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, 1997 
   Commission file No. 0-13167


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

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


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

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

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

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

   Check whether the issuer (1) filed all reports required  to be filed
   by Section 13 or 15(d) of the Exchange Act during the  past 12 months
   (or for such shorter period that the registrant was required to file
   such reports), and (2) has been subject to such filing requirements
   for the past 90 days. Yes   X   No___

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

   X

   The issuer's revenue for its most recent fiscal year was $7,246,663.

   The aggregate market value of the voting stock held by non-affiliates
   of the issuer on  December 19, 1997, based  upon the average bid  and
   asked prices of such stock on  that date was $489,500. The number  of
   issuer's shares of Common Stock outstanding  as of December 19,  1997
   was 2,483,193.

                    DOCUMENTS INCORPORATED BY REFERENCE

   Certain information  contained  in  the  Company's  1998  Information
   Statement is incorporated by reference in Part III.

   Transitional Small Business Disclosure Format (check one): Yes__ No X
<PAGE>
                                  PART I

   ITEM 1. DESCRIPTION OF BUSINESS

   General   
   TM  Century,  Inc.  (the  _Company_)  is  engaged  primarily in  the 
   creation,  production,  marketing,  and  worldwide  distribution   of
   compact  disc   music   libraries,  production   libraries,   station
   identification  jingles,  and   computer  software   used  in   music
   scheduling for radio stations worldwide.

   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) 406-6800.

   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 and  computer  hard
   drives, instrumental backgrounds  for commercials  and sound  effects
   (collectively, _music  libraries_), station  identification  jingles,
   and computer software used in music scheduling for radio stations.

   Music libraries are sold on compact discs and hard drives 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  eleven different  music  formats
   ("compact disc  libraries"):   Adult  Contemporary,  Easy  Listening,
   Classic Hits, Country, Classic  Rock, Contemporary Hit Radio,  Urban,
   and Seventies Rock,  New Adult Contemporary,  Dance and  Latin.   The
   Company provides a weekly service of  new record releases on  compact
   disc to its compact disc library customers.

   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. During January 1996, the  Company's
   agreement with its  previous supplier  of computer  software used  by
   customers in programming  music play sequences  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 and software 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.

   In June  1997 the  Company sold  its  Ultimate Digital  Studio  (UDS)
   division.    The  UDS division  distributed  specialized   computer
   broadcast equipment  and software  that controlled  music on  compact
   disc juke boxes.  This product had  been operating at a 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, 1997, 1996 and 1995.

     (Dollar Amounts in Thousands)                   Period Ended
                                             1997      1996       1995

      Broadcast Services
      Music Libraries                        $5,707    $4,673    $5,453
      Radio Jingles                           1,051     1,092       968
      Software and Compact Disc Equipment       461       744     1,836
      Other                                      27       460       405

      Total                                  $7,246    $6,969    $8,662


   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.), and elsewhere.  Other than  fees paid to independent  sales
   agents, no other  significant costs are  incurred by  the Company  in
   conjunction with  its international  sales activities.  Products  are
   shipped  from  the  Company's  headquarters  or  from  the  Company's
   supplier of compact  disc replication services  via mail and  express
   delivery services.
<PAGE>
   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 11,000  radio stations  were licensed  by
   the Federal Communications Commission  (FCC) for public  broadcasting
   in the United States.  Management believes that approximately  10,000
   stations in the U.S.  may require products and  services of the  type
   provided by the Company.  No  single customer has accounted for  more
   than 10% of the  Company's revenues in any  of the past three  years.
   Gross revenues from foreign sales totaled $2,200,000, $2,300,000, and
   $2,700,000 for the years ended 1997, 1996 and 1995, respectively.

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

   Seasonality

   The Company is not subject to strong seasonal fluctuations.  However,
   quarterly results are  affected by the  introduction of new  products
   and timing  of  customer  orders.   Because  profit  margins  on  the
   Company's many products  vary, the results  for any  quarter are  not
   necessarily indicative of the results that may be achieved for a full
   fiscal year.
<PAGE>
   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,  1997, the Company  had approximately 45  full-time
   employees.    The  Company also  contracts with  other personnel  and
   subcontractors who provide creative talent for various projects on an
   as-needed basis.

