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, 1996 
            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)247-8850

            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

             X

            The  issuer's   revenue  for  its  most   recent  fiscal  year   was
            $6.969,219.

            The  aggregate  market  value of  the  voting  stock  held  by  non-
            affiliates  of the  issuer  on December  18,  1996, based  upon  the
            average  bid  and asked  prices  of  such stock  on  that date  was
            $510,000. The number of issuer's shares of Common Stock  outstanding
            as of December 18, 1996 was 2,537,193.

<PAGE>

                            DOCUMENTS INCORPORATED BY REFERENCE

            Certain  information contained  in  the Company's  1997  Information
            Statement is incorporated by reference in Part III.


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

                                           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
            compact  disc   music  libraries,   production  libraries,   station
            identification jingles, computer software used in music  scheduling,
            specialized  computer  equipment  and  software,  and  compact  disc
            players for radio stations.

            The Company (formerly  TM Communications, Inc.) 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) 247-8850..
<PAGE>
            Products

            The Company  creates, produces, markets,  and distributes goods  and
            services for  radio stations  worldwide.   Products include  special
            compilations  of  popular  music  on  compact  discs,   instrumental
            backgrounds for commercials and sound effects (collectively,  _music
            libraries_), station identification jingles, computer software  used
            in music  scheduling, specialized computer  equipment and  software,
            and compact disc players for radio stations.

            Music  libraries are  sold  on  compact disc  and  include  original
            recordings  of  background  music  and  sound  effects  written  and
            produced by the Company as sources of production material for  radio
            stations  (_production   libraries_).    Production  libraries   are
            available  in a  variety of  musical styles  and are  used by  radio
            stations   as  background   music  for   contests,  promotions   and
            commercials.   Music   libraries  also   include   compilations   of
            copyrighted music of original artists sold in eight different  music
            formats  ("compact  disc  libraries"):    Adult  Contemporary,  Easy
            Listening,  Classic Hits,  Country, Classic  Rock, Contemporary  Hit
            Radio,  Urban, and  Seventies Rock.   The  Company also  provides  a
            weekly service of new record releases on compact disc.
            
            All products on compact disc are mastered by the Company on  compact
            disc  or PCM-1630  digital  audio  tape and  replicated  by  several
            available  suppliers  of   compact  discs.  The  Company   presently
            purchases   compact  discs   and  replication   services  from   one
            significant  supplier,  Sony Disc  Corporation,  which  the  Company
            believes provides high quality discs.  Management believes that  the
            loss  of this  source  of supply  would  not cause  any  significant
            interruption  of the  Company's  operations, as  there  are  several
            alternative  sources  of  compact  discs  and  replication  services
            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 level of  disc
            inventory  is  required to  satisfy  the  shipping  requirements  of
            current sales.
<PAGE>                                            
            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
            analog or digital audio tape or compact disc.

            Computer software  is sold by  the Company for  use by customers  in
            programming music  play sequences and  for automated music  playback
            systems consisting of  specialized software, computer equipment  and
            compact  disc players  sold by  the  Company.   Management  believes
            these systems improve the quality and consistency of the  customers'
            programming  and enable  customers to  operate more  efficiently  by
            reducing  the  number  of personnel  required  to  operate  a  radio
            station.    Certain  compact disc  equipment  is  purchased  by  the
            Company  under dealer  arrangements from  outside manufacturers  and
            modified for  use with software  programs marketed  by the  Company.
            During  January 1996,  the  Company's agreement  with  its  previous
            supplier  of computer  software  used by  customers  in  programming
            music play  sequences and for automated  music playback systems  was
            terminated  and  a   new  agreement  was  negotiated  with   another
            supplier. Management does  not believe that the  loss of any of  its
            sources of  supply of computer  hardware, software  or compact  disc
            equipment would  cause a significant  interruption in the  Company's
            ability to  make timely  delivery of  products to  its customers  or
            cause a  significant interruption  of the  Company's operations,  as
            there are  several alternative sources available  for each of  these
            items.

            In May  1995, the Company discontinued  production and marketing  of
            radio station  commercials for television  broadcast.  This  product
            had  been operating  at a  net loss  for the  previous three  fiscal
            years.
            
            Set forth in the  following tables are the Company's gross  revenues
            (in thousands) by  significant product category for the years  ended
            September 30, 1996, 1995 and 1994.

<TABLE>
<CAPTION>
                 (Dollar Amounts in Thousands)     Period Ended
                                            1996       1995      1994
                <S>                       <C>       <C>        <C>
                 Broadcast Services
                 Music Libraries          $4,673     $5,453    $6,159
                                                 
                 Radio Jingles
                                           1,092        968     1,067
                 Software  and   Compact
                 Disc Equipment              744      1,836     1,768
                 
                 Other (a)                   460        405       466
                 Total                    $6,969     $8,662    $9,460
                                             
</TABLE>
               (a)  Includes, for  1994 and a portion  of 1995, commercials  for
            television broadcast.
            
<PAGE>
            Marketing and Distribution

            The Company currently  sells and supplies its products and  services
            to customers in the United  States and Canada through its own  sales
            staff in Dallas, Texas.   Domestic sales are made through  telephone
            solicitation, advertising in  trade magazines, and trade  convention
            displays.  The Company also sells its products through  distribution
            arrangements with  independent sales agents in the United  Kingdom,
            Europe,  Australia, Japan,  the Commonwealth of Independent  States
            (C.I.S.),  Canada   and  elsewhere.    Other  than   fees  paid  to
            independent sales  agents, no other  significant costs are  incurred
            by  the  Company  in  conjunction  with  it's  international   sales
            activities. Products are shipped from the Company's headquarters  or
            from the  Company's supplier  of compact  disc replication  services
            via mail and express delivery services.

            Sales of music libraries  are made primarily on an individual  order
            basis or  under contractual agreements for   the sale of  production
            libraries.    Such  agreements  generally  call  for  equal  monthly
            payments by  the customer over  terms of up  to 48  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.
            
            Customers

            The  Company's  business  is  primarily  dependent  upon  the  radio
            broadcasting industry.   The Company's  revenues are generated  from
            sales to customers in the  United States and Canada, and from  sales
            through  agents  of  the Company  in  the  United  Kingdom,  Europe,
            Australia, Japan, the  C.I.S. and elsewhere.  According to  industry
            publications, approximately 12,000  radio stations were licensed  by
            the Federal Communications Commission (FCC) for public  broadcasting
            in the United States.  Management believes that approximately  9,000
            stations in the U.S. may  require products and services of the  type
            provided by  the Company and  that more than  half of such  stations
            have purchased  the Company's product  in recent years.   No  single
            customer has accounted for  more than 10% of the Company's  revenues
            in any of the past three  years.  Gross revenues from foreign  sales
            totaled $2,300,000, $2,700,000,  and $3,100,000 for the years  ended
            1996, 1995 and 1994, respectively.
<PAGE>           
            Competition

            The  Company competes  with  several other  music  syndicators  that
            provide  either music  libraries or  radio  jingle packages  to  the
            broadcast  industry,  and  certain  companies  which  provide  music
            scheduling software or  specialized computer software and  equipment
            and compact  disc players  for radio  stations, however,  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  the  largest supplier  of  radio  station
            identification jingles in the industry.  Several dozen providers  of
            production  libraries compete  with the  Company, but  most  provide
            song-length instrumentals  and only a  few specialize in  commercial
            length music.  Management believes it is one of two major  suppliers
            of  production libraries  to  the  radio industry.    The  Company's
            specialized computer equipment  and software competes with  numerous
            companies which  offer similar  products.   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  numerous
            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.

