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, 2001       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 $6,043,418.

The  aggregate  market value of the voting stock held by  non-affiliates  of the
issuer on September 30, 2001 based upon the average bid and asked prices of such
stock on that date was $497,696.  The number of issuer's  shares of Common Stock
outstanding as of September 30, 2001 was 2,483,193.

                       DOCUMENTS INCORPORATED BY REFERENCE

Certain  information  contained in the Company's 2001  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. Products include special compilations
of  popular  music on compact  discs and CD ROM,  instrumental  backgrounds  for
commercials  and  sound  effects,  station  identification  jingles,  commercial
jingles and comedy services.

Production  libraries are sold on compact discs and include original  recordings
of  background  music 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.  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.

The Company  also  provides a weekly  service of new record  releases on compact
disc  to  radio  stations.   Other  music  libraries  include   compilations  of
copyrighted music of original artists marketed in a variety of music formats.

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 2000 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.

Radio jingles  provide short identity songs for radio stations that promote name
recognition  for the station.  These are written and  produced in the  Company's
studios and are provided to customers on digital audio tape or compact disc.

                                       2

<PAGE>

Set  forth  in the  following  tables  are  the  Company's  gross  revenues  (in
thousands) by  significant  product  category for the years ended  September 30,
2001 and 2000.

     (Dollar Amounts in Thousands)
                                                                  2001     2000
                                                                 ------   ------
     Broadcast Services
     Music Libraries                                             $4,959   $5,714
     Radio Jingles                                                1,034    1,142
     Software and Compact Disc Equipment                              0        0
     Other                                                           50       48
                                                                 ------   ------
     Total                                                       $6,043   $6,904
                                                                 ======   ======

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  libraries  are made  primarily  on an  individual  order  basis.
Contractual  agreements for the sale of production  libraries generally call for
equal  monthly  payments by the customer  over terms of up to 36 months.  Weekly
music services are sold under  contracts of one month to three-year  terms.  The
Company's other products are generally sold pursuant to individual orders.  Both
commercial  and  station  identification  jingles are  primarily  sold on a cash
basis.

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  2001  the  Company  saw a
significant  increase in its sales of music  libraries  outside the  traditional
broadcast industry, particularly to Internet based businesses.

Gross revenues from foreign sales totaled $970,000, and $1,200,000 for the years
ended 2001 and 2000, 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 either 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.

                                       3

<PAGE>

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, 2001, the Company had  approximately  43 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 46,645 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 on July 15, 2003. The lease may be extended at the Company's  option for
two additional five-year terms. The first five year term rental rate is based on
a fixed amount per square foot which is  approximately  a 6.3% increase over the
2003  year  rental  rate.  The  second  five  year  term is  subject  to  rental
adjustments based on a formula related to fair market rental.  Effective July 1,
2001 the Company  entered  into an agreement  with an  unrelated  third party to
sublease approximately 4,800 square feet of space for a term of approximately 26
months.  Management  believes that the facility currently occupied is sufficient
for its existing activities and potential growth for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

On May 22,  1998,  the  Company  received a letter from the  Recording  Industry
Association of America,  Inc. (RIAA) alleging that it was illegally  duplicating
sound  recordings of the RIAA's member companies in its Mobile Beat Series I and
II and Mobile Beat Holiday Series.  In fiscal 1998 and 1999 certain  liabilities
were recorded relative to the claims of the RIAA,  however, as no litigation was
initiated and no  correspondence  was received  after  February 1999, it was the
opinion of  management  that the  accrued  legal  settlement  should be removed.
Accordingly,  the  accompanying  Statements  of  Operations  for the year  ended
September 30, 2000  includes a $440,523  increase in income  resulting  from the
reversal of the liability previously recorded.

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, 2001.

                                       4

<PAGE>

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

     Fiscal 2000:
                        1st Quarter      $    .81     $   .63
                        2nd Quarter           .81         .53
                        3rd Quarter           .78         .50
                        4th Quarter           .69         .44


As of September 30, 2001 the Company had approximately 196 record owners and 242
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,
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

                                       5

<PAGE>

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 2002.