   ITEM 2. DESCRIPTION OF PROPERTY

   The Company's principal operations are conducted from a leased 46,645
   square foot office and production  facility located at 2002  Academy,
   Dallas, Texas.  The facility is comprised of sales and administrative
   offices  and  recording  studios.    The  facility  is  leased   from
   unaffiliated third parties  under a lease  that expires  on July  15,
   2003.  The  lease may  be extended at  the Company's  option for  two
   additional five-year terms, 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, 1997.


                                  PART II

   ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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

                                      High      Low

          Fiscal 1997:
                       1st Quarter    $ .94    $ .50
                       2nd Quarter     1.12      .56
                       3rd Quarter     1.00      .40
                       4th Quarter      .66      .44

          Fiscal 1996:
                       1st Quarter    $1.63    $ .69
                       2nd Quarter     1.22      .56
                       3rd Quarter     1.22     1.16
                       4th Quarter     1.22      .72


   As of September  30, 1997 the  Company had  approximately 216  record
   owners and 600 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, 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.  Additionally, the  Company may not  have the ability  to
   develop new products cost-effectively. There  may be other risks  and
   uncertainties that management is not able to predict.
<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.  All forward-looking statements  are
   intended to be covered by the  safe harbor created by section 21E  of
   the Securities Exchange Commission Act of 1934.


   Liquidity and Capital Resources

   The Company relies  upon current sales  of music libraries,  jingles,
   and music  scheduling 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-years.  The
   Company is obligated to provide music updates throughout the contract
   terms for both production library and weekly music service contracts.
   Sales of  music libraries,  jingles, 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 1998.

   During fiscal 1997, the Company made $97,000 in capital  expenditures
   for the purchase of property and equipment which compares to  capital
   expenditures of  $73,000  in 1996  and  $247,000 in  1995.    Capital
   expenditures in  1997  were  primarily associated  with  upgrades  of
   production equipment.   Product  development costs  of $198,500  were
   incurred during  fiscal  1997  for software  development,  new  music
   libraries, and  music  library  updates, which  compares  to  product
   development expenditures of  $146,000 in 1996  and $288,000 in  1995.
   Funds for  operating  needs,  new product  development,  and  capital
   expenditures for the year ended September 30, 1997 were provided from
   operations  and  cash  reserves.    The  Company's  expenditures  for
   property,  equipment,   and   development   of   new   products   are
   discretionary.  Product development  expenditures are expected to  be
   approximately $150,000  in fiscal  1998.   In  May 1996  the  Company
   entered into a lease agreement for the financing of an upgrade of its
   computer hardware and software systems, which was completed in fiscal
   year 1997.  The cost of  the project was $529,000, of which  $426,000
   was financed as of September 30, 1996 and the remaining $103,000  was
   financed in fiscal 1997.  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 have  been increased to  approximately $16,000 as  a
   result of the December 1996 computer  upgrade of $103,000.  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 1998.
<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  27, 1997.   No  borrowings
   were drawn under the Line of  Credit during fiscal 1997 and no  long-
   term borrowing is  anticipated in the  foreseeable future at  current
   levels of business operation.

   Customer deposits decreased  to $192,800  as of  September 30,  1997,
   from $231,100 as  of September 30,  1996 for  deposits received  from
   customers ordering products.   The  balance in  customer deposits  is
   dependent upon  the  timing  of  customer  orders  for  compact  disc
   libraries, jingles, and production libraries.

   The Company  has  net  operating  loss  carryforwards  of  $1,324,000
   available to offset  future taxable income  expiring in 2008  through
   2010.  A valuation allowance of $499,000 has been provided to  reduce
   the total deferred tax asset to approximately $155,000.  In order  to
   fully realize the recorded  tax asset of  $155,000, the Company  will
   need to generate  approximately $456,000 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  certain  expenses  to  manageable  levels,  the
   discontinuation of  unprofitable product  lines during  the two  most
   recent  fiscal  years,  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.

   The Board  of Directors  authorized the  Company  to purchase  up  to
   75,000 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.  The Company  purchased
   54,000 shares of  its common  stock for a  total cost  of $42,000  in
   fiscal year 1997, which purchases were funded by cash reserves of the
   Company.

   The Company  is  in the  process  of converting  its  main  operating
   software system that  is Year 2000  compatible.   Such conversion  is
   scheduled to be completed by the  end of January, 1998.  The  Company
   has contracted with outside  computer consultants who have  concluded
   there are no major Year 2000 issues for the Company.