            Employees

            As of December 1,  1996, the Company had approximately 50  full-time
            employees.    The Company  also contracts with  other personnel  and
            subcontractors who provide  creative talent for various projects  on
            an as-needed basis.
<PAGE>
            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,  subject  to  rental
            adjustments  based on  a  formula  related to  fair  market  rental.
            Management believes that its existing facility and additional  space
            currently under  lease are  sufficient for  its existing  activities
            and potential growth for the foreseeable future.

            ITEM 3. LEGAL PROCEEDINGS

            The Company  is not involved in  any pending legal proceedings  that
            in management's  opinion could result in  a material adverse  effect
            on the Company's financial position or results of operations.
            
            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, 1996.

            
                                          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.  Quotations  are  inter-dealer   quotations,
            without  retail  markups,  markdowns  or  commissions,  and  do  not
            necessarily represent actual transactions.
<TABLE>
<CAPTION>
                                           Common Stock Bid
                                             High       Low
                   <S>                       <C>        <C>
                   Fiscal
                   1996:
                            1st Quarter      $1.63       $.69
                            2nd Quarter       1.22        .56
                            3rd Quarter       1.22       1.16
                            4th Quarter       1.22        .72

                   Fiscal
                   1995:
                            1st Quarter     $ 1.88     $ 1.13
                            2nd Quarter       1.75       1.00
                            3rd Quarter       1.38        .63
                            4th Quarter       1.38        .88
</TABLE>
<PAGE>

            As of  December 15, 1996  the Company had  approximately 250  record
            owners and 700 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

            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, the  Company's ability  to develop  new products  cost-
            effectively; 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, and on third parties engaged to replicate  the
            Company's products  on compact  discs; 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.   There may  be other  risks  and
            uncertainties that management is not able to predict.
<PAGE>
            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.


            Liquidity and Capital Resources

            The Company relies  upon current sales of music libraries,  jingles,
            and specialized  computer equipment and  software 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 four-year  terms.   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, jingles, and specialized computer equipment and  software
            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 1997.
           
            During   fiscal  1996,   the  Company   made  $73,000   in   capital
            expenditures  for  the purchase  of  property  and  equipment  which
            compares to  capital expenditures of $247,000  in 1995 and  $285,000
            in 1994.   Capital expenditures  in 1996  were primarily  associated
            with upgrades  of office equipment.   Product  development costs  of
            $146,000 were incurred during fiscal 1996 for software  development,
            new music  libraries, and music library  updates, which compares  to
            product development  expenditures of $288,000  in 1995 and  $234,000
            in 1994.   Funds for operating  needs, new product development,  and
            capital  expenditures for  the year  ended September  30, 1996  were
            provided  from  cash  reserves.    The  Company's  expenditures  for
            property,   equipment,  and   development   of  new   products   are
            discretionary.  Product development expenditures are expected to  be
            approximately $100,000  in fiscal  1997.   In May  1996 the  Company
            entered into a  lease agreement for the  financing of an upgrade  of
            its computer hardware and software systems, which is anticipated  to
            be  completed by  the end  of fiscal  year 1997.   The  cost of  the
            project is  estimated at $550,000,  of which approximately  $400,000
            has  been  financed as  of  September  30, 1996.    The  Company  is
            required to repay the  amount financed in equal monthly payments  of
            principal  and interest  during  the term  of  the lease.    Monthly
            payments  on the  lease commenced  in  June 1996  in the  amount  of
            approximately $13,000.  The required monthly payments will  increase
            with the amount financed.  The term of the lease is three years  and
            the  lease  is backed  by  a  letter of  credit  in  the  amount  of
            $200,000.  The letter  of credit reduces the availability under  the
            Company's  revolving  Line of  Credit  from  $300,000  to  $100,000.
            Management  anticipates that  cash  flow from  operations  and  cash
            reserves  will be  sufficient to  meet these  capital  requirements.
            The  Company  has  no  other  significant  commitments  for  capital
            expenditures in fiscal 1997.
<PAGE>           
            The  Company's revolving  Line  of Credit  with  a bank  provides  a
            negative pledge  on all  accounts receivable,  contract rights,  and
            inventory of the Company.  Borrowings under the Line of Credit  bear
            a fluctuating  interest rate of  prime plus  1.5%, payable  monthly.
            The Line of Credit, which bears a commitment fee of 0.5% per  annum,
            is renewable annually, subject to the consent of both parties.   The
            Line  of  Credit  was renewed  effective  February  28,  1996.    No
            borrowings were  drawn under the  Line of Credit  during the  fiscal
            1996 and  no long-term borrowing is  anticipated in the  foreseeable
            future at the current levels of business operation.

            During fiscal 1996, the Company received the approximately  $130,000
            that  was  recorded  as  federal  income  taxes  receivable  as   of
            September 30, 1995.

            Current customer deposits decreased to $72,000 as of  September 30,
            1996, from $152,000 as  of September 30, 1995 for deposits  received
            from  customers on  products  ordered.     The balance  in  customer
            deposits  is  dependent  upon the  timing  of  customer  orders  for
            jingles and specialized computer equipment.
           
            The  Company  has  net  operating  loss  carryforwards  of  $800,000
            available to offset  future taxable income expiring in 2008  through
            2009.   A  valuation  allowance of  $216,000  has been  provided  to
            reduce the total deferred  tax asset to approximately $172,000.   In
            order  to fully  realize the  recorded tax  asset of  $172,000,  the
            Company  will need  to generate  approximately $360,000  in  taxable
            income  prior to  expiration of  the loss  carryforwards.   Although
            realization  is not  assured,  management has  taken  certain  steps
            intended  to achieve  a return  to profitable  operations in  future
            periods.   These steps include  certain corporate restructuring  and
            cost reduction  measures which have  reduced expenses to  manageable
            levels,  the discontinuation  of unprofitable  product lines  during
            the  last fiscal  year,  new  approaches to  marketing  our  current
            products, and  the introduction of new  products. The amount of  the
            deferred tax asset considered realizable, however, could be  reduced
            in the near  term if estimates of  future taxable income during  the
            carryforward period are reduced.
<PAGE>
            On  December  19,  1996,  the  Board  of  Directors  by   resolution
            authorized  the Company  to  purchase up  to  50,000 shares  of  its
            common  stock on  the open  market or  through privately  negotiated
            transactions, from time  to time, dependent upon market  conditions,
            through  December 31,  1997.    Such  purchases are  expected to  be
            funded by cash reserves of the Company.

