UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-K/A

                                 Amendment No. 1
                                       to
                                    FORM 10-K
                                   (Mark One)

                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the fiscal year ended December 31, 2001, or

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

          For the transition period from ___________ to _______________

                        COMMISSION FILE NUMBER: 000-26585

                              MUSICMAKER.COM, INC.
             (Exact Name of Registrant as Specified in Its Charter)

                Delaware                                       54-1811721
    (State or Other Jurisdiction of                         (I.R.S. Employer
             Incorporation                                 Identification No.)

                        c/o Barington Capital Group, L.P.
                         888 Seventh Avenue, 17th Floor
                            New York, New York 10019
                     (Address of Principal Executive Office)
                                   (Zip Code)

Registrant's telephone number, including area code:     (212) 974-5700

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

Securities registered pursuant to Section 12(g)         Common Stock, par value
of the Securities Act:                                  $.01 per share

Indicate by check mark 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 [_].

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference to Part III of this Form 10-K or any
amendment to this Form 10-K [ ].

The aggregate market value of voting stock held by non-affiliates of the
Registrant was approximately $3,470,609 as of April 26, 2002, based upon the
closing price of such equity as of such date.

As of April 26, 2002, 3,313,996 shares of the issuer's common stock, par value
$0.01 per share (the "Common Stock"), were outstanding.

This  Amendment No. 1 on Form 10-K/A to the annual  report of  musicmaker.com,
Inc. (the  "Company") on Form 10-K for the fiscal year ended December 31, 2001
is being filed to add the information required to be set forth by Part III.

<PAGE>

                                    PART III

Item 10.          Directors and Executive Officers

      Set forth below is certain information regarding the directors and
executive officers of the Company.

Name                           Age    Position
----                           ---    --------

Seymour Holtzman............   66     Chairman of the Board of Directors
James Mitarotonda...........   47     President and Chief Executive Officer
Jesse Choper................   66     Director
Devarajan S. Puthukarai.....   58     Director
William W. Scranton, III....   54     Director
Irwin Steinberg.............   80     Director
Joseph Wright, Jr...........   63     Director

      Seymour Holtzman has been a member of the Company's  Board of Directors
and Chairman of the Board since January 2001.  Mr.  Holtzman has been involved
in the  retail  business  for over 30  years.  For many  years he has been the
President and Chief Executive Officer of Jewelcor,  Inc.,  formerly a New York
Stock  Exchange  company that  operated a nationwide  chain of retail  stores.
From  1986 to 1988,  Mr.  Holtzman  was the  Chairman  of the  Board and Chief
Executive  Officer of Gruen Marketing Corp, an American Stock Exchange company
involved in the  nationwide  distribution  of  watches.  For at least the last
five (5)  years,  Mr.  Holtzman  has been the  Chairman  and  Chief  Executive
Officer  of  Jewelcor   Management,   Inc,  an  entity  primarily  engaged  in
investment and management services;  C.D. Peacock,  Inc., a prominent Chicago,
Illinois retail jewelry  establishment;  and S.A. Peck & Company, a retail and
mail order  jewelry  company  based in  Chicago,  Illinois.  Mr.  Holtzman  is
currently  the Chairman of the Board of two public  companies:  Designs,  Inc.
(NASDAQ  "DESI") and  musicmaker.com,  Inc. (OTC bulletin board  "HITS").  Mr.
Holtzman is a former  Chairman  of the Board and a current  Director of Little
Switzerland,  Inc. (OTC bulletin board "LSVI"),  a leading jewelry retailer in
the  Caribbean,  Alaska and Key West,  Florida.  Mr.  Holtzman  is also on the
Board of Directors of  Northeast  Pennsylvania  Financial  Group,  Inc.  (AMEX
"NEP"),  the holding company for First Federal Bank, a $800 million bank based
in Hazleton,  Pennsylvania.  As of January 2000,  Mr.  Holtzman  became one of
ten outside  advisors to  Barington  Companies  Equity  Partners,  L.P.  James
Mitarotonda  is  the  President  and  Chief  Executive  Officer  of  Barington
Companies Investors,  LLC, which is the General Partner of Barington Companies
Equity  Partners,  L.P.  Jewelcor  Management,  Inc.  is a limited  partner in
Barington  Companies Equity  Partners,  L.P. Mr. Holtzman has been an investor
in banks and savings and loans since 1972.

      James Mitarotonda is President,  Chief Executive Officer and a director
of the Company  and has served in such  capacities  since  January  2001.  Mr.
Mitarotonda is also the Chairman of the Board,  President and Chief  Executive
Officer of Barington  Capital Group,  L.P. He has held these  positions for at
least  the last five  years.  Mr.  Mitarotonda  co-founded  Barington  Capital
Group,  L.P. in November  1991.  Mr.  Mitarotonda  is also President and Chief
Executive Officer of Barington Companies  Investors,  LLC, the General Partner
of Barington  Companies Equity Partners,  L.P., a small  capitalization  value
fund in which the  General  Partner  seeks to be  actively  involved  with its
portfolio  companies in order to enhance  shareholder  value. In May 1988, Mr.
Mitarotonda  co-founded  Commonwealth   Associates,   an  investment  banking,
brokerage and securities  trading firm. Mr.  Mitarotonda served as Chairman of
the Board and Co-Chief  Executive Officer of JMJ Management  Company Inc., the
general  partner of Commonwealth  Associates.  From December 1984 to May 1988,
Mr.  Mitarotonda  was  Senior  Vice  President/Investments  of DH Blair & Co.,
Inc.  Earlier in his career,  Mr.  Mitarotonda was employed by Citibank,  N.A.
in  an  executive  capacity  having  management   responsibility  for  two  of
Citibank's  business  banking  branches.  During his tenure at  Citibank,  Mr.
Mitarotonda  became Regional  Director of Citibank's Home Equity Financing and
Credit  Services.  Mr.  Mitarotonda is a member of the Alumni Advisory Council
of New York  University's  Stern  School  of  Business  and is a member of the
Executive  Committee and  Co-Chairman  of Membership for the Gotham Chapter of
the Young President's  Organization.  Mr. Mitarotonda  graduated from New York
University's  Leonard N. Stern  School of  Business  with a Master of Business
Administration  degree and from Queens  College with a Bachelor of Arts degree
with honors in Economics.

