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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, 1995 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
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 $7,627,994.
The aggregate market value of the voting stock held by non-affiliates of the
issuer on December 18, 1995, based upon the average bid and asked prices of
such stock on that date was $726,000. The number of issuer's shares of Common
Stock outstanding as of December 18, 1995 was 2,537,193.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information contained in the Company's 1996 Information Statement is
incorporated by reference in Part III.
Transitional Small Business Disclosure Format (check one): Yes___ No X
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
TM Century, Inc. (the "Company") is engaged primarily in the creation,
production, marketing, and worldwide distribution of compact disc music
libraries, production libraries, station identification jingles, computer
software used in music scheduling, specialized computer equipment and
software, and compact disc players for radio stations.
The Company (formerly TM Communications, Inc.) was incorporated as a Delaware
corporation on May 2, 1984. In October 1990, the Company changed its name
from TM Communications, Inc. to TM Century, Inc. following an August 1990
business combination transaction with Century 21 Programming, Inc. The
Company's principal offices are located at 2002 Academy, Dallas, Texas
75234, and its telephone number is (214) 247-8850.
PRODUCTS
The Company creates, produces, markets, and distributes goods and services
for radio stations worldwide. Products include special compilations of
popular music on compact discs, instrumental backgrounds for commercials and
sound effects (collectively, "music libraries"), station identification
jingles, computer software used in music scheduling, specialized computer
equipment and software, and compact disc players for radio stations.
Music libraries are sold on compact disc and include original recordings of
background music and sound effects written and produced by the Company as
sources of production material for radio stations ("production libraries").
Production libraries are available in a variety of musical styles and are
used by radio stations as background music for contests, promotions and
commercials. During 1995, the Company introduced a new production library
designed specifically for country radio which will be sold on a
market-exclusive basis. Music libraries also include compilations of
copyrighted music of original artists sold in eight different music formats
("compact disc libraries"): Adult Contemporary, Easy Listening, Classic
Hits, Country, Classic Rock, Contemporary Hit Radio, Urban, and Seventies
Rock. The Company also provides a weekly service of new record releases on
compact disc.
All products on compact disc are mastered by the Company on compact disc or
PCM-1630 digital audio tape and replicated by several available suppliers of
compact discs. The Company presently purchases compact discs and replication
services from one significant supplier, Digital Audio 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.
Radio jingles provide short identity songs for radio stations that promote
name recognition for the station. These are written and produced in the
Company's studios and are provided to customers on analog or digital audio
tape or compact disc.
Computer software is sold by the Company for use by customers in programming
music play sequences and for automated music playback systems consisting of
specialized software, computer equipment and compact disc
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players sold by the Company. Management believes these systems improve the
quality and consistency of the customers' programming and enable customers to
operate more efficiently by reducing the number of personnel required to
operate a radio station. Certain compact disc equipment is purchased by the
Company under dealer arrangements from outside manufacturers and modified for
use with software programs marketed by the Company. The Company is undergoing
discussions to terminate its agreement with its current supplier of computer
software and negotiations with another supplier are expected to be finalized
during the first quarter of fiscal year 1995. Management does not believe
that the transition to the new software supplier will cause any interruption
in the Company's ability to make timely delivery of products to its
customers, nor does management believe that the loss of any of its sources of
supply of computer hardware, software or compact disc equipment would cause
any 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 past 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,
1995, 1994 and 1993.
(DOLLAR AMOUNTS IN THOUSANDS) Period Ended
1995 1994 1993
---- ---- ----
BROADCAST SERVICES
Music Libraries $4,451 $4,956 $5,683
Radio Jingles 939 974 1,142
Software and Compact Disc Equipment 1,848 1,768 1,964
Other (a) 390 463 298
------ ------ ------
TOTAL $7,628 $8,161 $9,087
(a) Includes commercials for television broadcast.
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 and Canadian 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. Products are
shipped from the Company's headquarters to customers via mail and express
delivery services.
Sales of music libraries are made primarily on an individual order basis or
under three-year production library lease contracts with customers. The
contracts call for 36 equal monthly payments by the purchaser. 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. As
of November, 1995, according to industry publications, approximately 12,000
radio stations were licensed by the Federal Communications Commission (FCC)
for public broadcasting in the United States. Management believes that
approximately 9,000 stations in the U.S. may require products and services of
the type provided by the Company. Over 4,700 of such stations have purchased
one or more of the Company's products within the past three years. Over
3,200 radio stations in approximately 70 countries outside of the United
States have
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purchased the Company's products within the past three years. No
single customer has accounted for more than 10% of the Company's revenues in
any of the past three years. Gross revenues from foreign sales totaled
$1,658,178, $1,793,817, and $2,064,192 for the years ended 1995, 1994 and
1993, 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 software or specialized
computer software and equipment and compact disc players for radio stations;
however, management believes the Company offers a broader array of broadcast
products and services than any of its competitors. Competing radio program
syndicators generally provide either jingles, production libraries, or music
on tape, records, compact disc, or via satellite. Management believes the
Company is one of the leading suppliers of radio music services and the
largest supplier of radio music services on compact disc. The Company
competes with several hundred jingle producers; however, management believes
only a few specialize in radio station identification materials. Management
believes the Company is the largest supplier of radio station identification
jingles in the industry. Several dozen providers of production libraries
compete with the Company, but most provide song-length instrumentals and only
a few specialize in commercial length music. Management believes it is one
of two major suppliers of production libraries to the radio industry. The
Company's specialized computer equipment and software competes with numerous
companies which offer similar products. While certain competing products may
be considered to be equal in price or technical performance, management
believes the Company also competes effectively on the basis of quality and
creativity within each product line.
SEASONALITY
The Company is not subject to strong seasonal fluctuations. However,
quarterly results are affected by the introduction of new products and timing
of custom orders. Because profit margins on the Company's many products
vary, the results for any quarter are not necessarily indicative of the
results that may be achieved for a full fiscal year.
TRADEMARKS AND COPYRIGHTS
The Company markets products under various names and trademarks which
management believes provide the Company's products with international
industry recognition. The Company holds numerous registered copyrights on
sound recordings of original music and radio station jingles. Management
believes its copyrights have significant value, as the Company derives a
significant portion of its income from the licensed use of its sound
recordings.
EMPLOYEES
As of December 1, 1995, the Company had 50 full-time employees. The Company
also contracts with other personnel and subcontractors who provide creative
talent for various projects on an as-needed basis.
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.
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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, 1995.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is thinly traded in the over-the-counter market
under the symbol "TMCI". The following table sets forth, for the periods
shown, the range of the high and low bid quotations for the Company's common
stock in the over-the-counter market as reported by NASDAQ. Quotations are
inter-dealer quotations, without retail markups, markdowns or commissions,
and do not necessarily represent actual transactions.
COMMON STOCK BID
HIGH LOW
------ -----
Fiscal 1995:
1st Quarter $1.88 $1.13
2nd Quarter 1.75 1.00
3rd Quarter 1.38 .63
4th Quarter 1.38 .88
Fiscal 1994:
1st Quarter $3.50 $2.00
2nd Quarter 3.00 2.50
3rd Quarter 3.63 2.25
4th Quarter 2.38 1.50
As of December 15, 1995 the Company had approximately 250 record owners and
700 beneficial owners of its common stock. The Company has not paid
dividends on the common stock and does not anticipate paying dividends in the
foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
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
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service contracts will provide, in the opinion of management, adequate
liquidity to meet operating requirements for the foreseeable future.