            Results of Continuing Operations
           
            Fiscal 1996 Compared to Fiscal 1995

            Revenues decreased  approximately 20% to $7.0  million in 1996  from
            $8.7 million in 1995.  This  overall decline was due primarily to  a
            decrease in music library sales prices and volume and a decrease  in
            specialized computer equipment  and software sales.  The decline  in
            music  library sales  of approximately  $780,000, or  14%,  resulted
            primarily from  a decrease in  sales of compact  disc libraries  and
            production  libraries, partially  offset by  an increase  in  weekly
            music  service  revenues.     Revenues  from  specialized   computer
            equipment and software sales decreased approximately $1,090,000,  or
            59%, over  the prior  year.   Revenues from  radio jingles  remained
            consistent.   Jingles revenue increased  approximately $124,000,  or
            13%, due  primarily to  increases in  publishers royalties  received
            from the broadcast of the Company's jingles.

            As the compact disc  music library market matures, sales of  compact
            discs are generated  primarily from changes in music formats  rather
            than from  conversions to  compact disc  music delivery  technology.
            Management believes that  the decline in compact disc music  library
            revenues may continue as  the compact disc music library market  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.   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.   International  markets have  not reached  maturity
            for  compact  disc  technology.   Sales  of  weekly  music  services
            increased  approximately $66,000,  or 4%,  in international  markets
            during  fiscal 1996,  partially  offsetting the  decrease  in  music
            library revenues.    Management believes  that revenues from  weekly
            music services  will continue to grow  with the introduction of  new
            music formats.   Sales growth is  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.   While  digital  compression  does  not
            provide the  same quality of  music as compact  disc technology,  an
            increasing  number of  radio stations  are converting  to or  adding
            systems  using  digital  compression  technology.    Although  music
            libraries on compact disc can be transferred to hard drive  systems,
            some  of the  Company's competitors  are offering  hard drives  with
            pre-loaded music libraries.  The Company expects to begin  providing
            music libraries  on hard drive to  both equipment manufacturers  and
            directly to end customers in fiscal 1997.
<PAGE>
             In  1995 the  Company began  recording libraries  in a  hard  drive
            format  that  can   be  easily  converted  into  the  most   popular
            compression schemes.

            The decrease in  production library revenue resulted primarily  from
            the expiration of  three-year contracts entered into by the  Company
            with customers  in prior years.   The decrease in revenues  resulted
            from  a reduced  demand  for new  contracts  and the  nonrenewal  of
            expired  contracts  in  the  United  States.    Although  production
            library revenues  may continue to  decline as additional  three-year
            contracts  expire,  management believes  that  production  libraries
            will continue to generate a significant portion of overall  revenues
            from sales of new products  as well as existing products.   Renewals
            and new sales growth are  subject to customer acceptance of the  new
            products.
            
            On February 9, 1996 the  Company entered into a five year  marketing
            agreement with  Electronic Data Systems  Corporation (_EDS_),  which
            provides  the Company  with the  exclusive right  to distribute  and
            sublicense the  EDS CoSTAR_ hard  disk audio  storage and  retrieval
            system  to  radio   stations  within  the  United  States  and   its
            territories.   The  CoSTAR_ system  is  a collection  of  integrated
            software applications that allows a broadcaster to digitally  record
            and edit  material for  distribution within  a facility  on a  local
            area  network (LAN)  or to  remote  sites via  a wide  area  network
            (WAN).   The  growing  trend  to multi-station  facilities  and  the
            expansion of broadcast  groups allow broadcasters to take  advantage
            of   the  cost   savings   of  consolidation   and   the   marketing
            opportunities of  multimedia technologies.   The agreement  provides
            exclusive distribution  rights to the  Company through December  31,
            2000, subject to meeting certain annual performance goals.  Progress
            on development  needs and support  systems necessary  to market  the
            product in  the U.S. has been  delayed.  The  CoSTAR_ system is  not
            expected to impact revenues in the foreseeable future.

           
            Revenues  from   specialized  computer  equipment  sales   decreased
            approximately  $780,000  due  primarily  to  revisions  in  software
            necessary to satisfy market requirements,  the restructuring of  the
            marketing staff  in the  first fiscal  quarter 1996,   and  training
            time devoted  by the marketing  staff to the  CoSTAR_ audio  storage
            and retrieval  system.    The  Company has  completed the  necessary
            revisions in  software, and is now  re-directing its efforts to  its
            core  specialized computer  equipment and  rebuilding the  marketing
            staff.    Software sales  decreased  approximately  $400,000.    The
            decline in software sales  was due the termination of the  Company's
            agreement with it's supplier of computer software in January,  1996.
            The Company  expects that it  will be able  to rebuild its  customer
            base for  its software used in  programming music sequences and  for
            automated music playback systems over the next five years.

            Commissions as a percentage of revenue increased from  approximately
            19% of  revenue in  1995 to approximately  21% of  revenue in  1996.
            Increases  were primarily  due to  increases  in new  contracts  for
            weekly music services.
<PAGE>
            Production, programming and technical costs decreased  approximately
            27% to approximately  $2.9 million, or 42%  of revenue in 1996  from
            $4.0 million, or  46% of revenue in 1995.   This decrease is due  to
            the restructuring and  cost reduction measures which were  initiated
            in the  second quarter  of fiscal  1995 and  the discontinuation  of
            unprofitable products.

            General and  administrative costs decreased approximately  $275,000,
            or  10%,  as  a result  of  the  restructuring  and  cost  reduction
            measures mentioned  above, decreased compensation,  legal and  other
            professional fees associated with the resignation of a director  and
            officer  of  the  Company  in  November,  1994,  of    approximately
            $100,000 .   The decrease  was partially offset  by a settlement  of
            approximately $60,000 with a long distance carrier relating to  long
            distance  calls fraudulently  charged  to the  Company's  toll  free
            numbers.   The  Company has  discontinued  its toll  free  telephone
            numbers   and  has   experienced   no  significant   disruption   in
            operations.
           
            Selling  costs   declined  approximately  $196,000,   or  35%,   due
            primarily to decreases in advertising and promotion expenditures.

            Depreciation expense increased  approximately $40,000, or 20%, as  a
            result of computer  equipment and software acquired under a  capital
            lease during fiscal 1996.

            During the fourth quarter of 1996, the Company recorded a  provision
            of  approximately $230,000  to  reduce  the carrying  value  of  its
            production libraries  to the lower  of cost or  market.  The  amount
            retained in  inventory was reduced to  amounts supported by  current
            sales levels.
           
            Fiscal 1995 Compared to Fiscal 1994

            Revenues decreased  approximately 9% to  $8.7 million  in 1995  from
            $9.5 million in 1994.  This  overall decline was due primarily to  a
            decrease  in music  library  sales volume.    The decline  in  music
            library sales of approximately $700,000, or 11%, resulted  primarily
            from a  decrease in sales of  production libraries and compact  disc
            libraries, partially offset  by an increase in weekly music  service
            revenues.    Revenues   from  specialized  computer  equipment   and
            software  sales increased  approximately $68,000,  or 4%,  over  the
            prior year.  Revenues from radio jingles remained consistent.

            The decrease in  production library revenue resulted primarily  from
            the expiration of  three-year contracts entered into by the  Company
            with customers  in prior years.   The decrease in revenues  resulted
            from  a reduced  demand  for new  contracts  and the  nonrenewal  of
            expired contracts in the United States.

