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: March 31, 1998
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 as specified in its charter)
Delaware 73-1220394
(State of incorporation) (IRS Employer Identification No.)
2002 Academy, Dallas, Texas
75234
(Address of principal executive offices)
(Zip Code)
Issuer's telephone number:
(972) 247-8850
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 April
30, 1998 was 2,483,193.
Transitional Small Business Disclosure Format (check one): Yes__ No X
<PAGE>
<TABLE>
TM Century, Inc.
Balance Sheets
As of March 31, 1998 (Unaudited) and September 30, 1997
ASSETS
<S> <C> <C>
March 31, 1998 September 30, 199
CURRENT ASSETS
Cash 324,982 294,33
Accounts and notes receivable 883,121 983,76
less allowance for doubtful accounts (157,361) (250,000
Inventories, net 749,357 779,95
Deferred federal income taxes 146,630 154,53
Prepaid expenses and other current 17,897 25,22
assets
TOTAL CURRENT ASSETS 1,964,626 1,987,80
PROPERTY AND EQUIPMENT 2,507,874 2,463,95
Less accumulated depreciation (1,716,617) (1,548,617
NET PROPERTY AND EQUIPMENT 791,257 915,34
INVENTORIES - NONCURRENT, net 147,244 143,64
OTHER ASSETS 18,325 18,26
TOTAL ASSETS 2,921,452 3,065,05
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 58,705 69,45
Accrued expenses 178,564 205,67
Current portion of obligation under 171,570 178,03
capital lease
Deferred revenue 71,545 56,01
Customer deposits 17,858 26,35
TOTAL CURRENT LIABILITIES 498,242 535,52
OBLIGATIONS UNDER CAPITAL LEASE 47,593 128,75
CUSTOMER DEPOSITS - NONCURRENT 172,102 166,41
DEFERRED FEDERAL INCOME TAXES 18,500 26,40
TOTAL LIABILITIES 736,437 857,10
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 29,705 29,70
7,500,000 shares;
2,970,481 shares issued; and
2,483,193 shares outstanding
Paid-in capital 2,275,272 2,275,27
Treasury stock - at cost, 487,288 (1,291,227) (1,291,227
Retained earnings 1,171,265 1,194,20
TOTAL STOCKHOLDERS' EQUITY 2,185,015 2,207,95
TOTAL LIABILITIES AND STOCKHOLDERS' 2,921,452 3,065,05
EQUITY
</TABLE>
<PAGE>
<PAGE>
<TABLE>
TM CENTURY, INC.
Statements of Operations and Retained Earnings (Unaudited)
For the Three Months Ended March 31, 1998 and 1997
<S> <C> <C>
1998 1997
REVENUES 1,801,556 1,846,758
Less commissions 326,498 332,104
NET REVENUES 1,475,058 1,514,654 COSTS AND EXPENSES:
Production, programming and technical costs 578,635 744,039
General and administrative 491,928 554,665
Selling costs 270,481 244,250
Depreciation 84,000 90,000
Reduction in carrying value of inventories 0 148,000
TOTAL 1,425,044 1,780,954
OPERATING INCOME (LOSS) 50,014 (266,300)
OTHER INCOME (EXPENSES)
Other, net 3,297 3,022
Interest expense (4,243) (5,503)
TOTAL (946) (2,481)
INCOME (LOSS) BEFORE INCOME TAXES 49,068 (268,781)
INCOME TAX (BENEFIT) PROVISION 0 0
NET INCOME (LOSS) 49,068 (268,781)
RETAINED EARNINGS, BEGINNING OF PERIOD 1,122,197 1,727,580
RETAINED EARNINGS, END OF PERIOD 1,171,265 1,458,799
BASIC NET INCOME (LOSS) PER SHARE 0.02 (0.11)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 2,483,193 2,491,624
</TABLE>
<PAGE>
<PAGE>
<TABLE>
TM CENTURY, INC.