      Jesse Choper has served as a member of the Company's Board of Directors
since May 2001. Mr. Choper is the Earl Warren Professor of Public Law at the
University of California at Berkeley School of Law where he has

                                       2
<PAGE>

taught since 1965.  Professor Choper was the Dean of the Law School from 1982 to
1992.  He has been a visiting  professor  at Harvard  Law  School,  Fordham  Law
School,  University  of Milan in Italy Law School and  Universitad  Autonoma Law
School in Barcelona,  Spain. From 1960 to 1961, Professor Choper was a law clerk
for Supreme Court Chief  Justice Earl Warren.  He is widely  recognized  author,
lecturer,   consultant  and  commentator  on  issues  of  Constitution  Law  and
Corporation  Law.  Mr.  Choper is also a member of the  Board of  Director's  of
Designs, Inc. (NASDAQ "DESI").

      Devarajan S. Puthukarai  has served as a member of the Company's  Board
of Directors  since April 1997. Mr.  Puthukarai  was the Company's  President,
Chief Executive  Officer,  Chief Operating  Officer until January 12, 2001 and
served as the  Company's  Co-Chief  Executive  Officer  from  April 1997 until
December  1999.  From 1991 to April 1997,  Mr.  Puthukarai  was  President  of
Warner Music  Media,  a division of Warner  Music  Enterprises,  a Time Warner
Inc.  company  engaged in the business of promoting new and upcoming  artists.
From 1984 to 1990,  Mr.  Puthukarai  was  President  of RCA  Direct  Marketing
Inc./BMG Direct Marketing Inc.,  launching one of the country's first CD music
clubs and building the world's largest  classical  music club. Mr.  Puthukarai
earned his  Bachelor  of Science  and  Bachelor  of Law  degrees  from  Madras
University   in  India.   Mr.   Puthukarai   earned  a  Master   of   Business
Administration degree from the Indian Institute of Management,  a Harvard/Ford
Foundation school in Ahemadabad, India.

      William W. Scranton, III has served as a member of the Company's  Board
of  Directors  since May  2000.  Since  1994,  Mr.  Scranton  has  headed  the
Scranton  Family  Office,  a family  office  managing  investments  and  civic
initiatives.  From  1987 to  1994,  he  served  in  various  senior  executive
officer  positions  at two  direct  marketing  companies  and one  mail  order
company.  Mr.  Scranton  served as Lieutenant  Governor of  Pennsylvania  from
1979 to 1987.  Mr.  Scranton  received a Bachelor  of Arts  degree in American
Studies from Yale University.

      Irwin  Steinberg has served as a Company  director  since January 1997.
Mr.  Steinberg  also serves as a consultant  to the Company.  Since 1982,  Mr.
Steinberg  has  been  President  of  HIS   Corporation,   a  consulting   firm
specializing  in the music  industry.  From 1975 to 1982,  Mr.  Steinberg  was
Chairman and Chief Executive Officer of PolyGram  Records,  Inc. Mr. Steinberg
was  co-founder  of  Mercury  Records  Corporation.  From  1946 to  1975,  Mr.
Steinberg was Vice  President and  President,  the later of which he held from
1968 to 1975.  Mr.  Steinberg  currently  serves as an  adjunct  Professor  at
Columbia College of the Arts in Chicago,  where he teaches graduate courses in
music business.  Mr.  Steinberg  holds a Bachelors  degree from the University
of Chicago  Business  School and a Masters  degree from the  California  State
University at Domingo Hills.

       Joseph R. Wright, Jr. has served as a member of the Company's Board of
Directors  since  January 2001.  Mr.  Wright is President and Chief  Executive
Officer of PanAmSat  Inc.,  one of the  world's  largest  providers  of global
satellite-based   communications   services;   servicing  news  organizations,
telecommunications  companies,  DirecTV services, Internet networks and others
around  the  globe.  In the six  years  prior to this  position  in 2001,  Mr.
Wright was Vice Chairman of Terremark  Worldwide  Inc., a public  company that
develops  and  operates  Network  Access  Point (NAP)  centers in the U.S. and
Brazil. Mr. Wright was also Chairman and Director of GRC International,  Inc.,
a public  company  providing  advanced  IT,  Internet,  and  software  systems
technologies to government and commercial  customers,  which was sold to AT&T.
He was also  Co-Chairman  and Director of Baker & Taylor  Holdings,  Inc.,  an
international  book/video/software distribution and e-commerce company that is
majority  owned by the  Carlyle  Group.  From  1989 to 1994,  Mr.  Wright  was
Executive  Vice  President,  Vice  Chairman and Director of W.R.  Grace & Co.,
Chairman  of Grace  Energy  Company,  and  President  of  Grace  Environmental
Company.  Mr. Wright was Deputy Director and Director of the Federal Office of
Management  and  Budget  and a member of the  President's  Cabinet  during the
Reagan   Administration  from  1982  to  1989  and  Deputy  Secretary  of  the
Department  of Commerce from 1981 to 1982.  He  previously  held  positions as
President of two of Citibank's  subsidiaries,  as a partner of Booze Allen and
Hamilton  and  in  various   management/economic   positions  in  the  Federal
Departments  of Commerce and  Agriculture.  In addition,  Mr. Wright serves on
the  Board  of   Directors/Advisors   of  Terremark   Worldwide  Inc.,   Titan
Corporation,  Baker & Taylor,  Verso Technologies Inc., Proxim Corporation and
the  AT&T  Washington   Advisory  Board.   Mr.  Wright   graduated  from  Yale
University  with a  Master's  Degree  in  Industrial  Administration  and from
Colorado School of Mines with a Professional Engineering Degree.

                                       3
<PAGE>

Committees of the Board of Directors and Compensation

      The Board of Directors has  designated  an Audit  Committee of the Board
of Directors,  which consists of Mr.  Scranton,  Mr. Steinberg and Mr. Wright.
The Audit Committee is responsible  for reviewing,  along with our independent
public  accountants,  the  scope  of our  accounting  audits,  as  well as our
corporate accounting  practices and policies.  The Audit Committee reviews our
accounting  and  financial  controls,  and makes  themselves  available to our
independent public accountants for any necessary consultation.

      On January 23, 2001 the Board of Directors as then constituted approved
the dissolution of the Compensation Committee and has assumed the roles
generally carried out by the Compensation Committee. Since such time, the Board
of Directors has undertaken to review the performance of our management and
recommend and approve the compensation of and the issuance of stock options, if
any, to executive officers and employees under our stock option plan.