During fiscal 1995, the Company made $247,000 in capital expenditures for the
purchase of property and equipment which compares to capital expenditures of
$285,000 in 1994 and $465,000 in 1993. Capital expenditures in 1995 were
primarily associated with the construction of additional leased office and
production space completed in January, 1995 and upgrades of production
equipment. Product development costs of $288,000 were incurred during fiscal
1995 for software development, new music libraries, and music library
updates, which compares to product development expenditures of $234,000 in
1994 and $800,000 in 1993. Funds for operating needs, new product
development, and capital expenditures for the year ended September 30, 1995
were provided from cash reserves. The Company has no significant commitments
for capital expenditures in fiscal 1996. The Company is considering
upgrading its computer hardware and software systems. If approved, by the
Company's Board, the upgrade would probably be accomplished through a lease
transaction at a cost of approximately $250,000 over 3 to 5 years with
initial cash outlays of approximately $100,000 in fiscal year 1996. Product
development expenditures are expected to be approximately $200,000 for fiscal
1996. 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 for fiscal 1996.
Effective February 28, 1995, the Company renewed its $300,000 revolving line
of credit for a one-year term. Borrowings under the line of credit bear a
fluctuating interest rate of prime plus 1.5%, payable monthly, and the
Company provides a negative pledge on all accounts, contract rights, and
inventory of the Company. The line of credit, which bears a commitment fee
of .5% per annum, is renewable annually, subject to the consent of both
parties. No borrowings were drawn under the line of credit during fiscal
1995 and no long-term borrowing is anticipated in the foreseeable future at
the current levels of business operation.
RESULTS OF CONTINUING OPERATIONS
FISCAL 1995 COMPARED TO FISCAL 1994
Revenues decreased approximately 7% to $7.6 million in 1995 from $8.2 million
in 1994. This overall decline was due primarily to a decrease in music
library sales volume. The decline in music library sales resulted primarily
from a decrease in sales of production libraries and compact disc libraries,
partially offset by an increase in weekly music service revenues. Revenues
from specialized computer equipment and software sales increased by 5% over
the prior year. Revenues from radio jingles remained consistent.
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, and the Company introduced two new weekly music services for
international markets during fiscal 1994. Sales of weekly music services,
both in the U.S. and in international markets, increased during fiscal 1995,
partially offsetting the decrease in music library revenues.
Music library revenues may also be adversely affected as radio stations
convert to new music delivery systems technology offered by competitors, such
as computer hard drives which store music in a digital compression form.
While digital compression does not provide the same quality of music as
compact disc technology, an increasing number of radio stations are
converting to or adding systems using digital compression technology.
Although music libraries on compact disc can be transferred to hard drive
systems, some of the Company's competitors are offering hard drives with
pre-loaded music libraries. The Company has begun recording
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libraries in a hard drive format that can be easily converted into the most
popular compression schemes. The Company is seeking arrangements to sell
hard drives with pre-loaded music libraries to suppliers of hard drive
systems.
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 and software sales increased due
to the introduction of new versions of the company's automated playback
equipment system in fiscal 1995. Revenues in this category were depressed in
fiscal 1994 as the introduction of the new playback system was postponed due
to delays in receipt of components from manufacturers and the development of
certain enhancements to the system.
Commissions as a percentage of revenue increased due to changes in the
product mix of new contracts entered into during the year as compared with
the prior year. Increases were primarily due to increases in new contracts
for weekly music services.
Production, programming and technical costs increased due to (1) an increase
in production costs related to the newest version of the Company's automated
music playback system, (2) an increase in technical salaries costs for
support of automated music playback systems, and, (3) costs related to new
weekly compact disc music services for international markets which was
introduced in July, 1994 as well as increased volume for all weekly music
services.
General and administrative costs increased as a result of (1) increased
occupancy and facilities costs, (2) increased compensation, legal and other
professional fees associated with the resignation of a director and officer
of the Company in November, 1994, and, (3) relocation costs for executive and
sales employees.
Selling costs declined due primarily to decreases in advertising and
promotion expenditures.
In May 1995, the Company discontinued production and marketing of radio
station commercials for television broadcast. This product had been
operating a loss for the past three fiscal years. Operating losses for this
product were $86,000, $143,000, and $123,000 on net revenues of $54,000,
$233,000, and $104,000 in 1995, 1994, 1993, respectively. Other income
(expense) includes a loss on the sale of certain television production
equipment.
During the fourth quarter 1995, the Company recorded a provision of $360,000
for product development costs associated with its audio visual production
library. This production library, targeted to non radio customers, had been
operating at a loss for the past three fiscal years. Operating losses for
this product were $30,000, $48,000, and $112,000 on net revenues of $55,000,
$37,000, and $0 in 1995, 1994, and 1993, respectively.
FISCAL 1994 COMPARED TO FISCAL 1993
Revenues decreased approximately 10% to $8.2 million in 1994 from $9.1
million in 1993. This decrease was due primarily to a decline in compact
disc music library sales volume and prices and declines in production
library, station identification jingles, specialized computer equipment and
software sales volumes. Sales of weekly music services increased during
fiscal 1994, partially offsetting the overall decrease in music library
revenues.
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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.
The decline in specialized computer equipment and software sales was a result
of a delay in completion of the newest version of the Company's automated
music playback system due to additional enhancements deemed desirable and
delays in receipt from manufacturers of product components.
Revenues from sales of station identification jingles declined approximately
15% compared to the prior year. This decline may be attributed to a decline
in volume of new jingle products introduced during the year.
Commissions as a percentage of revenue remained consistent with the prior
year.
Production, programming and technical costs increased due to (1) an increase
in amortization expense related to development costs of a significant new
production library which was introduced in January, 1993, (2) costs related
to increased television commercial production for radio stations, and, (3)
costs related to two new weekly compact disc music services for international
markets which were introduced in October, 1993 and July, 1994.
General and administrative costs decreased as a result of (1) a decrease in
facilities and occupancy costs following the Company's move to new facilities
in July, 1993, (2) a decline in bad debt expense resulting from an increase
in the level of cash sales as a percentage of total revenue and (3) a
decrease in profits-based bonus compensation costs.
Selling costs increased approximately 10% due to increased advertising and
promotional costs associated with new products and corporate image campaigns.
Depreciation expense increased as a result of significant property and
equipment purchases made in connection with the move of the Company to new
facilities in July, 1993.
Interest income decreased as a result of declining interest rates and a
decrease in the balance of receivables from financed music library sales.
Interest expense decreased as a result of the repayment of long-term debt in
November, 1993.
Other income increased as a result of the sales of certain excess equipment,
partially offset by a loss on the sale of net assets under lease.
ACCOUNTING MATTERS
The Financial Accounting Standards Board ("FASB") periodically issues
accounting standards which may affect the financial accounting or disclosures
of the Company. Accounting standards that have been issued, but not yet
adopted by the Company, would not 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 1, 1995, 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.
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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 1996 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 1996 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 1996 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 1996 Information Statement and
is incorporated herein by reference pursuant to General Instruction E(3).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3 (a) Certificate of Incorporation and By-Laws (1)
(b) Certificate of Merger: Video Image Inc. and TM Communications, Inc.
(1)
(c) Certificate of Merger: TM Communications, Inc. and Century 21
Programming, Inc. (Exhibit 3(c)) (2)
(d) Certificate of Amendment of Certificate of Incorporation of TM
Century, Inc. effective March 27, 1992. (Exhibit 1) (3) (March 31,
1992)
10 Material Contracts:
(a) Loan and Security Agreement and Term Note among Merrill Lynch
Business Financial Services and TM Communications, Inc. and
subsidiaries dated August 31, 1990 (Exhibit 10(q)) (2)
(b) Agreement for Sale of Stock, Secured Note, Security Agreement,
Pledge Agreement, and Guaranty dated January 1, 1991, from TF
Productions to TM Century, Inc. (Exhibits 1-3) (3) (December 30, 1990)
(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.
