at
the closing which provides that in the event of rescission of the FCC grant of
its consent, the parties would "unwind" the transaction which would place the
parties back in their preclosing positions. The Unwind Agreement does not
require the Seller to escrow funds for, or to collateralize his obligations
under, the Unwind Agreement, and the Company would be at risk in the event the
Seller failed, or was unable, to rescind or unwind the transaction. In addition,
if the transfer of control of the FCC license were rescinded by the FCC, the
Company would lose market coverage in all or portions of the New York City AM
radio market, which is currently the largest in the United States. If the
Company would be unable to make an alternate acquisition in such market, the
revenue generated from its network would be materially and adversely affected.

         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 market. WJDM has been broadcasting the Company's Radio AAHS(R) programming
in the nation's largest radio market since February 1, 1996, over its 1660 kHz
frequency pursuant to a local programming and marketing agreement. 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. 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 market, thereby resulting in a
substantial diminution of the value of the Company's investment in REI. Most
radio receivers produced prior to 1990 cannot receive Expanded Band frequencies.

         ADDITIONAL FINANCING REQUIREMENTS. Part of the Company's strategy for
development and expansion of its network includes acquiring and/or operating
radio properties in key United States markets. There can be no assurance that
the Company will be able to identify and complete suitable acquisitions on terms
favorable or acceptable to the Company. In the event the Company purchases
additional stations, the Company will require additional financing. There can be
no assurance that such financing will be available on terms acceptable to the
Company.

         Assuming the Company is able to retain the $2,500,000 held in escrow in
connection with REI, the Company believes that the proceeds from its February
1996 public offering will be sufficient to meet its anticipated cash
requirements through 1996; however, additional financing will be required to
fund future operations and the expansion of its radio network. Additional
financing may be required before the end of 1996 if the growth of the network
exceeds the Company's current expectations, if revenue goals are not met, or if
the Company is presented with opportunities for acquisitions which exceed the
Company's financial resources. In addition, if the Company is obligated to pay
$2,500,000 to the Seller in lieu of the shares delivered in the REI transaction
as described above, the Company will not have sufficient working capital
anticipated to be needed for 1996 operations and will require financing for
operations as well as to fund acquisitions. 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.

         ACCEPTANCE OF RADIO FORMAT. The Company produces and distributes a
unique 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
rating service. Such ratings are generally used by potential advertisers in
making advertising decisions. The Company is working with ratings services 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.

         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 successful in retaining
existing affiliates or attracting additional affiliates. Since the inception of
the network a total of eight former affiliate stations have discontinued their
affiliation. In cases where the Company deems it appropriate, the Company
intends to seek alternate affiliates by entering into affiliation agreements or
local marketing agreements ("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 establishing its network. 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 ancillary 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 year
ended December 31, 1995, the Company's network, which is in a development phase,
generated $1,059,000 in revenue. For the years ended December 31, 1993, 1994 and
1995, approximately 45%, 51% and 42%, respectively, of the Company's revenue was
derived from its radio stations which do not carry the Radio AAHS format:
KTEK-AM, Houston, Texas, KCNW-AM, Kansas City, Kansas, WZER-AM, Milwaukee,
Wisconsin and KYCR-AM, Minneapolis, Minnesota. For each of the years in the
three year period ended December 31, 1995, the Company derived approximately
13%, 16% and 13%, respectively, of its revenue from KTEK-AM; approximately 10%,
11% and 9%, respectively, of its revenue from KCNW-AM; approximately 11%, 12%
and 11%, respectively, of its revenue from WZER-AM; and approximately 11%, 12%
and 9%, respectively, of its revenue from KYCR-AM. If the Company converts any
of these stations to the Radio AAHS format, its revenue may be negatively
affected until a new advertising base is developed for the Radio AAHS 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, or that the Company will be able to generate sufficient advertising
revenue to operate profitably in the future.

         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.
None of the members of the Company's current senior management team is 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 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 certain management services with Community
Airwaves Corporation ("CAC"), which are provided by another entity, Radio
Management Corporation ("RMC"), owned by Messrs. Dahl, Perkins and Cowles, who
also own CAC. The management services consist of administrative, legal and
accounting services. Such arrangements involve potential conflicts of interest
in connection with the pricing of services provided. In addition, CAC may
acquire interests in additional stations. Such ownership would, under current
FCC regulations, limit the number of additional radio stations which the Company
may acquire. 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. Such agreement may result in conflicts of interest with members of the
Company's management and could be detrimental to the Company. The Company has
also entered into an affiliation agreement with a subsidiary of CAC subject to
its acquisition of a radio station in Honolulu, Hawaii.

         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. 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 Radio AAHS. 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 Radio AAHS format could be imitated by others
seeking to enter the children's radio field.

         FCC REGULATION. Although the radio broadcast licenses of the stations
owned by the Company are already granted, their continuation and the continued
licensing of any radio station acquired by the Company depend upon 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.

         CONTROL BY PRINCIPAL SHAREHOLDERS. Approximately 38% 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.
See "Principal Shareholders."

         NO ASSURANCE AS TO LIQUIDITY ON THE NASDAQ NATIONAL MARKET. 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 Company issued 290,213 shares of convertible preferred stock in connection
with its merger with a California corporation, licensee of radio station
KPLS-AM, Orange County, California. The convertible preferred stock ranks senior
to Common Stock and all other series of preferred stock as to payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up of the Company, voluntary or involuntary.

         SHARES ELIGIBLE FOR FUTURE SALE. Additional shares of Common Stock of
the Company may be issued from time to time upon the exercise of outstanding
stock options, the conversion of outstanding convertible preferred stock and the
exercise of outstanding stock purchase warrants. Certain holders thereof have
registration rights with respect to such shares. The Company has registered
under the Securities Act of 1933, as amended, 1,614,802 shares of Common Stock
which was either outstanding as "restricted securities" or shares issuable upon
exercise of outstanding warrants. Such issuances, or the resale of Common Stock
owned or to acquired by Selling Shareholders in connection with such
registration, could have an adverse effect on the market price of the Company's
Common Stock.