U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-KSB

                     ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: September 30, 2002        Commission file No. 0-13167


                                TM CENTURY, INC.
                 (Name of small business issuer in its charter)

    Delaware                                             73-1220394
(State of incorporation)                      (IRS Employer Identification  No.)


2002 Academy, Dallas, Texas                                                75234
(Address of principal executive offices)                              (Zip Code)

Issuer's telephone number:                                        (972) 406-6800

Securities registered pursuant to Section 12(b) of the Exchange Act:        None

Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.01 Par Value

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes X  No
                                                             ---   ---

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB

The issuer's revenue for its most recent fiscal year was $5,191,706.

The  aggregate  market value of the voting stock held by  non-affiliates  of the
issuer on September 30, 2002 based upon the average bid and asked prices of such
stock on that date was $234,433.  The number of issuer's  shares of Common Stock
outstanding as of September 30, 2002 was 2,481,193.

                       DOCUMENTS INCORPORATED BY REFERENCE

Certain  information  contained in the Company's 2002  Information  Statement is
incorporated by reference in Part III.

Transitional Small Business Disclosure Format (check one): Yes    No X
                                                              ---   ---


<PAGE>

                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS

General
-------

TM  Century,  Inc.  (the  "Company")  is  engaged  primarily  in  the  creation,
production, marketing, and worldwide distribution of music libraries, production
libraries, comedy services, station identification and commercials for broadcast
multimedia use.

TM Century's clients include radio and television stations;  radio,  television,
satellite  and Internet  networks;  web sites and portals;  the American  Forces
Radio Network;  advertising agencies; post production studios; cable facilities;
and a wide variety of commercial businesses.

The  Company  was  incorporated  as a Delaware  corporation  on May 2, 1984.  In
October 1990, the Company  changed its name from TM  Communications,  Inc. to TM
Century,  Inc.  following an August 1990 business  combination  transaction with
Century 21 Programming, Inc. The Company's principal offices are located at 2002
Academy, Dallas, Texas 75234, and its telephone number is (972) 406-6800.

Products
--------

The Company  creates,  produces,  markets,  and  distributes  musical  goods and
services for multimedia  clients  worldwide.  In fiscal 2002 the Company had two
product categories, Music Services and Jingles.

Music Services include compilations of popular music, audio production elements,
sales libraries, and comedy and show preparation elements for broadcast.

HitDisc(R), GoldDisc(R), GoldDrive(R), and GoldWav(TM) provide copyrighted music
in various  media forms to radio  stations,  satellite  and  Internet  networks,
websites,   the  American  Forces  Radio  Network  and  commercial   businesses.
HitDisc(TM)  provides a weekly  service of new record  releases,  while the Gold
product line  provides  compilation  libraries,  by format,  of Top Twenty music
titles for the past fifty years on compact disc, MP2 or .wav format.

Audio Architecture(R),  Imagio(R), and ImagioPlus(TM), are subscription services
which provide  original  recordings of music beds and sound effects  written and
produced by the Company as sources of production material for radio/TV stations,
post production  houses,  web sites and commercial  businesses.  These services,
along with production libraries are available in a variety of musical styles and
are  used  as  background   music  for  contests,   promotional   announcements,
commercials, film or audio video presentations and web sites. These products are
available on compact discs or available for download from the Company's website.

JingleBank(R) is a library of commercial  jingles available for licensing by any
business either in the generic form or customized for the individual customer.

The Company's  Show Prep and Comedy service  consists of topical  drops,  songs,
bits and parodies  primarily used in morning radio show broadcasts,  provided on
compact disc and online.

Jingles  are short  identity  songs for radio  and  Internet  broadcasters  that
promote name recognition. The Company's Jingle and ID Division can create custom
jingles  or  customize  existing  jingles  to meet  the  specific  needs of each
customer.  Studio  Dragonfly(TM) offers syndicated jingles at a discounted price
online.  All jingles are written and produced through the Company's  studios and
are provided to the customer on compact disc.


                                       2
<PAGE>

During  2002 the Company  filed for a patent on a process to deliver  content to
consumers via the Internet.  The Company believes  Sold-Rite(TM) (Secure On Line
Delivery Of Recordings,  Information,  Text and Entertainment) holds the promise
of becoming a major platform from which consumers around the globe would acquire
music,  films,  television  programs,  books, games and other content that lends
itself to electronic  distribution.  The potential of  Sold-Rite(TM)  is largely
unknown at this point in time and depends  significantly  on the actual issuance
of a patent and marketplace acceptance.

Products  provided  to clients on compact  disc are  mastered by the Company and
replicated  in-house  on compact  discs  available  from a number of  suppliers.
Management  believes  that the loss of the current  sources of supply  would not
cause any  significant  interruption of the Company's  operations,  as there are
several alternative sources of compact discs available.

Due to the wide  variety of music  services in multiple  formats  offered by the
Company on compact disc, a significant number of compact discs are maintained on
the premises.  The  implementation of in-house disc replication for all products
during 2001 allows greater  control over inventory  levels  necessary to satisfy
shipping requirements on a timely basis, however,  certain inventory levels must
be maintained for products produced in prior periods.

Set  forth  in the  following  tables  are  the  Company's  gross  revenues  (in
thousands) by  significant  product  category for the years ended  September 30,
2002 and 2001.

     (Dollar Amounts in Thousands)
                                                            2002          2001
                                                         ----------   ----------
     Music Services                                      $    4,023   $    4,959
     Jingles                                                  1,161        1,034
     Other                                                        8           50
                                                         ----------   ----------
     Total                                               $    5,192   $    6,043
                                                         ==========   ==========

Marketing and Distribution
--------------------------

The Company  currently sells and supplies its products and services to customers
in the United  States,  Canada,  Mexico and other parts of the world through its
sales staff in Dallas,  Texas.  Sales are made through  telephone  solicitation,
advertising in trade magazines, trade convention displays, and the Internet. The
Company  also  sells  its  products  through   distribution   arrangements  with
independent  sales agents  worldwide.  Other than fees paid to independent sales
agents,  no other  significant  costs are incurred by the Company in conjunction
with its international sales activities. Products are shipped from the Company's
headquarters via mail and express delivery services.

Sales of music and  production  libraries  are made  primarily on an  individual
order basis. Contractual agreements for subscription services generally call for
equal  monthly  payments  by the  customer  over terms of up to 36  months.  The
Company's  other  products are generally  sold  pursuant to  individual  orders.
Products are sold either for cash or barter, depending upon the customer. Barter
revenue is derived from obtaining airtime from radio stations and marketing such
airtime to advertisers.

Customers
---------

The Company's  business is largely  dependent  upon the  broadcasting  industry.
Revenues  are  generated  from  sales to  customers  in the  United  States  and
worldwide.  According  to  industry  publications,  approximately  13,000  radio
stations are licensed by the Federal Communications  Commission (FCC) for public
broadcasting in the United States. Management believes that approximately 11,000
stations in the U. S. may require  products and services of the type provided by
the Company. No single customer has accounted for more than 10% of the Company's
revenues  in any of the  past two  years.  In  fiscal  2002  the  Company  saw a


                                       3
<PAGE>

significant  increase in its sales of music  libraries  outside the  traditional
broadcast  industry  as a result of efforts  to target  satellite  and  Internet
networks, post production facilities, and commercial businesses.

Gross revenues from foreign sales totaled  $885,000,  and $970,000 for the years
ended 2002 and 2001, respectively.