Statements of Operations and Retained Earnings (Unaudited)
For the Six Months Ended March 31, 1998 and 1997
<C> <S> <S>
1998 1997
REVENUES 3,475,643 3,507,398
Less commissions 633,055 642,165
NET REVENUES 2,842,588 2,865,233
COSTS AND EXPENSES:
Production, programming and technical costs 1,112,407 1,489,488
General and administrative 1,030,936 1,143,011
Selling costs 549,761 459,311
Depreciation 168,000 180,368
Reduction in carrying value of inventories 0 148,000
TOTAL 2,861,104 3,420,178
OPERATING INCOME (LOSS) (18,516) (554,945)
OTHER INCOME (EXPENSES)
Other, net 4,979 5,374
Interest expense (9,403) (13,180)
TOTAL (4,424) (7,806)
INCOME (LOSS) BEFORE INCOME TAXES (22,940) (562,751)
INCOME TAX (BENEFIT) PROVISION 0 0
NET INCOME (LOSS) (22,940) (562,751)
RETAINED EARNINGS, BEGINNING OF PERIOD 1,194,205 2,021,550
RETAINED EARNINGS, END OF PERIOD 1,171,265 1,458,799
BASIC NET INCOME (LOSS) PER SHARE (0.01) (0.22)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 2,483,193 2,514,283
</TABLE>
<PAGE>
<PAGE>
<TABLE>
TM Century, Inc.
Statement of Cash Flows (Unaudited)
For the Six Months Ended March 31, 1998 and 1997
<C> <S> <S>
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) (22,940) (562,751)
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 168,000 180,368
Amortization 142,800 138,190
Provision for doubtful accounts 20,000 40,000
Reduction in carrying value of inventories 0 148,000
Change in assets and liabilities
Increase (Decrease) in cash for changes in:
Trade accounts receivable (11,994) (112,646)
Inventories (115,800) 139,307
Prepaid expenses 7,262 (58,705)
Accounts payable and accrued expenses (37,857) 55,218
Deferred revenue 15,534 7,160
Customer deposits (2,815) 16,727
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 162,190 (9,132)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (43,916) (17,478)
Acquisition of treasury stock 0 (40,911)
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (43,916) (58,389)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on capital lease obligations (87,625) (80,611)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (87,625) (80,611)
NET INCREASE (DECREASE) IN CASH 30,649 (148,132)
CASH AT BEGINNING OF PERIOD 294,333 377,855
CASH AND CASH EQUIVALENTS AT END OF PERIOD 324,982 229,723
</TABLE>
<PAGE>
TM CENTURY INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
MARCH 31, 1998 AND 1997
1. BASIS OF PRESENTATION
The interim financial statements of TM Century, Inc. (the _Company_)
at March 31, 1998, and for the three and six months ended March 31,
1998 and 1997, are unaudited, but include all adjustments (consisting
only of normal recurring adjustments) which the Company considers
necessary for a fair presentation. The September 30, 1997, 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, 1997. Certain amounts previously reported in
prior interim financial statements have been reclassified to conform
to the 1998 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 and six months
ended March 31, 1998, are not necessarily indicative of the results
which can be expected for the entire fiscal year.
2. 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 net operating loss carryforwards of approximately
$1.3 million available to offset future taxable income expiring in
2008 through 2010. The Company has recorded a deferred tax asset of
$155,000 after deduction of a valuation allowance of $522,000 to
reduce the total deferred tax asset because it is likely that a
portion of the tax asset will not be realized. Realization is
dependent on generating sufficient taxable income prior to expiration
of the loss carryforwards. Management believes it is more likely than
not that the non-reserved portion of the deferred tax asset will be
realized. The amount of the deferred tax asset considered
realizable, however, could be reduced in the near term if estimates
of future taxable income during the carryforward period are reduced.
Certain provisions of the tax law may limit the net operating loss,
capital loss and credit carryforwards available for use in any given
tax year in the event of a significant change in ownership interest.