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(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)*Consulting Agreement between TM Century, Inc. and Marjorie L.
McIntyre dated July 5, 1993. (Exhibit 1) (3) (June 30, 1993)
(k) 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)
(l) 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)
(m)*Consulting Agreement between TM Century, Inc. and Carol M. Peek
dated January 27, 1995. (Exhibit 1) (3) (December 31, 1994)
(n)*Employment Agreement between TM Century, Inc. and Neil W. Sargent
dated March 22, 1995. (Exhibit 1) (3) (March 31, 1995)
(o) Distribution agreement between TM Century, Inc. and Radio Express,
Inc. dated November 1, 1992.
Notes to Exhibits:
(1) Incorporated by reference to the similarly-numbered exhibit to
the Registration Statement on Form S-18 (No. 2-93588-FW), filed
October 2, 1984, as amended.
(2) Incorporated by reference to the indicated exhibit to the
Annual Report on Form 10-K for the fiscal year ended September 30,
1990, as amended.
(3) Incorporated by reference to the indicated exhibit to the
Quarterly Report on Form 10-Q for the indicated period, of the
Registrant.
(4) Incorporated by reference to the indicated exhibit to the
Annual Report on Form 10-K for the fiscal year ended September 30,
1991.
(5) Incorporated by reference to the indicated exhibit to the
Current Report on Form 10-K dated 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-K for the fiscal year ended September 30,
1994.
* The documents filed or incorporated by reference as Exhibits
10(c), (h), (j), (m) and (n) 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, 1995.
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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 28, 1995
TM CENTURY, INC.
BY: /s/JANETTE WILLIAMS
------------------------
Janette Williams
Chief Accounting Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
DATE:
/s/ JANETTE WILLIAMS December 28, 1995
- --------------------
JANETTE WILLIAMS, Chief Accounting Officer
(Principal financial and accounting officer)
/s/ NEIL W. SARGENT December 28, 1995
- -------------------
NEIL W. SARGENT, President and Chief Executive Officer
(Principal executive officer)
/s/ MARJORIE L. MCINTYRE December 28, 1995
- ------------------------
MARJORIE L. MCINTYRE, Chairman of the Board of Directors
/s/ ANN ARMSTRONG BELLOWS December 28, 1995
- -------------------------
ANN ARMSTRONG BELLOWS, Director
/s/ DONALD E. LATIN December 28, 1995
- -------------------
DONALD E. LATIN, Director
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TM CENTURY, INC.
INDEX TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS:
Independent Auditors' Report 13
Balance Sheets, September 30, 1995 and 1994 14
Statements of Operations for the Years Ended
September 30, 1995, 1994 and 1993 15
Statements of Stockholders' Equity for the Years Ended
September 30, 1995, 1994 and 1993 16
Statements of Cash Flows for the Years Ended September 30,
1995, 1994 and 1993 17
Notes to Financial Statements 18
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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, 1995 and 1994, and the related statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended September 30, 1995. 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, 1995 and
1994, and the results of its operations and its cash flows for each of the
three years in the period ended September 30, 1995, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
December 1, 1995
13
<PAGE>
TM CENTURY, INC.
BALANCE SHEETS
SEPTEMBER 30, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 245,812 $ 746,912
Accounts and notes receivable
less allowances of $112,000 and $102,000, respectively 915,798 660,524
Inventories, net 1,654,197 1,538,480
Federal income taxes receivable 132,220 99,594
Deferred federal income taxes 166,063 34,704
Prepaid expenses 22,976 54,949
------------ ----------
TOTAL CURRENT ASSETS 3,137,066 3,135,163
PROPERTY AND EQUIPMENT 1,878,452 1,691,367
Less accumulated depreciation (1,016,452) (817,441)
------------ -----------
NET PROPERTY AND EQUIPMENT 862,000 873,926
INVENTORIES - NONCURRENT, NET 587,217 1,034,290
OTHER ASSETS 16,388 44,182
------------ -----------
TOTAL $4,602,671 $5,087,561
------------ -----------
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 205,082 $ 109,594
Accrued expenses 201,456 170,798
Deferred revenue - 32,461
Customer deposits 151,502 166,555
------------ ------------
TOTAL CURRENT LIABILITIES 558,040 479,408
DEFERRED REVENUE - 6,758
CUSTOMER DEPOSITS - NONCURRENT 204,093 188,117
DEFERRED FEDERAL INCOME TAXES 75,510 61,071
------------ ------------
TOTAL LIABILITIES 837,643 735,354
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 2,275,273
Treasury stock - at cost, 433,288 shares (1,250,316) (1,250,316)
Retained earnings 2,710,367 3,297,545
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 3,765,028 4,352,207
------------ ------------
TOTAL $ 4,602,671 $ 5,087,561
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements
14
<PAGE>
TM CENTURY, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES $7,627,994 $8,161,623 $9,086,675
Less commissions 603,175 597,199 644,682
---------- ---------- ----------
NET REVENUES 7,024,819 7,564,424 8,441,993
---------- ---------- ----------
COSTS AND EXPENSES
Production, programming and technical
costs 4,107,727 3,934,759 3,775,854
General and administrative 2,620,739 2,417,874 2,703,696
Selling 556,411 772,339 715,062
Depreciation 203,293 200,339 190,971
Discontinued product development costs 360,000 0 0
---------- ---------- ----------
TOTAL 7,848,170 7,325,311 7,385,583
---------- ---------- ----------
OPERATING INCOME (LOSS) (823,351) 239,113 1,056,410
OTHER INCOME (EXPENSE)
Interest income 14,857 15,649 26,846
Interest expense 0 (720) (19,435)
Other (34,590) 8,266 (28,465)
---------- ---------- ----------
TOTAL (19,733) 23,195 (21,054)
---------- ---------- ----------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES (843,084) 262,308 1,035,356
PROVISION (BENEFIT) FOR INCOME TAXES
Current (134,220) 53,738 283,353
Deferred (121,686) 39,276 (12,909)
---------- ---------- ----------
TOTAL (255,906) 93,014 270,444
---------- ---------- ----------
NET INCOME (LOSS) ($587,178) $ 169,294 $ 764,912
---------- ---------- ----------
---------- ---------- ----------
NET INCOME (LOSS) PER COMMON SHARE ($0.23) $0.07 $0.30
---------- ---------- ----------
---------- ---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 2,537,193 2,537,193 2,542,278
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to financial statements
15
<PAGE>
TM CENTURY, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
COMMON STOCK
----------------------
NUMBER OF ADDITIONAL TREASURY RETAINED
SHARES AMOUNT PAID-IN CAPITAL STOCK EARNINGS
---------- ------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Balance September 30, 1992 2,970,488 $29,705 $2,275,280 $(1,235,316) $2,363,339
Payment for Fractional Shares (5) (4)
Acquisition of Treasury Stock (15,000)
Net Income 764,912
--------- ------- ---------- ----------- ----------
Balance September 30, 1993 2,970,483 29,705 2,275,276 (1,250,316) 3,128,251
Payment for Fractional Shares (2) (3)
Net Income 169,294
--------- ------- ---------- ----------- ----------
Balance September 30, 1994 2,970,481 29,705 2,275,273 (1,250,316) 3,297,545
Payment for Fractional Shares (1)
Net Loss (587,178)
--------- ------- ---------- ----------- ----------
Balance September 30, 1995 2,970,481 $29,705 $2,275,272 (1,250,316) $2,710,367
--------- ------- ---------- ----------- ----------
--------- ------- ---------- ----------- ----------
</TABLE>
See notes to financial statements
16
<PAGE>
TM CENTURY, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Income $(587,178) $ 169,294 $ 764,912
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation 203,293 200,339 190,971
Amortization 832,682 457,338 396,336
Deferred income taxes (116,920) 39,276 (12,909)
Provision for doubtful accounts 79,000 95,930 226,006
Gain on sale of U.S. Treasuries (7,639)