      On January 23, 2001, the Board of Directors adopted a compensation plan
for members of the Board of Directors. All newly appointed directors receive
7,500 options to purchase the Company's Common Stock. Directors attending a
Board meeting in person receive shares of restricted Common Stock of the Company
with a fair market value of $3,000 (based on the closing stock price on the day
of the meeting). Directors attending a meeting of the Board of Directors
telephonically receive shares of restricted Common Stock of the Company with a
fair market value of $500 (based on the closing stock price on the day of the
meeting). Each member of the Audit Committee receives shares of restricted
Common Stock of the Company with a fair market value of $1,500 (based on the
closing stock price on the day of the meeting ) for attending committee
meetings. Options issued to members of the Board of Directors for their
participation in Board meetings vest immediately and are exercisable on the date
of grant. All options are issued with an exercise price equal to the fair market
value of the Common Stock on the date of grant. Directors receive reimbursement
to cover their reasonable expenses incurred in attending Board meetings.

      During 2001, there were six meetings of the Board of Directors and no
meetings of the Audit Committee. Each director attended 75% or more of the
meetings of the Board of Directors and of the committees of the Board on which
the director served during the period for which he was director or committee
member.

Compensation Committee Interlocks and Insider Participation in Compensation
Decisions

None.

There is no standing Nominating Committee of the Board of Directors.



                                       4
<PAGE>

Item 11.          Executive Compensation

      The following table sets forth all compensation awarded to, earned by, or
paid for services rendered to the Company in all capacities by the Company's
chief executive officer and other executive officers whose salary, on an
annualized basis, and bonus exceeded $100,000 (the "Named Executive Officers")
during the fiscal years ended December 31, 1999, 2000 and 2001.

                           Summary Compensation Table

                                                                     Long-Term
                                                                    Compensation
                                        Annual Compensation            Awards
                                 --------------------------------   ------------
                                                                      Number of
                                                                       Shares
                                                                     Underlying
   Name and Principal Position   Year       Salary($)    Bonus($)      Options
              (a)                 (b)         (c)          (d)       -----------
------------------------------           ------------   ---------

James A. Mitarotonda(1)           2001    $46,923(6)         --           --
President and Chief Executive     2000        --             --           --
Officer                           1999        --             --           --

Seymour Holtzman(2)               2001    $50,000(7)         --           --
Chairman of the Board of          2000        --             --           --
Directors                         1999        --             --           --

Devarajan S. Puthukarai (3)       2001    $ 9,615(8)     $100,000         --
Former President, Chief           2000    $ 250,000      $100,000(11)   33,500
Executive Officer and Chief       1999    $ 250,000      $100,000         --
Operating Officer

Mark A. Fowler(4)                 2001    $  93,130(9)   $ 50,000         --
Former Chief Financial Officer,   2000    $ 135,060      $ 85,000       13,500
Vice President of Finance and     1999    $ 125,000      $ 50,000(12)    3,025
Administration

William Crowley(5)                2001    $   9,519(10)      --           --
Former Senior Vice President,     2000    $ 202,926      $ 80,000       10,000
U.S. Marketing                    1999    $ 144,230      $ 50,000         --

-----------------------------

(1)   Mr. Mitarotonda was appointed  President and Chief Executive Officer on
      January 18, 2001.

(2)   Mr. Holtzman was  appointed  Chairman of the Board on January 18, 2001.
      Mr. Holtzman is the  Chairman and Chief  Executive  Officer of Jewelcor
      Management, Inc.  See Note 7.

(3)   Mr. Puthukarai resigned as President,  Chief Executive Officer and Chief
      Operating Officer on January 18, 2001.

(4)   Mr. Fowler resigned as Chief  Financial  Officer and Vice  President of
      Finance and  Administration  on January 11, 2001. Mr. Fowler  continued
      to serve as an at-will employee with the Company until June 30, 2001.

(5)   Mr. Crowley  resigned  as Senior Vice  President  of  Marketing,  U.S.,
      effective January 5, 2001.

(6)   From April 2001 through June 2001, James A. Mitarotonda received $16,923
      for services performed in his capacity as Chief Executive Officer.
      Commencing July 1, 2001, Mr. Mitarotonda received $5,000 per month for
      services rendered in his capacity as President and Chief Executive
      Officer.

                                       5
<PAGE>

(7)   Commencing March 2001, Jewelcor  Management,  Inc. received $5,000 per
      month for  services  rendered by Mr.  Holtzman,  the  Chairman and Chief
      Executive Officer of Jewelcor Management, Inc.

(8)   Does not include $784,077 paid by the Company to Mr. Puthukarai accordance
      with a severance agreement between Mr. Puthukarai and the Company, as
      described more fully under the caption "Employment Agreements and
      Consulting Agreements" below. The Company deducted from the payment the
      amount due to the Company, plus accrued interest, by Mr. Puthukarai
      pursuant to the advance of $81,519 by the Company to Mr. Puthukarai in
      December 1998.

(9)   Does  not  include  $174,519  paid  by  the  Company  to Mr.  Fowler  in
      accordance  with a  severance  agreement  between  Mr.  Fowler  and  the
      Company. See "Employment Agreements and Consulting Agreements" below.

(10)  Does  not  include  $165,000  paid  by the  Company  to Mr.  Crowley  in
      accordance  with a  severance  agreement  between  Mr.  Crowley  and the
      Company.  See "Employment Agreements and Consulting Agreements" below.

(11)  Does not include  $51,667 paid to Mr.  Puthukarai  for a bonus earned in
      1998.

(12)  Net of $20,000 used for the payment of taxes.


                              Option Grants in 2001

      The following table sets forth information  regarding the grant of options
to purchase the Company's  Common Stock to each of the Named Executive  Officers
during the fiscal year ended  December  31,  2001.  Potential  realizable  value
assumes  that  the  Common  Stock  appreciates  at  the  indicated  annual  rate
(compounded  annually)  from the grant date until the  expiration  of the option
term and is calculated  based on the requirements of the Securities and Exchange
Commission. Potential realizable value does not represent the Company's estimate
of future stock price growth.

<TABLE>
<CAPTION>

                                        Individual Grants
                           ----------------------------------------------
                                                                              Potential Realizable Value at
                                                                                Assumed Annual Rates of
                                          Percentage of                       Stock Price Appreciation for
                             Number of       Total                                   Option Term(1)
                            Securities     Options/SARs                        -----------------------------
                            Underlying     Granted to    Exercise of
                            Options/SARs   Employees in   Base Price   Expiration
      Name                    Granted       Fiscal 2001     ($/Sh)        Date         5%($)     10%($)
       (a)                      (b)            (c)           (c)          (e)           (f)        (g)
--------------------        ------------   ------------ ------------   ----------    -------    --------

<S>                          <C>              <C>        <C>            <C>         <C>         <C>
James A. Mitarotonda         184,756(2)       0.00%      $ 1.8523(5)    1/12/06      $17,111    $34,222

Seymour Holtzman             184,756(3)       0.00%      $ 1.8523(6)    1/12/06      $17,111    $34,222

Devarajan Puthukarai               0(4)       --              --          --           --          --
</TABLE>

(1)   Potential  Realizable  Value assumes that the Common Stock  appreciates at
      the indicated annual rate (compounded  annually) from the grant date until
      the  expiration  of  the  option  term  and  is  calculated  based  on the
      requirements  promulgated  by  the  Securities  and  Exchange  Commission.
      Potential  Realizable  Value does not represent the Company's  estimate of
      future stock price growth.

