<PAGE>

                   U.S. SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, DC  20549


                                  FORM 10-QSB



  /X/   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934


            For the quarterly period ended: December 31, 1995


  / /   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

                        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:                              (214) 247-8850


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
     ---    ---

The number of issuer's shares of Common Stock outstanding as of January 31,
1996 was 2,537,193.

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

<PAGE>


                               TM CENTURY, INC.

                                BALANCE SHEETS

             DECEMBER 31, 1995 (UNAUDITED) AND SEPTEMBER 30, 1995

                                    ASSETS

<TABLE>
<CAPTION>

                                                                 DECEMBER 31,   SEPTEMBER 30,
                                                                     1995            1995
                                                                 ------------   -------------
<S>                                                              <C>            <C>
CURRENT ASSETS
  Cash                                                           $  265,709      $  245,812
  Accounts and notes receivable
    less allowances of $107,000 and $112,000, respectively          696,143         915,798
  Inventories, net                                                1,608,220       1,654,197
  Federal income taxes receivable                                   132,220         132,220
  Deferred federal income taxes                                     153,434         166,063
  Prepaid expenses                                                   30,341          22,976
                                                                 ----------      ----------
    TOTAL CURRENT ASSETS                                          2,886,067       3,137,066

PROPERTY AND EQUIPMENT                                            1,890,759       1,878,452
  Less accumulated depreciation                                  (1,067,265)     (1,016,452)
                                                                 ----------      ----------
    NET PROPERTY AND EQUIPMENT                                      823,494         862,000

INVENTORIES - NONCURRENT, net                                       531,940         587,217
OTHER ASSETS                                                         15,388          16,388
                                                                 ----------      ----------
  TOTAL                                                          $4,256,889      $4,602,671
                                                                 ----------      ----------
                                                                 ----------      ----------

                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                               $  115,101      $  205,082
  Accrued expenses                                                  139,801         201,456
  Customer deposits                                                  17,981         151,502
                                                                 ----------      ----------
    TOTAL CURRENT LIABILITIES                                       272,883         558,040

CUSTOMER DEPOSITS - noncurrent                                      152,714         204,093
DEFERRED FEDERAL INCOME TAXES                                        50,791          75,510
                                                                 ----------      ----------
    TOTAL LIABILITIES                                               476,388         837,643

STOCKHOLDERS'  EQUITY
  Common stock, $.01 par value; authorized 7,500,000 shares;
    2,970,481 shares issued                                          29,705          29,705
  Paid-in capital                                                 2,275,272       2,275,272
  Treasury stock - at cost, 433,288 shares                       (1,250,316)     (1,250,316)
  Retained earnings                                               2,725,840       2,710,367
                                                                 ----------      ----------
    TOTAL STOCKHOLDERS' EQUITY                                    3,780,501       3,765,028
                                                                 ----------      ----------
  TOTAL                                                          $4,256,889      $4,602,671
                                                                 ----------      ----------
                                                                 ----------      ----------

</TABLE>



                  See notes to interim financial statements.

                                      2


<PAGE>


                               TM CENTURY, INC.

          STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (UNAUDITED)

            FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>

                                                      1995           1994
                                                   ----------      ----------
<S>                                                 <C>             <C>
REVENUES                                           $1,515,943      $2,059,388
  Less Commissions                                    114,678         161,903
                                                   ----------      ----------
           NET REVENUES                             1,401,265       1,897,485
                                                   ----------      ----------

COSTS AND EXPENSES:
  Production, programming and technical costs         750,263       1,072,150
  General and administrative                          529,139         726,836
  Selling                                              70,169         204,243
  Depreciation                                         50,813          54,710
                                                   ----------      ----------
           TOTAL                                    1,400,384       2,057,939
                                                   ----------      ----------
OPERATING INCOME (LOSS)                                   881        (160,454)
OTHER INCOME (EXPENSES):
  Interest income                                       2,569           5,664
  Other                                                   (67)         (8,922)
                                                   ----------      ----------
           TOTAL                                        2,502          (3,258)
                                                   ----------      ----------
INCOME (LOSS) BEFORE INCOME TAXES                       3,383        (163,712)

INCOME TAX (BENEFIT) PROVISION:
  Current                                               -             (45,059)
  Deferred                                            (12,090)         (8,463)
                                                   ----------      ----------
           TOTAL                                      (12,090)        (53,522)
                                                   ----------      ----------
NET INCOME (LOSS)                                   $  15,473      ($ 110,190)


RETAINED EARNINGS, BEGINNING OF PERIOD              2,710,367       3,297,545
                                                   ----------      ----------
RETAINED EARNINGS, END OF PERIOD                   $2,725,840      $3,187,355
                                                   ----------      ----------
                                                   ----------      ----------

NET INCOME (LOSS) PER COMMON SHARE                      $0.01          ($0.04)
                                                   ----------      ----------
                                                   ----------      ----------

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING                         2,537,193       2,537,193
                                                   ----------      ----------
                                                   ----------      ----------
</TABLE>





                  See notes to interim financial statements.