Loss (gain) on disposition of property and equipment 25,668 (8,266) 28,465
Gain on settlement of capital lease and notes payable - - (26,152)
Accretion of discounts (215) (4,038) (18,737)
Payments received on installment receivables 12,874 58,065 227,093
Changes in operating assets and liabilities:
Accounts receivable (367,632) 47,336 80,110
Inventories (473,471) (305,485) (1,085,155)
Prepaid expenses 31,973 (22,793) 33,520
Accounts payable and accrued expenses 126,146 (221,472) 166,781
Federal income taxes receivable/payable (32,626) 122,926 (215,999)
Deferred revenue (39,219) (29,704) (31,540)
Customer deposits 923 70,591 (87,449)
--------- --------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES (312,341) 669,337 636,253
--------- --------- ----------
INVESTING ACTIVITIES:
(Decrease) increase in long-term liabilities - (9,337) 9,751
Decrease (increase) in other assets (61) 10,160 (8,446)
Purchases of property and equipment (247,035) (285,166) (464,903)
Purchase of U.S. Treasuries (292,361)
Proceeds from sale of U.S. Treasuries 300,000
Principal payments received on notes receivable 20,699 16,271 19,273
Principal payments received from lease of
property and equipment - 12,046 41,176
Proceeds from sale of net assets under lease - 150,000 -
Proceeds from sale of property and equipment 30,000 31,857 126,276
--------- --------- ----------
NET CASH USED IN INVESTING ACTIVITIES (188,758) (74,169) (276,873)
--------- --------- ----------
FINANCING ACTIVITIES:
Fractional shares paid to stockholders (1) (3) (4)
Borrowings under revolving line of credit - - 49,406
Principal payments on revolving line of credit - - (49,406)
Principal payments on long-term debt
and capital lease obligations (50,000) (341,932)
--------- --------- ----------
NET CASH USED IN FINANCING ACTIVITIES (1) (50,003) (341,936)
--------- --------- ----------
INCREASE (DECREASE) IN CASH (501,100) 545,165 17,444
CASH AT BEGINNING OF PERIOD 746,912 201,747 184,303
--------- --------- ----------
CASH AT END OF PERIOD $ 245,812 $ 746,912 $ 201,747
--------- --------- ----------
--------- --------- ----------
</TABLE>
See notes to financial statements
17
<PAGE>
TM CENTURY, INC.
NOTES TO FINANCIAL STATEMENTS
1. THE COMPANY
TM Century, Inc. (the Company) is primarily engaged in the creation,
production, marketing, and distribution of goods and services for radio
stations worldwide. Products include special compilations of popular music
on compact discs, sound effects, station identification jingles, computer
software used in music scheduling, specialized computer equipment and
software, and compact disc players for radio stations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
INVENTORIES
Inventories created by the Company or purchased for resale are carried at the
lower of cost or market, as follows:
MUSIC LIBRARIES - The Company produces music compilations and background
music libraries which are provided to radio stations under one-year to
three-year lease contracts or under buyout arrangements. The costs to
develop the libraries are amortized on a straight-line basis over three
to five years. 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.
MUSIC SCHEDULING SOFTWARE - The Company creates and markets software to
radio stations for use in programming music play sequences. The
capitalized software development costs are amortized on a straight-line
basis over three years.
COMPACT DISC EQUIPMENT - Equipment inventory purchased by the Company
under dealer arrangements is charged to cost of sales under the specific
identification method.
REVENUE RECOGNITION
Revenues are recognized as follows:
LIBRARY LEASE CONTRACTS - Monthly upon delivery of the product in
accordance with the terms of the lease contracts.
LIBRARY BUYOUTS - Upon delivery of the product.
IDENTIFICATION JINGLES - Upon delivery of the product.
MUSIC SCHEDULING SOFTWARE - Monthly in accordance with the terms of the
lease contracts.
COMPACT DISC EQUIPMENT - Upon delivery of the product.
18
<PAGE>
PROPERTY AND EQUIPMENT
Expenditures for additions, renewals, and betterments are recorded at cost.
Expenditures for maintenance and repairs are charged to expense as incurred.
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 5 to 7 years
Production equipment 7 to 10 years
Leasehold improvements 5 to 10 years
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.
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.
3. LEASE OF ASSETS AND SERVICE AGREEMENT
On November 1, 1990, the Company executed a financing lease agreement for the
sale of certain property and equipment to a company owned by three former
officers and directors of the Company (the group). The lease was payable in
eighty-four monthly installments of $6,435 including interest at 11%, and
granted the group an option to purchase such property and equipment at the
fair market value at the end of the lease.
On March 29, 1994, the Company executed a Purchase and Sale Agreement for the
sale of the property and equipment previously leased under the financing
lease agreement. The financing lease agreement was terminated by all parties
upon payment to the Company of $150,000 by the group on March 29, 1994. A
loss on the sale of $6,800 is included in the financial statements for the
fiscal year ended September 30, 1994.
4. INVENTORY
Inventories consisted of the following at September 30, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Music libraries $ 2,857,366 $ 2,648,363
Compact discs 960,182 880,875
Software 471,738 422,882
Identification jingles 0 91,541
Compact disc equipment 357,479 251,174
Other 0 6,334
----------- -----------
Total cost $ 4,646,765 $ 4,301,169
Accumulated amortization (2,405,351) (1,728,398)
----------- -----------
Inventories, net $ 2,241,414 $ 2,572,770
----------- -----------
----------- -----------
</TABLE>
19
<PAGE>
5. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at September 30, 1995
and 1994:
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Office furniture & equipment $ 666,338 $ 614,896
Production equipment 867,448 832,901
Leasehold improvements 344,666 243,570
------------ -----------
Total $ 1,878,452 $ 1,691,367
------------ -----------
------------ -----------
</TABLE>
6. LONG-TERM DEBT
Effective February 28, 1995, the Company renewed its $300,000 revolving line
of credit for a one-year term. Borrowings under the line of credit bear a
fluctuating interest rate of prime (8.75% at September 30, 1995) plus 1.5%,
payable monthly and the Company provides a negative pledge on all accounts
receivable, contract rights, and inventory of the Company. The line of
credit, which bears a commitment fee of .5% per annum, is renewable annually,
subject to the consent of both parties. No borrowings were drawn under the
line of credit during the fiscal year ended September 30, 1995.
The Company paid no interest on notes payable and long-term debt during the
fiscal year ended September 30, 1995 and paid $720 and $19,435 of interest
during the years ended September 30, 1994 and 1993, respectively.
7. INCOME TAXES
Differences between the statutory federal income tax rate and the effective
rate for the years ended September 30, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ----- -----
<S> <C> <C> <C>
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 net operating
losses 5.3
Recognition of deferred tax benefits
originating in prior years (6.0)
Other (1.7) 1.5 (1.8)
------ ----- -----
(30.4%) 35.5% 26.2%
------ ----- -----
------ ----- -----
</TABLE>
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109) effective October 1, 1993, and
there was no material impact on income as a result of adoption of the new
standard. Prior years' financial statements have not been restated to apply
SFAS 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. 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 $166,000 reflecting the benefit of $360,000
in net operating losses which is available for carryforward until 2008.
Realization is dependent on generating sufficient
20
<PAGE>
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.