   It is  estimated it  may cost  the Company  approximately $50,000  to
   update any hardware and software applications  to deal with any  Year
   2000 issues.  Any necessary funds will come from operations and  cash
   reserves.
<PAGE>
   Results of Continuing Operations

   Fiscal 1997 Compared to Fiscal 1996

   Revenues increased approximately 4.0% to $7.2  million in 1997  from
   $7.0 million in 1996.  The  overall increase was primarily due to  an
   increase in music library sales prices and volume, and was  partially
   offset by a reduction in software  and compact disc equipment  sales.
   The reduction in  software and compact  disc equipment  sales can  be
   attributed to the sale of the Ultimate Digital Studio division  (UDS)
   in June 1997.  The increase  in music library sales of  approximately
   $1 million, or  22%, resulted from  an increase in  sales of  compact
   disc libraries  and production  libraries, and  weekly music  service
   revenues.  Revenues  from radio jingles  decreased by  $41,000 or  4%
   primarily due to a decrease in publishers royalties received from the
   broadcasting of the Company's jingles.

   Sales of weekly music  services increased approximately $415,000,  or
   21%.  The increase in compact disc music library revenues was due  to
   the introduction in the fourth quarter of 1996 of a new music  format
   targeted to  non-broadcast  customers.   As  the compact  disc  music
   library market matures,  sales of compact  discs generated  primarily
   from changes in music formats or sales of new music libraries  rather
   than from conversions to compact disc music library technology.   The
   market for compact  disc music libraries  to broadcast customers  has
   reached a substantial level of maturity  in the United States,  which
   is the  market from  which  the Company  derives  most of  its  music
   library revenues.  A decline in revenues from music library sales may
   result in  a  proportionately  greater decline  in  operating  income
   because music  libraries provide  higher margins  than the  Company's
   other products.   However,  management  believes that  revenues  from
   weekly music services will  continue to grow  by targeting new  music
   formats  to  non-broadcast  customers   and  introducing  new   music
   libraries to radio stations.   Management believes the  international
   markets have  not  reached  maturity  for  compact  disc  technology.
   Renewals and new sales growth are  subject to customer acceptance  of
   the new products.
   
   An increase in revenue from weekly comedy services was primarily  due
   to barter arrangements  whereby revenues are  derived from  obtaining
   airtime from radio stations in exchange for such weekly services  and
   derived from  obtaining commercial  airtime  from radio  stations  in
   exchange for  such  weekly services  and  marketing such  airtime  to
   advertisers.  The Company  has begun to  market other products  using
   similar barter arrangements.  Revenues from such barter  arrangements
   are expected to increase in the future.
<PAGE>
   Music library  revenues  may  also be  adversely  affected  as  radio
   stations convert to new music delivery systems technology offered  by
   competitors, such  as computer  hard drives  which store  music in  a
   digital  compression  form.    The  Company  began  providing   music
   libraries on hard drive to both equipment manufacturers and  directly
   to end  customers  in  fiscal 1997,  but  several  of  the  Company's
   competitors have been providing products in  this format at a  longer
   period of time and the Company's hard drive sales have not  generated
   significant revenues.   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.

   Revenues from  specialized  computer  equipment  and  software  sales
   decreased approximately $283,000  primarily due  to the  sale of  the
   Ultimate Digital  Studio (UDS)  division. and  revisions in  software
   necessary to satisfy market requirements  The Company expects that it
   will be able  to rebuild  its revenues  but does  not expect  revenue
   levels to attain its former levels from software sales over the  next
   five years by entering into strategic alliances with other  companies
   who develop computer software used in programming music sequences and
   for automated playback systems.
   Commissions as a  percentage of revenues  decreased to  approximately
   19% of revenue  in fiscal 1997  from 21% of  revenue in fiscal  1996.
   This decrease is due to changes in the commission structure.

   Production, programming and  technical costs increased  approximately
   5% to approximately $3.1 million in  1997 from $2.9 million in  1996.
   As a percentage of revenue these  costs remained relatively the  same
   at approximately 42% for fiscal years 1996 and 1997.

   General and administrative costs increased approximately $165,800, or
   7%, primarily due to an increase in bad debt and freight expenses.

   Selling costs increased $162,700 or 45%, primarily due to an increase
   in advertising and promotion expenditures due to the introduction  of
   two new products in 1997and convention costs.

   Depreciation  expense  increased   approximately  $93,000,  or   38%,
   primarily as a  result of  computer equipment  and software  acquired
   under a capital lease during fiscal years 1996 and 1997.