Competition
-----------

The Company  competes with several other music  syndicators  that provide either
music libraries or radio jingle packages to the broadcast  industry.  Management
believes the Company  offers a broader array of broadcast  products and services
than any of its  competitors.  Competing  radio  program  syndicators  generally
provide jingles,  production libraries, or music on tape, records, compact disc,
or via  satellite.  Management  believes  the  Company  is  one  of the  leading
suppliers  of radio  music  services  and the  largest  supplier  of radio music
services on compact  disc.  The Company  competes  with several  hundred  jingle
producers,  however,  management believes only a few specialize in radio station
identification  materials.  Management believes the Company is one of the larger
suppliers of radio station identification jingles in the industry. Several dozen
providers of production libraries compete with the Company.  Management believes
the Company is one of the major  suppliers of production  libraries to the radio
industry.  While  certain  competing  products may be  considered to be equal in
price or technical  performance,  management  believes the Company also competes
effectively on the basis of quality and creativity within each product line.

Seasonality
-----------

The Company is not subject to strong seasonal fluctuations.  However,  quarterly
results are affected by the  introduction of new products and timing of customer
orders.  Because profit margins on the Company's many products vary, the results
for any  quarter  are not  necessarily  indicative  of the  results  that may be
achieved for a full fiscal year.

Trademarks and Copyrights
-------------------------

The Company markets products under various names and trademarks which management
believes provide the Company's products with international industry recognition.
The Company  holds  hundreds of  registered  copyrights  on sound  recordings of
original  music and radio station  jingles.  Management  believes its copyrights
have  significant  value,  as the Company  derives a significant  portion of its
income from the licensed use of its sound recordings and additional  performance
royalties (ASCAP) earned as a result.

Employees
---------

As of December 1, 2002, the Company had  approximately  40 full-time  employees.
The Company also contracts with other personnel and  subcontractors  who provide
creative talent for various projects on an as-needed basis.

ITEM 2.   DESCRIPTION OF PROPERTY

The Company's  principal  operations  are conducted  from a leased 47,000 square
foot office and production facility located at 2002 Academy,  Dallas, Texas. The
facility is comprised of sales and administrative offices and recording studios.
The  facility  is leased  from  unaffiliated  third  parties  under a lease that
expires August 31, 2010.  During fiscal 2002 the Company entered into agreements
with  unrelated  third  parties to sublease  approximately  6,300 square feet of
space for a term ending August 31, 2003.  Management  believes that the facility
currently  occupied is  sufficient  for its existing  activities  and  potential
growth for the foreseeable future.

ITEM 3.   LEGAL PROCEEDINGS

None


                                       4
<PAGE>

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters  submitted  to a vote of the  Company's  security  holders
during the fourth quarter of the fiscal year ended September 30, 2002.

                                    PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's common stock is thinly traded in the over-the-counter market under
the symbol "TMCI".  The following table sets forth,  for the periods shown,  the
range of the high and low bid quotations  for the Company's  common stock in the
over-the-counter  market as reported by NASDAQ.  The Company was de-listed  from
NASDAQ in  February  1997 for not meeting the  minimum  NASDAQ  SmallCap  market
requirements. Since that time the stock continues to be traded on the OTC market
with  quotations   obtained  from  the  OTC  bulletin   board.   Quotations  are
inter-dealer quotations,  without retail markups, markdowns or commissions,  and
do not necessarily represent actual transactions.

                                                             Common Stock Bid
                                                          ----------------------
                                                            High           Low
                                                          --------       -------
     Fiscal 2002:
                    1st Quarter                           $    .55       $   .45
                    2nd Quarter                                .55           .36
                    3rd Quarter                                .45           .40
                    4th Quarter                                .41           .27

     Fiscal 2001:
                    1st Quarter                           $    .81       $   .44
                    2nd Quarter                               1.00           .50
                    3rd Quarter                                .75           .74
                    4th Quarter                                .74           .45


As of September 30, 2002 the Company had approximately 195 record owners and 202
beneficial owners of its common stock. The Company has not paid dividends on the
common stock and does not anticipate paying dividends in the foreseeable future.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward-Looking Statements
--------------------------

This Annual  Report  contains  forward-looking  statements  about the  business,
financial  condition and prospects of the Company that reflect  assumptions made
by management and management's beliefs based on information  currently available
to it. The Company can give no assurance that the expectations indicated by such
forward-looking  statements will be realized. If any of management's assumptions
should prove incorrect, or if any of the risks and uncertainties underlying such
expectations  should  materialize,  the  Company's  actual  results  may  differ
materially from those indicated by the forward-looking statements.

The key factors  that are not within the  Company's  control and that may have a
direct bearing on operating  results include,  but are not limited to, continued
maturation  of  the  domestic  and   international   markets  for  compact  disc
technology;  acceptance by the  customers of the Company's  existing and any new
products and formats;  the development by competitors of products using improved
or alternative  technologies and the potential obsolescence of technologies used
by the Company;  the  continued  availability  of  software,  hardware and other
products obtained by the Company from third parties; dependence on distributors,


                                       5
<PAGE>

particularly  in the  international  market;  the  retention of  employees;  the
success  of the  Company's  current  and  future  efforts  to  reduce  operating
expenses;  the effectiveness of new marketing  strategies;  and general economic
conditions including, but not limited to, terrorist attacks on the United States
and the effect on the economy in general and on the  Company's  revenue  base in
particular.  Additionally,  the  Company may not have the ability to develop new
products  cost-effectively.  There  may be other  risks and  uncertainties  that
management is not able to predict.

When used in this Annual Report, words such as "believes," "expects," "intends,"
"plans,"  "anticipates,"  "estimates"  and similar  expressions  are intended to
identify   forward-looking   statements,   although   there   may   be   certain
forward-looking   statements   not   accompanied   by  such   expressions.   All
forward-looking statements are intended to be covered by the safe harbor created
by section 21E of the Securities Exchange Commission Act of 1934.

Liquidity and Capital Resources
-------------------------------

The Company relies upon current sales of music libraries and jingles on terms of
cash upon delivery for operating  liquidity.  Liquidity is also provided by cash
receipts from  customers  under  contracts for  production  libraries and weekly
music service contracts having terms of one month to three years. The Company is
obligated  to provide  music  updates  throughout  the  contract  terms for both
production library and weekly music service contracts.  Sales of music libraries
and jingles and the payments under  production  library and weekly music service
contracts will provide, in the opinion of management, adequate liquidity to meet
operating requirements at least through the end of fiscal 2003.

The Company  experienced  a net loss of  approximately  $57,000 in fiscal  2002,
compared  to net income of  $332,000  in 2001.  The  majority  of the  Company's
clients are  businesses  that are  dependent  upon  advertising  sales for their
income.  The decline in advertising sales experienced by the broadcast  industry
in the fourth  quarter of fiscal 2001 continued into the first quarter of fiscal
2002 and was  exacerbated by the events of September 11, 2001.  These events had
an immediate and significant impact on the Company's revenues in the first three
quarters of 2002. The fourth quarter of fiscal 2002 reflected positive growth in
the advertising industry,  which management believes will continue into the next
fiscal year. During fiscal 2002, the Company incurred  approximately  $95,000 in
capital  expenditures  for the  purchase of property and  equipment  compared to
capital expenditures of approximately  $156,000 in 2001. Capital expenditures in
2002 were  primarily  associated  with  upgrades of production  equipment  while
capital  expenditures in 2001 represented the conversion of warehouse space into
office space in addition to production equipment purchases.  Product development
costs of $158,000 were incurred  during fiscal 2002 for new music  libraries and
music library  updates,  which compares to product  development  expenditures of
$192,000 in 2001. The Company purchased 2,000 shares of treasury stock at a cost
of $1,500 through the stock repurchase plan authorized by the Board of Directors
on October 29, 2001.  Funds for operating needs,  new product  development,  and
capital  expenditures  for the year ended  September 30, 2002 were provided from
operations and cash reserves.  The Company  generated cash flows from operations
of  approximately  $117,000 in 2002  primarily  due to the net loss for the year
(offset by changes in operating  assets and  liabilities),  compared to $547,000
for 2001 which  included net income of  approximately  $332,000.  The  Company's
expenditures  for  property,  equipment,  and  development  of new  products are
discretionary. Product development expenditures are expected to be approximately
$170,000 in fiscal 2003. The Company has no other  significant  commitments  for
capital expenditures in fiscal 2003. Management  anticipates that cash flow from
operations and cash reserves will be sufficient to meet capital requirements.