During  fiscal  2001,  the Company  incurred  approximately  $156,000 in capital
expenditures  for the  purchase of property  and  equipment  compared to capital
expenditures of  approximately  $175,000 in 2000.  Capital  expenditures in 2001
were  primarily  associated  with  upgrades  of  production  equipment  and  the
conversion of warehouse space into office space.  Product  development  costs of
$192,000  were  incurred  during  fiscal 2001 for new music  libraries and music
library updates, which compares to product development  expenditures of $221,000
in 2000.  Funds for  operating  needs,  new  product  development,  and  capital
expenditures for the year ended September 30, 2001 were provided from operations
and  cash  reserves.  The  Company  generated  cash  flows  from  operations  of
approximately  $547,000 and $602,000  during the years ended  September 30, 2001
and 2000, respectively.  The Company's expenditures for property, equipment, and
development of new products are discretionary.  Product development expenditures
are expected to be  approximately  $250,000 in fiscal  2002.  The Company has no
other  significant   commitments  for  capital   expenditures  in  fiscal  2002.
Management  anticipates that cash flow from operations and cash reserves will be
sufficient to meet capital requirements.

Effective  January 2, 2000, 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.

Customer deposits  decreased to $160,000 as of September 30, 2001, from $185,000
as of  September  30,  2000,  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  $523,000
available to offset  future  taxable  income  expiring in 2011  through  2013. A
valuation  allowance of  approximately  $354,000 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 2001 Compared to Fiscal 2000
-----------------------------------

The Company  experienced a 12.5%  decrease in revenues from $6.9 million in 2000
to  $6.0  million  in  2001.  The  overall  decrease  was due to a  decrease  in
advertising  revenues,  which decreased from $2.8 million to $2.4 million in the
current year,  combined with a 16.9% decrease in international  revenues.  Music

                                       6

<PAGE>

libraries revenue  generated from HitDisc and GoldDisc sales decreased  $514,000
or 19.1%,  due to  decreases  in  domestic  and  international  sales.  Revenues
generated from  production  libraries  decreased  $213,000,  or 10.9%,  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
such weekly  services and marketing such airtime to  advertisers.  Revenues from
radio jingles decreased by $108,000, or 9.5%, primarily due to a decrease in the
sales   volume  of  custom   and   syndicated   jingles   packages   being  sold
internationally. Weekly comedy service revenue decreased from $1,079,000 in 2000
to $1,050,000 in 2001, or 2.6%. The overall  decrease in advertising  revenue is
primarily  responsible  for  this  decrease,  as  barter  contracts  make  up  a
significant percentage of the total comedy service.

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.

Commissions as a percentage of revenues  decreased to 19.0% of revenue in fiscal
2001 from 19.9% of revenue in fiscal  2000.  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 13.5% to $1.7 million in
2001 from $1.9 million in 2000.  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.  As a percentage of revenue these costs  decreased from
28% in 2000 to 27% in 2001.

General and administrative  costs decreased $99,800,  or 5.1%. A reallocation of
payroll expenses  related to sales personnel,  along with reductions in bad debt
expense and facilities management costs were responsible for the decrease.

Selling costs reflected a decrease of $83,000,  or 8.4% over 2000. Cost of sales
personnel  decreased as a percentage  of lower  overall  revenues,  offset by an
increase in advertising costs.

Depreciation and amortization expense decreased $11,000, or 7.3%, primarily as a
result of more assets being fully depreciated compared to the prior year.

On May 22,  1998,  the  Company  received a letter from the  Recording  Industry
Association of America,  Inc. (RIAA) alleging that it was illegally  duplicating
sound  recordings of the RIAA's member companies in its Mobile Beat Series I and
II and Mobile Beat Holiday Series.  In fiscal 1998 and 1999 certain  liabilities
were recorded relative to the claims of the RIAA,  however, as no litigation was
initiated and no  correspondence  was received  after  February 1999, it was the
opinion of  management  that the  accrued  legal  settlement  should be removed.
Accordingly,  the  accompanying  Statements  of  Operations  for the year  ended
September 30, 2000  includes a $440,523  increase in income  resulting  from the
reversal of the liability previously recorded.