   During 1997,  the  Company  recorded  a  provision  of  approximately
   $148,000 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.
<PAGE>
   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, including an increase of approximately $66,000,  or
   4%, in  international  markets during  fiscal  1996.   Revenues  from
   specialized  computer   equipment   and  software   sales   decreased
   approximately $1,090,000,  or  59%, over  the  prior year.    Jingles
   revenue increased approximately  $124,000, or 13%,  due primarily  to
   increases in publishers royalties received from the broadcast of  the
   Company's jingles.

   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.

   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 has redirected 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 to the termination of the Company's agreement with  its
   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.

   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 was due  to
   the restructuring and cost reduction measures which were initiated in
   the  second  quarter  of  fiscal  1995  and  the  discontinuation  of
   unprofitable products.
<PAGE>
   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.

   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 22, 1997,  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 1998 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 1998 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  1998
   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 1998 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)
<PAGE>
   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)
      (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
        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)
<PAGE>
      (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.

   27   Financial Data Schedule

   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
          Annual  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, 1997.
<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 29, 1997

                                      TM CENTURY, INC.


                                      BY:/s/Roger Holeman
                                      Roger Holeman
                                      Chief Financial Officer

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

                                                DATE:

   /s/Roger Holeman                             December 29, 1997
   ROGER HOLEMAN, Chief Financial Officer
   (Principal financial and accounting officer)


   /s/Neil W. Sargent                           December 29, 1997
   NEIL W. SARGENT, President and Chief Executive Officer
   (Principal executive officer)


   /s/Marjorie L. McIntyre                      December 29, 1997
   MARJORIE L. MCINTYRE, Chairman of the Board of Directors


   /s/A.  Ann Armstrong                         December 29, 1997
   A. ANN ARMSTRONG, Director


   /s/Donald E. Latin                           December 29, 1997
   DONALD E. LATIN, Director


<PAGE>
                                TM CENTURY, INC.

                       INDEX TO FINANCIAL STATEMENTS

   Financial Statements:

   Independent Auditors' Report                                     

   Balance Sheets, September 30, 1997 and 1996                      

   Statements of Operations for the Years Ended
   September 30, 1997, 1996 and 1995                                

   Statements of Stockholders' Equity for the Years Ended
   September 30, 1997, 1996 and 1995                               

   Statements of Cash Flows for the Years Ended
   September 30, 1997, 1996 and 1995                                

   Notes to Financial Statements                                    



   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,  1997  and 1996,  and  the  related
   statements of  operations, stockholders'  equity and  cash flows  for
   each of  the three  years in  the period  ended September  30,  1997.
   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, 1997 and  1996, and the  results of its  operations and its  cash
   flows for each of the three  years in the period ended September  30,
   1997, in conformity with generally accepted accounting principles.




   DELOITTE & TOUCHE LLP
   Dallas, Texas
   December 22, 1997
<PAGE>
<TABLE>
                                   TM CENTURY, INC.

                                    Balance Sheets
                             September 30, 1997 and 1996
    
                                        ASSETS
                                                               1997          1996
          <S>                                                   <C>           <C>
   CURRENT ASSETS                                               
     Cash and cash equivalents                           $    294,333  $    377,855
     Accounts receivable,  less allowance
        for doubtful accounts of $250,000 and $144,000,       733,767       829,848
        respectively
     Inventories, net                                         779,953     1,220,454
     Deferred federal income taxes                            154,530       171,877
     Prepaid expenses                                          25,224        51,573
        TOTAL CURRENT ASSETS                                1,987,807     2,651,607

     PROPERTY AND EQUIPMENT                                 2,463,958     2,298,086
        Less accumulated depreciation                      (1,548,617)   (1,224,005)
        NET PROPERTY AND EQUIPMENT                            915,341     1,074,081

   INVENTORIES - NONCURRENT, net                              143,647       351,016
   OTHER ASSETS                                                18,260        15,388
     TOTAL                                               $  3,065,055  $  4,092,092
</TABLE>
<PAGE>
<TABLE>
                         LIABILITIES AND STOCKHOLDERS' EQUITY
         <S>                                                    <C>           <C>
   CURRENT LIABILITIES
     Accounts payable                                    $     69,451  $    225,260
     Accrued expenses                                         205,674       123,619
     Current portion of obligation under capital lease        178,033       121,303
     Deferred revenue                                          56,011        24,298
     Customer deposits                                         26,358        71,568
        TOTAL CURRENT LIABILITIES                             535,527       566,048