<PAGE>
3. LONG-TERM DEBT AND LEASE OBLIGATIONS
The Company's Line of Credit was renewed through February 28, 1999
for $500,000 which represented a $200,000 increase compared to the
prior year. The Company's $500,000 revolving Line of Credit with a
bank grants a first lien and security interest in and upon 80% of the
Company's domestic accounts and chattel paper, chattel paper with
installments or other sums more than 90 days past due, and accounts
and chattel paper due from any person or entity not domiciled in the
United States. Borrowings under the Line of Credit bear a
fluctuating interest rate of prime plus 1.5%, payable monthly. The
Line of Credit, which bears an annual commitment fee of 0.5% of the
unused amounts, is renewable annually, subject to the consent of both
parties. No borrowings were drawn under the Line of Credit during the
quarter. In conjunction with the Company's leasing arrangement
discussed below, the availability under the Line of Credit is reduced
from $500,000 to $300,000 due to a $200,000 letter of credit.
In May, 1996, the Company entered into a lease agreement for the
financing of an upgrade of its computer hardware and software
systems. During the quarter ended December 31, 1997, the Company
obtained financing on the remaining $100,000 of the total $550,000
project. The lease is backed by a $200,000 letter of credit which
must be renewed annually subject to the renewal of the Company's Line
of Credit. The requirement of the letter of credit will be reviewed
on an annual basis. The lease has a term of three years and is
scheduled to expire in November, 1999. The lease contains an option
to purchase the equipment at its fair market value or renew the lease
at its fair market rental value at the end of the initial term.
Based on borrowing rates currently available to the Company on
similar arrangements, the fair value of the lease agreement
approximates the carrying value.
4. Earnings Per Share
In February, 1997, the Financial Accounting Standards Board ("FASB")
issued Statement No. 128, "Earnings per Share", effective for periods
ending after December 15, 1997. Basic earnings per share are
calculated on the weighted average number of common shares
outstanding during each period. All prior period earnings per share
amounts have been restated in accordance with FASB No. 128. Diluted
earnings per share are not materially different than basic earnings
per share.
<PAGE>
TM CENTURY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
TM Century, Inc. (the "Company") is engaged primarily in the
creation, production, marketing, and worldwide distribution of
compact disc music libraries, production libraries, morning show
services, and station identification jingles, for radio stations
worldwide.
Forward-Looking Statements
This Quarterly Report contains forward-looking statements about the
business, financial condition and prospects of the Company that
reflect assumptions made by management and management's beliefs based
on information currently available to it. The Company can give no
assurance that the expectations indicated by such forward-looking
statements will be realized. If any of management's assumptions
should prove incorrect, or if any of the risks and uncertainties
underlying such expectations should materialize, the Company's actual
results may differ materially from those indicated by the forward-
looking statements.
The key factors that are not within the Company's control and that
may have a direct bearing on operating results include, but are not
limited to, continued maturation of the domestic and international
markets for compact disc technology; acceptance by the customers of
the Company's existing and any new products and formats; the
development by competitors of products using improved or alternative
technologies and the potential obsolescence of technologies used by
the Company; the continued availability of software, hardware and
other products obtained by the Company from third parties; dependence
on distributors, particularly in the international market, and on
third parties engaged to replicate the Company's products on compact
discs; the retention of employees; the success of the Company's
current and future efforts to reduce operating expenses; the
effectiveness of new marketing strategies; and general economic
conditions. Additionally, the Company may not have the ability to
develop new products cost-effectively. There may be other risks and
uncertainties that management is not able to predict.
When used in this Quarterly Report, words such as _believes,_
_expects,_, _intends,_ _plans,_ _anticipates,_ _estimates_ and
similar expressions are intended to identify forward-looking
statements, although there may be certain forward-looking statements
not accompanied by such expressions. All forward-looking statements
are intended to be covered by the safe harbor created by Section 21E
of the Securities Exchange Act of 1934.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company relies upon current sales of music libraries and jingles
on terms of cash upon delivery for operating liquidity. Liquidity is
also provided by cash receipts from customers under contracts for
production libraries and weekly music service contracts having terms
of up to four years. The Company is obligated to provide music
updates throughout the contract terms for both production library and
weekly music service contracts. Sales of music libraries, jingles,
and the payments under production library and weekly music service
contracts will provide in the opinion of management, adequate
liquidity to meet operating requirements at least through the end of
fiscal 1998.