                                       7

<PAGE>

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.

In July 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 141 "Business  Combinations" which requires
the  purchase  method  of  accounting  for  business  combination   transactions
initiated after June 30, 2001.

In July 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 142 "Goodwill and Other Intangible Assets".
The statement requires that goodwill recorded on acquisitions completed prior to
July 1, 2001 be amortized  through December 31, 2001.  Goodwill  amortization is
precluded on acquisitions  completed after June 30, 2001.  Effective  January 1,
2002,  goodwill will no longer be amortized but will be tested for impairment as
set forth in the statement.  Management is currently  reviewing the new standard
and  evaluating  the  effects of this  standard on future  financial  condition,
results of operations, and accounting policies and practices.

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.



ITEM 7. FINANCIAL STATEMENTS

The financial statements and notes thereto,  together with the report thereon of
King Griffin & Adamson P.C.  dated  November 14, 2001 are included  elsewhere in
this report.

                                       8

<PAGE>
                                    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
2002 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 2002  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  2002  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 2002  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)  *TM Century, Inc. Bonus Plan for Executive Management dated October 1,
          1992 (Exhibit 10(j)) (4)
     (c)  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)
     (d)  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)) (5)
     (e)  *Employment  Agreement between TM Century,  Inc. and R. David Graupner
          dated May 31, 1999. (Exhibit 10.2) (June 30, 1999)(2)
     (f)  *Consulting  Agreement  between TM Century,  Inc.  and Neil W. Sargent
          dated June 28, 1999. (Exhibit 10.3) (June 30, 1999)(2)
     (g)  *Amended and Restated 1991 Long Term Performance  Incentive Plan of TM
          Century dated July 2, 1999 (Exhibit 10h)(6)
     (h)  *TM Century,  Inc.  2000 Stock Option Plan  effective  March 20, 2000.
          (Exhibit 10.1) (March 31, 2000)(2)

21   Subsidiaries

                                       9

<PAGE>
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-K for the fiscal year ended  September  30, 1992, of
          the Registrant.
     (5)  Incorporated  by  reference  to the  indicated  exhibit  to the Annual
          Report on Form 10-KSB for the fiscal year ended September 30, 1994.
     (6)  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),  (b), (e),
(f), (g) and (h) 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, 2001.

                                       10

<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 19, 2001

                                                        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 19, 2001
------------------
TERI R.S. JAMES, Chief Financial Officer
(Principal financial and accounting officer)


/s/R.David Graupner                                            December 19, 2001
-------------------
R. DAVID GRAUPNER, President and Chief Executive Officer
(Principal executive officer)


/s/Marjorie L. McIntyre                                        December 19, 2001
-----------------------
MARJORIE L. MCINTYRE, Chairman of the Board of Directors


/s/A.  Ann Armstrong                                           December 19, 2001
---------------------------
A. ANN ARMSTRONG, Director


/s/Carol M. Long                                               December 19, 2001
----------------
CAROL LONG, Director


/s/Michael Cope                                                December 19, 2001
------------------
MICHAEL COPE, Director


                                       11

<PAGE>



                                TM CENTURY, INC.

                          INDEX TO FINANCIAL STATEMENTS


Report of Independent Certified Public Accountants                            13

Financial Statements:

Balance Sheets at September 30, 2001 and 2000                                 14

Statements of Operations for the Years Ended
  September 30, 2001 and 2000                                                 15

Statement of Stockholders' Equity for the Years
   Ended September 30, 2001 and 2000                                          16

Statements of Cash Flows for the Years Ended
   September 30, 2001 and 2000                                                17

Notes to Financial Statements                                                 18



                                       12

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
               --------------------------------------------------


To The Board of Directors
TM Century, Inc.