Effective  January 2, 1999, the Company  purchased the remaining 50% interest of
certain  comedy  material  that was written and  produced by an  individual  for
broadcast  by radio  stations  and  marketed by the  Company,  resulting  in the
Company  owning 100% of such comedy  service.  For  consideration  of the comedy
material and the Company being able to use the  individual's  name in connection
with  promoting the Comedy Service the Company agreed to pay to the individual a
total of $124,000, payable over five years through December 2, 2003.


                                       6
<PAGE>

Customer deposits  increased to $167,000 as of September 30, 2002, from $160,000
as of  September  30,  2001,  for  deposits  received  from  customers  ordering
products.  The balance in  customer  deposits  is  dependent  upon the timing of
customer orders for compact disc libraries, jingles, and production libraries.

The Company has net  operating  loss  carryforwards  of  approximately  $560,000
available to offset  future  taxable  income  expiring in 2011  through  2022. A
valuation  allowance of  approximately  $360,000 has been provided to reduce the
total net  deferred tax asset to zero  because of the  uncertainty  that the tax
assets will be realized.  Realization  is dependent upon  generating  sufficient
taxable income prior to the expiration of the loss carryforwards.

Results of  Operations
----------------------

Fiscal 2002 Compared to Fiscal 2001
-----------------------------------

The Company  experienced a net loss of $57,000 in 2002 compared to net income of
$332,000  in 2001.  This loss was  primarily  the result of a 14.1%  decrease in
revenues from $6.0 million in 2001 to $5.2 million in 2002. The overall decrease
was due to a decrease in advertising revenues, which decreased from $2.4 million
in 2001 to $1.7 million in the current  year,  combined  with a 9.0% decrease in
international revenues.

The majority of the Company's  clients are businesses that depend on advertising
sales for their income.  The serious recession in advertising  expenditures this
year has caused  most,  if not all, of these  businesses  to curtail or postpone
spending,  especially in  non-essential  products such as those  marketed by the
Company.  It is management's view that the worst of the recession has passed and
a  return  to  positive  growth  trends  for  advertising  is  expected  and was
experienced in the third calendar  quarter of this year.  This trend is expected
to result in  increased  spending  on  products  such as those  marketed  by the
Company in the near future,  although the positive  impact  cannot be determined
with any certainty.

Music services revenue  generated from cash sales decreased  $244,000,  or 9.5%.
Barter revenue decreased $724,000, or 30.3%, which is attributable to a decrease
in  advertising  rates for barter  service.  Barter  revenues  are derived  from
obtaining  airtime from radio  stations in exchange  for products and  marketing
such airtime to advertisers.

As the compact disc music  library  market  matures,  sales of compact discs are
generated  primarily  from  changes  in music  formats  or  sales  of new  music
libraries rather than from conversions to compact disc music library technology.
The market for compact disc music libraries to broadcast customers has reached a
substantial  level of  maturity in the United  States,  which is the market from
which the Company  derives  most of its music  library  revenues.  However,  the
advent of  computer-based  music storage has opened a new market to the Company;
delivering  music in a form (.wav file  format  and MPEG  format)  which is more
conducive,  convenient  and cost  efficient  for  operators  to load onto  their
computer-based broadcast systems. A decline in revenues from music library sales
may result in a  proportionately  greater  decline in operating  income  because
music  libraries  provide  higher  margins than the  Company's  other  products.
However,  management  believes  that  revenues  from weekly music  services will
either remain relatively  unchanged or continue to grow by introducing new music
libraries to the market.  Management believes the international markets have not
reached maturity for compact disc technology.  Renewals and new sales growth are
subject to customer acceptance of the new products.

Music library revenues may also be adversely  affected as radio stations convert
to new  music  delivery  systems  technology  offered  by  competitors,  such as
computer  hard  drives  which  store music in a digital  compression  form.  The
Company began  providing  music libraries on hard drive to the radio industry in
1997. An increasing number of radio stations are converting to or adding systems
using  digital  technology.  Although  music  libraries  on compact  disc can be
transferred  to hard drive  systems,  some of the equipment  manufacturer's  are
offering hard drives with pre-loaded music libraries.

Jingles revenue increased  approximately $127,000, or 12.3%. Royalties increased
$64,000 over the same period in 2001.


                                       7
<PAGE>

Commissions as a percentage of revenues  decreased to 16.0% of revenue in fiscal
2002 from 19.0% of revenue in fiscal  2001.  This  decrease is due to changes in
the revenue  structure where a greater  percentage of international  revenue was
derived from direct sales rather than through third-party representatives.

Production,  programming  and technical  costs decreased 3.3% to $1.6 million in
2002 from $1.7 million in 2001.  The  decrease is primarily  due to lower direct
costs  resulting  from the  conversion  to in-house  compact  disc  replication,
combined  with  cost  saving  measures  implemented  in  all  other  aspects  of
production and shipping.

General and  administrative  costs  decreased  $22,000,  or 1.2%.  A decrease of
approximately  $82,000 in  administrative  salaries,  which  occurred  due to no
incentive  bonus  payments  in the  current  year,  was offset by  increases  in
professional fees, travel, and facilities maintenance.  Approximately $70,000 in
professional  fees and other  expenses  were  related to the  application  for a
patent for Sold-Rite (Secure On Line Delivery Of Recordings,  Information,  Text
and Entertainment),  a process to deliver content to consumers via the Internet.
The Company  believes  Sold-Rite  holds the promise of becoming a major platform
from which  consumers  around the globe would acquire music,  films,  television
programs,  books,  games and  other  content  that  lends  itself to  electronic
distribution.  The  potential of  Sold-Rite is largely  unknown at this point in
time  and  depends  significantly  on  the  actual  issuance  of  a  patent  and
marketplace acceptance

Selling costs  reflected a decrease of $75,000,  or 8.3% in 2002 over 2001. Cost
of sales  personnel  decreased  as  commission-based  salaries  reflected  lower
overall revenues, offset by an increase in advertising costs.

Depreciation and amortization  expense increased $6,700, or 4.7%, primarily as a
result purchases to replace outdated equipment.

Critical Accounting Policies
----------------------------

The  Consolidated  Financial  Statements  have been prepared in accordance  with
accounting principles generally accepted in the United States, which require the
Company to make estimates and  assumptions  that affect the reported  amounts of
assets and liabilities at the date of the Consolidated Financial Statements, and
revenues and expenses during the periods  reported.  Actual results could differ
from those  estimates.  The Company  believes  the  following  are the  critical
accounting  policies  which  could  have  the  most  significant  effect  on the
Company's reported results and require the most difficult, subjective or complex
judgments by management.