(2)   As of January 12, 2001, the Company issued a stock  appreciation right for
      75,000 shares to James Mitarotonda pursuant to the stockholder  agreement.
      The stock appreciation right provides that it may be exercised for cash in
      an amount equal to the excess value,  if any, by which the market value of
      the shares on the date of exercise  exceeds $4.563,  as adjusted from time
      to time. See "Description of Stockholder Agreement" below.

                                       6
<PAGE>

(3)   As of January 12, 2001, the Company issued a stock  appreciation right for
      75,000 shares to Seymour Holtzman  pursuant to the stockholder  agreement.
      The stock appreciation right provides that it may be exercised for cash in
      an amount equal to the excess value,  if any, by which the market value of
      the shares on the date of exercise  exceeds $4.563,  as adjusted from time
      to time. See "Description of Stockholder Agreement" below.

(4)   Does not  include  10,000  options to be  delivered  by the Company to Mr.
      Puthukarai for services provided in his role as director.  See "Committees
      of the Board of Directors and Compensation" above.

(5)   In accordance with terms of the Stock Appreciation  Rights Agreement,  the
      original stock  appreciation  rights exercise price of $4.563 was adjusted
      to  reflect  the  cash  distribution  of  $3.00  per  share  paid  to  all
      stockholders  of record on March 1, 2001. See  "Description of Stockholder
      Agreement" below.

(6)   In accordance with terms of the Stock Appreciation  Rights Agreement,  the
      original stock  appreciation  rights exercise price of $4.563 was adjusted
      to  reflect  the  cash  distribution  of  $3.00  per  share  paid  to  all
      stockholders  of record on March 1, 2001. See  "Description of Stockholder
      Agreement" below.




                                       7
<PAGE>

              Aggregate Option Exercises and Year End Option Values

      The following table sets forth information  regarding the number and value
of securities underlying options held by each of the Named Executive Officers at
the end of the fiscal year ended December 31, 2001. No options were exercised by
any of the Named  Executive  Officers  during the fiscal year ended December 31,
2001.

<TABLE>
<CAPTION>

                          Number of Securities Underlying    Value of Unexercised "In-the-
                               Unexercised Options at              Money" Options at
                                  December 31, 2001               December 31, 2001(1)
                          -------------------------------    -----------------------------
       Name               Exercisable     Unexercisable      Exercisable    Unexercisable
 ----------------------   -----------     -------------      -----------    -------------

<S>                         <C>              <C>               <C>               <C>
Devarajan S. Puthukarai      63,756            --                --               --
</TABLE>

------------------------------------------------------------------------------

(1)   Value for  "in-the-money"  options  represents the positive spread between
      the  exercise  price of  outstanding  options and the fair market value of
      $1.90 per share on December 31, 2001.

In 2001, 258,713 options with a weighted  average exercise price of $39.35 were
canceled or expired.

             SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section  16(a) of the  Securities  Exchange  Act of 1934,  as amended (the
"Exchange Act") requires the Company's  officers and directors,  and persons who
own more than 10% of the Company's Common Stock to file reports of ownership and
changes in  ownership of the  Company's  Common  Stock with the  Securities  and
Exchange  Commission and Nasdaq.  Based solely on a review of the copies of such
reports and written  representations  from the  reporting  persons that no other
reports were  required,  the Company  believes that during the fiscal year ended
December  31,  2001,  its  executive  officers,  directors  and greater than 10%
stockholders  filed on a timely basis all reports due under Section 16(a) of the
Exchange Act, except that Mr. Choper  belatedly filed in April 2002 a Form 3 due
in 2001.

Employment Agreements and Consulting Agreements

      Prior to his  resignation on January 18, 2001, the Company was party to an
employment  agreement with Mr.  Puthukarai with an initial term through December
7, 2002.  Under the  agreement  Mr.  Puthukarai  was to receive a base salary of
$250,000 per annum and was eligible for payment of bonuses and stock  options as
determined  by the  Compensation  Committee  of the Board of  Directors,  with a
guaranteed  minimum  annual bonus of $100,000.  Upon  termination by the Company
without cause,  or  termination by Mr.  Puthukarai  upon  non-compliance  by the
Company with a material  provision of the  employment  agreement,  the agreement
provided  for payment of all accrued  salary,  benefits  and bonuses  plus a sum
equal to the salary,  benefits and bonuses that Mr.  Puthukarai  would have been
received if the initial or any renewal term had been  completed,  discounted  by
three percent. The agreement was automatically renewable on a year-to-year basis
following the expiration of the initial term and any renewal term unless written
notice of non-renewal was given by either party 90 days before expiration of the
term. The agreement  also provided that if the Company  decided not to renew the
agreement,  Mr.  Puthukarai  was  entitled to a severance  payment  equal to one
year's salary and benefits.  The agreement  also  restricted  the ability of Mr.
Puthukarai  to solicit  customers or call upon  employees of the Company for one
year after the expiration of the term of each of their agreements. The agreement
further  restricted  Mr.  Puthukarai's  ownership  in excess of 5% of the common
stock of any U.S.  publicly  traded  company  that is engaged  in the  Company's
business.

      In January 2001, the Company  entered into a severance  agreement with Mr.
Puthukarai,  in which Mr.  Puthukarai  and the Company  agreed to terminate  his
employment  agreement with the Company  effective  January 18, 2001. The Company
agreed to pay Mr. Puthukarai, in a lump sum form: (i) all of his accrued salary,
bonuses  and accrued  benefits;  (ii) a sum equal to the  aggregate  of the full
amount,  discounted by three  percent  (3%), of the salary which Mr.  Puthukarai
would have received through December 7, 2002, at the rate of $250,000 per annum;
(iii) the annual  bonuses which Mr.  Puthukarai  would have received  during the
remainder of his  employment  agreement,  at the rate of the minimum  guaranteed
bonus of $100,000; and (iv) the equivalent of two years of life

                                       8
<PAGE>

insurance premiums  ("grossed-up" to account for federal and state income taxes)
or $72,250.  The Company also agreed to provide medical and health insurance for
Mr.  Puthukarai  through  December  7,  2002,  on a basis  consistent  with past
practices.  The Company deducted from the payment the amount due to the Company,
plus accrued interest,  by Mr. Puthukarai  pursuant to the advance of $81,519 by
the Company to Mr. Puthukarai in December 1998.

