MMUS Makemusic, Inc. (MM)

MakeMusic, Inc. (NASDAQ: MMUS) today announced financial results for the three months ended March 31, 2009. Net revenues for the three months ended March 31, 2009 were $3,842,000, a 6% increase compared to $3,622,000 in the prior year. The company also announced for the first quarter of 2009 a net loss of $145,000 or $0.03 per basic and diluted share, compared to a net loss of $149,000 or $0.03 per basic and diluted share in the first quarter of 2008.

SmartMusic� subscriptions increased to 110,318 as of March 31, 2009, a 19% increase over the March 31, 2008 subscription count of 92,776. SmartMusic subscription and accessory revenue continues to represent an increasing share of the company's revenue and was $1,156,000 for the quarter ended March 31, 2009, a 31% increase over SmartMusic revenue of $882,000 for the quarter ended March 31, 2008. Total SmartMusic revenue represented 30% of the company�s total revenue in the first quarter of 2009 compared to 24% during the first quarter of 2008.

The following table illustrates the net new SmartMusic subscription data for the quarter ended March 31, 2009:

� � � � � � � � � � � � � � �

12/31/2008

Subscriptions

New

Subscriptions

Renewed

Subscriptions

Subscriptions

Ended

3/31/2009

Subscriptions

Net New

Subscriptions

3 months

ended 3/31/2009

106,584 10,609 12,241 19,116 110,318 3,734

Renewed subscriptions are defined as those subscriptions that customers purchase within the two-month period after their prior subscription ended. Because of changes to the start of school from year to year as well as fluctuations in the date that music teachers implement their curriculum, subscribers may have a delay of up to two months in renewing their subscription. The company believes this definition most closely reflects the renewal rate of SmartMusic subscriptions.

Total educators using SmartMusic was 9,091 as of March 31, 2009, an 11% increase over the 8,161 educator accounts in the prior year. The number of educators that had issued a SmartMusic assignment increased 62% from 1,159 as of March 31, 2008 to 1,874 as of March 31, 2009. The number of SmartMusic Gradebook� teachers, defined as teachers who deliver and manage SmartMusic student assignments to 50 students or more, was 829 as of March 31, 2009 and the average number of student subscriptions per Gradebook teacher was 39. As of March 31, 2008 the company reported 498 Gradebook teachers and an average number of student subscriptions per teacher of 32. The Gradebook teacher growth reflects a 66% annual increase. The number of SmartMusic site licenses increased from 212 as of December 31, 2008 to 216 as March 31, 2009. Finally, the company released 177 new SmartMusic large ensemble band, jazz ensemble and orchestra titles with pre-authored assignments in the first quarter of 2009.

Notation revenue decreased by $28,000 to $2,528,000 during the first quarter of 2009 compared to $2,556,000 for the same period last year. The first quarter of 2008 included revenue from a $133,000 Finale site license, whereas there was no comparable sale in 2009. Notation revenue decreases during the quarter were also due to a decline in our channel sales due to economic conditions. Partially offsetting this decline were sales of Finale NotePad� which the company began charging for in October 2008.

Gross profit in the quarter ended March 31, 2009 increased by $170,000 to $3,285,000 compared to gross profit of $3,115,000 for the quarter ended March 31, 2008. The increase in gross profit is a result of the increase in revenues, which was partially offset by higher software development amortization as a result of the expanding repertoire for SmartMusic.

Operating expenses for the first quarter were $3,442,000, a 5% increase over the $3,273,000 reported in the first quarter last year. These planned increases, primarily in development, were the result of increased personnel and contract labor costs to achieve numerous product development goals.

Total cash decreased by $481,000 to $6,111,000 during the first quarter of 2009. The decrease in cash for the first quarter is primarily due to the seasonal pattern of the company�s business and the net cash used in investing activities. During the first quarter, cash of $299,000 was used in investing activities primarily to expand SmartMusic repertoire. By comparison, during the first quarter of 2008, $579,000 was used in investing activities.

CEO Ron Raup commented on first quarter results, �We are satisfied with our overall financial performance for the first quarter of 2009 given current worldwide economic conditions. SmartMusic metrics were as anticipated due to the seasonality of the education market. In February, we hired a director of education sales and focused our direct sales force on existing SmartMusic teachers that have not yet utilized Gradebook in their curriculum. We are also contacting schools demonstrating desired behavior to assist them in any training requirements, capture end-of-year sales, leverage their success with other teachers in the district and lay the foundation for a stronger back-to-school season. In addition, our development efforts are focused on improving and simplifying the SmartMusic purchase processes, Gradebook class set-up, student enrollment and SmartMusic assignments. The overall objective is to make these processes easy and intuitive for both teachers and students. These product enhancements will be included in SmartMusic 2010 which is scheduled to be released prior to the back-to-school season of 2009 and parallel to the release of Finale 2010.�

The company will be hosting a conference call today, May 6, 2009 at 3:30 p.m. CST to discuss these results. Participants should call 877-840-1316 and reference Conference ID Number 95082430. A replay of the conference call will be available through May 15, 2009. To access this replay, please dial 800-642-1687 or 706-645-9291.

About MakeMusic, Inc.