Inventories and Product Development Costs:

Inventories  are carried at the lower of average  cost on a first-in,  first-out
("FIFO") basis or market, and charged to expense as follows:

         Music  libraries  -  The  Company   produces  music   compilations  and
         background  music  libraries which are provided to clients under one to
         three year  lease  contracts  or under  buyout  arrangements.  Costs of
         current  music update  services are charged to expense in the period in
         which incurred.

         Identification  Jingles  -  Jingles  provide  short  identity  songs to
         clients  in order to  promote  name  recognition.  The costs to produce
         jingles are expensed upon delivery of the product.

Product  development  costs (the costs to develop new libraries and updates) are
carried  at actual  cost and are  amortized  on a  straight-line  basis over the
economic life of the product (typically, three to five years).

The  provision  for obsolete  and  slow-moving  inventory  is adjusted  based on
current inventory levels, historical and expected future sales levels.


                                       8
<PAGE>

Revenue Recognition:

Revenues are recognized according to contract terms as follows:

         Library  Lease  Contracts  - Monthly  upon  delivery  of the product in
         accordance with the terms of the lease contracts.

         Library Buyouts - Upon delivery of the product.

         Identification Jingles - Upon delivery of the product.

         Barter  Contracts - Monthly,  as advertising  revenues are generated by
         third party agents,  in accordance  with the terms of the library lease
         contracts.

Accounting Matters
------------------

The Financial Accounting Standards Board ("FASB") periodically issues accounting
standards  that may  affect  the  financial  accounting  or  disclosures  of the
Company.  There are no accounting  standards that have been issued,  but not yet
adopted by the  Company,  which  would have a material  effect on the  financial
position or results of operations of the Company.

Inflation and Foreign Currency Fluctuations
-------------------------------------------

To date,  inflation and foreign  currency  fluctuations  have not had a material
impact on the Company's  operations.  There can be no assurance,  however,  that
future  inflation  or foreign  currently  fluctuations  will not have a material
adverse  effect  on the  Company,  or that the  Company  will be able to pass on
resulting  cost  increases  without  experiencing  a reduction in demand for its
products.





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                                       9
<PAGE>

ITEM 7.   FINANCIAL STATEMENTS


                        TM CENTURY, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Certified Public Accountants                            11

Consolidated Financial Statements:

Consolidated Balance Sheets at September 30, 2002 and 2001                    12

Consolidated Statements of Operations for the Years Ended
   September 30, 2002 and 2001                                                13

Consolidated Statement of Stockholders' Equity for the Years Ended
   September 30, 2002 and 2001                                                14

Consolidated Statements of Cash Flows for the Years Ended
   September 30, 2002 and 2001                                                15

Notes to Consolidated Financial Statements                                    16




















                                       10
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To The Board of Directors
TM Century, Inc.

We have audited the accompanying consolidated balance sheets of TM Century, Inc.
and subsidiaries as of September 30, 2002 and 2001, and the related consolidated
statements of  operations,  stockholders'  equity,  and cash flows for the years
then ended.  These financial  statements are the responsibility of the Company'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 audits 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 consolidated  financial position of TM Century, Inc.
and subsidiaries as of September 30, 2002 and 2001, and the consolidated results
of their  operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.




                                                 /s/ KING GRIFFIN & ADAMSON P.C.
                                                --------------------------------

Dallas, Texas
November 22, 2002

















                                       11
<PAGE>
<TABLE>
<CAPTION>

                        TM Century, Inc. and Subsidiaries
                           Consolidated Balance Sheets


                                     ASSETS

                                                                                            September 30, 2002   September 30, 2001
                                                                                            ------------------   ------------------
<S>                                                                                         <C>                  <C>
CURRENT ASSETS
       Cash and cash equivalents                                                            $          459,649   $          464,631
       Short-term investments                                                                          645,452              634,049
       Accounts receivable, less allowance for doubtful accounts
        of $49,181 and $84,589, respectively                                                           635,814              540,488
       Inventories, net of allowance for obsolescence of $258,000 for both periods                     369,779              420,260
       Prepaid expenses                                                                                 88,577               66,824
                                                                                            ------------------   ------------------
             TOTAL CURRENT ASSETS                                                                    2,199,271            2,126,252

PROPERTY AND EQUIPMENT                                                                               2,981,103            2,886,485
       Less accumulated depreciation and amortization                                               (2,556,719)          (2,406,438)
                                                                                            ------------------   ------------------
             NET PROPERTY AND EQUIPMENT                                                                424,384              480,047

PRODUCT DEVELOPMENT COSTS, net of accumulated amortization
       of $502,474 and $1,950,432, respectively                                                        403,455              403,800
COMEDY MATERIAL RIGHTS, net of accumulated amortization
       of $93,000 and $68,200, respectively                                                             31,000               55,800
OTHER ASSETS                                                                                             7,560               19,804
                                                                                            ------------------   ------------------

       TOTAL ASSETS                                                                         $        3,065,670   $        3,085,703
                                                                                            ==================   ==================


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
       Current portion of note payable                                                      $           12,000   $           13,556
       Accounts payable                                                                                 30,956               11,019
       Accrued expenses                                                                                 87,065              110,015
       Deferred revenue                                                                                129,484               80,882
       Customer deposits - current                                                                      59,645               72,320
                                                                                            ------------------   ------------------
             TOTAL CURRENT LIABILITIES                                                                 319,150              287,792

NOTE PAYABLE, less current portion                                                                       3,000               16,000
CUSTOMER DEPOSITS - non-current                                                                        107,170               87,517
                                                                                            ------------------   ------------------
             TOTAL LIABILITIES                                                                         429,320              391,309

STOCKHOLDERS' EQUITY
       Common stock, $.01 par value; authorized 7,500,000 shares; 2,970,481 shares issued;              29,705               29,705
       2,481,193 and 2,483,193 shares outstanding, respectively
       Additional paid-in capital                                                                    2,275,272            2,275,272
       Retained earnings                                                                             1,624,100            1,680,644
       Treasury stock - at cost, 489,288 and 487,288 shares, respectively                           (1,292,727)          (1,291,227)
                                                                                            ------------------   ------------------
             TOTAL STOCKHOLDERS' EQUITY                                                              2,636,350            2,694,394
                                                                                            ------------------   ------------------

       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                           $        3,065,670   $        3,085,703
                                                                                            ==================   ==================
</TABLE>

The  accompanying  notes are an intergral part of these  consolidated  financial
statements.

                                       12
<PAGE>

                        TM Century, Inc. and Subsidiaries
                      Consolidated Statements of Operations



                                                      Year ended September 30,
                                                     --------------------------
                                                         2002           2001
                                                     -----------    -----------

REVENUES                                             $ 5,191,706    $ 6,043,418
      Less  Commissions                                  829,343      1,147,757
                                                     -----------    -----------
           NET REVENUES                                4,362,363      4,895,661

COSTS AND EXPENSES
      Production, Programming, and Technical Costs     1,604,888      1,659,269
      General and Administrative                       1,847,607      1,869,515
      Selling Costs                                      833,749        908,833
      Depreciation                                       150,281        143,561
                                                     -----------    -----------
           TOTAL COSTS AND EXPENSES                    4,436,525      4,581,178

                                                     -----------    -----------
OPERATING INCOME (LOSS)                                  (74,162)       314,483

OTHER INCOME (EXPENSE)
      Interest income                                     14,787         18,081
      Other income (expense), net                          2,831           (853)
                                                     -----------    -----------
           TOTAL OTHER INCOME                             17,618         17,228
                                                     -----------    -----------

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES          (56,544)       331,711

PROVISION FOR INCOME TAXES                                  --             --

                                                     -----------    -----------
NET INCOME (LOSS)                                    $   (56,544)   $   331,711
                                                     ===========    ===========


BASIC NET INCOME PER COMMON SHARE                    $     (0.02)   $      0.13
                                                     ===========    ===========

DILUTED NET INCOME PER COMMON SHARE                  $     (0.02)   $      0.13
                                                     ===========    ===========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING             2,481,443      2,483,193
                                                     ===========    ===========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING,
      ASSUMING DILUTION                                2,481,443      2,492,358
                                                     ===========    ===========

The  accompanying  notes are an intergral part of these  consolidated  financial
statements.