            Revenues  from specialized  computer  equipment and  software  sales
            increased due to the  introduction of new versions of the  Company's
            automated playback  equipment system in  fiscal 1995.   Revenues  in
            this category were depressed  in fiscal 1994 as the introduction  of
            the new playback  system was postponed due  to delays in receipt  of
            components  from  manufacturers  and  the  development  of   certain
            enhancements to the system.
<PAGE>
            Production, programming and technical costs increased  approximately
            $88,000, or 2%, due to  (1) an increase in production costs  related
            to  the newest  version of  the Company's  automated music  playback
            system, (2) an increase  in technical salaries costs for support  of
            automated  music playback  systems, and,  (3) costs  related to  new
            weekly compact disc  music services for international markets  which
            was introduced  in July, 1994  as well as  increased volume for  all
            weekly music services.

            General and  administrative costs increased approximately  $288,000,
            or  12%, as  a  result of  (1)  increased occupancy  and  facilities
            costs, of  approximately $80,000 (2)  increased compensation,  legal
            and  other professional  fees of  approximately $100,000  associated
            with the  resignation of a  director and officer  of the Company  in
            November, 1994,  and, (3) relocation costs  for executive and  sales
            employees.

            Selling  costs   declined  approximately  $216,000,   or  28%,   due
            primarily to decreases in advertising and promotion expenditures.
            
            In May  1995, the Company discontinued  production and marketing  of
            radio station  commercials for television  broadcast.  This  product
            had  been operating  a loss  for the  previous three  fiscal  years.
            Operating  losses  for this  product  were  $86,000,  $143,000,  and
            $123,000  on net  revenues of  $54,000,  $233,000, and  $104,000  in
            1995, 1994, 1993,  respectively.  Other income (expense) includes  a
            loss  of approximately  $26,000 on  the sale  of certain  television
            production equipment.
           
            During the fourth quarter 1995, the Company recorded a provision  of
            approximately  $360,000  to write-off  substantially  all    product
            development  costs  associated  with  its  audio  visual  production
            library.  This production library, targeted to non radio  customers,
            had  been operating  at a  loss  for the  past three  fiscal  years.
            Operating  losses  for  this  product  were  $30,000,  $48,000,  and
            $112,000 on net revenues of $55,000, $37,000, and $0 in 1995,  1994,
            and 1993, respectively.

            Accounting Matters

            The  Financial  Accounting  Standards  Board  (_FASB_)  periodically
            issues  accounting   standards  which  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.

            ITEM 7.   FINANCIAL STATEMENTS

            The  financial  statements and  notes  thereto,  together  with  the
            report thereon  of Deloitte &  Touche LLP dated  December 11,  1996,
            included elsewhere in  this report are incorporated by reference  in
            answer to this Item 7.

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

            None.
<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  1997  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 1997  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 1997 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 1997  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 Merger: TM Communications, Inc. and
                  Century 21 Programming, Inc. (Exhibit 3(c)) (2)
               (d)    Certificate of Amendment of Certificate of Incorporation
                  of TM Century, Inc. effective March 27, 1992. (Exhibit 1) (3)
                  (March 31, 1992)
            
            10 Material Contracts:

               (a)  Loan and Security Agreement and Term Note among Merrill
                    Lynch Business Financial Services and TM Communications,Inc.
                    and subsidiaries dated August 31, 1990 (Exhibit 10(q)) (2)
               (b)  Agreement for Sale of Stock, Secured Note, Security
                    Agreement, Pledge Agreement, and Guaranty dated January 1,
                    1991, from TF Productions to TM Century, Inc. (Exhibits 1-3)
                    (3) (December 30, 1990)
<PAGE>
               (c)  *Long Term Performance Incentive Plan of TM Century, Inc.
                    dated December 3, 1991. (Exhibit 10(bb))(4)
               (d)  Amendment No. 1 to Term Note and Amendment No. 2 to Loan and
                    Security Agreement dated February 26, 1992 among Merrill
                    Lynch Business Financial Services Inc. and TM Century, Inc.
                    and subsidiaries. (Exhibit 2) (3) (March 31, 1992)
               (e)  WCMA Line of Credit Extension Letter Agreement by and
                    between Merrill Lynch Business Financial Services Inc. and
                    TM Century Inc. dated April 21, 1994. (Exhibit 2) (3) (March
                    31, 1994)
               (f)  WMCA Line of Credit Extension Letter Agreement by and
                    between Merrill Lynch Business Financial Services Inc. and
                    TM Century,Inc. dated  January 16, 1995. (Exhibit 10(f)) (8)
               (g)  Agreement dated November 30, 1994 between TM Century, Inc.
                    and P. Craig Turner regarding Mr. Turner's resignation as
                    President and Chief Executive Officer and director of the
                    Registrant. (Exhibit 10.1) (6)
               (h)  *TM Century, Inc. Bonus Plan for Executive Management dated
                    October 1, 1992 (Exhibit 10(j)) (5)
               (i)  Lease Agreement, dated as of April 23, 1993 by and between
                    NationsBank of Texas, N.A., Trustee and TM Century, Inc.
                    (Exhibit 1) (3) (March 31, 1993)
               (j)  Purchase and Sale Agreement by and between Merriman
                    Patrick Turner Productions, Inc. and TM Century, Inc. dated
                    March 29, 1994. (Exhibit 1) (3) (March 31, 1994)
               (k)  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)) (7)
               (l)  *Consulting Agreement between TM Century, Inc. and Carol M.
                    Peek dated January 27, 1995. (Exhibit 1) (3) (December 31,
                    1994)
               (m)  *Employment Agreement between TM Century, Inc. and Neil W.
                    Sargent dated March 22, 1995. (Exhibit 1) (3) (March 31,
                    1995)
               (n)  Distribution agreement between TM Century, Inc. and Radio
                    Express, Inc. dated November 1, 1992. (Exhibit (o)) (8)
               (o)  Software Remarketing Agreement between Electronic Data
                    Systems Corporation and TM Century, Inc. dated February 9,
                    1996. (Exhibit 1) (3) (December 31, 1995)
               (p)  WMCA Line of Credit Extension Letter Agreement by and
                    between Merrill Lynch Business Financial Services Inc. and
                    TM Century, Inc. dated March 18, 1996.  (Exhibit 1) (3)
                    (March 31, 1996)
               (q)  Letter Amendment Agreement and Letter of Credit Supplement
                    Agreement to Loan and Security Agreement and Term Note by
                    and between Merrill Lynch Business Financial Services Inc.
                    and TM Century, Inc. dated  April 22, 1996  and April  18,
                    1996; and a Letter of Credit Agreement by and between
                    Merrill Lynch Business Financial Services Inc., The Northern
                    Trust Company, and TM Century, Inc. dated April 30, 1996.
                    (Exhibit 10(a)) (3)(June 30, 1996)
               (r)  Master Lease Agreement by and between USL Capital
                    Corporation and TM Century, Inc.  dated May 2,  1996.
                    (Exhibit 10(b)) (3)(June 30, 1996)
               (s)  *Employment Agreement  between TM Century, Inc. and R. David
                    Graupner dated  May 6,  1996. (Exhibit  10(c)) (3) (June 30,
                    1996)
               (t)  *Consulting Agreement  between TM Century, Inc. and Marjorie
                    L. McIntyre dated July 5, 1996.
<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
                 Annual Report on Form 10-K for the fiscal year ended  September
                 30, 1990, as amended.
                 (3)  Incorporated by reference to the indicated exhibit to  the
                 Quarterly Report on Form 10-Q for the indicated period, of  the
                 Registrant.
                 (4)  Incorporated by reference to the indicated exhibit to  the
                 Annual Report on Form 10-K for the fiscal year ended  September
                 30, 1991.
                 (5)  Incorporated by reference to the indicated exhibit to  the
                 Current  Report  on  Form  10-K  for  the  fiscal  year   ended
                 September 30, 1992, of the Registrant.
                 (6)  Incorporated by reference to the indicated exhibit to  the
                 Current Report  on Form  8-K dated  November 30,  1994, of  the
                 Registrant.
                 (7)  Incorporated by reference  to the indicated exhibit to the
                 Annual Report  on  Form 10-KSB  for  the fiscal  year  ended
                 September 30, 1994.
                 (8)  Incorporated by reference  to the indicated exhibit to the
                 Annual Report  on  Form 10-KSB  for  the fiscal  year  ended
                 September 30, 1995.