                                      3


<PAGE>

                               TM CENTURY, INC.

                    STATEMENTS OF CASH FLOWS (UNAUDITED)

            FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
                                                               1995           1994
                                                            ---------       ---------
<S>                                                           <C>            <C>
OPERATING ACTIVITIES:
  Net Income (Loss)                                         $  15,473       $(110,190)
  Adjustments to reconcile net income (loss)
    to net cash (used in) provided by operations:
    Depreciation                                               50,813          54,710
    Amortization                                               92,906         103,463
    Deferred income taxes                                     (12,090)         (8,463)
    Provision for doubtful accounts                            24,000          15,000
    Payments received on installment receivables               -                5,550
    Changes in operating assets and liabilities:
        Accounts receivable                                   191,231          (7,170)
        Inventories                                             8,348        (148,104)
        Prepaid expenses and other assets                      (6,365)         (4,860)
        Accounts payable and accrued expenses                (151,636)        122,192
        Federal income taxes receivable/payable                -              (45,059)
        Deferred revenue                                       -              (10,305)
        Customer deposits                                    (184,899)        (32,007)
                                                            ---------       ---------
  NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES          27,781         (65,243)
                                                            ---------       ---------

INVESTING ACTIVITIES:
  Purchase of U.S. Treasury Securities                         -             (294,423)
  Decrease in other assets                                     -                  (61)
  Purchases of property and equipment                         (12,307)        (88,997)
  Principal payments received on notes receivable               4,423           4,326
                                                            ---------       ---------
  NET CASH USED IN INVESTING ACTIVITIES                        (7,884)       (379,155)
                                                            ---------       ---------
INCREASE (DECREASE) IN CASH                                    19,897        (444,398)

CASH AT BEGINNING OF PERIOD                                   245,812         746,912
                                                            ---------       ---------

CASH AT END OF PERIOD                                        $265,709        $302,514
                                                            ---------       ---------
                                                            ---------       ---------
</TABLE>

                    See notes to interim financial statements.


                                       4

<PAGE>

                               TM CENTURY INC.

                    NOTES TO INTERIM FINANCIAL STATEMENTS

                         DECEMBER 31, 1995 AND 1994

1. BASIS OF PRESENTATION

The interim financial statements of TM Century, Inc. (the "Company") at
December 31, 1995, and for the three months ended December 31, 1995 and 1994,
are unaudited, but include all adjustments (consisting only of normal
recurring adjustments) which the Company considers necessary for a fair
presentation.  The September 30, 1995 balance sheet was derived from the
balance sheet included in the Company's audited financial statements as filed
on Form 10-KSB for the year ended September 30, 1995.  Certain amounts
previously reported in prior interim financial statements have been
reclassified to conform to the 1995 presentation.

The accompanying unaudited interim financial statements are for interim
periods and do not include all disclosures normally provided in annual
financial statements, and should be read in conjunction with the Company's
audited financial statements.  The accompanying unaudited interim financial
statements for the three months ended December 31, 1995 are not necessarily
indicative of the results which can be expected for the entire fiscal year.

2. STOCK OPTION PLAN

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 that 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.

Option information for the quarter ended December 31, 1995:

<TABLE>
<CAPTION>
     At December 31, 1995            Option Price per Share    Number of Shares
     --------------------            ----------------------    ----------------
     <S>                                 <C>                      <C>
     Options outstanding:
       Incentive                         $1.125 - $2.50             160,000
       Nonqualified                           $1.20                  25,000
     Options exercisable:
       Incentive                         $1.125 - $2.50              59,375
       Nonqualified                           $1.20                  18,500

     Options granted during the quarter: 5,000
     Options exercised during the quarter: None
</TABLE>


                                       5

<PAGE>


3. 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 ("SFAS 109").  Temporary differences which give rise to
deferred taxes include basis differences of property and equipment,
accelerated tax depreciation in excess of book depreciation, and valuation
allowances provided in excess of amounts deductible for tax purposes.  Under
the provisions of SFAS 109, recognition of deferred tax assets is permitted
for such amounts which can be carried forward to future periods.  The Company
has recorded a deferred tax asset of $153,000 reflecting the benefit of
$340,000 in net operating losses which is available for carryforward until
2008.  Realization is dependent on generating sufficient taxable income prior
to expiration of the loss carryforwards.  Although realization is not
assured, management believes it is more likely than not that all 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.