   OBLIGATION UNDER CAPITAL LEASE                             128,755       246,555
   CUSTOMER DEPOSITS - noncurrent                             166,418       159,531
   DEFERRED FEDERAL INCOME TAXES                               26,400        43,747
        TOTAL LIABILITIES                                     857,100     1,015,881

   STOCKHOLDERS' EQUITY
     Common Stock, $.01 par value; authorized 7,500,000
     shares;
        2,970,481shares issued                                 29,705        29,705
     Paid-in Capital                                        2,275,272     2,275,272
     Treasury Stock - at cost, 487,288 and 433,288        (1,291,227)   (1,250,316)
     shares, respectively
     Retained earnings                                      1,194,205     2,021,550
        TOTAL STOCKHOLDERS' EQUITY                          2,207,955     3,076,211
     TOTAL                                               $  3,065,055  $  4,092,092

</TABLE>
<PAGE>
<TABLE>
                             TM CENTURY, INC.

                         Statements of Operations
                     September 30, 1997, 1996 and 1995

                                             1997         1996         1995
      <S>                                    <C>           <C>         <C>
   REVENUES                              $ 7,246,663  $ 6,969,219 $ 8,662,271
     Less commissions                      1,356,585    1,446,394   1,637,452
        NET REVENUES                       5,890,078    5,522,825   7,024,819


   COSTS AND EXPENSES
     Production, programming, and          3,099,381    2,948,599   4,022,727
        technical costs
     General and administrative            2,595,353    2,430,300   2,705,739
     Selling                                 522,961      360,256     556,411
     Depreciation                            338,111      244,823     203,293
     Reduction in carrying value             148,000      229,580     360,000
        of inventories

        TOTAL                              6,703,806    6,213,558   7,848,170

   OPERATING INCOME (LOSS)                  (813,728)    (690,733)   (823,351)

   OTHER INCOME (EXPENSE)
     Interest income                          11,436       12,856      14,857
     Interest expense                       (25,871)      (8,138)
     Other                                       818     (37,115)    (34,590)

        TOTAL                               (13,617)     (32,397)    (19,733)


   INCOME (LOSS) BEFORE TAXES ON INCOME    (827,345)    (723,130)   (843,084)
       
   PROVISION (BENEFIT) FOR INCOME TAXES
     Current                                                        (134,220)
     Deferred                                            (34,313)   (121,686)

        TOTAL                                            (34,313)   (255,906)
     
   NET INCOME (LOSS)                     $ (827,345)  $ (688,817) $ (587,178)

   NET INCOME (LOSS) PER COMMON SHARE    $     (.33)  $     (.27) $     (.23)
   
   WEIGHTED AVERAGE NUMBER OF
     COMMON SHARES OUTSTANDING            2,496,210    2,537,193   2,537,193
</TABLE>
<PAGE>
<TABLE>

                                               TM CENTURY, INC.

                                      Statements of Stockholders' Equity
                                Years Ended September 30, 1997, 1996 and 1995


                                     Common Stock                                                      Total
                                  Number of              Additional       Treasury      Retained    Shareholder's
                                   Shares     Amount   Paid-In-Capital      Stock       Earnings       Equity
            <S>                      <C>        <C>         <C>             <C>            <C>          <C>
   BALANCE, OCTOBER 1, 1994       2,970,481  $ 29,705   $ 2,275,273    $ (1,250,316)  $ 2,710,367   $ 3,765,029

   Payment for Fractional Shares                                (1)

    Net income

   BALANCE, SEPTEMBER 30, 1995    2,970,481    29,705     2,275,272      (1,250,316)    2,710,367     3,765,029

    Net income                                                                           (688,719)     (688,719)
 
   BALANCE, SEPTEMBER 30, 1996    2,970,481    29,705     2,275,272      (1,250,316)    2,021,550     3,076,211

   Purchase of Treasury Stock                                               (40,911)                    (40,911)

    Net income                                                                           (827,345)     (827,345)

   BALANCE, SEPTEMBER 30, 1997    2,970,481  $ 29,705   $ 2,275,272    $ (1,291,227)  $ 1,194,205   $ 2,207,955

</TABLE>
<PAGE>            
<TABLE>
                                TM CENTURY, INC.