                                       13
<PAGE>
<TABLE>
<CAPTION>

                        TM Century, Inc. and Subsidiaries
                 Consolidated Statement of Stockholders' Equity
                     Years Ended September 30, 2002 and 2001



                                       Common Stock                                          Treasury Stock
                              -------------------------    Additional                  -------------------------       Total
                                Number of                   Paid-In       Retained      Number of       Amount     Stockholders'
                                 Shares        Amount       Capital       Earnings        Shares      (at cost)        Equity
                              -----------   -----------   -----------   -----------    -----------   -----------    -----------

<S>                           <C>           <C>           <C>           <C>                <C>       <C>            <C>
BALANCE, SEPTEMBER 30, 2000     2,970,481   $    29,705   $ 2,275,272   $ 1,348,933        487,288   $(1,291,227)   $ 2,362,683

Net Income                           --            --            --         331,711           --            --          331,711
                              -------------------------------------------------------------------------------------------------

BALANCE, SEPTEMBER 30, 2001     2,970,481        29,705     2,275,272     1,680,644        487,288    (1,291,227)     2,694,394

Repurchase of Stock                  --            --            --            --            2,000        (1,500)        (1,500)

Net Loss                             --            --            --         (56,544)          --            --          (56,544)
                              -------------------------------------------------------------------------------------------------

BALANCE, SEPTEMBER 30, 2002     2,970,481   $    29,705   $ 2,275,272   $ 1,624,100        489,288   $(1,292,727)   $ 2,636,350
                              =================================================================================================
</TABLE>




















The  accompanying  notes are an intergral part of these  consolidated  financial
statements.


                                       14
<PAGE>
<TABLE>
<CAPTION>

                        TM Century, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flow

                                                                                   Year ended September 30,
                                                                                   ------------------------
                                                                                      2002          2001
                                                                                   ----------    ----------
<S>                                                                                <C>           <C>

OPERATING ACTIVITIES
     Net income (loss)                                                             $  (56,544)   $  331,711
     Adjustments to reconcile net income (loss) to
     net cash provided by operating activities
            Depreciation and amortization of property and equipment                   150,281       143,561
            Amortization of product development costs and comedy material rights      182,676       190,681
            Provision for doubtful accounts                                            16,750        16,250
     Increase (decrease) from changes in operating assets and liabilities:
            Accounts receivable                                                      (112,076)      137,259
            Inventories                                                                50,481        28,033
            Product development costs                                                (157,531)     (192,440)
            Prepaid expenses                                                          (21,753)      (22,139)
            Other assets                                                               12,244          --
            Accounts payable and accrued expenses                                      (3,013)      (40,816)
            Deferred revenue                                                           48,602       (19,968)
            Customer deposits                                                           6,978       (25,151)
                                                                                   ----------    ----------
     NET CASH PROVIDED BY OPERATING ACTIVITIES                                        117,095       546,981

INVESTING ACTIVITIES
     Purchase of short-term investments                                               (11,403)     (312,554)
     Purchases of property and equipment                                              (94,618)     (156,024)
                                                                                   ----------    ----------
     NET CASH USED IN INVESTING ACTIVITIES                                           (106,021)     (468,578)

FINANCING ACTIVITIES
     Principal payments on note payable                                               (14,556)      (36,111)
     Acquisition of treasury stock                                                     (1,500)         --
                                                                                   ----------    ----------
     NET CASH USED IN FINANCING ACTIVITIES                                            (16,056)      (36,111)
                                                                                   ----------    ----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   (4,982)       42,292

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                        464,631       422,339
                                                                                   ----------    ----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                           $  459,649    $  464,631
                                                                                   ==========    ==========




SUPPLEMENTAL CASH FLOW INFORMATION

     Cash paid for interest                                                        $     --      $     --
                                                                                   ==========    ==========

     Cash paid for income taxes                                                    $     --      $     --
                                                                                   ==========    ==========
</TABLE>


The  accompanying  notes are an intergral part of these  consolidated  financial
statements.


                                       15
<PAGE>

                        TM CENTURY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       THE COMPANY

TM  Century,  Inc.  (the  "Company")  is  primarily  engaged  in  the  creation,
production,  marketing,  and  distribution  of goods and  services for radio and
television stations;  radio,  television,  satellite and Internet networks;  web
sites and portals;  post  production  houses;  and corporate  users,  worldwide.
Products include special  compilations of popular music on compact discs,  sound
effects, comedy services, station identification and commercial jingles.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Principles of Consolidation

The accompanying  consolidated  financial  statements include the accounts of TM
Century,  Inc. and its wholly owned subsidiaries.  All significant  intercompany
transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash  equivalents  of the Company are composed of demand  deposits with
banks and other highly  liquid debt  instruments  with  maturity  terms of three
months or less when purchased.

Short-term Investments

Short-term  investments  are  comprised  of  mutual  funds  which  are  invested
primarily  in short term bonds.  The Company  classifies  its  investments  with
readily  determinable  market  values based on its intent.  All of the Company's
short-term investments are classified as available for sale, and accordingly are
carried at estimated  fair value.  For  investments  classified as available for
sale,  the related  unrealized  holding gains and losses are typically  excluded
from earnings and  reported,  net of income  taxes,  as a separate  component of
stockholders' equity until realized. Realized gains and losses are determined on
the specific identification method and are also reflected in net income.

Accounts Receivable

The  Company  extends  unsecured  credit in the  normal  course of  business  to
virtually  all of its  customers.  Management  has  provided  an  allowance  for
doubtful  accounts  which  reflects its opinion of amounts which may  ultimately
become  uncollectible.  In the event of non-performance of accounts  receivable,
the maximum  exposure to the Company is the recorded amount shown on the balance
sheets.

Inventories and Product Development Costs

Inventories,  which consist primarily of compact discs, are carried at the lower
of average cost on a first-in,  first-out  ("FIFO") basis or market, and charged
to expense as follows:

         Music  libraries  -  The  Company   produces  music   compilations  and
         background  music  libraries which are provided to clients under one to
         three year  lease  contracts  or under  buyout  arrangements.  Costs of
         current  music update  services are charged to expense in the period in
         which incurred.


                                       16
<PAGE>

         Identification  Jingles  -  Jingles  provide  short  identity  songs to
         clients  in order to  promote  name  recognition.  The costs to produce
         jingles are expensed upon delivery of the product.

Product  development  costs (the costs to develop new libraries and updates) are
carried  at actual  cost and are  amortized  on a  straight-line  basis over the
economic life of the product (typically, three to five years).

The  provision  for obsolete  and  slow-moving  inventory  is adjusted  based on
current inventory levels, historical and expected future sales levels.