      The Company  entered into a severance  agreement  with Robert P. Bernardi,
the  Company's  Former  Co-Chief  Executive  Officer and  Chairman of the Board,
pursuant  to  which  Mr.  Bernardi  and the  Company  agreed  to  terminate  his
employment agreement with the Company effective September 1, 2000. The agreement
provided for,  among other things,  the lump sum payment to Mr.  Bernardi of (i)
all of his accrued salary through September 1, 2000; and (ii) a sum equal to the
full amount,  discounted by 3%, of the salary Mr.  Bernardi  would have received
through  December 7, 2002, at the rate of $175,000 per annum.  In addition,  the
terms  of  the  severance   agreement  continue  in  force  the  indemnification
protections  afforded by the Company's Charter and Bylaws as they pertain to Mr.
Bernardi  for his actions on behalf of the Company in his capacity as an officer
and/or director or otherwise related to his duties for the Company. Mr. Bernardi
also agreed to cooperate with the Company in connection with any claims or suits
that have been or may be filed  against any  officers  and/or  directors  of the
Company related to their performance or conduct on behalf of the Company.

      On January 5, 2001,  the Company  entered into a severance  agreement with
William Crowley  pursuant to which Mr. Crowley  received a severance  payment of
$165,000.

      Mr. Fowler  entered into an  employment  agreement on January 5, 2001 that
terminated on the shorter of (i) one year, (ii) the final distribution under the
Company's  plan of  liquidation,  as proposed by the Board of  Directors as then
constituted, or (iii) the retention of a third party to coordinate a liquidation
of the Company. This agreement required that Mr. Fowler commit substantially all
of his time and effort to winding  down the  affairs of the  Company in exchange
for a salary of $165,000  per annum.  Upon  termination  by the Company  without
cause or for death or incapacity,  or termination by Mr. Fowler for good reason,
the employment  agreement  provided for payment of all accrued salary,  benefits
and  bonuses  plus a sum equal to  $160,050.  On January 11,  2001,  the Company
released Mr.  Fowler from his  employment  contract and in  accordance  with his
employment contract issued a payment of $160,050, plus accrued benefits.

      Under a  non-exclusive  consulting  agreement  between the Company and IHS
Corporation,  Mr. Steinberg was required to provide  consulting  services to the
Company for not less than fifteen days in any given month.  Under the  agreement
Mr.  Steinberg  was  obligated  to  seek to  obtain,  on the  Company's  behalf,
additional license agreements and content relationships with record labels in an
effort to expand the Company's music library.  For his services,  Mr.  Steinberg
was paid a minimum  monthly  payment of $9,000.  In January  2001,  the  Company
entered into an agreement  with IHS  Corporation  to  terminate  the  consulting
agreement. The termination agreement provided for a lump sum payment paid to IHS
Corporation in the amount of $108,000.

      Effective July 1, 2001,  Barington  Capital Group, L.P. has made available
to the  Company  the  services  of a  Barington  employee  to serve as the Chief
Financial Officer and Secretary of the Company,  and began providing the Company
with the assistance of certain other  Barington  employees and the use of office
space and administrative services provided by Barington. In consideration of the
foregoing,  the Company pays  Barington a $5,000  monthly fee. In addition,  the
Company pays $5,000 per month to James Mitarotonda for services performed in his
capacity as President  and Chief  Executive  Officer.  Lastly,  the Company pays
Jewelcor  Management,  Inc.  $5,000 per month for services  performed by Seymour
Holtzman, the Chairman and Chief Executive Officer of Jewelcor Management,  Inc.
in his capacity as Chairman of the Company.

Indemnification of Directors and Officers

      The Company's  Amended and Restated  Certificate of Incorporation  Charter
and Amended  Bylaws  provide that it shall  indemnify  all of its  directors and
officers to the full extent permitted by the Delaware  General  Corporation Law.
Under these  provisions,  any director or officer who, in his or her capacity as
such, is made or threatened to be made a party to any suit or proceeding, may be
indemnified if the Board  determines the director or officer acted in good faith
and in a manner the  director  reasonably  believed to be in, or not opposed to,
the best interests of the Company. The Charter, Amended Bylaws, and Delaware law
further  provide that  indemnification  is

                                       9
<PAGE>

not  exclusive  of any  other  rights to which  directors  and  officers  may be
entitled  under  our  Charter,  Amended  Bylaws,  any  agreement,  any  vote  of
stockholders or disinterested directors, or otherwise.

      The Company has the power to purchase and maintain  insurance on behalf of
any person who is or was a director, officer, employee, or agent of the Company,
or is or was  serving at the  request of the  Company  as a  director,  officer,
employee or agent of another corporation,  partnership, joint venture, trust, or
other  enterprise,  against any  expense,  liability,  or loss  incurred by that
person in the capacity he served for the Company or arising out of his status as
such,  whether or not the Company would have the power to indemnify  that person
against  similar  liability  under  Delaware  law.  The Company has director and
officer  insurance  coverage.  Our  directors  and officers are insured  against
liability of up to $10,000,000 in the aggregate each policy year.

Report of the Compensation Committee of the Board of Directors.

      Since the dissolution of the Company's  Compensation  Committee on January
23, 2001 the Board of Directors has undertaken to review the  performance of the
Company's  management  and  recommend  and approve the  compensation  of and the
issuance  of stock  options  to  executive  officers  and  employees  under  the
Company's stock option plan. In addition,  the Board reviews compensation levels
of other employees and reviews other compensation-related issues.

      General  Compensation  Policy.  The fundamental  policy of the Board is to
provide  the  Company's   executive   officers  with  competitive   compensation
opportunities  based upon their  contribution  to the Company's  development and
financial success and their personal  performance.  The compensation package for
each executive  officer is comprised of three  elements:  (i) base salary,  (ii)
bonus and (iii) equity incentive awards.

      Base  Salary.  The  Board  strives  to  offer  salaries  to its  executive
officers,  which are competitive  with salaries  offered by companies of similar
size and capitalization in the Company's industry. Base salaries are reviewed on
an annual  basis and are  subject  to  adjustment  based  upon the  individual's
contribution  to the Company and changes in salary levels  offered by comparable
companies.  Executive  officers'  salaries are determined by the Chief Executive
Officer, based on information from various sources, and approved by the Board of
Directors.