            *  The documents  filed or  incorporated  by reference  as  Exhibits
            10(c),  (h), (l),  (m)  (s)  and (t)  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, 1996.
<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 27, 1996

                                               TM CENTURY, INC.


                                               BY:/s/Janette Williams
                                               Janette Williams
                                               Chief Accounting 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/Janette Williams                                    December 27, 
            JANETTE WILLIAMS, Chief Accounting Officer                    1996
            (Principal financial and accounting officer)
                                           

            /s/Neil W. Sargent                               December 27, 1996
            NEIL W. SARGENT, President and Chief Executive Officer
            (Principal executive officer) 

            /s/Marjorie L. McIntyre                          December 27, 1996
            MARJORIE L. MCINTYRE, Chairman of the Board of Directors

            /s/Ann Armstrong Bellows                         December 27, 1996
            ANN ARMSTRONG BELLOWS, Director                               

            /s/Donald E. Latin                               December 27, 1996
            DONALD E. LATIN, Director
<PAGE>           
      
                         TM CENTURY, INC.
                         INDEX TO FINANCIAL STATEMENTS

            Financial Statements:

            Independent Auditors' Report                                15

            Balance Sheets, September 30, 1996 and 1995                 16

            Statements of Operations for the Years Ended
               September 30, 1996, 1995 and 1994                        17

            Statements of Stockholders' Equity for the Years Ended
               September 30, 1996,  1995 and 1994                       18

            Statements of Cash Flows for the Years Ended
               September 30, 1996, 1995 and 1994                        19

            Notes to Financial Statements                               20

<PAGE>

            INDEPENDENT AUDITORS' REPORT

            To the Stockholders and Board of Directors of TM Century, Inc.:

            We  have  audited  the balance  sheets  of  TM  Century,  Inc.  (the
            _Company_),  as of  September 30,  1996 and  1995, and  the  related
            statements of  operations, stockholders' equity  and cash flows  for
            each of  the three  years in the  period ended  September 30,  1996.
            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  generally  accepted
            auditing  standards.   Those  standards  require that  we  plan  and
            perform the audit  to obtain reasonable assurance about whether  the
            financial statements  are free of material  misstatement.  An  audit
            includes  examining,  on  a  test  basis,  evidence  supporting  the
            amounts and disclosures in the financial statements.  An audit  also
            includes assessing  the accounting principles  used and  significant
            estimates  made by  management, as  well as  evaluating the  overall
            financial  statement  presentation.   We  believe  that  our  audits
            provide a reasonable basis for our opinion.

            In our  opinion, such financial  statements present  fairly, in  all
            material  respects,  the  financial  position  of  the  Company   at
            September 30, 1996 and 1995,  and the results of its operations  and
            its cash  flows for  each of  the three  years in  the period  ended
            September   30,  1996,   in  conformity   with  generally   accepted
            accounting principles.
           



            DELOITTE & TOUCHE LLP
            Dallas, Texas
            December 11, 1996

<PAGE>
<TABLE>
<CAPTION>
                         TM CENTURY, INC.
                          Balance Sheets
                   September 30, 1996, and 1995
                                  
                             ASSETS         1996          1995
<S>                                         <C>            <C>
CURRENT ASSETS
    Cash                                 $  377,855    $   245,812
    Accounts and notes receivable less allowances
        of $144,000 and $112,000,           829,848        915,798
        respectively
    Inventories, net                      1,220,454      1,654,197
    Federal income taxes receivable          -             132,220
    Deferred federal income taxes           171,877        166,063
    Prepaid expenses                         51,573         22,976
        TOTAL CURRENT ASSETS              2,651,607      3,137,066

PROPERTY AND EQUIPMENT                    2,298,086      1,878,452
    Less accumulated depreciation       (1,224,005)    (1,016,452)
        NET PROPERTY AND EQUIPMENT        1,074,081        862,000
INVENTORIES - NONCURRENT, net               351,016        587,217
OTHER ASSETS                                 15,388         16,388

    TOTAL                                $4,092,092     $4,602,671

               LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
    Accounts payable                       $225,260       $205,082
    Accrued expenses                        123,619        201,456
    Current portion of obligation under     121,303       -
    capital lease
    Deferred revenue                         24,298       -
    Customer deposits                        71,568        151,502

        TOTAL CURRENT LIABILITIES           566,048        558,040

OBLIGATION UNDER CAPITAL LEASE              246,555       -
CUSTOMER DEPOSITS                           159,531        204,093
DEFERRED FEDERAL INCOME TAXES                43,747         75,510

        TOTAL LIABILITIES                 1,015,881        837,643

STOCKHOLDERS'  EQUITY
    Common stock, $.01 par value;
    authorized
        7,500,000 shares; 2,970,481          29,705         29,705
        shares issued

    Paid-in capital                       2,275,272      2,275,272
    Treasury stock - at cost, 433,288   (1,250,316)    (1,250,316)
    shares
    Retained earnings                     2,021,550      2,710,367

        TOTAL STOCKHOLDERS' EQUITY        3,076,211      3,765,028

    TOTAL                                $4,092,092     $4,602,671
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                          TM CENTURY, INC.
                      Statements of Operations
       For the Years Ended September 30, 1996, 1995, and 1994

                                  1996         1995         1994
<S>                              <C>          <C>         <C>
REVENUES                         $6,969,219   $8,662,271  $9,460,212
    Less commissions              1,446,394    1,637,452   1,895,788

        NET REVENUES              5,522,825    7,024,819   7,564,424

COSTS AND EXPENSES
    Production, programming       2,948,599    4,022,727   3,934,759
    and technical costs
    General and                   2,430,300    2,705,739   2,417,874
    administrative
    Selling                         360,256      556,411     772,339
    Depreciation                    244,823      203,293     200,339
    Reduction in carrying           229,580      360,000      -
    value of inventories