Comedy Material Rights

Comedy Material Rights are recorded at cost and are amortized on a straight-line
basis over the economic life of the product (5 years).

Property and Equipment

Expenditures for property and equipment additions, renewals, and betterments are
recorded  at cost.  Expenditures  for  maintenance  and  repairs  are charged to
expense as  incurred.  Property  leased  under  capital  leases is  included  in
property and equipment.  Depreciation and amortization of property and equipment
are computed on the  straight-line  method based upon the estimated useful lives
of the assets or the applicable minimum lease term if shorter, as follows:


         Office furniture                                           3 to 7 years
         Computer software & equipment                              3 to 7 years
         Production equipment                                       5 to 7 years
         Leasehold improvements              the shorter of the estimated useful
                                               life or the remaining term of the
                                                                           lease
         Vehicle                                                         5 years
         Capital lease                       the shorter of the estimated useful
                                               life or the remaining term of the
                                                                           lease


Revenue Recognition

Revenues are recognized according to contract terms as follows:

         Library  Lease  Contracts  - Monthly  upon  delivery  of the product in
         accordance with the terms of the lease contracts.

         Library Buyouts - Upon delivery of the product.

         Identification Jingles - Upon delivery of the product.

         Barter  Contracts - Monthly,  as advertising  revenues are generated by
         third party agents,  in accordance  with the terms of the library lease
         contracts.


Income Taxes

The Company  provides for income taxes under the asset and  liability  approach.
This method  requires that deferred tax assets and liabilities be recognized for
the future tax  consequences  attributable to differences  between the financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective tax bases. Valuation allowances are established,  when necessary,  to


                                       17
<PAGE>

reduce deferred tax assets to the amount  expected to be realized.  Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled.  The effect on deferred tax assets and liabilities of a
change in tax rates is  recognized  in income in the period  that  includes  the
enactment date.

Net Income (Loss) Per Share

Basic and diluted net income  (loss) per common  share is based on the  weighted
average  number of common  shares and common  stock  equivalents,  if  dilutive,
outstanding during the respective periods.  Diluted earnings (loss) per share of
common stock includes the impact of outstanding  dilutive stock options, if any.
The Company had 373,000 and 365,500  stock options  outstanding  as of September
30, 2002 and 2001, respectively.

Stock Based Compensation

The Company  accounts for  stock-based  employee  compensation  arrangements  in
accordance  with provisions of Accounting  Principals  Board ("APB") Opinion No.
25, "Accounting for Stock Issued to Employees," and complies with the disclosure
provisions of SFAS No. 123, "Accounting for Stock Based Compensation." Under APB
Opinion No. 25,  compensation  expense for employees is based on the excess,  if
any, on the date of grant,  between the fair value of the  Company's  stock over
the exercise price.

Use of Estimates

The  preparation  of financial  statements  in  conformity  with U.S.  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect  reported  amounts  of  certain  assets,  liabilities,
revenues, and expenses. Actual results may differ from such estimates.

Concentrations

The  Company  maintains  cash  balances at banks,  which may,  at times,  exceed
federally insured limits.  However,  management monitors these balances and does
not believe undue risk is present.

Fair Value of Financial Instruments

At September  30, 2002 and 2001 the  carrying  value of the  Company's  accounts
receivable,  accounts payable,  and accrued  liabilities  approximate fair value
because of their  short-term  nature.  The Company entered into one non interest
bearing note payable during 1999. The impact of imputed interest is not material
to the financial statements of the Company.


3.  INVENTORIES

Inventories  include raw materials for in-house  production  and  replication of
compact discs as well as compact discs completed and ready to ship as follows:

                                                    September 30,
                                               ----------------------
                                                 2002         2001
                                               ---------    ---------
         Raw materials                         $  19,444    $  30,600

         Finished goods                          608,335      647,660

         Allowance for obsolescence             (258,000)    (258,000)
                                               ---------    ---------
         Total                                 $ 369,779    $ 420,260
                                               =========    =========






                                       18
<PAGE>

4.       PROPERTY AND EQUIPMENT

Property and equipment consists of the following at September 30, 2002 and 2001:

                                                            2002         2001
                                                         ----------   ----------
         Office furniture                                $  567,000   $  567,000
         Computer software and equipment                    312,166      272,712
         Production equipment                             1,131,133    1,080,860
         Leasehold improvements                             422,935      418,044
         Vehicle                                             19,142       19,142
         Capital lease                                      528,727      528,727
                                                         ----------   ----------
                Total                                    $2,981,103   $2,886,485
                                                         ==========   ==========

The capital lease is for computer software and equipment acquired in fiscal 1997
and 1996.  Amortization of  approximately  $300 is included in depreciation  and
amortization  of  property  and  equipment  expense  for the  fiscal  year ended
September 30, 2001.

5.       NOTE PAYABLE

During   1999,   the   Company   issued   a   $124,000   non-interest   bearing,
uncollateralized  note payable in exchange for comedy material rights. This note
requires  monthly  payments  of $2,778  through  December  2,  2001 and  monthly
payments of $1,000 thereafter through December 2, 2003.

Future minimum payments associated with this note payable as of September 30,
2002 are as follows:

         2003                                                         $   12,000
         2004                                                              3,000
                                                                      ----------
         Future minimum note payments                                 $   15,000
                                                                      ==========



6.       COMMITMENTS AND CONTINGENCIES

Leases

The  Company  signed a new  lease  for its  facilities  effective  March 1, 2002
through August 31, 2010.  The lease may be extended at the Company's  option for
one  additional  five-year  term.  The  Company  has  subleased a portion of its
facility  through  August 2003.  Future minimum rental revenue from the sublease
agreements is $79,906.

Future minimum lease payments under operating leases (excluding  sublease rental
income) with initial lease terms in excess of one year are as follows:

         2003                                                         $  333,717
         2004                                                            273,116
         2005                                                            276,709
         2006                                                            316,239
         2007                                                            316,239
         Thereafter                                                      965,488
                                                                      ----------
         Future minimum lease payments                                $2,481,508
                                                                      ==========

Rent expense  under  operating  leases was $273,671 and $230,862 net of sublease
rental income of $85,391 and $153,000, for 2002 and 2001, respectively.


                                       19
<PAGE>

Employment Agreements

Effective May 31, 1999, the Company entered into a thirty-eight month employment
contract with an executive  officer and director of the Company  which  provides
for a base annual  salary of $150,000  and  eligibility  to  participate  in the
Company's  Bonus Plan. The  Compensation  Committee voted to amend the agreement
effective  October  1,  2001 to  provide  for a base  salary  of  $180,000.  The
agreement  term was extended  through  September  30, 2002. A new  agreement was
approved  effective October 1, 2002 which provides for a base salary of $180,000
per year  through  September  30,  2005.  This  agreement is not included in the
commitments for future salaries listed below.

The Company has consulting  agreements with certain current members and a former
member of the Board of Directors. Total compensation expensed in connection with
these  consulting  agreements  was  $130,350  and  $105,975  in  2002  and  2001
respectively.