MakeMusic�, Inc., a Minnesota corporation, is a world leader in music technology whose mission is to develop and market solutions that transform how music is composed, taught, learned and performed. For 20 years, Finale� has been the industry standard in music notation software. It has transformed the process by which composers, arrangers, musicians, teachers, students and publishers create, edit, audition, print and publish musical scores. Additionally, MakeMusic is the creator of SmartMusic�, the complete practice tool for band, orchestra and choir and SmartMusic Gradebook�, a web-based grade book that makes it easy to manage, grade and document assignments for every student. Further information about the Company can be found at www.makemusic.com.

Cautionary Statements

Certain statements found in this release may constitute forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the speaker�s current views with respect to future events and financial performance and include any statement that does not directly relate to a current or historical fact. Our forward-looking statements in this release relate to contacting teachers to capture end of year sales and assist them in training requirements, our development efforts to improve and simplify SmartMusic and Gradebook and the SmartMusic 2010 scheduled release date. Forward-looking statements cannot be guaranteed and actual results may vary materially due to the uncertainties and risks, known and unknown, associated with such statements. Examples of risks and uncertainties for MakeMusic include, but are not limited to, the rapid technological changes and obsolescence in our industry, the impact of emerging and existing competitors, fluctuations in general economic conditions, our ability to obtain licenses from music publishers and those risks described from time to time in our reports to the Securities and Exchange Commission (including our Annual Report on Form 10-K). Investors should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or potentially inaccurate assumptions investors should take into account when making investment decisions. Shareholders and other readers should not place undue reliance on �forward-looking statements,� as such statements speak only as of the date of this release. We undertake no obligation to update publicly or revise any forward-looking statements.

� � � � � � MakeMusic, Inc. Statements of Operations

(In thousands of U.S. dollars, except share and per share data)

(Unaudited)

�

3 Months Ended March 31, 2009 � � � � � 2008 Notation revenue $2,528 $2,556 SmartMusic revenue 1,156 882 Other revenue 158 184 NET REVENUE 3,842 3,622 � COST OF REVENUES 557 507 � GROSS PROFIT 3,285 3,115 � OPERATING EXPENSES: Development expenses 1,279 1,113 Selling and marketing expenses 1,131 1,175 General and administrative expenses 1,032 985 � Total operating expenses 3,442 3,273 � LOSS FROM OPERATIONS (157) (158) � Other, net 14 9 Net loss before income tax (143) (149) � Income tax expense 2 0 Net loss ($145) ($149) � Loss per common share:

Basic and diluted

($0.03) ($0.03) � Weighted average common shares outstanding:

Basic and diluted

4,644,410 4,577,458 � � � � � � � � � MakeMusic, Inc. Balance Sheets

(In thousands of U.S. dollars, except share and per share data)

� Assets March 31, December 31, 2009 2008 (Unaudited) � Current assets: Cash and cash equivalents $6,111 $6,592 Accounts receivable (net of allowance of $45 and $44 in 2009 and 2008, respectively) 1,517 1,397 Inventories 426 465 Prepaid expenses and other current assets 368 293 Total current assets 8,422 8,747 � Property and equipment, net 689 673 Capitalized software products, net 2,679 2,631 Goodwill 3,630 3,630 Other non-current assets 9 10 Total assets 15,429 15,691 � Liabilities and Shareholders� Equity Current liabilities: Current portion of capital lease obligations 55 $56 Accounts payable 451 373 Accrued compensation 910 1,170 Other accrued liabilities 240 272 Post contract support 146 146 Reserve for product returns 502 382 Current portion of deferred rent 32 30 Deferred revenue 2,175 2,336 Total current liabilities 4,511 4,765 �

Capital lease obligations, net of current portion

62 76 Deferred rent, net of current portion 31 39 � Shareholders� equity: Common stock, $0.01 par value: Authorized shares � 10,000,000

Issued and outstanding shares � 4,662,173 and 4,635,529

in 2009 and 2008, respectively

47 46 Additional paid-in capital 65,874 65,716 Accumulated deficit (55,096) (54,951) Total shareholders� equity 10,825 10,811 Total liabilities and shareholders� equity $15,429 $15,691 � � � � � MakeMusic, Inc. Statements of Cash Flows

(In thousands of U.S. dollars)

(Unaudited)

� 3 Months Ended March 31, 2009 � � � 2008 Cash flows from operating activities Net loss ($145) ($149) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 237 189 Noncash stock based compensation 158 139 Net changes in assets and liabilities: Accounts receivable (120) 95 Inventories 39 6 Prepaid expenses and other current assets (75) 11 Accounts payable 78 (41) Accrued liabilities and product returns (178) (280) Deferred revenue (161) (48) Net cash used in operating activities (167) (78) � Cash flows from investing activities Purchases of property and equipment (126) (70) Capitalized development and other intangibles (173) (509) Net cash used in investing activities (299) (579) � Cash flows from financing activities Proceeds from stock options and warrants exercised 0 297 Payments on capital leases (15) (14) Net cash (used) provided by financing activities (15) 283 � � Net decrease in cash and cash equivalents (481) (374) Cash and cash equivalents, beginning of period 6,592 6,041 Cash and cash equivalents, end of period $6,111 $5,667 � Supplemental disclosure of cash flow information Interest paid $3 $4 Income taxes paid 2 0