      Bonuses.  The  amount of awards  granted  to the  executive  officers  are
contingent upon the Company achieving  certain  performance goals established by
the Board of Directors.  For executive  officers,  awards are also contingent on
the achievement of individual performance objectives. Target and minimum amounts
of bonuses for each executive officer are set annually by the Board of Directors
and are specifically  weighted for identified financial,  management,  strategic
and operational goals.

      Equity  Incentives.  The Board of Directors  believes that employee equity
ownership is highly motivating, provides a major incentive to employees to build
stockholder  value and  serves  to align the  interests  of  employees  with the
interests of the Company's  stockholders.  In  determining  the amount of equity
compensation  to be awarded to executive  officers in any fiscal year, the Board
considers  the  position of the  officer,  the current  stock  ownership  of the
officer,  the number of shares  which  continue  to be subject to vesting  under
outstanding  options and the expected future  contribution of the officer to the
Company's  performance,  giving primary weight to the officer's position and his
expected future contributions.  In addition, the Board of Directors compares the
stock ownership and options held by each officer with the other officer's equity
positions and each officer's experience and value to the Company.

      CEO  Compensation.  In  accordance  with  his  employment  agreement,  the
Company's former Chief Executive Officer, Mr. Puthukarai, received a base salary
of  $250,000  for the  fiscal  year  ending  December  31,  2001  and a bonus of
$100,000.  In January 2001, the Company entered into a severance  agreement with
Mr. Puthukarai,  in which Mr. Puthukarai and the Company agreed to terminate his
employment   agreement  with  the  Company   effective  January  18,  2001.  See
"Employment Agreements and Consulting Agreements" above. From April 2001 through
June 2001, James A. Mitarotonda  received $16,923 for services  performed in his
capacity as President and Chief Executive Officer.  Commencing July 1, 2001, Mr.
Mitarotonda  received $5,000 per month for services  rendered in his capacity as
President and Chief Executive Officer. See "Executive Compensation" above.

                                       10
<PAGE>

James Mitarotonda
Seymour Holtzman
Jesse Choper
Devarajan S. Puthukarai
William W. Scranton, III
Irwin H. Steinberg
Joseph Wright, Jr.

      This Report on Compensation shall not be deemed  incorporated by reference
by any general  statement  incorporating  by reference  this  amendment into any
filing under the  Securities  Act of 1933, as amended,  or under the  Securities
Exchange Act of 1934, as amended,  except to the extent the Company specifically
incorporates  this report by reference,  and shall not otherwise be deemed filed
under such Acts.

COMPANY STOCK PRICE PERFORMANCE

      The graph below compares the cumulative  total  stockholder  return on the
Company's  Common  Stock,  the  Wilshire  Small  Capital  Index  and the S&P 500
Industrial  Index.  Cumulative total  stockholder  return represents share value
appreciation  through December 31, 2001,  assuming the investment of $100 in the
Common Stock of the Company at the initial  public  offering on July 7, 1999 and
in  each  of the  other  indexes  on the  same  date,  and  reinvestment  to all
dividends.  The  comparisons in the graph below are based on historical data and
are not  intended to forecast  the  possible  future  performance  of our common
stock.


                     (Stock Performance Graph Appears Here]


                                       11
<PAGE>


              The above graph was plotted using the following data:

                                                       Cumulative Total Return
                                                        7/7/99      12/31/2001
MUSICMAKER.COM, INC                                      100.00        (79.53%)
WILSHIRE SMALL CAPITAL INDEX                             100.00         13.24%
S & P INDUSTRIAL INDEX                                   100.00        (17.75%)


------------------------------------------------------------------------------




                                       12
<PAGE>

Item 12.          Security Ownership of Certain Beneficial Owners and Management

      The following table sets forth information  regarding shares of our Common
Stock  beneficially  owned  as  of  April  26,  2002.  Beneficial  ownership  is
calculated in accordance with Rule 13d-3(d) under the Securities Exchange Act of
1934.  Shares of Common Stock subject to options and warrants that are currently
exercisable  or are  exercisable  within 60 days of April 26,  2002,  are deemed
outstanding  with respect to the person holding those options but are not deemed
outstanding  for purposes of  computing  the  percentage  ownership of any other
person.  Unless  otherwise  indicated,  each  person  possesses  sole voting and
investment  power with respect to the shares  identified as beneficially  owned.
Except as  otherwise  indicated  in the table,  the address of the  stockholders
listed below is that of the Company's principal executive office.  Directors not
included in the table below do not hold Company securities.

--------------------------------------------------------------------------------
                                                      Shares Beneficially
                                                          Owned as of
                                                         April 26, 2002
--------------------------------------------------------------------------------
Name and Address of Beneficial Owner               Number            Percent
--------------------------------------------------------------------------------
 Principal Stockholders (holding more than 5%)
--------------------------------------------------------------------------------
BCG Strategic Investors LLC                      1,271,466     (1)    34.6%
c/o Barington Capital Group, LP
888 Seventh Avenue, 17th Floor
New York, NY  10019
--------------------------------------------------------------------------------
Rho Management Trust I                             281,432     (2)     7.7%
152 West 57th Street
Floor 23
New York, NY  10019-3310
--------------------------------------------------------------------------------
       Officers and Directors
--------------------------------------------------------------------------------
Jesse Choper                                          0        (3)      *
--------------------------------------------------------------------------------
Devarajan S. Puthukarai                            122,578     (4)     3.3%
--------------------------------------------------------------------------------
Irwin H. Steinberg                                  34,042     (5)      *
--------------------------------------------------------------------------------
William W. Scranton, III                              0        (6)      *
--------------------------------------------------------------------------------
Joseph Wright, Jr.                                    0        (7)      *
--------------------------------------------------------------------------------
All  executive  officers and  directors as a       156,620     (8)     4.3%
group (8 persons)
--------------------------------------------------------------------------------
* Less than 1%

(1)   Includes  18,500 shares held by Barington  Capital Group L.P., a member of
      BCG Strategic  Investors LLC, whose general  partner is LNA Capital Corp.,
      and of which the Chairman, President and CEO is James Mitarotonda;  26,200
      shares  acquired by dot com  Investment  Corp.,  a member of BCG Strategic
      Investors,  LLC, and of which the  President  and sole director is Seymour
      Holtzman;  and 16,900 shares held by Barington  Companies Equity Partners,
      L.P.,  whose general  partner is Barington  Companies  Investors,  LLC, of
      which the managing member is James Mitarotonda.