Commitments  for future  salaries  under  employment  agreements  and consulting
agreements as of September 30, 2002 are as follows:

         2003                                                         $   21,600
         2004                                                             16,200
                                                                      ----------
         Total employment & consulting commitments                    $   37,800
                                                                      ==========


7.  INCOME TAXES

Differences between the statutory federal income tax rate and the effective rate
for the years ended September 30, 2002 and 2001 are as follows:

                                                           2002         2001
                                                        ----------   ----------
         Income tax provision at statutory rate             35.00%       35.00%
         Effect of graduated tax rates                       (1.00)       (1.00)
         Change in valuation allowance                      (10.13)      (35.71)
         Change in prior year estimate                        7.45          .09
         Other                                              (31.32)        1.62
                                                        ----------   ----------
                                                             0.00%        0.00%
                                                        ==========   ==========


At September  30, 2002,  the Company has net  operating  loss  carryforwards  of
approximately  $560,000  available to offset future taxable  income  expiring in
2011 through  2022. A valuation  allowance  of  approximately  $360,000 has been
provided to reduce the net deferred tax asset to zero because of the uncertainty
of generating future taxable income. The valuation allowance increased by $6,000
during the year ended September 30, 2002.  Certain provisions of the tax law may
limit the net operating loss,  capital loss and credit  carryforwards  available
for use in any given tax year in the event of a significant  change in ownership
interest.

The  components  of the net deferred  income tax asset at September 30, 2002 and
2001 are as follows:


                                       20
<PAGE>

                                                           2002         2001
                                                         ---------    ---------
         Allowance for doubtful accounts                 $  17,052    $  29,606
         Property and equipment                             56,710       44,342
         Inventory allowance for obsolescence               90,491       90,491
         Unrealized losses                                    --          6,878
         Net operating loss carryforwards                  195,969      183,178
                                                         ---------    ---------
         Total deferred tax asset                          360,222      354,495
         Valuation allowance                              (360,222)    (354,495)
                                                         ---------    ---------

         Net deferred tax asset                          $    --      $    --
                                                         =========    =========

8.       EARNINGS (LOSS) PER SHARE

The  following  table  provides a  reconciliation  between basic and diluted net
income (loss) per share:

<TABLE>
<CAPTION>
                                                                      Year Ended
                                                                    September 30,
                                                             --------------------------
                                                                 2002           2001
                                                             -----------    -----------
         <S>                                                 <C>            <C>
         Net Income (Loss)                                   $   (56,544)   $   331,711

         Weighted Average Number of Shares Outstanding
               Basic                                           2,481,443      2,483,193
               Dilutive effect of common stock equivalents          --            9,165
                                                             -----------    -----------
               Diluted                                         2,481,443      2,492,358

         Earnings Per Share:
               Basic Net Income (Loss)                       $     (0.02)   $      0.13
                                                             ===========    ===========
               Diluted Net Income (Loss)                     $     (0.02)   $      0.13
                                                             ===========    ===========
</TABLE>

9.       TREASURY STOCK

On October  29,  2001 the Board of  Directors,  by  resolution,  authorized  the
Company to purchase up to 100,000  shares of its common stock on the open market
or through privately negotiated transactions,  from time to time, dependent upon
market  conditions,  from November 1, 2001 through  October 31, 2003. As of June
30, 2002 the Company has made  purchases of 2,000 shares at an average  price of
$.75 per share.  These  purchases  were funded by cash  reserves of the Company.
Future  purchases are expected to be funded from  operations or cash reserves of
the Company.

10.  STOCK OPTIONS

On December 3, 1991, the Board of Directors  approved a Long Term Incentive Plan
(the "Plan")  which  provides for grants of Incentive  Stock Options to selected
employees  and for grants of  Nonqualified  Stock Options to any persons who, in
the opinion of the Board of Directors, perform significant services on behalf of
the Company.  Each member of the Compensation  Committee who was not an employee
or full-time consultant of the Company was automatically  granted in December of
each year, commencing in 1991, for five years (but only for so long as he or she
remained a member of the Compensation  Committee),  a Nonqualified  Stock Option
for 2,500 shares.  The maximum number of shares which may be issued  pursuant to
the exercise of options under the Plan was 187,500 shares. Effective October 28,
1993, the Board of Directors  approved an amendment to the Plan which  increased
the  total  number of shares  which  may be issued to  250,000  shares of common
stock. The Board of Directors approved an amendment to the Plan,  effective July
2,  1999,  which  increased  the total  number of shares  which may be issued to
350,000 shares of common stock and provided for Employee Incentive Options based
upon an employee's length of employment.

The option  price of  Incentive  Stock  Options is not less than the fair market
value of the common stock at the date of grant. All outstanding  Incentive Stock
Options vest over a period of five years from the date of grant at a rate of 20%
upon grant,  35% after year one, 50% after year two,  65% after year three,  80%
after year four and 100% after year five.


                                       21
<PAGE>

The option prices of outstanding Nonqualified Stock Options issued to members of
the  Company's  Board of  Directors  range  from  $.75 to $1.20 per  share.  All
outstanding  Nonqualified  Stock  Options are 20% vested upon grant,  50% vested
after year one, and 100% vested after two years.

Employee  Incentive Stock Options are granted based on the employee's  length of
employment  at an option price not less than the fair market value of the common
stock at the date of grant. All Employee Incentive Stock Options are 100% vested
upon grant.

On March 20, 2000,  the Board of  Directors  approved the 2000 Stock Option Plan
(the "Plan")  which  provides for grants of Incentive  Stock Options to selected
employees  and for grants of  Nonqualified  Stock Options to any persons who, in
the opinion of the Board of Directors, perform significant services on behalf of
the Company.  Each member of the Compensation  Committee who was not an employee
or full-time consultant of the Company was automatically  granted in December of
each year, commencing in 2000, for five years (but only for so long as he or she
remained a member of the Compensation  Committee),  a Nonqualified  Stock Option
for 2,500 shares.  The maximum number of shares which may be issued  pursuant to
the exercise of options under the Plan is 350,000 shares.

Option  information for the fiscal years ended September 30, 2002 and 2001 is as
follows:
<TABLE>
<CAPTION>

                                                                                         Weighted
                                                       Number of          Price         Avg. Price
                                                         Shares           Per Share     Per Share
                                                       ---------         ---------      ----------
     <S>                                               <C>             <C>              <C>
     Options outstanding at September 30, 2000           332,500       $.355 - $2.50      .9475
        Granted                                           47,000       $.150 - $1.190     .2200
        Exercised                                           -                -              -
        Forfeited                                        (14,000)      $.625 - $.910      .6964
                                                       ---------
     Options outstanding at September 30, 2001           365,500       $.150 - $2.50      .9178
       Granted                                            23,000       $.150 - $.680      .4230
       Exercised                                            -                -              -
       Forfeited                                         (15,500)      $.500 - $1.19      .7761
                                                       ---------
     Options outstanding at September 30, 2002           373,000       $.150 - $2.50      .8905
                                                       =========

     Options exercisable at September 30, 2002           308,650       $.150 - $2.50      .9478
                                                       =========
</TABLE>

The weighted average remaining contractual life of the stock options outstanding
at September 30, 2002 is 7.21 years.

At  September  30, 2002 the Company  has  reserved a total of 700,000  shares of
common stock for exercise of stock options.

The  Company  applies  APB  Opinion  No.  25,  "Accounting  for Stock  Issued to
Employees" in accounting for its stock option and award plans.  During the years
ended  September 30, 2002 and 2001 the exercise price of each option granted was
greater than or equal to the market price of the Company's  stock on the date of
grant. Accordingly,  no compensation expense has been recognized. For the fiscal
years 2002 and 2001, the net income (loss) on a proforma basis as if the Company
had utilized the accounting  methodology prescribed by SFAS No. 123, "Accounting
for  Stock-Based   Compensation,"   would  have  been  ($74,876)  and  $329,061,
respectively  and would have resulted in no difference in reported net income or
loss per share.