        TOTAL                     6,213,558    7,848,170   7,325,311

OPERATING INCOME (LOSS)           (690,733)    (823,351)     239,113

OTHER INCOME (EXPENSE)
    Interest income                  12,856       14,857      15,649
    Interest expense                (8,138)      -             (720)
    Other                          (37,115)     (34,590)       8,266

        TOTAL                      (32,397)     (19,733)      23,195

INCOME (LOSS) BEFORE INCOME       (723,130)    (843,084)     262,308
TAXES

PROVISION (BENEFIT) FOR
INCOME TAXES
    Current                         -          (134,220)      53,738
    Deferred                       (34,313)    (121,686)      39,276

        TOTAL                      (34,313)    (255,906)      93,014


NET INCOME (LOSS)                ($688,817)   ($587,178) $   169,294
 
NET INCOME (LOSS) PER COMMON        ($0.27)      ($0.23)       $0.07
SHARE

WEIGHTED AVERAGE NUMBER OF
COMMON
    SHARES OUTSTANDING            2,537,193    2,537,193   2,537,193

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                            TM CENTURY, INC.
                   Statements of Stockholders' Equity
         For the Years Ended September 30, 1996, 1995 and 1994
                                      Additional
                  Number of            Paid-In    Treasury    Retained
                    Shares   Amount    Capital      Stock     Earnings
<S>               <C>        <C>      <C>        <C>          <C>           
Balance September 2,970,483  $29,705  $2,275,276 ($1,250,316) $3,128,251
30, 1993
Payment for             (2)                  (3)
Fractional Shares

Net Income                                                       169,294

Balance September 2,970,481   29,705   2,275,273  (1,250,316)  3,297,545
30, 1994

Payment for                                  (1)
Fractional Shares

Net Loss                                                       (587,178)

Balance September 2,970,481   29,705   2,275,272  (1,250,316)  2,710,367
30, 1995

    Net Loss                                                       (688,817)
Balance September 2,970,481   29,705   2,275,272  (1,250,316)  2,021,550
30, 1996
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                         TM CENTURY, INC.

                      Statements of Cash Flows
       For the Years Ended September 30, 1996, 1995, and 1994
                                      1996        1995       1994
<S>                                  <C>         <C>         <C>
OPERATING ACTIVITIES:
   Net Income (loss)                 ($688,817)  ($587,178)  $169,294
   Adjustments to reconcile net
   income
     to net cash provided by
     operations:
     Depreciation                       244,823     203,293   200,339
     Amortization                       391,519     502,682   457,338
     Deferred income taxes             (37,577)   (116,920)    39,276
     Provision for doubtful accounts    80,000      79,000    95,930
     Gain on sale of U.S.                -          (7,639)     -
     Treasuries
     Loss (gain) on disposition of       37,115      25,668   (8,266)
     property and equipment
     Reduction in carrying value of     229,580     360,000
     inventories
     Accretion of discounts              -            (215)   (4,038)
     Payments received on                -           12,874    58,065
     installment receivables
     Changes in operating assets
     and liabilities:
       Accounts receivable                1,527   (367,632)    47,336
       Inventories                       48,844   (503,471) (305,485)
       Prepaid expenses                (28,597)      31,973  (22,793)
       Accounts payable and accrued    (57,659)     126,146 (221,472)
       expenses
       Federal income taxes             132,220    (32,626)   122,926
       receivable/payable
       Deferred revenue                  24,298    (39,219)  (29,704)
       Customer deposits              (124,496)         923    70,591
   NET CASH PROVIDED BY OPERATING       252,780   (312,341)   669,337
   ACTIVITIES

INVESTING ACTIVITIES:
   (Decrease) increase in long-term      -           -        (9,337)
   liabilities
   Decrease (increase) in other           1,000        (61)    10,160
   assets
   Purchases of property and           (72,949)   (247,035) (285,166)
   equipment
   Purchase of U.S. Treasuries           -        (292,361)     -
   Proceeds from sale of U.S.            -          300,000     -
   Treasuries
   Principal payments received on         4,423      20,699    16,271
   notes receivable
   Principal payments received from      -           -         12,046
   lease of property and equipment

   Proceeds from sale of net assets      -           -        150,000
   under lease
   Proceeds from sale of property         5,080      30,000    31,857
   and equipment
   NET CASH USED IN INVESTING          (62,446)   (188,758)  (74,169)
   ACTIVITIES

FINANCING ACTIVITIES:
   Fractional shares paid to             -              (1)       (3)
   stockholders
   Principal payments on long-term     (58,291)              (50,000)
   debt and capital lease
   obligations
    NET CASH USED IN FINANCING          (58,291)         (1)  (50,003)
   ACTIVITIES

INCREASE (DECREASE) IN CASH             132,043   (501,100)   545,165

CASH AT BEGINNING OF PERIOD             245,812     746,912   201,747

CASH AT END OF PERIOD                  $377,855    $245,812  $746,912

See Note 3 to financial statements for supplemental disclosures of
cash flow information.
</TABLE>
<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 stations  worldwide.   Products include  special
            compilations  of popular  music  on compact  discs,  sound  effects,
            station  identification jingles,  computer  software used  in  music
            scheduling,  specialized   computer  equipment  and  software,   and
            compact disc players for radio stations.

            Previous amounts have been  restated to conform to the current  year
            presentation.

                                     
            2.  SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

            Inventories

            Inventories  created by  the Company  or  purchased for  resale
            are carried at the lower of cost or market, as follows:

                 Music libraries - The Company produces music  compilations
                 and  background  music libraries  which  are  provided  to
                 radio stations under  one to four year lease contracts  or
                 under  buyout arrangements.    The costs  to  develop  the
                 libraries are amortized on a straight-line basis over  the
                 lesser of three to five years or the economic life of  the
                 product.   Current music  update services  are charged  to
                 expense in the period  in which incurred.  The portion  of
                 libraries  expected to  be amortized  within one  year  is
                 included in current assets.

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

                 Software  -  The  Company  markets  specialized   computer
                 equipment to radio  stations for automated music  playback
                 systems.    The  capitalized  software  development  costs
                 associated  with  this   equipment  are  amortized  on   a
                 straight-line basis over three years.

                 Compact Disc Equipment - Equipment inventory purchased  by
                 the Company under  dealer arrangements is charged to  cost
                 of sales under the specific identification method.
<PAGE>
            Revenue Recognition

            Revenues are recognized 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.

                 Compact Disc Equipment - Upon delivery of the product.

            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 and  amortized over the life  of
            the  lease.  Depreciation  and  amortization  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 and          5 to 7  years
                   equipment                      
                   Production equipment          7 to 10 years
                   Leasehold improvements        5 to 10 years

            Statement  of  Financial  Accounting  Standards  (_SFAS_)  No.  121,
            _Accounting for  the Impairment of Long-Lived  Assets and for  Long-
            lived Assets  to be  Disposed Of _,  which is  effective for  fiscal
            years beginning  after December 15,  1995, requires that  long-lived
            assets and certain identifiable  intangibles to be held and used  by
            an entity be reviewed  for impairment whenever events or changes  in
            circumstances indicate that the  carrying value of an asset may  not
            be recoverable.  SFAS  No. 121 also requires that long-lived  assets
            and certain identifiable  intangibles to be disposed of be  reported
            at the  lower of carrying amount  or fair value  less cost to  sell.
            The Company will adopt SFAS  No. 121 effective October 1, 1996,  and
            the impact of such adoption  is expected to be insignificant to  its
            financial condition and results of operations.