(2)   Includes  78,790 shares of Common Stock issuable upon exercise of Series B
      warrants  and 43,828  shares of Common  Stock  issuable  upon  exercise of
      Series C  warrants.  Rho  Management  Partners  L.P.,  a Delaware  limited
      partnership,  may be deemed the beneficial  owner of shares  registered in
      the  name  of  Rho  Management  Trust  I,  under  an  investment  advisory
      relationship by which Rho Management  Partners L.P.  exercises sole voting
      and investment control over Rho Management Trust I's shares and warrants.

(3)   Does not  include  (i)  7,500  shares of Common  Stock  issuable  upon the
      exercise of 7,500 options and (ii) shares of restricted  Common Stock with
      a fair market value of $3,500,  both to be delivered by the Company to Mr.
      Choper for services provided in his role as director.


                                       13
<PAGE>

(4)   Consists of 22,997  shares of Common Stock  issuable  upon the exercise of
      warrants with exercise  prices ranging from $16.50 to $19.80 per share and
      63,756 shares of Common Stock issuable upon the exercise of vested options
      and 35,825 shares of restricted  Common Stock. Does not include (i) 10,000
      shares of Common Stock  issuable  upon the exercise of 10,000  options and
      (ii) shares of restricted Common Stock with a fair market value of $6,500,
      both  to be  delivered  by the  Company  to Mr.  Puthukarai  for  services
      provided in his role as director.

(5)   Includes of 5,000  shares of Common  Stock  issuable  upon the exercise of
      vested  options  with an  exercise  price of $19.80  per share and  16,940
      shares of Common  Stock  issuable  upon the  exercise of warrants  with an
      exercise price of $16.50 per share.  Does not include (i) 10,000 shares of
      Common Stock  issuable upon the exercise of 10,000 options and (ii) shares
      of restricted Common Stock with a fair market value of $7,000,  both to be
      delivered by the Company to Mr.  Steinberg  for  services  provided in his
      role as  director.  Does not  include  and 6,048  shares  of Common  Stock
      issuable  upon the exercise of warrants  with an exercise  price of $19.80
      per share held by Mr. Steinberg's spouse and three children.

(6)   Does not  include  shares of  restricted  Common  Stock with a fair market
      value of  $7,000  to be  delivered  by the  Company  to Mr.  Scranton  for
      services provided in his role as director.

(7)   Does not  include  (i)  7,500  shares of Common  Stock  issuable  upon the
      exercise of 7,500 options and (ii) shares of restricted  Common Stock with
      a fair market value of $7,000,  both to be delivered by the Company to Mr.
      Wright for services provided in his role as director.

(8)   Includes  22,997  shares of Common  Stock  issuable  upon the  exercise of
      outstanding  Common  Stock  warrants  and  68,756  shares of Common  Stock
      issuable  upon  the  exercise  of  vested  options.  Does not  reflect  as
      beneficially owned by the Company's President and Chief Executive Officer,
      James Mitarotonda,  shares held by BCG Strategic  Investors LLC, Barington
      Capital Group L.P., or Barington Equity Partners, L.P.; Mr. Mitarotonda is
      a managing member of BCG Strategic Investors LLC, the Chairman,  President
      and CEO of LNA Capital  Corp.,  the general  partner of Barington  Capital
      Group L.P., and the managing member of Barington Company  Investors,  LLC,
      the general partner of Barington Companies Equity Partners, L.P. Also does
      not reflect as  beneficially  owned by the Chairman of the Company's Board
      of Directors, Seymour Holtzman, shares held by BCG Strategic Investors LLC
      or dot com Investment Corp.; Mr. Holtzman, along with Mr. Mitarotonda,  is
      a managing  member of BCG  Strategic  Investors  LLC and the President and
      sole director of dot com  Investment  Corp. See also Note 1 to this table,
      above.  Does not include (i) 35,000  shares of Common Stock  issuable upon
      the exercise of vested options and (ii) shares of restricted  Common Stock
      with a fair market value of $31,000, to be delivered by the Company to Mr.
      Choper, Mr. Puthukarai,  Mr. Steinberg,  Mr. Scranton and Mr. Wright, both
      to be  delivered  by the Company for  services  provided in their roles as
      directors.

Description of Stockholder Agreement

      On January 12, 2001, the Company entered into a stockholder agreement with
BCG Strategic Investors, LLC, Barington Capital Group, L.P., Barington Companies
Equity Partners, L.P. and dot com Investment Corporation  (collectively known as
the "BCG Group").  The Company  agreed to appoint three nominees of BCG Group as
directors of the Company.  Mr.  Mitarotonda was appointed as a Class A director,
Joseph Wright,  Jr. as a Class B director and Seymour Holtzman,  Chairman of the
Board  and a  Class  C  director.  As of  January  12,  2001,  pursuant  to such
stockholder  agreement,  the Company issued stock appreciation rights for 75,000
shares to each of James Mitarotonda and Seymour Holtzman. The stock appreciation
right  provides  that it may be  exercised  for cash in an  amount  equal to the
excess  value,  if any,  by which the market  value of the shares on the date of
exercise exceeds $4.563, as adjusted from time to time. In accordance with Stock
Appreciation  Rights  Agreement,  the exercise  price of the stock  appreciation
rights was adjusted to reflect the cash  distribution of $3.00 per share paid to
all  stockholders  of  record  on March  1,  2001.  After  the  adjustment,  Mr.
Mitarotonda and Mr. Holtzman each own 184,756 stock appreciation  rights with an
exercise price of $1.8523. No compensation  expense has been recorded during the
year ended  December 31, 2001, as the  Company's  stock price was lower than the
stock  appreciation  right's  exercise  price.  In  addition,  pursuant  to such
stockholder  agreement,  Mr.  Mitarotonda  was  appointed  President  and  Chief
Executive  Officer  of the  Company  on  January  18,  2001.  At the  end of the
standstill  period  under such  stockholder  agreement,  on May 12,  2001, a BCG
Strategic  Investors,  LLC  nominee,  Jesse  Choper,  was  added to the Board of
Directors.


                                       14
<PAGE>

Item 13.    Certain Relationships and Related Transactions.

      On June 8, 1999, the Company executed a license agreement with Virgin
Holdings, Inc., an affiliate of EMI Recorded Music ("EMI"). The agreement
provides for royalty payments in connection with sales of custom CDs including
any music content provided under license by EMI. In exchange for our rights
under the license agreement, the Company issued 1,517,086 shares of our Common
Stock to Virgin Holdings. Virgin Holdings received approximately $40,000,000
from the sale of 307,219 shares of its stock by participating as a selling
stockholder in our initial public offering.