The estimated  weighted  average grant date fair value of options granted during
fiscal years 2002 and 2001 using the  Black-Scholes  Model was $.49 and $.56 per
share, respectively.  For purposes of determining the fair value of each option,
the Company used the following assumptions:


                                       22
<PAGE>

                                                        2002             2001
                                                     -----------     -----------
         Risk-free interest rate                        4.7 %             6 %

         Volatility                                     154 %            87 %

         Expected life  (years)                          10              10



















                                       23
<PAGE>

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURES.

None.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.

The   information   required  by  this  item  is  contained  under  the  heading
"Information  Concerning the Directors and Executive  Officers" in the Company's
2003 Information  Statement and is incorporated  herein by reference pursuant to
General Instruction E(3).

ITEM 10.  EXECUTIVE COMPENSATION

The information  required by this item is contained under the heading "Executive
Compensation"  in the Company's 2003  Information  Statement and is incorporated
herein by reference pursuant to General Instruction E(3).

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  information  required by this item is contained  under the heading  "Voting
Securities  and  Principal  Stockholders"  in  the  Company's  2003  Information
Statement  and  is  incorporated   herein  by  reference   pursuant  to  General
Instruction E(3).

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information  required by this item is contained under the heading "Executive
Compensation"  in the Company's 2003  Information  Statement and is incorporated
herein by reference pursuant to General Instruction E(3).

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:
3    (a)  Certificate of Incorporation and By-Laws (1)
     (b)  Certificate of Merger:  Video Image Inc. and TM  Communications,  Inc.
          (1)
     (c)  Certificate  of  Amendment  of  Certificate  of  Incorporation  of  TM
          Century,  Inc.  effective  March 27, 1992.  (Exhibit 1) (2) (March 31,
          1992)

10   Material Contracts:
     (a)  *Long  Term  Performance  Incentive  Plan of TM  Century,  Inc.  dated
          December 3, 1991. (Exhibit 10(bb))(3)
     (b)  Lease Agreement, dated as of April 23, 1993 by and between NationsBank
          of Texas,  N.A.,  Trustee and TM Century,  Inc.  (Exhibit 1)(March 31,
          1993)(2)
     (c)  First  Amendment of Lease,  dated as of August 22, 1994 by and between
          NationsBank  of Texas,  N.A.,  Trustee and TM Century,  Inc.  (Exhibit
          10(m)) (4)
     (d)  *Employment  Agreement between TM Century,  Inc. and R. David Graupner
          dated May 31, 1999. (Exhibit 10.2) (June 30, 1999)(2)
     (e)  *Consulting  Agreement  between TM Century,  Inc.  and Neil W. Sargent
          dated June 28, 1999. (Exhibit 10.3) (June 30, 1999)(2)
     (f)  *Amended and Restated 1991 Long Term Performance  Incentive Plan of TM
          Century dated July 2, 1999 (Exhibit 10h)(5)


                                       24
<PAGE>

     (g)  *TM Century,  Inc.  2000 Stock Option Plan  effective  March 20, 2000.
          (Exhibit 10.1) (March 31, 2000)(2)
     (h)  Lease  Agreement,  dated as of June 1,  2002 by and  between  AIP-SWAG
          Operating Partnership, L.P. and TM Century, Inc. (Exhibit 10.1)


21   Subsidiaries

99.1 Certification by R. David Graupner, Chief Executive Officer, pursuant to 18
     USC Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley
     Act of 2002.

99.2 Certification by Teri R.S. James, Chief Financial  Officer,  pursuant to 18
     USC Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley
     Act of 2002.


Notes to Exhibits:
     (1)  Incorporated  by reference to the  similarly  numbered  exhibit to the
          Registration  Statement on Form S-18 (No. 2- 93588-FW),  filed October
          2, 1984, as amended.
     (2)  Incorporated  by reference to the  indicated  exhibit to the Quarterly
          Report on Form 10-Q for the indicated period, of the Registrant.
     (3)  Incorporated  by  reference  to the  indicated  exhibit  to the Annual
          Report on Form 10-K for the fiscal year ended September 30, 1991.
     (4)  Incorporated  by  reference  to the  indicated  exhibit  to the Annual
          Report on Form 10-KSB for the fiscal year ended September 30, 1994.
     (5)  Incorporated  by  reference  to the  indicated  exhibit  to the Annual
          Report on Form 10-KSB for the fiscal year ended September 30, 1999.


* The documents filed or incorporated by reference as Exhibits 10(a),  (d), (e),
(f), and (g) hereto  constitute  management  contracts or compensatory  plans or
arrangements.

(b)  Reports on Form 8-K

No reports on Form 8-K were filed  during the fourth  quarter of the fiscal year
ended September 30, 2002.


ITEM 14.  CONTROLS AND PROCEDURES

Based on their  evaluation,  as of a date  within 90 days of the filing  date of
this Form 10-KSB,  the Company's  Chief  Executive  Officer and Chief  Financial
Officer have concluded that the Company's disclosure controls and procedures (as
defined in Rule 13a-14 (c) and 15d-14 (c) under the  Securities  Exchange Act of
1934,  as amended)  are  effective.  There have been no  significant  changes in
internal  controls or in other  factors  that could  significantly  affect these
controls  subsequent to the date of their  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.















                                       25
<PAGE>

                                   SIGNATURES

In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  registrant
caused this report to be signed on its behalf by the undersigned  thereunto duly
authorized.

                                                        Dated: December 20, 2002

                                                        TM CENTURY, INC.


                                                        BY: /s/Teri R.S. James
                                                        ------------------------
                                                        Teri R.S. James
                                                        Chief Financial Officer

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

                                                               DATE:

/s/Teri R.S. James                                             December 20, 2002
-----------------------
TERI R.S. JAMES, Chief Financial Officer
(Principal financial and accounting officer)


/s/R.David Graupner                                            December 20, 2002
-----------------------
R. DAVID GRAUPNER, President and Chief Executive Officer
(Principal executive officer)


/s/Marjorie L. McIntyre                                        December 20, 2002
-----------------------
MARJORIE L. MCINTYRE, Chairman of the Board of Directors


/s/A. Ann Armstrong                                            December 20, 2002
-----------------------
A. ANN ARMSTRONG, Director


/s/Carol M. Long                                               December 20, 2002
-----------------------
CAROL LONG, Director


/s/Michael Cope                                                December 20, 2002
-----------------------
MICHAEL COPE, Director




                                       26
<PAGE>

                                 CERTIFICATIONS

I, R. David Graupner, Chief Executive Officer, certify that:
1. I have  reviewed  this annual  report on Form  10-KSB of TM  Century,  Inc. a
Delaware Corporation;
2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;
3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing  and  maintaining  disclosure  controls and  procedures (as defined
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this annual report is being prepared;
b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the  "Evaluation  Date");  and
c) presented in this annual report our conclusions  about the  effectiveness  of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):
a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and
b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and
6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:  December 20, 2002

/s/R. David Graupner, Chief Executive Officer
---------------------------------------------
Principal Executive Officer



I, Teri R.S. James, Chief Financial Officer, certify that:
1. I have  reviewed  this annual  report on Form  10-KSB of TM  Century,  Inc. a
Delaware Corporation;
2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;
3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing  and  maintaining  disclosure  controls and  procedures (as defined
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this annual report is being prepared;
b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions  about the  effectiveness  of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;


                                       27
<PAGE>

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):
a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and
b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and
6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:  December 20, 2002

/s/Teri R.S. James, Chief Financial Officer
-------------------------------------------
Principal Financial Officer





















                                       28