                            Statements of Cash Flows
                  Years Ended September 30, 1997, 1996 and 1995
                                                             1997         1996         1995
          <S>                                                 <C>          <C>         <C>     
   OPERATING ACTIVITIES:
    Net Income (loss)                                    $ (827,345)  $ (688,817)  $ (587,178)
    Adjustments to reconcile net income to 
     net cash provided by (used in) operations
     Depreciation                                           338,111      244,823      203,293
     Amortization                                           385,079      391,519      502,682
     Deferred income taxes                                  (37,577)    (116,920)
     Provision for doubtful accounts                        140,498       80,000       79,000
     Gain on sale of U. S. Treasuries                                                  (7,639)
     Loss (gain) on disposition of property and equipment      (818)      37,115       25,668
     Reduction in carrying value of inventory               148,000      229,580      360,000
     Accretion of discounts                                                              (215)
     Payments received on installment receivables                                                  12,874
     Increases (decreases) in cash from changes in
       operating assets and liabilities:
       Accounts receivable                                  (44,417)       1,527     (367,632)
       Inventories                                          114,791       48,844     (503,471)
       Prepaid expenses                                     26,349       (28,597)      31,973
       Accounts payable and accrued expenses               (73,754)      (57,659)     126,146
       Federal income taxes receivable/payable                   0       132,220      (32,626)
       Deferred revenue                                      31,713       24,298      (39,219)
       Customer deposits                                    (38,323)    (124,496)         923
    NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES     199,884      252,780     (312,341)

   INVESTING ACTIVITIES:
    (Increase) Decrease in other assets                      (2,872)       1,000          (61)
    Purchases of property and equipment                     (96,891)     (72,949)    (247,035)
    Purchase of U.S. Treasuries                                                      (292,361)
    Proceeds from sale of U.S.                                                        300,000
    Treasuries
    Principal payments received on notes receivable           4,423       20,699
    Proceeds from sale of property and equipment             20,916        5,080       30,000
    
    NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES     (78,847)     (62,446)    (188,758)
    
   FINANCING ACTIVITIES:
    Fractional shares paid to Stockholders                                                               (1)
    Purchase of treasury shares                             (40,911)
    Principal payments on long-term debt and               (163,648)     (58,291)
      and capital lease obligations

    NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES    (204,559)     (58,291)          (1)

   INCREASE (DECREASE) IN CASH                              (83,522)     132,043     (501,100)

   CASH AT BEGINNING OF PERIOD                              377,855      245,812      746,912

   CASH AT END OF PERIOD                                 $  294,333   $  377,855   $  245,812

</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  and computer software  used in  music
   scheduling.

   Certain reclassifications  have  been  made  to  the  1996  and  1995
   financial statements to conform to the current year presentation.

   2.  SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

   Cash and cash equivalents

   Cash and  cash equivalents  of the  Company  are composed  of  demand
   deposits with  banks and  short-term investments  with maturities  of
   three months or less when purchased.

   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.

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


   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 equipment     3 to 7 years
          Production equipment               5 to 7 years
          Leasehold improvements            5 to 10 years

   The Company  adopted  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  _,  effective
   October 1, 1996, the effect of  such adoption was not significant  to
   the Company's financial condition or 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 SFAS 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.

   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.
<PAGE>
   New Accounting Pronouncements

   In February 1997, the  Financial Accounting Standards Board  (_FASB_)
   issued SFAS  No. 128,  _Earnings per  Share,_ which  establishes  new
   standards for  computing and  presenting earnings  per share  and  is
   effective for financial  statements issued for  periods ending  after
   December 15, 1997, including interim periods; earlier application  is
   not permitted.  The Company does not expect the adoption of SFAS  No.
   128 to have a significant impact upon the Company's reported earnings
   per share.

   The FASB  issued, in  February 1997,  SFAS  No. 129,  _Disclosure  of
   Information about Capital Structure,_ which establishes standards for
   disclosing information  about an  entity's capital  structure and  is
   effective for financial statements for periods ending after  December
   15, 1997.   The effect of  such adoption will not have a  significant
   impact upon the Company's  results of operations  but will result  in
   additional disclosure in the 1998 financial statements.

   In June 1997, the FASB issued SFAS No. 130, _Reporting  Comprehensive
   Income,_ which  establishes standards  for reporting  and display  of
   comprehensive income and its components in the financial  statements.
   SFAS No. 130 is effective for  fiscal years beginning after  December
   15, 1997. The Company does not expect the adoption of SFAS No. 130 to
   have a  significant impact  upon the  Company's reported  results  of
   operations but  will  result in  additional  disclosure in  the  1998
   financial statements.   The FASB also issued, in June 1997,
   SFAS No. 131, _Disclosures  about
   Segments of an Enterprise and Related Information,_ which establishes
   standards for  the way  public companies  disclose information  about
   operating segments, products and services, geographic areas and major
   customers.  SFAS No.  131 is effective  for financial statements  for
   periods beginning  after  December  15,  1997.  The  effect  of  such
   adoption will  not  have  a significant  impact  upon  the  Company's
   results of operations but will result in additional disclosure in the
   1998 financial statements.