4.  SUBSEQUENT EVENTS

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 Vamos/CoStar
hard disk audio storage and retrieval system to radio stations within the
United States and its territories.  The Vamos/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.  The Company also
anticipates entering into service agreements with end users of the
Vamos/CoStar system.  EDS, which is headquartered in Plano, Texas, a suburb
of Dallas, is recognized world wide as a leader in data management and
services.










                                       6



<PAGE>

                               TM CENTURY, INC.

                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                 FINANCIAL CONDITION AND RESULTS OF OPERATION


TM Century, Inc. is primarily engaged 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.

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 monthly revenues
under three-year contracts for production libraries and under weekly music
service contracts having one month to three-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 year 1996.

During the quarter, the Company made capital expenditures of $12,000 for the
purchase of property and equipment and incurred product development costs of
$40,000 for software development, new music libraries, and music library
updates.  Funds for operating needs, new product development, and capital
expenditures for the period were provided from cash reserves.  The Company's
expenditures for property, equipment, and development of new products are
discretionary.  Management anticipates that cash flow from operations, cash
reserves, and funds available under the Company's line of credit will be
sufficient to meet these capital requirements at least through the end of
fiscal year 1996.  The Company has received approval from the Company's Board
to upgrade its computer hardware and software systems.  The upgrade is
estimated to cost approximately $500,000 and is expected to be financed
through a capital lease obligation over a period of three years.  The Company
currently has no significant capital commitments.

The Company has a $300,000 revolving line of credit with a bank in which the
Company 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 .5% per annum, is renewable
annually, subject to the consent of both parties.  No borrowings were drawn
under the line of credit during the quarter.  The line of credit is expected
to be renewed on February 28, 1996.

RESULTS OF CONTINUING OPERATIONS

Revenues declined approximately 26% in the three month period ended December
31, 1995 as compared to the same period for the previous year.  The decrease
was due primarily to a decline in specialized computer equipment sales
volume.  Revenues also declined due to declines in compact disc music library
sales volume and prices and declines in production library and station
identification jingle sales.  Sales of weekly music services increased during
the period partially offsetting the overall decrease in music library
revenues.

Management believes that the decline in specialized computer equipment sales
was due to a restructuring of the marketing staff in the first quarter of
fiscal 1996 to create a separate technical sales department.

During January 1996, the Company finalized discussions to terminate its
agreement with its previous supplier of computer software used by customers
in programming music play sequences and for automated music


                                       7

<PAGE>

playback systems. Negotiations with another supplier were finalized in the
second quarter of fiscal year 1996.  Due to the difficulty in transitioning
customers to a new software, revenues from software sales are expected to be
below 1995 levels for the remainder of fiscal year 1996.  Revenues of
computer software comprised 7% of revenues during fiscal year 1995.

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, both in the U.S. and in
international markets, increased during the quarter, partially offsetting the
decrease in music library revenues.

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.

Production, programming and technical costs decreased as the result of
restructuring and cost reduction measures which were undertaken during the
second quarter of fiscal year 1995.  This included a reduction of personnel
and other cost cutting measures as well as the discontinuation of
unprofitable product lines.

Selling costs decreased due to decreases in advertising and promotion
expenses as well as convention and convention-related advertising expenses
incurred in October of the prior year.

General and administrative costs decreased as a result of restructuring and
cost reduction measures discussed above and compensation, legal and other
professional fees associated with the resignation of a director and officer
of the Company in November, 1994.

Other expenses decreased as a result of one-time costs associated with the
resignation of a director and officer of the Company in November, 1994.


                                       8

<PAGE>


                         PART II. OTHER INFORMATION

Item 1. Legal proceedings - Not applicable.

Item 2. Changes in securities - Not applicable.

Item 3. Defaults upon senior securities - Not applicable.

Item 4. Submission of matters to a vote of security holders - Not applicable.

Item 5. Other information - Not applicable.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits
MATERIAL CONTRACTS:
1.  Software Remarketing Agreement between Electronic Data Systems
Corporation and TM Century, Inc. dated February 9, 1996.

(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the period October 1,
1995 through December 31, 1995.













                                       9

<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: February 14, 1996

                                   TM CENTURY, INC.


                                   BY: /s/ JANETTE L. WILLIAMS
                                      -------------------------------
                                          Janette L. Williams
                                       Chief Accounting Officer
                                    (Principal Accounting Officer)


                                   BY: /s/ NEIL W. SARGENT
                                      -------------------------------
                                           Neil W. Sargent
                                       Chief Executive Officer
                                    (Principal Executive Officer)












                                      10