----

----

**SECURITIES        AND EXCHANGE COMMISSION**

**Washington,        D.C. 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                  September 30,                  2005  |
|--------|-------------------------------------------------------------------------------------------|

| o | Transition                    report under Section 13 or 15(d) of the Exchange                    Act |
|---|-------------------------------------------------------------------------------------------------------|

|   | For                    the transition period from  ________To_________ |
|--------|-----------------------------------------------------------------------------|

|                                                                                                    | Commission file number | 0-26192 |
|---------------------------------------------------------------------------------------------------------|------------------------|---------|
|                                                                                                    |                   |    |
| **MakeMusic!                    Inc.**                                                                  |
| (Exact                    Name of Small Business Issuer as                    Specified in its Charter) |

| Minnesota                                                                                                                           |   | 41-1716250                                                |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|
| (State                      or Other Jurisdiction of                       Incorporation                      or Organization) |   | (I.R.S.                      Employer Identification No.) |
|                                                                                                                                |   |                                                      |

|                                                                                                                                                    | 7615                      Golden Triangle Drive, Suite                      M              |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                    | Eden                      Prairie, Minnesota                      55344-3848               |   |
|                                                                                                                                                    | (Address                      of Principal Executive                      Offices)         |   |
|                                                                                                                                                    |                                                                                       |   |
|                                                                                                                                                    | (952)                      937-9611                                                        |   |
|                                                                                                                                                    | (Issuer's                      Telephone Number, Including                      Area Code) |   |
|                                                                                                                                                    |                                                                                       |   |
|                                                                                                                                                    |
|  (Former                      Name, Former Address and Former                      Fiscal Year, if                      Changed Since Last Report) |
|                                                                                                                                                    |                                                                                       |   |

----

|                    | **MakeMusic!                  Inc.**                                                              |                          |
|-------------------------|---------------------------------------------------------------------------------------------------|-------------------------------|
|                    |                                                                                              |                          |
|                    | **INDEX**                                                                                         |                          |
|                    |                                                                                              |                          |
|                    | **PART                  I. FINANCIAL INFORMATION**                                                | **Page                  No.** |
|                    |                                                                                              |                          |
| Item                  1 | Condensed                  Consolidated Financial                  Statements                     | 3                             |
|                    |                                                                                                   |                          |
|                    | Condensed                  Consolidated Balance Sheets                                            |                          |
|                    | September                  30, 2005 and December 31,                  2004                        | 3                             |
|                    |                                                                                              |                          |
|                    | Condensed                  Consolidated Statement of                  Operations                  |                          |
|                    | Three                  and nine-month periods ended September 30, 2005 and                  2004  | 4                             |
|                    |                                                                                              |                          |
|                    | Condensed                  Consolidated Statement of Cash                  Flows                  |                          |
|                    | Three                  and nine-month periods ended September 30, 2005 and                  2004  | 5                             |
|                    |                                                                                              |                          |
|                    | Notes                  to Condensed Consolidated Financial                  Statements            | 6                             |
|                    |                                                                                              |                          |
| Item                  2 | Management’s                  Discussion and Analysis or Plan of                  Operation | 7                             |
|                    |                                                                                              |                          |
| Item                  3 | Controls                  and Procedures                                                          | 12                            |
|                    |                                                                                              |                          |
|                    | **PART                  II. OTHER INFORMATION**                                                   |                          |
|                    |                                                                                              |                          |
| Item                  1 | Legal                  Proceedings                                                                | 13                            |
|                    |                                                                                              |                          |
| Item                  2 | Unregistered                  Sales of Equity Securities and Use of                  Proceeds     | 13                            |
|                    |                                                                                              |                          |
| Item                  3 | Defaults                  Upon Senior Securities                                                  | 13                            |
|                    |                                                                                              |                          |
| Item                  4 | Submission                  of Matters to a Vote of Security                  Holders             | 14                            |
|                    |                                                                                              |                          |
| Item                  5 | Other                  Information                                                                | 14                            |
|                    |                                                                                              |                          |
| Item                  6 | Exhibits                                                                                          | 14                            |
|                    | Signatures                                                                                        | 15                            |
|                    | Exhibit                  Index                                                                    | 16                            |