At September 30, 1995, for income tax purposes, the Company has approximately
$460,000 of capital losses which are available for carryforward until 1996.
The Company made no income tax payments during fiscal 1995 and 1994 and made
income tax payments of $575,850 during fiscal 1993. The Company received
$10,000, $73,000 and $111,542 of income tax refunds during 1995, 1994 and
1993, respectively.
8. COMMITMENTS AND CONTINGENCIES
LEASES
Future minimum lease payments under operating leases with initial lease terms
in excess of one year are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 244,884
1997 279,876
1998 279,876
1999 291,534
2000 326,508
Thereafter 925,106
-----------
Future minimum lease payments $ 2,347,784
-----------
-----------
</TABLE>
The Company leases its facilities under a ten-year lease which began July 15,
1993. The lease may be renewed at the Company's option for two additional
five-year periods at an amount approximating fair market value.
Rent expense under operating leases was $226,851, $184,258, and $211,324 for
1995, 1994, and 1993, 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 of $156,000, future compensation
reviews, and eligibility to participate in the Company's Bonus Plan. In
July, 1993, the officer's base annual salary was increased to $172,000 and
increased to $200,000 in October, 1993. 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 former members
of the Board of Directors. The compensation expensed was $160,000, $120,000
and $168,000 in 1995, 1994 and 1993, respectively. Aggregate commitments for
future salaries under these employment agreements is $235,000.
21
<PAGE>
9. ROYALTY AND SALES REPRESENTATION AGREEMENTS
In 1990, the Company acquired rights to sell a radio programming software
product for which royalties of 50-65% are payable by the Company on sales as
collected. Royalties under this agreement totaled $313,210, $308,429, and
$262,018 in 1995, 1994 and 1993, respectively.
The Company has an agreement with a production company whereby the production
company is entitled to a 50% royalty on sales of a production library which
it developed for the Company. Royalties under this agreement totaled
$51,026, $131,117, and $170,821 in 1995, 1994, and 1993, respectively.
10. DISCONTINUED PRODUCT DEVELOPMENT COSTS
During the fourth quarter 1995, the Company recorded a provision of $360,000
for product development costs associated with its audio visual music
production library. This production library, targeted to non radio
customers, had been operating at a loss for the past three fiscal years.
Operating losses for this product were $30,000, $48,000, and $112,000 on net
revenues of $55,000, $37,000, and $0 in 1995, 1994, and 1993, respectively.
11. EQUITY
STOCK OPTIONS
On December 3, 1991, the Board of Directors approved a Long Term Incentive
Plan (the "Plan") which provides for grants of Incentive Stock Options to
selected employees and for grants of Nonqualified Stock Options to any
persons who in the opinion of the Board of Directors perform significant
services on behalf of the Company. Each member of the Compensation Committee
who is not an employee or full-time consultant of the Company is
automatically granted in December of each year, commencing in 1991, for five
years (but only for so long as he or she remains a member of the Compensation
Committee), a Nonqualified Stock Option for 2,500 shares. The maximum number
of shares which may be issued pursuant to the exercise of options under the
Plan was 187,500 shares. Effective October 28, 1993, the Board of Directors
approved an amendment to the Plan which increased the total number of shares
which may be issued to 250,000 shares of common stock.
The option price of Incentive Stock Options is not less 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 fiscal year ended September 30, 1995:
<TABLE>
<CAPTION>
At September 30, 1995 Option Price per Share Number of Shares
--------------------- ----------------------- ----------------
<S> <C> <C>
Options outstanding:
Incentive $1.125 - $2.50 190,000
Nonqualified $1.20 20,000
Options exercisable:
Incentive $1.125 - $2.50 65,000
Nonqualified $1.20 13,500
Options granted during the year: 125,000
Options exercised during the year: None
</TABLE>
22
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10(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.
10(o) Distribution agreement between TM Century, Inc. and Radio
Express, Inc. dated November 1, 1992.
</TABLE>
<PAGE>
EXHIBIT 10(f)
33 West Monroe Street
22nd Floor
Chicago, Illinois 60603
312-269-4479
FAX 312-845-9093
[LOGO]
Christopher T. Samson
RENEWAL ANALYST
January 16, 1995
TM Century, Inc.
2002 Academy
Dallas, TX 75234-9220
Attention: Ms. Lynne Mabry
Re: WORKING CAPITAL MANAGEMENT ACCOUNT ("WCMA") NO. 586-07R66
Ladies and Gentlemen:
It is our pleasure to inform you that we have approved an extension of your
WCMA Line of Credit.
As extended, the new Maturity Date for your WCMA Line of Credit will be
February 29, 1996, with all other terms and conditions of our agreements
remaining unchanged.
In connection with this extension, a $1,500.00 fee will be charged to your
WCMA Account.
With so many institutions offering financial services today, we realize that
you have a choice and we thank you for choosing Merrill Lynch. You are a very
important client to us and we hope that the WCMA Line of Credit has provided
better control of your working capital and helped enhance your company's
bottom line. In addition to the WCMA Line of Credit, Merrill Lynch offers a
broad range of products and services to our business clients including:
Term Financing: Equipment Purchases, Fixed Asset Acquisitions and
ESOP Financing;
Business Advisory Services: Business Valuations, Private
Placements, ESOP Advisory,
Acquisition Advisory and Sale of Business; and
Business Investment Services: Strategies for Short-term and
Intermediate-term investments.
Again, we are pleased to provide you with an extension of your WCMA Line of
Credit and would enjoy discussing additional business services with you in
greater detail. Should you have any questions regarding the above mentioned
items, please contact Ron Abigail at (214) 969-2609.
Sincerely,
/s/ CHRISTOPHER T. SAMSON
____________________________
Christopher T. Samson
cc: Michael Owens - MLPF&S - Dallas, TX (DA)
Ron Abigail - MLBFS - Dallas, TX
<PAGE>
EXHIBIT 10(o)
[LETTERHEAD]
November 1, 1992
Craig Turner
Chief Executive Officer
TM Century, Inc.
14444 Beltwood Parkway
Dallas, Texas 75244
Re: Distribution Agreement
----------------------
Dear Craig:
This letter agreement (the "Agreement") when signed by both parties
shall constitute the restated agreement between TM Century, Inc. ("TMC") and
Radio Express, Inc. ("RE") for the distribution by RE of certain products of TMC
(the "Licensed Products"). This Agreement supersedes the August 1, 1989 letter
agreement between RE and TMC (formerly known as Century 21 Programming, Inc.)
and all amendments thereto.
1. LICENSED PRODUCTS. As used in this Agreement, Licensed Products
shall include all radio products and programs owned or controlled by TMC during
the term of this Agreement, including without limitation, the following, but
excluding those programs and products of TMC listed on Exhibit A attached
hereto:
(a) HITDISC (including versions developed for markets outside of
the United States), which is a weekly compact disc service which is manufactured
and shipped weekly and contains re-recordings of recent single record releases
being newly feature on United States radio stations in the "CHR", "AC", and
"AOR" music format categories;
(b) GOLDDISC libraries (including those developed for markets
outside of the United States), which are compact disc libraries containing re-
recordings of single record oldies, provided with a complete index and in the
music formats of "Classic Hits", "Classic Rock", "Adult Contemporary",
"Optional Adult Contemporary", "Mellow Adult Contemporary", "Optional Mellow
Adult Contemporary", "CHR", "Urban", "Country", "Traditional Country", "TM Mix"
and all combinations thereof;
(c) JINGLES (excluding the right to sell to
<PAGE>
Craig Turner
TM Century, Inc.