We have  audited  the  accompanying  balance  sheets of TM  Century,  Inc. as of
September  30,  2001  and  2000,  and  the  related  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  financial  position  of TM  Century,  Inc.  as of
September  30,  2001 and 2000,  and the results of its  operations  and its 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 14, 2001





                                       13

<PAGE>
<TABLE>
<CAPTION>


                                TM Century, Inc.
                                 Balance Sheets
                           September 30, 2001 and 2000

                                     ASSETS

                                                                                         2001           2000
                                                                                     -----------    -----------
<S>                                                                                  <C>            <C>
CURRENT ASSETS
       Cash and cash equivalents                                                     $   464,631    $   422,339
       Short-term investments                                                            634,049        321,495
       Accounts receivable, less allowance for doubtful accounts
        of $84,589 and $95,510 respectively                                              540,488        693,997
       Inventories, net of allowance for obsolescence of $258,545 for both periods       420,260        448,293
       Prepaid expenses                                                                   66,824         44,685
                                                                                     -----------    -----------
             TOTAL CURRENT ASSETS                                                      2,126,252      1,930,809

PROPERTY AND EQUIPMENT                                                                 2,886,485      2,730,584
       Less accumulated depreciation and amortization                                 (2,406,438)    (2,263,000)
                                                                                     -----------    -----------
             NET PROPERTY AND EQUIPMENT                                                  480,047        467,584

PRODUCT DEVELOPMENT COSTS, net of accumulated amortization
       of $1,950,432 and $1,784,549 respectively                                         403,800        377,240
COMEDY MATERIAL RIGHTS, net of accumulated amortization
       of $68,200 and $43,400 respectively                                                55,800         80,601
OTHER ASSETS                                                                              19,804         19,804
                                                                                     -----------    -----------

       TOTAL ASSETS                                                                  $ 3,085,703    $ 2,876,038
                                                                                     ===========    ===========


                                        LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
       Current portion of note payable                                               $    13,556    $    33,333
       Accounts payable                                                                   11,019         48,833
       Accrued expenses                                                                  110,015        113,017
       Deferred revenue                                                                   80,882        100,850
       Customer deposits                                                                  72,320         46,916
                                                                                     -----------    -----------
             TOTAL CURRENT LIABILITIES                                                   287,792        342,949

NOTE PAYABLE, less current portion                                                        16,000         32,334
CUSTOMER DEPOSITS - NON-CURRENT                                                           87,517        138,072
                                                                                     -----------    -----------
             TOTAL LIABILITIES                                                           391,309        513,355

STOCKHOLDERS' EQUITY
       Common stock, $.01 par value; authorized 7,500,000 shares;                         29,705         29,705
          2,970,481 shares issued; 2,483,193 shares outstanding
       Additional paid-in capital                                                      2,275,272      2,275,272
       Retained earnings                                                               1,680,644      1,348,933
       Treasury stock - at cost, 487,288 shares                                       (1,291,227)    (1,291,227)
                                                                                     -----------    -----------
             TOTAL STOCKHOLDERS' EQUITY                                                2,694,394      2,362,683
                                                                                     -----------    -----------

       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $ 3,085,703    $ 2,876,038
                                                                                     ===========    ===========
</TABLE>

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

                                       14

<PAGE>
<TABLE>
<CAPTION>

                                TM Century, Inc.
                            Statements of Operations
                     Years Ended September 30, 2001 and 2000



                                                                    2001           2000
                                                                -----------    -----------
<S>                                                             <C>            <C>

REVENUES                                                        $ 6,043,418    $ 6,904,492
      Less  Commissions                                           1,147,757      1,372,902
                                                                -----------    -----------
          NET REVENUES                                            4,895,661      5,531,590

COSTS AND EXPENSES
      Production, Programming, and Technical Costs                1,659,269      1,918,907
      General and Administrative                                  1,869,515      1,969,368
      Selling Costs                                                 908,833        992,130
      Depreciation                                                  143,561        154,884
                                                                -----------    -----------
          TOTAL COSTS AND EXPENSES                                4,581,178      5,035,289

                                                                -----------    -----------
OPERATING INCOME                                                    314,483        496,301

OTHER INCOME
      Interest income                                                18,081          7,372
      Other income (expense), net                                      (853)         1,054
      Change in estimate of legal settlement for RIAA dispute          --          440,523
                                                                -----------    -----------
          TOTAL OTHER INCOME                                         17,228        448,949
                                                                -----------    -----------