      On December 6, 2000 EMI sold its holdings in the Company, which consisted
of 1,209,866 share, or 36.5% of outstanding common stock, to BCG Strategic
Investors, LLC. In connection with EMI's sale of common stock, two members of
the Board of Directors, Mr. Jay A. Samit and Mr. Jonathan A.B. Smith, both of
whom were employees with EMI, resigned from their positions as directors of the
Company's Board.

      The Company entered into a severance agreement with Robert P. Bernardi,
the former Co-Chief Executive Officer and Chairman of the Board of the Company,
in which Mr. Bernardi and the Company agreed to terminate his employment
agreement with the Company effective September 1, 2000. The agreement provided
for, among other things, the lump sum payment to Mr. Bernardi of (i) all of his
accrued salary through September 1, 2000; and (ii) a sum equal to the full
amount, discounted by 3% of the salary Mr. Bernardi would have received through
December 7, 2002, at the rate of $175,000 per annum. In addition, the terms of
the severance agreement continue in force the indemnification protections
afforded by the Company's charter and bylaws as they pertain to Mr. Bernardi for
his actions on behalf of the Company in his capacity as an officer and/or
director or otherwise related to his duties for the Company. Mr. Bernardi also
agreed to cooperate with the Company in connection with any claims or suits that
have been or may be filed against any officers and/or directors of the Company
related to their performance or conduct on behalf of the Company.

      On January 5, 2001, the Company entered into a severance agreement with
William Crowley pursuant to which Mr. Crowley received a severance payment of
$165,000.

      On January 5, 2001, Mr. Fowler entered into an employment agreement that
provided for termination on the shorter of (i) one year, (ii) the final
distribution under the Company's plan of liquidation, as proposed to be
submitted to the Company's stockholders by the Board of Directors as then
constituted, or (iii) the retention of a third party to coordinate a liquidation
of the Company. This agreement required that Mr. Fowler commit substantially all
of his time and effort to winding down the affairs of the Company in exchange
for a salary of $165,000 per annum. Upon termination by the Company without
cause or for death or incapacity, or termination by Mr. Fowler for good reason,
the employment agreement provided for payment of all accrued salary, benefits
and bonuses plus a sum equal to $160,050. On January 11, 2001, the Company
released Mr. Fowler from his contract and in accordance with his employment
contract issued a payment of $160,050, plus accrued benefits.

      In January 2001, the Company entered into a severance agreement with Mr.
Puthukarai, in which Mr. Puthukarai and the Company agreed to terminate his
employment agreement with the Company effective January 18, 2001. The Company
agreed to pay Mr. Puthukarai, in a lump sum form,: (i) all of his accrued
salary, bonuses and accrued benefits; (ii) a sum equal to the aggregate of the
full amount, discounted by three percent (3%), of the salary which Mr.
Puthukarai would have received through December 7, 2002, at the rate of $250,000
per annum; (iii) the annual bonuses which Mr. Puthukarai would have received
during the remainder of his employment agreement, at the rate of the minimum
guaranteed bonus of $100,000; and (iv) the equivalent of two years of life
insurance premiums ("grossed-up" to account for federal and state income taxes)
or $72,250. The Company also agreed to provide medical and health insurance for
Mr. Puthukarai through December 7, 2002, on a basis consistent with past
practices. The Company deducted from the payment the amount due to the Company,
plus accrued interest, by Mr. Puthukarai pursuant to the advance of $81,519 by
the Company to Mr. Puthukarai in December 1998.

      Under a non-exclusive consulting agreement between the Company and IHS
Corporation, Mr. Steinberg was required to provide consulting services to the
Company for not less than fifteen days in any given month. Under the agreement
Mr. Steinberg was obligated to seek to obtain, on the Company's behalf,
additional license agreements and content relationships with record labels in an
effort to expand the Company's music library. For his

                                       15
<PAGE>

services, Mr. Steinberg was paid a minimum monthly payment of $9,000. In January
2001, the Company  entered into an agreement  with IHS  Corporation to terminate
the existing consulting agreement. The termination agreement provided for a lump
sum payment paid to IHS Corporation in the amount of $108,000.

      On January 16, 2001, the Board of Directors  appointed three  individuals,
Seymour  Holtzman,  James  Mitarotonda and Joseph Wright,  Jr., to fill existing
vacancies,  bringing the total number of directors to seven. Such persons, along
with certain  other  persons,  had been  nominated as directors by BCG Strategic
Investors,  LLC pursuant to a consent  solicitation  initiated in January  2001,
which had sought,  among other things,  stockholder approval to elect a majority
of the  Company's  Board of  Directors.  On  January  12,  2001,  BCG  Strategic
Investors,  LLC and its affiliates entered into an agreement with the Company to
withdraw such consent  solicitation.  Following the January 18, 2001 resignation
of the Company's then Chairman,  CEO, and President,  Devarajan Puthukarai,  Mr.
Holtzman  was  named  Chairman  of the  Company's  Board of  Directors,  and Mr.
Mitarotonda was named President and Chief Executive  Officer.  At the end of the
standstill  period  under such  stockholder  agreement,  on May 12,  2001, a BCG
Strategic  Investors,  LLC  nominee,  Jesse  Choper,  was  added to the Board of
Directors. See "Description of Stockholder Agreement" above.

      Effective July 1, 2001,  Barington  Capital Group, L.P. has made available
to the  Company  the  services  of a  Barington  employee  to serve as the Chief
Financial Officer and Secretary of the Company,  and began providing the Company
with the assistance of certain other  Barington  employees and the use of office
space and administrative services provided by Barington. In consideration of the
foregoing,  the Company pays  Barington a $5,000  monthly fee. In addition,  the
Company pays $5,000 per month to each Mr.  Mitarotonda for services performed in
his capacity as President and Chief Executive Officer.  Lastly, the Company pays
Jewelcor  Management,  Inc.  $5,000  per month  for  services  performed  by Mr.
Holtzman, the Chairman and Chief Executive Officer of Jewelcor Management,  Inc.
in his capacity as Chairman of the Company.




                                       16

<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the  registrant  has duly  caused this  amendment  to Form 10-K be signed on its
behalf by the undersigned, thereunto duly authorized.


                                    musicmaker.com, Inc.

                                    By: /s/ James A. Mitarotonda
                                        ------------------------------
                                    James A. Mitarotonda
                                    President and Chief Executive Officer

Dated:  April  30 , 2002




                                       17