November 1, 1992
Page 2
certain clients of TMC set forth on Exhibit B attached hereto, with whom TMC
shall do business directly and exclusively), syndicated packages of jingle
recordings packaged in a minimum of ten cuts per station, customized to the
station's specifications and available in various formats;
(d) PRODUCTION LIBRARIES (including an index describing all cuts
and indicating their location on the compact discs), including:
(i) MEGAMUSIC;
(ii) LASER LIGHTNING;
(iii) COMPACT DISC PRODUCTION LIBRARY;
(iv) GENERATION THREE; and
(v) WINNING SCORE (including the right to sell this
library to television broadcast stations in RE's territory set forth in
Paragraph 4).
(e) The parties agree to negotiate in good faith on the terms
and conditions of an agreement under which RE shall have certain rights to sell
"Ultimate Digital Studio."
2. GRANT OF RIGHTS. Subject to the terms and conditions of this
Agreement, TMC hereby grants to RE the exclusive right, except where expressly
noted otherwise in Paragraph 4, to market, advertise, license and distribute the
Licensed Products in all media now or hereafter developed, including without
limitation, radio stations, production companies and television stations in RE's
territory (as defined in Paragraph 4). RE agrees that all licenses granted
under its authority shall be granted as nearly as possible upon the terms
contained in TMC's standard licensing agreement in the form attached hereto as
Exhibit C.
3. TERM. This Agreement shall commence on November 1, 1992 and
shall continue until December 31, 1996 (the "Initial Term"), unless sooner
terminated in accordance with Paragraph 11. Either party may terminate this
Agreement effective at the end of the Initial Term by giving written notice
in accordance with Paragraph 13(c) to the other party during the third
calendar quarter of the final year of the Initial Term. If no such notice of
termination is given by either party, the Agreement shall automatically
extend for additional one year terms (each a
<PAGE>
Craig Turner
TM Century, Inc.
November 1, 1992
Page 3
"Renewal Term") until such time as written notice of termination is given
during the third calendar quarter of the Renewal Term then in effect. (The
Initial Term and all Renewal Terms are collectively referred to herein as the
"Term").
4. TERRITORY. Except as otherwise provided in this Paragraph 4, RE
shall have the exclusive worldwide marketing rights in the Licensed Programs
exclusive of the fifty states of the United States, the United Kingdom, Japan,
the Republic of Ireland and the C.I.S., including the fifteen republics
comprising the former Soviet Union, subject to the following limitations: (i)
RE's rights in Ireland shall be non-exclusive; (ii) RE's rights in Canada
shall be limited to selling Hitdisc, Golddisc and Production Libraries to the
radio stations listed on Exhibit D and such rights shall continue only through
January 31, 1993; (iii) RE shall have no right to market Jingle Packages in
New Zealand and Australia.
5. LICENSE FEES CHARGED BY RE. Subject to the provisions of
Paragraph 6, RE may use its sole discretion in determining license fees and
payment terms for the License Products.
6. DIVISION OF LICENSE FEES. The license fees actually collected by
RE for each Licensed Product shall be divided between TMC and RE as follows:
(i) For Hitdisc, Golddisc and Production Libraries, 50% of
adjusted gross license fees to each of TMC and RE; and
(iii) For Jingles, RE shall receive 10% of gross license
fees, whether collected by TMC or RE, for any jingle sales in RE's territory,
and TMC shall retain all other amounts.
As used in this Paragraph 6, "gross license fees" shall mean
cash license fees actually received by RE in U.S. currency in the United States
from distribution of the Licensed Products and "adjusted gross license fees"
shall mean gross license fees less charges for freight, handling or similar
items charged by RE to its licensees.
(a) ACCOUNTING AND PAYMENT. Each party shall provide an
accounting statement to the other party (and make any payments due under such
accounting statement) within thirty (30) days following the end of each calendar
quarter. Each party
<PAGE>
Craig Turner
TM Century, Inc.
November 1, 1992
Page 4
shall only be required to account for and pay amounts actually received by
such party in the United States. RE's accounting statement shall include a
report indicating each transaction involving the Licensed Products, including
customer name and product shipped. If RE shall be prohibited or restricted
from making payments to TMC at the time when due and payable hereunder by
reason of the laws of currency regulations of a country in RE's territory, RE
shall promptly so advise to TMC in writing. Promptly following TMC's
request, RE shall deposit any such blocked funds to the credit of TMC in a
depository in such country or pay to such person as TMC may designate. All
payments hereunder shall be subject to applicable taxation statutes,
regulations and treaties.
(b) AUDIT RIGHTS. Each party hereto (or a certified public
accountant on such party's behalf) shall have the right to audit the books and
records of the party relating to a particular accounting statement for a period
of one year after the date such accounting statement is received by such party.
All payments hereunder shall be subject to all applicable taxation statutes,
regulations and treaties.
7. RESPONSIBILITIES OF THE PARTIES. In addition to their other
obligations under this Agreement, the parties shall have the following
responsibilities:
(a) RESPONSIBILITIES OF TMC. TMC shall, at its expense, perform
the following functions: (i) deliver in a timely fashion to RE in Los Angeles
all necessary copies of the Licensed Products packaged for shipping to RE's
customers; (ii) provide to RE, in reasonable quantities, if available,
promotional material and audio demos; and (iii) refer to RE any and all sales
leads in RE's exclusive territory regarding the Licensed Products.
(b) RESPONSIBILITIES OF RE. RE shall, at its expense, perform
the following functions: (i) use its best efforts to advertise, promote,
publicize and license the Licensed Products to radio stations, television
stations and production companies in RE's territory; (ii) display and
demonstrate the Licensed Products on field selling trips and at trade show and
conventions; (iii) include the Licensed Products in catalogues mailed to
prospective customers; and (iv) make all necessary shipments of the Licensed
Products, invoice RE's licensees and collect License Fees.
8. ADVERTISING. TMC will use its best efforts to
<PAGE>
Craig Turner
TM Century, Inc.
November 1, 1992
Page 5
include in all print advertising relating to the Licensed Products, the
following statement, together with RE's logo, telephone number, telecopier
number and address: "Radio Express, Exclusive International Distributors."
9. PERFORMANCE REVIEW. To provide TMC with the option of removing
specific countries from RE's territory, both parties agree that upon review of
"sales performance" by RE for the six month periods covering the months of
January through June and July through December each year during the Term hereof,
TMC may elect to set a "Performance Goal" to be achieved by RE in the following
six-month period in a specific country within RE's territory, provided TMC
notify RE in writing within 30 days following delivery of a standard accounting
by RE as specified in Paragraph 6 of this Agreement. Any Performance Goal must
be mutually agreed upon by the parties.
In this context, "sales performance" is defined as gross license fees
actually received by RE during the specific six-month period. A "Performance
Goal" defined as gross license fees to be received for a subsequent six month
period before revenue is shared, according to Paragraph 6 of this Agreement.
Within 30 days after receipt of a subsequent six month report in which
80% of a Performance Goal is not attained, TMC may terminate this Agreement as
it pertains to that specific country, provided actual termination does not
occur until 30 days after written notice is provided by TMC.
To illustrate the above, the following example is provided:
--- On August 1, 1993, RE provided TMC with a standard transaction
report covering revenues actually received during the period January through
July, 1993 including those received from all countries including the Country of
Mu. (Subtotals for each country will be reflected in the report).
--- No later than August 30, 1993, TMC may notify RE, in writing, that
a Performance Goal of $10,000 has been set for the Country of Mu and RE agrees
to meet this goal for the period July - December 1993.
--- On February 1, 1994, RE provides TMC with its standard Transaction
Report. In this report, revenues of $6,000 are reported for Mu (only 60% of the
Performance Goal.)