NET INCOME BEFORE PROVISION FOR INCOME TAXES                        331,711        945,250

PROVISION FOR INCOME TAXES                                             --             --

                                                                -----------    -----------
NET INCOME                                                      $   331,711    $   945,250
                                                                ===========    ===========

BASIC NET INCOME PER COMMON SHARE                               $      0.13    $      0.38
                                                                ===========    ===========

DILUTED NET INCOME PER COMMON SHARE                             $      0.13    $      0.38
                                                                ===========    ===========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                        2,483,193      2,483,193
                                                                ===========    ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING,
      ASSUMING DILUTION                                           2,492,358      2,487,486
                                                                ===========    ===========
</TABLE>


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

                                       15

<PAGE>
<TABLE>
<CAPTION>

                                TM Century, Inc.
                        Statement of Stockholders' Equity
                     Years Ended September 30, 2001 and 2000



                                     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, OCTOBER 1, 1999        2,970,481   $ 29,705 $ 2,275,272   $   403,683       487,288   $(1,291,227)   $ 1,417,433

Net Income                           --         --          --         945,250          --             -          945,250
                                -----------------------------------------------------------------------------------------

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
                                =========================================================================================
</TABLE>

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

                                       16

<PAGE>
<TABLE>
<CAPTION>

                                                     TM Century, Inc.
                                                 Statements of Cash Flows
                                         Years Ended September 30, 2001 and 2000

                                                                                     2001         2000
                                                                                   ---------    ---------
<S>                                                                                <C>          <C>
OPERATING ACTIVITIES
     Net income                                                                    $ 331,711    $ 945,250
     Adjustments to reconcile net income to
     net cash provided by operating activities
            Depreciation and amortization of property and equipment                  143,561      154,884
            Amortization of product development costs and comedy material rights     190,681      192,925
            Provision for legal settlement of RIAA dispute                              --       (440,523)
            Provision for doubtful accounts                                           16,250       30,000
     Increase (decrease) from changes in operating assets and liabilities:
            Accounts receivable                                                      137,259       (2,459)
            Inventories                                                               28,033       (2,014)
            Product development costs                                               (192,440)    (221,272)
            Prepaid expenses                                                         (22,139)     (13,408)
            Other assets                                                                --           (488)
            Accounts payable and accrued expenses                                    (40,816)     (63,213)
            Deferred revenue                                                         (19,968)     (26,532)
            Customer deposits                                                        (25,151)      48,251
                                                                                   ---------    ---------
     NET CASH PROVIDED BY OPERATING ACTIVITIES                                       546,981      601,401

INVESTING ACTIVITIES
     Purchase of short-term investments                                             (312,554)    (321,495)
     Purchases of property and equipment                                            (156,024)    (175,364)
                                                                                   ---------    ---------
     NET CASH USED IN INVESTING ACTIVITIES                                          (468,578)    (496,859)

FINANCING ACTIVITIES
     Principal payments on note payable                                              (36,111)     (33,333)
     Principal payments on capital lease obligations                                    --         (3,202)
                                                                                   ---------    ---------
     NET CASH USED IN FINANCING ACTIVITIES                                           (36,111)     (36,535)
                                                                                   ---------    ---------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                             42,292       68,007

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                       422,339      354,332
                                                                                   ---------    ---------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                           $ 464,631    $ 422,339
                                                                                   =========    =========
</TABLE>

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

                                       17

<PAGE>


                                TM CENTURY, INC.
                          NOTES TO 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

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. 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. Due to immateriality,
the unrealized holding gains and losses have been reported in net income for all
periods  presented.  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
sheet.

Inventories and Product Development Costs

Inventories created by the Company 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).

                                       18

<PAGE>


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 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 term of the lease
     Vehicle                                                             5 years
     Capital lease                           the shorter of the estimated useful
                                                   life or the 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.

     Music  Scheduling  Software - Monthly in  accordance  with the terms of the
     lease contracts.