            Income Taxes

            Deferred income  taxes are provided,  when applicable, on  temporary
            differences between  the recognition of income  and expense for  tax
            and for financial  accounting purposes in accordance with  Statement
            of Financial  Accounting Standards No. 109.   Deferred income  taxes
            are  provided,  when  applicable,  for  all  significant   temporary
            differences by  the liability  method, whereby  deferred tax  assets
            and liabilities are determined  by the tax laws and statutory  rates
            in effect at the balance sheet date.
<PAGE>
            Net Income (Loss) Per Share

            Net income (loss) per common share is based on the weighted  average
            number of  common shares outstanding  and common stock  equivalents,
            if dilutive, outstanding during the periods.

            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.

            3.   SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

            Supplemental disclosures as of September 30, 1996:

               Cash paid for interest                       $  8,138

               Noncash investing and financing activities:
                    Capital lease obligation incurred       $426,149



            4.  INVENTORIES

            Inventories consisted  of the following  at September  30, 1996  and
            1995:
<TABLE>
<CAPTION>

                           1996                     1995
                    Current    Long-Term    Current     Long-Term
 S>                <C>         <C>           <C>           <C>

  Music            $    97,574 $2,709,907  $   303,168  $ 2,567,844
  libraries
  Compact discs        831,409        -        946,536
  Software              43,512                  47,014      424,724
                                  348,315
  Compact disc         247,959     -           357,479
  equipment
  Total cost         1,220,454  3,058,222    1,654,197    2,992,568
  Accumulated                                           
  amortization                 (2,707,206)               (2,405,351)
  Inventories,net   $1,220,454   $351,016   $1,654,197    $ 587,217


</TABLE>
<PAGE>           
            Amounts  charged to  expense  for capitalized  software  costs  were
            $51,975, $52,345, $41,077 in 1996, 1995 and 1994, respectively.

            During the fourth quarter of 1996, the Company recorded a  provision
            of $230,000 to reduce the carrying value of its music and compact
            disc libraries to the lower of cost or market.The amount retained
            in inventory was reduced to amounts supported by current sales
            levels.

            During the fourth quarter 1995, the Company recorded a provision  of
            $360,000 to write-down  substantially all product development  costs
            associated with its audio visual music library.  This library,
            targeted to non radio customers, had been operating at a loss for
            the past three fiscal years.  Operating losses for this product
            were $30,000, $48,000, and $112,000 on  net revenues  of $55,000,
            $37,000,  and $0  in  1995, 1994,  and  1993, respectively.

<PAGE>
            5.  PROPERTY AND EQUIPMENT

            Property and equipment  consisted of the following at September  30,
            1996 and 1995:
<TABLE>
<CAPTION>
                                         1996        1995
                   <S>               <C>          <C>
                   Office furniture  $1,048,313   $  666,388
                   and equipment

                   Production
                   equipment            885,335      867,448

                   Leasehold
                   improvements         364,438      344,666

                          Total      $2,298,086   $1,878,452
</TABLE>
      
            Property and  equipment includes $426,000  in computer software  and
            equipment   acquired   under  capital   leases   in   fiscal   1996.
            Amortization of  the lease of approximately  $47,000 is included  in
            depreciation expense for the year ended September 30, 1996.

            6.  LONG-TERM DEBT AND LEASE OBLIGATIONS

            Effective  February  28, 1996,  the  Company  renewed  its  $300,000
            revolving  line of  credit (the  _Line of  Credit_) for  a  one-year
            term.   Borrowings  under  the Line  of  Credit bear  a  fluctuating
            interest rate  of prime plus 1.5%,  payable monthly and the  Company
            provides  a negative  pledge on  all accounts  receivable,  contract
            rights, and  inventory of the  Company.  The  Line of Credit,  which
            bears a  commitment fee  of .5%  per annum,  is renewable  annually,
            subject to the  consent of both parties.   No borrowings were  drawn
            under the Line of Credit during the fiscal year ended September  30,
            1996.    In  conjunction  with  the  Company's  leasing  arrangement
            discussed  below, the  availability under  the  Line of  Credit  was
            reduced to from $300,000 to $100,000.

            In May 1996, the Company entered into a capital lease agreement  for
            the financing of the  upgrade of its computer hardware and  software
            systems.   The total cost  of the project  is estimated at  $550,000
            and is  anticipated to be completed  by the end  of the next  fiscal
            year.  Costs financed on the project were approximately $400,000  as
            of September 30, 1996.  The lease is backed by a $200,000 letter  of
            credit which must be renewed annually subject to the renewal of  the
            Company's Line of Credit.   The requirement of the letter of  credit
            will be reviewed on an annual basis.  The lease has a term of  three
            years and contains an option  to purchase the equipment at its  fair
            market value or renew the lease  at its fair market rental value  at
            the end  of the initial  term.  Based  on borrowing rates  currently
            available to the Company on similar arrangements, the fair value  of
            the lease agreement approximates the carrying value.
<PAGE>
            Future minimum lease payments under  the lease as of  September  30,
            1996 are as follows:
<TABLE>
<CAPTION>
                  <S>                               <C>
                  1997                              $ 155,204

                  1998                                155,204

                  1999                                 90,536

                  Total     minimum      lease        400,944
                  payments

                  Less amount representing
                  interest                            (33,086)

                  Net present value of                    
                  minimum lease payments            $ 367,858
</TABLE>

            The  Company paid  $8,138, $720  and $19,435  of interest  on  notes
            payable   and  long-term   debt  during   1996,  1995,   and   1994,
            respectively.

            On  November  1,  1990,  the  Company  executed  a  financing  lease
            agreement  for the  sale  of certain  property  and equipment  to  a
            company owned by three former officers and directors of the  Company
            (the  group).    The  lease  was  payable  in  eighty-four   monthly
            installments of  $6,435 including interest at  11%, and granted  the
            group an option to purchase such property and equipment at the  fair
            market value at the end of the lease.

            On  March  29,  1994, the  Company  executed  a  Purchase  and  Sale
            Agreement  for the  sale of  the property  and equipment  previously
            leased under  the financing lease  agreement.   The financing  lease
            agreement was terminated by all parties upon payment to the  Company
            of $150,000 by the group on  March 29, 1994.  A loss on the sale  of
            $6,800 is included in  the financial statements for the fiscal  year
            ended September 30, 1994.
<PAGE>
            7.  COMMITMENTS AND CONTINGENCIES

            Leases

            Future minimum  lease payments under  operating leases with  initial
            lease terms in excess of one year are as follows:
<TABLE>
<CAPTION>
                  <S>                            <C>
                  1997                           $ 279,876
                                                  
                  1998                             279,876
                                                  
                  1999                             291,534
                                                  
                  2000                             326,508
                                                   
                  2001                             326,508

                  Thereafter                       598,598
                                                  
                  Future     minimum
                  lease payments                $2,102,900
</TABLE>                                                         


            The  Company leases  its facilities  under  a ten-year  lease  which
            began July  15, 1993.   The lease may  be renewed  at the  Company's
            option  for   two  additional   five-year  periods   at  an   amount
            approximating fair market value.