<PAGE>
Craig Turner
TM Century, Inc.
November 1, 1992
Page 6
--- No later than March 1, 1994, TMC may provide RE with written
notice of termination of this Agreement as it pertains to Mu.
--- 30 days after delivery of this notice to RE, the termination as
to the Country of Mu takes effect.
10. REPRESENTATIONS AND WARRANTIES. TMC represents and warrants that
it has the right to enter into this Agreement and grant the rights herein
granted to RE; that it is the sole owner of all rights in the Licensed Products;
that the rights granted to RE hereunder shall be exclusive to RE and has made no
other grant inconsistent with the rights granted herein; that the exercise by RE
of the rights granted herein will not violate or infringe any rights of any
third parties. TMC agrees to defend, indemnify and hold harmless RE from any
loss, damage, cost, expense claim or liability, including attorney's fees, which
may result from a breach of any of the representations, warranties or covenants
made by TMC herein. In the event of any event or claim against RE which may
result in liability from TMC to RE under these indemnity provisions, RE shall
have the right to defend against such claim, at TMC's cost, with counsel of RE's
choice, and shall have the right to offset from amounts payable to TMC hereunder
amounts not in excess of the potential liability to RE as a result of such
claim.
11. DEFAULT AND TERMINATION.
(a) If either party shall fail in the material performance of
its obligations or representations and warranties hereunder, including but not
limited to, either party's material failure to perform its respective
responsibilities under Paragraph 7 of this Agreement or either party
discontinuing its business operations, which failure is not cured within thirty
(30) days of the date of receipt of written notice thereof from the party, then
the other party, in addition to any rights and remedies available to such party
under this Agreement and applicable law, shall have the right to terminate this
Agreement. In addition, if Tom Rounds and John Fodor die or become
significantly disabled such that they are prevented from being actively involved
in RE, TMC may give a termination notice to RE within thirty (30) days of such
event. Any termination will be effective thirty (30) days following notice.
(b) If pursuant to this Paragraph 11, TMC terminates the
Agreement as a result of a material default by RE due to its failure to remit to
TMC those amounts described in
<PAGE>
Craig Turner
TM Century, Inc.
November 1, 1992
Page 7
Paragraph 6 thereof within 30 days after receipt of written notice from TMC
expressly stating that TMC will terminate the Agreement if such payment is
not rendered, TMC may assume responsibilities with respect to TMC products
previously sold by RE. All royalties collected by TMC for sales serviced by
TMC under this provision will be assigned in total to TMC. Any royalties
collected by TMC for sales serviced by RE, including all sales of Licensed
Product prior to termination, will be paid to RE after application of the
appropriate license fee to TMC pursuant to Paragraph 6 of the Agreement. If
TMC invokes this provision, RE will make available to TMC all contract,
billing and accounts receivable information for TMC product sales.
12. SECURITY INTEREST. RE agrees to grant to TMC a subordinated
security interest in its (TMC's) portion of "Receivables" (as hereinafter
defined) derived from RE's exploitation of the Licensed Products as per
paragraph 6 of the Agreement. For the purposes of this paragraph,
"Receivables" shall mean accounts, instruments, documents, chattel paper, and
general intangibles in which RE has or later acquires rights, solely relating
to RE's exploitation of Licensed Products under the Agreement. TMC's
security interest shall have a ceiling initially set at $200,000 subject to
increase in $50,000 increments if royalties in any one quarterly reporting
period exceed the then current ceiling amount. TMC's security interest shall
be subordinate to any other secured financing obligations, past, present or
future, incurred by RE. RE agrees to execute a UCC-1 financing statement and
file such statement with the Secretary of State of California reflecting the
security interest described herein, in form and substance mutually approved
by the parties.
13. GENERAL.
(a) The titles of the Paragraphs of this Agreement are for
convenience only and shall not in any way affect the interpretation of any
Paragraph of this Agreement or of the Agreement itself.
(b) A waiver by either party of any of the terms of conditions
of this Agreement in any instance shall not be deemed or construed to be a
waiver of such term or condition for the future, or of subsequent breach
thereof. All remedies, rights, undertakings, obligations and agreements
contained in this Agreement shall be cumulative and none of them shall be in
limitation of any other remedy, rights, undertaking, obligation or agreement of
either party.
<PAGE>
Craig Turner
TM Century, Inc.
November 1, 1992
Page 8
(c) All notices and other communications to be given to any
party hereto shall be in writing and shall be personally delivered or sent by
United States registered or certified mail, postage prepaid, return receipt
requested or certified mail, postage prepaid, return receipt requested, or by
telecopier, and shall be deemed to be given for purposes of this Agreement on
the day that such writing is delivered or sent to the intended recipient
thereof in accordance with the provisions of this Paragraph 12(c), except in
the case of a notice sent by mail, such notice shall be deemed given 3 days
after posting. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Paragraph 12(c), notices and
other communications in writing shall be given to the respective parties
hereto at their respective addresses (or to their respective telecopier
numbers) indicated below:
If to Radio Express, Inc.:
3575 Cahuenga Boulevard West
Suite 390
Los Angeles, California 90068
Attention: Thomas Rounds
Telecopier No. (213) 874-7753
With a copy to:
Rosenfeld, Meyer & Susman
9601 Wilshire Boulevard
Fourth Floor
Beverly Hills, California 90210
Attention: William B. Kirshenbaum
Telecopier No. (310) 271-6430
If to TM Century, Inc.
TM Century, Inc.
14444 Beltwood Parkway
Dallas, Texas 75244
Attention: Craig Turner
Telecopier No. (214) 448-0010
-----------------
With a copy to:
See attached_______________________
___________________________________
Telecopier No. ____________________
(d) This Agreement and all matters or issues
<PAGE>
IN ADDITION TO WRITTEN NOTICE BEING SENT TO CRAIG TURNER AT TM CENTURY'S
CORPORATE ADDRESS, COPIES OF LEGAL NOTICE SHOULD BE SENT TO:
VIAL, HAMILTON, KOCH & KNOX
1717 MAIN STREET SUITE 4400
DALLAS, TEXAS 75201
FAX NUMBER (214) 712-4402
ATTN: MR. MIKE TARSKI
14444 Beltwood Parkway - Dallas, TX 75244 - (214) 934-2121 - (800) 937-2100 -
FAX (800) 749-2121
<PAGE>
Craig Turner
TM Century, Inc.
November 1, 1992
Page 9
collateral thereto shall be governed by the laws of the State of California
applicable to contracts entered into and to be performed entirely therein.
Any action or proceeding of whatsoever kind or nature, with respect to or
rising out of this Agreement may, if brought by any party hereto, be
instituted and tried in the federal or state courts located in the State of
California, and each party hereto waives any right to cause such action or
proceeding, services of process upon a party hereto may be accomplished by
sending process in the manner specified herein for the giving of notice to
such party, in which event such party shall be considered as having consented
and submitted to the jurisdiction of the court in which such action or
proceeding shall have been instituted. In the event of any action or
proceeding to interpret or enforce this Agreement, the prevailing party shall
be entitled to receive its costs incurred in connection therewith, including
reasonable attorneys fees.
(e) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter herein contained, supersedes
all prior agreements, understandings, representations or warranties with respect
to such subject matter and this Agreement cannot be changed or modified except
in as writing signed by both parties.
(f) If any provision of this Agreement, as applied to either
party or to any circumstances, shall be adjudged by a court to be void or
unenforceable, the same shall in no way affect any other provision of this
Agreement, or the validity of this Agreement.
(g) Nothing in this Agreement shall be construed to create or
evidence a joint venture, partnership or agency relationship between the parties
hereto and neither party shall have the right to bind the other party without
the express written consent of the other party.