During the quarter ended March 31, 1998, approximately $42,000 was
spent for the purchase of property and equipment and for product
development costs for new music libraries, music library updates, and
jingles. 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. Product development expenditures
are expected to be approximately $150,000 in fiscal 1998.
In May, 1996, the Company entered into a lease agreement for the
financing of an upgrade of its computer hardware and software
systems. The Company is required to repay the amount financed,
totaling $550,000 in equal monthly payments of principal and interest
during the term of the lease. Monthly payments on the lease are
approximately $16,000. The term of the lease is three years and is
scheduled to expire in November, 1999. The lease is backed by a
letter of credit in the amount of $200,000. The letter of credit
reduces the availability under the Company's revolving Line of Credit
from $500,000 to $300,000.
Management anticipates that cash flow from operations and cash
reserves will be sufficient to meet these capital requirements at
least through the end of fiscal year 1998. The Company has no other
significant commitments for capital expenditures in fiscal 1998.
<PAGE>
RESULTS OF CONTINUING OPERATIONS
Comparison of the Three-Month Periods Ended March 31, 1997 and 1998
Revenues declined approximately $45,000 or 2.4% in the three-month
period ended March 31, 1998 as compared to the same period for the
previous year. The decrease was primarily due to the sale of all
computerized radio station computer software and equipment inventory
and other assets in June, 1997. The Company's revenue of
computerized radio station computer software and equipment
contributed approximately $157,000 in revenue for three months ended
March 31, 1997. Excluding this revenue for three months ended March
31, 1997, would result in revenues increasing approximately $112,000
or 6.7% in the three-month period ended March 31, 1998 as compared to
the same period for the previous year. The revenue increase was
primarily due to an increase in revenues for production libraries of
$89,000 and radio Jingles of $113,000. Offsetting these increases
were decreases in the weekly HitDisc and GoldDisc music services of
$11,000 and Morning Show services of $79,000. Morning Show services
decreased as a result of a decrease in the allocation of advertising
revenues.
Production library revenues increased $89,000, or 4.8%. Increases in
production library revenue is due to the substantial increase in
advertising/barter arrangements for the Company's sales and imaging
libraries. Even though production library revenues may decline due
to the expiration of three-year contracts, management believes that
production libraries will continue to generate a significant portion
of overall revenues from sales of existing products through
advertising/barter arrangements and sales of new products. The
Company introduced a new production library in the second quarter of
fiscal 1997. Sales and new sales growth are subject to customer
acceptance of the new products.
Jingles increased $113,000 or 43.6% primarily due to an increase in
demand for custom Jingles compared to the same quarter, prior fiscal
year 1997.
Revenues of weekly HitDisc and GoldDisc music services decreased
$5,000 and $6,000 respectively, or 1.0% as compared to the same
period previous year. The decrease in compact disc music library
revenues was due to a slight decrease in weekly music sales to
customers. The introduction in the fourth quarter of 1996 and the
first quarter of 1998 of new music formats targeted to non-broadcast
customers reduced the decline in the GoldDisc music service. As the
compact disc music library market matures, sales of compact discs are
generated primarily from changes in music formats or sales of new
music libraries or formats rather than from conversions to compact
disc music delivery technology. The market for compact disc music
libraries to broadcast customers has reached a substantial level of
maturity in the United States, which is the market from which the
Company derives most of its music library revenues. A decline in
revenues from music library sales may result in a proportionately
greater decline in operating income because music libraries provide
higher margins than the Company's other products. However,
management believes that sales to non-broadcast customers and the
introduction of new products will counteract the declines in revenues
from existing music libraries. New products include pre-recorded
music (GoldDrive) provided to equipment manufacturers of hard drive
systems which was introduced during the fiscal year 1997, and a new
music library targeted to non-broadcast customers which was
introduced during the second quarter of fiscal year 1998. Renewals
and new sales growth are subject to customer acceptance of the new
products.