            Rent  expense under  operating leases  was $245,470,  $226,851,  and
            $184,258 for 1996, 1995, and 1994, respectively.

            Employment Agreements

            Effective  April  1995,  the  Company  entered  into  a   three-year
            employment contract  with an executive officer  and director of  the
            Company which  provides for  a base  annual salary  of $180,000  and
            eligibility to participate in the Company's Bonus Plan.

            In September 1992, the Company entered into a three-year  employment
            contract  effective July  7,  1992  with an  executive  officer  and
            director of  the Company  which provided  for a  base annual  salary
            (modified to $200,000  in October, 1993), compensation reviews,  and
            eligibility  to  participate  in  the  Company's  Bonus  Plan.    In
            November 1994,  the officer resigned  as President, Chief  Executive
            Officer,  and Director  of  the Company.    In connection  with  his
            resignation  the  Company  paid  this  former  officer  $60,000   on
            December 1,  1994 and $25,000 on  December 1, 1995 in  consideration
            for his one-year limited non-compete agreement and general release.

            The Company has consulting agreements with certain members a  former
            member of  the Board of  Directors.  The  compensation expensed  was
            $180,000,   $160,000  and   $120,000  in   1996,  1995   and   1994,
            respectively.    Aggregate commitments  for  future  salaries  under
            these employment agreements is $405,000.
<PAGE>
            9.  INCOME TAXES

            Differences between  the statutory federal income  tax rate and  the
            effective rate for the years ended September 30, 1996 1995 and  1994
            are as follows:
<TABLE>
<CAPTION>
                                                1996      1995   1994
                 <S>                            <C>      <C>     <C>
                 Income tax provision at        (35.0%)  (35.0%) 35.0%                                               )  35.0
                                                                   
                 Effect of graduated tax          1.0     1.0    (1.0)

                 rates
                 Effect of carryback of net               5.3
                 operating losses
                                                     
                 Operating losses with no         27.8
                 current tax benefit
                 Other                             1.5    (1.7)   1.5



                                                ( 4.7%)  (30.4%)  35.5%
                                                                   
</TABLE>

            The  Company has  net  operating  loss carryforwards  of    $800,000
            available to offset  future taxable income expiring in 2008  through
            2009.   A  valuation  allowance of  $216,000  has been  provided  to
            reduce  the total  deferred  tax asset  to  $172,000 because  it  is
            likely  that a  portion  of the  tax  asset will  not  be  realized.
            Realization is dependent on generating sufficient taxable income
            prior to expiration of the loss carryforwards. Management believes
            it is more likely than not that the non-reserved portion of the
            deferred tax asset will be realized.  The amount of the deferred
            tax asset considered realizable, however, could be reduced in the
            near term if estimates of future taxable income during the
            carryforward period are reduced.   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.

            Additionally,  in  conjunction  with  the  Alternative  Minimum  Tax
            (_AMT_ ) rules, the Company has available AMT carryforwards for  tax
            purposes of  approximately $23,000, which  may be used  indefinitely
            to reduce regular federal income taxes.
<PAGE>
            The components  of the net  deferred income tax  asset at  September
            30, 1996 and 1995 is as follows:

<TABLE>
<CAPTION>
                                                     1996          1995
                   <S>                              <C>           <C>
                   Bad debt                         $48,870       $34,560 

                   Depreciable assets               (42,250)      (73,500)
                                                          
                   Inventory                         66,300         -
                   valuation
                   allowance
                   Net operating  loss              272,970       123,000
                   carryforwards
                   Other                             (1,490)        6,493
                   Total deferred  tax              344,400        90,553
                   asset
                   Valuation                        216,270         -
                   allowance
                   Net  deferred   tax                                 
                   asset                           $128,130       $90,553
</TABLE>
                                            
            The Company  made no income tax  payments during fiscal 1996,  1995,
            and  1994. Due  to the  Company's net  operating loss  position,  no
            income tax  payments were  necessary in fiscal  1996 and  1995.   In
            fiscal 1994, overpayments of tax from fiscal year 1993 were  applied
            to the period.   The Company received $129,000, $10,000 and  $73,000
            of income tax refunds during 1996, 1995 and 1994, respectively.

            10.  ROYALTY AND SALES REPRESENTATION AGREEMENTS

            In 1990,  the Company acquired  rights to sell  a radio  programming
            software product  for which royalties of  50-65% are payable by  the
            Company  on sales  as collected.    Royalties under  this  agreement
            totaled  $72,132, $313,210,  and $308,429  in 1996,  1995 and  1994,
            respectively.  This agreement was terminated in January, 1996.

            The Company has an  agreement with a production company whereby  the
            production  company is  entitled to  a  50% royalty  on sales  of  a
            production library  which it developed for  the Company.   Royalties
            under  this agreement  totaled  $26,000, $51,026,  and  $131,117  in
            1996, 1995, and 1994, respectively.

            The Company has  certain distribution arrangements with  independent
            sales agents  in the United Kingdom,  Europe, Australia, Japan,  the
            Commonwealth of Independent  States (C.I.S.), Canada and  elsewhere.
            Fees included  in commission expense  under these arrangements  were
            $989,000,  $1,034,000  and  $1,299,000  in  1996,  1995,  and  1994,
            respectively.
<PAGE>                      

            11.  STOCKHOLDERS' EQUITY

            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 is not an employee  or
            full-time  consultant of  the Company  is automatically  granted  in
            December of each year, commencing in 1991, for five years (but  only
            for  so long  as he  or she  remains 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 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.

            The option price of outstanding Nonqualified Stock Options is  $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.
<PAGE>
            SFAS No.  123, _Accounting for  Stock-Based Compensation_, which  is
            effective  for  fiscal years  beginning  after  December  15,  1995,
            requires  that an  employer's financial  statements include  certain
            disclosures  about stock-based  employee  compensation  arrangements
            regardless  of the  method used  to account  for them.    Management
            expects to continue to measure compensation costs using APB  Opinion
            No.  25,  _Accounting  for Stock  Issued  to  Employees_,  and  will
            therefore  include  pro  forma  disclosures  in  the  notes  to  the
            financial  statements for  all  awards granted  after  December  31,
            1994.   The Company will  disclose the proforma  net income and  pro
            forma  earnings per  share as  if the  fair value  based  accounting
            method in  SFAS No.  123 had been  used to  account for  stock-based
            compensation cost in future financial statement presentations.

            Option information for the fiscal year ended September 30, 1996:
<TABLE>
<CAPTION>

 		      
         		       Option Price           Number of  Shares  
	                       per share	          1996             1995
               <S>                   <C>                   <C>	    <C>
               Options
               outstanding:
                  Incentive           $1.0625 -       210,000	190,000
                                        $2.50
                  Nonqualified          $1.20          25,000    20,000
               Options
               exercisable:
                  Incentive           $1.0625 -        84,375    65,000
                                        $2.50
                  Nonqualified          $1.20          18,500    13,500 
                                                                              

                 Options granted during the year     55,000      125,000
                 Options exercised during the year      -           -

</TABLE>