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

                                       19

<PAGE>

Net Income Per Share

Basic and diluted net income 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  per share of common  stock
includes the impact of  outstanding  dilutive  stock  options for the year ended
September  30, 2001 and 2000.  The Company had 365,500 and 332,500 stock options
outstanding as of September 30, 2001 and 2000, 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 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.

Reclassifications

Certain  amounts in the 2000  financial  statements  have been  reclassified  to
conform with the classifications  used in the 2001 financial  statements with no
effect on previously reported net loss or stockholders' equity.


3.  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Supplemental disclosures as of September 30:

                                                            2001         2000
                                                         ----------   ----------
     Cash paid for interest                              $     --     $       46
                                                         ==========   ==========
     Cash paid for income taxes                          $     --           --
                                                         ==========   ==========


4.  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,
                                                         ----------------------
                                                           2001         2000
                                                         ----------------------
     Raw materials                                       $  30,600    $  42,272
     Finished goods                                        648,205      664,566
     Allowance for obsolescence                           (258,545)    (258,545)
                                                         ---------    ---------
     Total                                               $ 420,260    $ 448,293
                                                         =========    =========

                                       20

<PAGE>

5.  PROPERTY AND EQUIPMENT

Property and equipment consists of the following at September 30, 2001 and 2000:

                                                            2001         2000
                                                         ----------   ----------
     Office furniture                                    $  567,000   $  544,616
     Computer software and equipment                        272,712      202,053
     Production equipment                                 1,080,860    1,044,612
     Leasehold improvements                                 418,044      391,434
     Vehicle                                                 19,142       19,142
     Capital lease                                          528,727      528,727
                                                         ----------   ----------
            Total                                        $2,886,485   $2,730,584
                                                         ==========   ==========

The capital lease is for computer software and equipment acquired in fiscal 1997
and  1996.  Amortization  of  approximately  $300  and  $8,500  is  included  in
depreciation and  amortization of property and equipment  expense for the fiscal
years ended September 30, 2001 and 2000, respectively.

6.  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,
2001 are as follows:

     2002                                                                $13,556
     2003                                                                 12,000
     2004                                                                  4,000
                                                                         -------
     Future minimum note payments                                        $29,556
                                                                         =======


7.  COMMITMENTS AND CONTINGENCIES

Leases

The Company  leases its  facilities  under a ten year lease which began July 15,
1993.  The lease may be  extended  at the  Company's  option for two  additional
five-year  terms.  The Company has  subleased a portion of its facility  through
July  2003.  Future  minimum  rental  revenue  from the  sublease  agreement  is
$123,809.

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

     2002                                                               $326,508
     2003                                                                299,299
                                                                        --------
     Future minimum lease payments                                      $625,807
                                                                        ========



Rent expense under operating  leases was $230,862 and $220,565,  net of sublease
rental income of $153,000 and $170,000, for 2001 and 2000, respectively.

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

                                       21

<PAGE>

Company's  Bonus Plan. The  Compensation  Committee voted to amend the agreement
effective  October  1,  2000 to  provide  for a base  salary  of  $180,000.  The
amendment does not affect the agreement term.

The Company has consulting  agreements  with certain members and a former member
of the Board of Directors. A twelve-month  consulting agreement was entered into
with a former  officer  of the  Company  on April 1,  2001  which  provides  for
compensation totaling $48,750 over the term of the agreement. Total compensation
expensed  in  connection  with these  consulting  agreements  was  $105,975  and
$118,163 in 2001 and 2000 respectively.

Commitments  for future  salaries  under  employment  agreements  and consulting
agreements are as follows:

     2002                                                               $216,600
     2003                                                                 21,600
     2004                                                                 16,200
                                                                        --------
     Total employment & consulting commitments                          $254,400
                                                                        ========

Legal Proceedings

On May 22,  1998,  the  Company  received a letter from the  Recording  Industry
Association of America,  Inc. (RIAA) alleging that it was illegally  duplicating
sound  recordings of the RIAA's member companies in its Mobile Beat Series I and
II and Mobile Beat Holiday Series.  In fiscal 1998 and 1999 certain  liabilities
were recorded relative to the claims of the RIAA,  however, as no litigation was
initiated and no  correspondence  was received  after  February 1999, it was the
opinion of  management  that the  accrued  legal  settlement  should be removed.
Accordingly,  the  accompanying  Statements  of  Operations  for the year  ended
September 30, 2000  includes a $440,523  increase in income  resulting  from the
reversal of the liability previously recorded.