   3.   SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

   Supplemental disclosures as of September 30:
                                                    1997       1996
     Cash paid for interest                     $ 25,871    $  8,138

     Noncash investing and financing activities:
     Capital lease obligation incurred         $102,578     $426,149
<PAGE>
   4.  INVENTORIES

   Inventories consisted  of the  following at  September 30,  1997  and
   1996:
<PAGE>
<TABLE>
                                        1997                      1996
                                
                                 Current   Long-Term        Current   Long-Term
          <S>                      <C>        <C>             <C>         <C>   
      Music libraries           $107,766  $ 2,898,244    $   97,574  $ 2,709,907
      Compact discs              666,992       -            831,409        -
      Software                      -        391,827         43,512      348,315
      Compact disc equipment       5,195       -            247,959        -
         Total cost              779,953    3,290,071     1,220,454    3,058,222

      Accumulated amortization             (3,146,424)                (2,707,206)
      
      Inventories, net          $779,953  $   143,647    $1,220,454  $   351,016

</TABLE>
<PAGE>



   Amounts charged  to  expense  for  capitalized  software  costs  were
   $43,512 , $51,975 and $52,345 in 1997, 1996 and 1995, respectively.

   During 1997 and 1996,  the Company recorded  a provision of  $148,000
   and $230,000, respectively, 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.
   Operating loss  for  this product  during  1995 was  $30,000  on  net
   revenues of $55,000.

   5.  PROPERTY AND EQUIPMENT   Property and equipment  consisted of the 
   following at September  30, 1997 and 1996:

                                                1997           1996

          Office furniture and equipment   $ 1,172,781    $ 1,048,313
          Production equipment                 925,539        885,335
          Leasehold improvements               365,638        364,438

                 Total                     $ 2,463,958    $ 2,298,086

<PAGE>

   Property and  equipment includes  $529,000 in  computer software  and
   equipment acquired  under capital  leases in  fiscal 1997  and  1996.
   Amortization of the  lease of approximately  $203,000 and $47,000  is
   included in depreciation  expense for the  years ended September  30,
   1997 and 1996, respectively.

   6.  CREDIT FACILITIES AND CAPITAL 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
   which was automatically extended to February 28, 1998 under the terms
   of the  renewal.    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 occurred under
   the Line of Credit during the  fiscal years ended September 30,  1997
   and 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 as of September 30, 1997,  is
   approximately $529,000.  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.

   Future minimum lease payments  under the lease as of
   September 30, 1997 are as follows:

        1998                                        $ 194,056
        1999                                          126,145
        2000                                            6,478

        Total minimum lease payments                  326,679

        Less amount representing interest             (19,891)
        
        Net present value of minimum lease payments   306,788

        Less current portion                         (178,003)
        
        Long term capital lease obligation          $ 128,785



   The Company  paid  $25,871, $8,138  and  $720 of  interest  on  notes
   payable and capital  lease obligations during  1997, 1996, and  1995,
   respectively.


   7.  COMMITMENTS AND CONTINGENCIES
<PAGE>
   Leases

   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.

   Future minimum  lease payments  under operating  leases with  initial
   lease terms in excess of one year are as follows:

        1998                              $   279,876
        1999                                  283,762
        2000                                  326,508
        2001                                  326,508
        2002                                  299,299
        Thereafter                            299,299

        Future minimum lease payments     $ 1,815,252





   Rent expense  under  operating  leases  was  $261,663,  $245,470  and
   $226,851 for 1997, 1996, and 1995, 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  and  a
   former member of the Board of  Directors.  The compensation  expensed
   was  $180,000,  $180,000  and  $160,000  in  1997,  1996  and   1995,
   respectively.