<PAGE>
Production, programming and technical costs decreased $165,000 or
22.2%, and as a percentage of revenue decreased from 40.3% to 32.1%.
The decrease as a percentage of revenues is primarily due to the
reduction in expenses which resulted from the sale of all
computerized radio station computer software and equipment inventory
and assets in June 1997.
Commissions decreased $6,000 or 1.8%, and as a percentage of revenues
increased from 18.0% to 18.1%. Commissions as a percentage of selling
and commission costs decreased from 57.6% to 54.7% due to higher
selling costs in the three months ended fiscal year 1998 compared to
same period prior year.
Selling costs increased $26,000 or 10.7%, and as a percentage of
revenues increased from 13.2% to 15.0%. The increase in expenses is
primarily due to higher promotional costs of new products and sales
promotions, and increases in sales salaries due to changes in sales
force and commission plans. Selling costs as a percentage of selling
and commission costs increased from 42.3% to 45.3%.
General and administrative costs decreased $63,000 or 11.3% and is
primarily due to the Company's continued efforts in reducing
operating expenses.
Depreciation decreased $6,000 or 6.7% primarily due to the sale of
all computerized radio station computer software and equipment
inventory and assets in June, 1997, and offset by increases in
production equipment in the first and second quarters of fiscal year
1998.
During the quarter ended March 31, 1997, the Company recorded a
charge against operations of approximately $148,000 to reduce the
carrying value of its equipment inventory and related assets to their
net realizable value.
<PAGE>
Comparison of the Six-Month Periods Ended March 31, 1997 and 1998
Revenues declined approximately $32,000 or 1.0% in the six-month
period ended March 31, 1998 as compared to the same period for the
previous year. The decrease was primarily due to the sale of all
computerized radio station computer software and equipment inventory
and other assets in June, 1997. The Company's revenue of
computerized radio station computer software and equipment
contributed approximately $271,000 in revenue for six months ended
March 31, 1997. Excluding this revenue for six months ended March
31, 1997 would result in revenues increasing approximately $239,000
or 7.4% in the six-month period ended March 31, 1998 as compared to
the same period for the previous year. The revenue increase was
primarily due to increase in revenues for the weekly HitDisc and
GoldDisc music services of $102,000, production libraries of $151,000
and radio Jingles of $110,000. Offsetting these increases were
decreases in Morning Show services of $119,000. Morning Show
services decreased as a result of a decrease in the allocation of
advertising revenues.
Revenues of weekly HitDisc and GoldDisc music services increased
$51,000 and $52,000 respectively, or 4.9% as compared to the same
period previous year. The increase in compact disc music library
revenues was primarily due to an increase in weekly music sales and
the introduction in the fourth quarter of 1996 and the first quarter
of 1998 of new music formats targeted to non-broadcast customers. As
the compact disc music library market matures, sales of compact discs
are generated primarily from changes in music formats or sales of new
music libraries or formats rather than from conversions to compact
disc music delivery technology. The market for compact disc music
libraries to broadcast customers has reached a substantial level of
maturity in the United States, which is the market from which the
Company derives most of its music library revenues. A decline in
revenues from music library sales may result in a proportionately
greater decline in operating income because music libraries provide
higher margins than the Company's other products. However,
management believes that sales to non-broadcast customers and the
introduction of new products will counteract the declines in revenues
from existing music libraries. New products include pre-recorded
music (GoldDrive) provided to equipment manufacturers of hard drive
systems which was introduced during the fiscal year 1997, and a new
music library targeted to non-broadcast customers which was
introduced during the second quarter of fiscal year 1998. Renewals
and new sales growth are subject to customer acceptance of the new
products.