8.  INCOME TAXES

Differences between the statutory federal income tax rate and the effective rate
for the years ended September 30, 2001 and 2000 are as follows:

                                                                 2001      2000
                                                                -----     -----
     Income tax provision at statutory rate                     35.00%    35.00%
     Effect of graduated tax rates                              (1.00)    (1.00)
     Change in valuation allowance                             (35.71)   (28.21)
     Change in prior year estimate                                .09     (7.04)
     Other                                                       1.62      1.25
                                                                -----     -----
                                                                 0.00%     0.00%
                                                                =====     =====

At September  30, 2001,  the Company has net  operating  loss  carryforwards  of
approximately  $523,000  available to offset future taxable  income  expiring in
2011 through  2013. A valuation  allowance  of  approximately  $354,000 has been
provided to reduce the net deferred tax asset to zero because of the uncertainty
of  generating  future  taxable  income.  The valuation  allowance  decreased by
$118,000 during the year ended September 30, 2001. 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.

                                       22

<PAGE>

The  components  of the net deferred  income tax asset at September 30, 2001 and
2000 are as follows:

                                                           2001         2000
                                                         ---------    ---------
     Allowance for doubtful accounts                     $  29,606    $  33,429
     Property and equipment                                 44,342       45,493
     Inventory allowance for obsolescence                   90,491       90,491
     Unrealized losses                                       6,878         --
     Net operating loss carryforwards                      183,178      303,550
                                                         ---------    ---------
     Total deferred tax asset                              354,495      472,963
     Valuation allowance                                  (354,495)    (472,963)
                                                         ---------    ---------
     Net deferred tax asset                              $    --      $    --
                                                         =========    =========

9.  EARNINGS PER SHARE

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

                                                                Year Ended
                                                               September 30,
                                                         -----------------------
                                                            2001         2000
                                                         ----------   ----------
     Net Income                                          $  331,711   $  945,250
                                                         ==========   ==========
     Weighted Average Number of Shares Outstanding
           Basic                                          2,483,193    2,483,193
           Dilutive effect of common stock equivalents        9,165        4,293
                                                         ----------   ----------
           Diluted                                        2,492,358    2,487,486
     Earnings Per Share:
           Basic Net Income                              $     0.13   $     0.38
                                                         ==========   ==========
           Diluted Net Income                            $     0.13   $     0.38
                                                         ==========   ==========


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.

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.

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<PAGE>

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, 2001 and 2000 is as
follows:

                                                                   Weighted Avg.
                                             Number of      Price     Price Per
                                              Shares     Per Share      Share

Options outstanding at October 1, 1999       339,000    $.355-$2.50        .9335
   Granted                                    21,000    $.560-$.910        .7602
   Exercised                                    --          --           --
   Forfeited                                 (27,500)   $.515-$.810        .6367
                                              ------
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
                                             =======

Options exercisable at September 30, 2001    281,850    $.150-$2.50       1.0054
                                             =======

The weighted average remaining contractual life of the stock options outstanding
at September 30, 2001 is 7.43 years.

At  September  30, 2001 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, 2001 and 2000 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 2001 and 2000, 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  $329,061  and  $944,021,
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 2001 and 2000 using the  Black-Scholes  Model was $.5616 and $.4214
per share,  respectively.  For  purposes of  determining  the fair value of each
option, the Company used the following assumptions:

                                        2001          2000
                                        ----          ----
     Risk-free interest rate               6 %           6 %

     Volatility                           87 %          75 %

     Expected life  (years)               10            10

                                       24

<PAGE>


                                      EX-21
                         Subsidiaries of the Registrant

                                   EXHIBIT 21

                                TM CENTURY, INC.
                     List of Subsidiaries of the Registrant


Subsidiary and Name Under Which Business is Done              Where Organized
------------------------------------------------              ---------------

Hula Bear Music, Inc.                                         Texas




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