   Aggregate commitments for future salaries under employment agreements
   and consulting agreements  is $245,000.
<PAGE>
   9.  INCOME TAXES

   Differences between the  statutory federal  income tax  rate and  the
   effective rate for the years ended September 30, 1997 1996 and 1995,
   are as follows:


                                                  1997       1996       1995

        Income tax provision at statutory rate   (35.0%)    (35.0)%   (35.0)%
        Effect of graduated tax rates              1.0        1.0        1.0
        Effect of  carryback of                                          5.3
          net operating losses

        Operating losses with no current tax      32.5       27.8  
        Other                                      1.5        1.5       (1.7)

                                                  (0.0%)     (4.7%)    (30.4%)




   The Company  has  net operating  loss  carryforwards of    $1,324,000
   available to offset  future taxable income  expiring in 2008  through
   2010.  A valuation allowance of $499,000 has been provided to  reduce
   the total deferred tax asset to $155,000 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.

   The components of the net deferred income tax asset at September  30,
   1997 and 1996 is as follows:

                                                  1997         1996

          Bad debt                              $ 87,500     $ 48,870
          Depreciable assets                     (26,400)     (42,250)
          Inventory valuation allowance          116,600       66,300
          Net operating loss carryforwards       450,100      272,970
          Other                                  (1,100)       (1,490)

          Total deferred tax asset               626,700      344,400
          Valuation allowance                    498,570      216,270

          Net deferred tax asset                $128,130     $128,130
<PAGE>


   The Company made no income tax payments during fiscal 1997, 1996, and
   1995. Due to the Company's net operating loss position, no income tax
   payments were necessary in fiscal 1997,  1996 and 1995.  The  Company
   received $129,000 and $10,000 of income  tax refunds during 1996  and
   1995, respectively.

   10.  ROYALTY AND SALES REPRESENTATION AGREEMENTS

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

   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
   $929,000,  $989,000  and   $1,034,000  in  1997,   1996,  and   1995,
   respectively.


   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 was not an employee  or
   full-time consultant  of the  Company  was automatically  granted  in
   December of each year, commencing in  1991, for five years (but  only
   for so  long as  he or  she  remained a  member of  the  Compensation
   Committee), a Nonqualified Stock Option for 2,500 shares. The maximum
   number of shares  which may  be issued  pursuant to  the exercise  of
   options under the  Plan was 187,500  shares.   Effective October  28,
   1993, the Board of Directors approved an amendment to the Plan  which
   increased the total number of shares  which may be issued to  250,000
   shares of common stock.

   The 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>
   Option information for the fiscal years ended September 30, 1997  and
   1996:


                                                                Weighted
                                Number of         Price          Average
                                  Shares        Per Share          Price
                                                                 Per Share
      Options outstanding at     87,500        $1.20 - $2.50     $ 1.3114
      September 30, 1994
         Granted                125,000        $1.125 - $2.50      1.1880
         Exercised                 -
         Forfeited               (2,500)          $ 2.50           2.5000
      Options outstanding at    210,000        $1.125 - $2.50      1.2238
      September 30, 1995
         Granted                 55,000        $1.0625 - $1.20     1.0573
         Exercised                 -
         Forfeited              (30,000)          $ 1.20           1.2000
      Options outstanding at    235,000        $1.0625 - $2.50     1.1690
      September 30, 1996                                        
         Granted                 25,000             $.625          0.6250
         Exercised                 -                   -        
         Forfeited              (60,000)        $.625 - $1.125     1.0573
      Options outstanding at    200,000        $1.0625 - $2.50     1.1345
      September 30, 1997

      Options exercisable at    108,500        $1.0625 - $2.50     1.1874
      September 30, 1997

   The weighted average remaining contractual life of the stock options
   outstanding at September 31, 1997 is 7.2 years.

   At September 30, 1997 the Company has reserved a total of  250,000
   shares of common stock for exercise of stock options.

   The Company applies APB Opinion No. 25, _Accounting for Stock Issued
   to Employees_ in accounting for its stock option and award plan.
   During 1997, the exercise price of each option granted was greater
   than or equal to the market price of the Company's stock on the date
   of grant.  Accordingly, no compensation expense has been recognized
   under this plan.  For the year ended September 30, 1997, the
   difference between actual net loss and net loss on a proforma basis
   as if the Company had utilized the accounting methodology prescribed
   by SFAS No. 123, _Accounting for Stock-Based Compensation,_ would
   have been $7,500 and would result in no difference in reported net
   loss per share.

   The estimated weighted average grant date fair value of options
   granted during fiscal year 1997 was $.3252 per share.  For purposes
   of determining fair value of each option, the Company used the
   minimum value method using the following assumptions:

        Risk-free interest rate                    6.75 %
        Expected life                             10 years
<PAGE>