<PAGE>
Craig Turner
TM Century, Inc.
November 1, 1992
Page 10
Please indicate your acceptance of the terms of this Agreement by
signing below and returning a signed copy of this letter.
Very truly yours,
RADIO EXPRESS, INC.
By: /s/ THOMAS E. ROUNDS
---------------------------
Thomas E. Rounds, President
AGREED AND ACCEPTED:
TM CENTURY, INC.
By: /s/ PHILLIP CRAIG TURNER
----------------------------
Craig Turner
Chief Executive Officer
<PAGE>
EXHIBIT A
SCHEDULE OF EXCLUDED TM CENTURY RADIO PRODUCTS AND PROGRAMS
1) "ULTIMATE DIGITAL STUDIO" (U.D.S.) IN ALL, OR PART.
2) PRODUCTS FROM TM CENTURY TELEVISION DIVISION
<PAGE>
EXHIBIT B
SCHEDULE OF EXCLUDED TM CENTURY CLIENTS FOR JINGLE SALES
1) MIKE BIANCO, WHO OWNS WHITE COMMUNICATIONS IN ROME, ITALY.
2) MUSIC & IMAGES, BASED IN HOLLAND
<PAGE>
Craig Turner
TM Century, Inc.
November 1, 1992
Page 13
EXHIBIT C
TM CENTURY STANDARD LICENSING AGREEMENT
SEE ATTACHED EXAMPLES BY PRODUCT.
<PAGE>
Craig Turner
TM Century, Inc.
November 1, 1992
Page 14
EXHIBIT D
PERMITTED CANADIAN RADIO STATIONS FOR SALES BY RADIO EXPRESS
SEE ATTACHED LIST PROVIDED BY RADIO EXPRESS
<PAGE>
<TABLE>
<CAPTION>
STATION CITY, PROVINCE PRODUCTS
- ------- -------------- --------
<S> <C> <C>
CKCL Truro, NS GOLDDISC
CKEN Kentville, NS GOLDDISC, HDISC
CKJB Barrie, ON GOLDDISC
CKWM Kentville, NS GOLDDISC
CKGB Timmins, ON GOLDDISC
CKLY Lindsay, ON GOLDDISC, HITDISC
CKIK Calgary, AB MEGAMUSIC
CKSY Chatham, ON GOLDDISC, MEGAMUSIC
CFJO Victoriaville, PQ GOLDDISC
CHRC Ste-Foy, PQ GOLDDISC
CISN Edmonton, AB MEGAMUSIC
CJCJ Woodstock, NB GOLDDISC
CAN. RADIO NET Niagara Falls, ON GOLDDISC
RAWLCO COM. Calgary, AB GOLDDISC (for CJME, CFFR,
CKOM)
CJOY Guelph, ON GOLDDISC
CKPG/CIOI Prince George, BC GOLDDISC
CJEZ Toronto, ON GOLDDISC
CHYM Kitchener, ON GOLDDISC
CJMS/CKMF Montreal, PQ GOLDDISC (for RADIOMUTUEL,
incl. CKTF, CJRP, CIMO, CHIK, CIKI, CJMM, CFTR, CJRS, CJRC)
TELEMEDIA Toronto, ON GOLDDISC (for CJCL,
CFCH/CKAT, CKBB/CFTI, CFOR, CKMP, CJCS, CFYN/CHAS, CKSO/CIGM,
CKSL/CIQM, CFGB)
CJBX London, ON GOLDDISC
PELMOREX RADIO Sudbury, ON GOLDDISC (for CJMX, CJQM,
CKCY, CHUR, CHNO, CKAP, CHRO, CKNS, CFCL, CJNR, CFBR)
CJOB Winnipeg, MB GOLDDISC
CFCO Chatham, ON GOLDDISC
CKAN Newmarket, ON GOLDDISC
ST. LAWRENCE Kingston, ON GOLDDISC (for CKLC, CFLY,
CFJR, CHXL)
CFMP Peterborough, ON GOLDDISC
CJRN/CJFT Niagara, ON GOLDDISC
POWER BROAD. Montreal, PQ GOLDDISC (for CKBB, CKCB,
CKLA, CJOY, CIAM, CHEX, CFMP, CKAR, CKQT, CFFX, CFMK, CFZZ, CJDM,
CKSM, CFEL, CIKI, CFLP, CFVM)
CFGL Laval, PQ GOLDDISC
CKNW Newwestminster, BC GOLDDISC
CHML/CKDS Hamilton, ON GOLDDISC
</TABLE>
Page 2
Protected Canadian Stations
8/3/92-12/31/92
Western & Central Canada
<PAGE>
<TABLE>
<CAPTION>
Station City, Province Products
- ------- -------------- --------
<S> <C> <C>
CKBI Prince Albert, SK GOLDDISC, UDS
CKDM Dauphin, MB GOLDDISC
CKQR/CKGF Castlegar, BC GOLDDISC
CJCY Medicine Hat, AB GOLDDISC
CKDQ Drumheller, AB GOLDDISC
CHOO Ajax, ON GOLDDISC
CFVR Clearbrook, BC GOLDDISC, HITDISC
CHRX Vancouver, BC GOLDDISC
CJCD Yellowknife, NWT GOLDDISC, HITDISC
CFMO/CFRA Ottawa, ON GOLDDISC (closed 8/3)
CKZZ Vancouver, BC GOLDDISC
CKRA/CFCW Edmonton, AB GOLDDISC
CJAT Trail, BC GOLDDISC
CKDO Oshawa, ON GOLDDISC
CJCY Medicine Hat, AB GOLDDISC
CKBI Prince Albert, SK GOLDDISC
CKIQ Kelowna, BC GOLDDISC
CHUC Cobourg, ON HITDISC
CKRW White Horse, Yukon GOLDDISC
CKDQ Drumheller, AB GOLDDISC
CHOO Ajax, ON GOLDDISC
CKSW Swift Current, SK GOLDDISC
CKDM Dauphin, MB GOLDDISC
CJXX Grande Prairie, AB GOLDDISC
CIFM Kamloops, BC GOLDDISC
CFVR Clearbrook, BC GOLDDISC
CHWK Chilliwack, BC GOLDDISC
CHNI Part Hardy, BC GOLDDISC
CKOV/CKLZ Kelowna, BC GOLDDISC
CILK kelowna, BC GOLDDISC
CHRK Kamloops, BC GOLDDISC
CJVR Melford, SK GOLDDISC
CKSA Lloydminster, AB GOLDDISC
CJCY Charlottetown, PEI GOLDDISC
CJVI Victoria, BC GOLDDISC
</TABLE>
Radio Express Protect List
for
Canada
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<CASH> 245,812
<SECURITIES> 0
<RECEIVABLES> 1,027,798
<ALLOWANCES> (112,000)
<INVENTORY> 1,654,197
<CURRENT-ASSETS> 3,137,066
<PP&E> 1,878,452
<DEPRECIATION> 1,016,452
<TOTAL-ASSETS> 4,602,671
<CURRENT-LIABILITIES> 558,040
<BONDS> 0
<COMMON> 29,705
0
0
<OTHER-SE> 3,735,323
<TOTAL-LIABILITY-AND-EQUITY> 4,602,671
<SALES> 7,627,994
<TOTAL-REVENUES> 7,627,994
<CGS> 4,107,727
<TOTAL-COSTS> 4,107,727
<OTHER-EXPENSES> 360,000
<LOSS-PROVISION> 79,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (843,084)
<INCOME-TAX> (255,906)
<INCOME-CONTINUING> (587,178)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (587,178)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.23)
</TABLE>