Production library revenues increased $151,000, or 43.2%. Increases
in production library revenue is due to the substantial increase in
advertising/barter arrangements for the Company's sales and imaging
libraries. Even though production library revenues may decline due
to the expiration of three-year contracts, management believes that
production libraries will continue to generate a significant portion
of overall revenues from sales of existing products through
advertising/barter arrangements and sales of new products. The
Company introduced a new production library in the second quarter of
fiscal 1997. Sales and new sales growth are subject to customer
acceptance of the new products.
Jingles increased $110,000 or 24.7% primarily due to an increase in
demand for custom Jingles compared to the same period, prior fiscal
year 1997.
Production, programming and technical costs decreased $377,000 or
25.3%, and as a percentage of revenue decreased from 42.5% to 32.0%.
The decrease as a percentage of revenues is primarily due to the
reduction in expenses which resulted from the sale of all
computerized radio station computer software and equipment inventory
and assets in June 1997.
<PAGE>
Commissions decreased $9,000 or 1.4%, and as a percentage of revenues
decreased from 18.3% to 18.2% Commissions as a percentage of selling
and commission costs decreased from 58.3% to 53.5% due to higher
selling costs in the six months ended fiscal year 1998 compared to
same period prior year.
Selling costs increased $90,450 or 19.7%, and as a percentage of
revenues increased from 13.1% to 15.8%. The increase in expenses is
primarily due to higher promotional costs of new products and sales
promotions, and increases in sales salaries due to changes in sales
force and commission plans. Selling costs as a percentage of selling
and commission costs increased from 41.7% to 46.5%.
General and administrative costs decreased $112,000 or 9.8% and is
primarily due to the Company's continued efforts in reducing
operating expenses.
Depreciation decreased $12,000 or 6.9% primarily due to the sale of
all computerized radio station computer software and equipment
inventory and other assets in June, 1997, and offset by increases in
production equipment in the first and second quarters of fiscal year
1998.
During the quarter ended March 31, 1997, the Company recorded a
charge against operations of approximately $148,000 to reduce the
carrying value of its equipment inventory and related assets to their
net realizable value.
<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
The holders of approximately 71% of the outstanding common stock
of the Company, by written consent executed as of April 28, 1998 in
accordance with Delaware law, (i) re-elected each of the four
directors of the Company, Marjorie L. McIntyre, Neil W. Sargent, Ann
A. Armstrong and Donald E. Latin, and (ii) approved the appointment
of Deloitte & Touche as the Company's independent public accountants
for the fiscal year ending September 30, 1998. The Company did not
solicit proxies or consents in connection therewith.
Item 5. Other information - The Company provides music library
services to radio stations in various States. One of the States the
Company provides this service has indicated their intention to audit
the 1991 to 1995 calendar years for any tax possibly due, due to
sales. The final audit assessment has not yet occurred and therefore
the results of such audit are unknown.
(a) Exhibits
Material Contracts:
10.1. WMCA Line of Credit Extension Letter Agreement by and between
Merrill Lynch Business Financial Services Inc. and TM Century, Inc.
dated April 21, 1998.
10.2. Request To Amend A Letter of Credit by and between The
Northern Trust Company and TM Century, Inc. dated April 21, 1998.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the three
month period ending March 31, 1998.
<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: May 12, 1998
TM CENTURY, INC.
BY:/s/Roger A. Holeman
Roger A. Holeman
Chief Financial Officer
(Principal Accounting Officer)
BY:/s/Neil W. Sargent
Neil W. Sargent
Chief Executive Officer
(Principal Executive Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS DOCUMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS AND STATEMENTS OF OPERATIONS OF THE COMPANY'S FORM 10-QSB FOR THE SIX
MONTH PERIOD ENDED MARCH 31, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 324982
<SECURITIES> 0
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<ALLOWANCES> 157361
<INVENTORY> 896601
<CURRENT-ASSETS> 1964626
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<DEPRECIATION> 1716617
<TOTAL-ASSETS> 2921452
<CURRENT-LIABILITIES> 498242
<BONDS> 0
0
0
<COMMON> 29705
<OTHER-SE> 2155310
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22940)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