----

**PART        I. FINANCIAL INFORMATION**

**ITEM        1. Condensed Consolidated Financial        Statements**

**MakeMusic!        Inc.**

**Condensed        Consolidated Balance Sheets**

*(In        thousands of U.S. dollars)*

|                                                                               |   | **September                    30,** |        | **December                    31,** |   |
|------------------------------------------------------------------------------------|--------|--------------------------------------|-------------|-------------------------------------|--------|
|                                                                               |   | **2005**                             |        | **2004**                            |   |
| **Assets**                                                                         |   | (unaudited)                          |        |                                |   |
|                                                                               |   |                                 |        |                                |   |   |   |
| Cash                    and cash equivalents                                       |   | **$**                                | **1,734**   |                                | $      | 2,215 |   |
| Accounts                    receivable, net                                        |   |                                 | **1,005**   |                                |   | 830 |   |
| Inventories,                    net of reserves                                    |   |                                 | **617**     |                                |   | 332 |   |
| Prepaid                    expenses and other current assets                       |   |                                 | **203**     |                                |   | 241 |   |
| Total                    current assets                                            |   |                                 | **3,559**   |                                |   | 3,618 |   |
|                                                                               |   |                                 |        |                                |   |   |   |
| Property                    and equipment, net                                     |   |                                 | **333**     |                                |   | 250 |   |
| Goodwill,                    net                                                   |   |                                 | **3,630**   |                                |   | 3,630 |   |
| Capitalized                    software products                                   |   |                                 | **408**     |                                |   | 347 |   |
| Intangible                    assets, net                                          |   |                                 | **47**      |                                |   | 725 |   |
| Other                    non-current assets                                        |   |                                 | **85**      |                                |   | 83 |   |
| **Total                    assets**                                                |   | **$**                                | **8,062**   |                                | $      | 8,653 |   |
|                                                                               |   |                                 |        |                                |   |   |   |
| **Liabilities                    and Shareholders’ Equity**                  |   |                                 |        |                                |   |   |   |
| Current                    portion of long-term debt and capital lease obligations |   | **$**                                | **6**       |                                | $      | 6 |   |
| Accounts                    payable                                                |   |                                 | **239**     |                                |   | 494 |   |
| Accrued                    compensation                                            |   |                                 | **720**     |                                |   | 1,024 |   |
| Accrued                    expenses and other current liabilities                  |   |                                 | **483**     |                                |   | 402 |   |
| Reserve                    for product returns                                     |   |                                 | **333**     |                                |   | 203 |   |
| Deferred                    revenue                                                |   |                                 | **736**     |                                |   | 697 |   |
| Total                    current liabilities                                       |   |                                 | **2,517**   |                                |   | 2,826 |   |
|                                                                               |   |                                 |        |                                |   |   |   |
| Capital                    lease obligations, net of current portion               |   |                                 | **11**      |                                |   | 16 |   |
|                                                                               |   |                                 |        |                                |   |   |   |
| Shareholders’                    Equity:                                     |   |                                 |        |                                |   |   |   |
| Common                    stock                                                    |   |                                 | **35**      |                                |   | 34 |   |
| Additional                    paid-in capital                                      |   |                                 | **61,908**  |                                |   | 61,626 |   |
| Accumulated                    deficit                                             |   |                                 | **(56,409** | **)**                               |   | (55,849 | ) |
| Total                    shareholders’ equity                                |   |                                 | **5,534**   |                                |   | 5,811 |   |
| Total                    liabilities and shareholders’ equity                |   | **$**                                | **8,062**   |                                | $      | 8,653 |   |

----

**MakeMusic!        Inc.**

**Condensed        Consolidated Statements of Operations**

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

|                                                         |   | **Three                  Months**        |          | **Nine                  Months**         |   |
|--------------------------------------------------------------|--------|------------------------------------------|---------------|------------------------------------------|--------|
|                                                         |   | **Ended                  September 30,** |          | **Ended                  September 30,** |   |
|                                                         |   | **2005**                                 |          | 2004                                     |   | **2005** |   | 2004 |   |
| Notation                  revenue                            |   | **$**                                    | **3,399**     |                                     | $      | 2,269 |   | **$** | **7,098** |   | $ | 7,208 |   |
| SmartMusic                  revenue                          |   |                                     | **390**       |                                     |   | 268 |   |   | **1,059** |   |   | 710 |   |
| Other                  revenue                               |   |                                     | **192**       |                                     |   | 125 |   |   | **371** |   |   | 342 |   |
| NET                  REVENUE                                 |   |                                     | **3,981**     |                                     |   | 2,662 |   |   | **8,528** |   |   | 8,260 |   |
|                                                         |   |                                     |          |                                     |   |   |   |   |   |   |   |   |   |
| COST                  OF REVENUES                            |   |                                     | **634**       |                                     |   | 433 |   |   | **1,479** |   |   | 1,457 |   |
|                                                         |   |                                     |          |                                     |   |   |   |   |   |   |   |   |   |
| GROSS                  PROFIT                                |   |                                     | **3,347**     |                                     |   | 2,229 |   |   | **7,049** |   |   | 6,803 |   |
|                                                         |   |                                     |          |                                     |   |   |   |   |   |   |   |   |   |
| OPERATING                  EXPENSES:                         |   |                                     |          |                                     |   |   |   |   |   |   |   |   |   |
| Development                  expenses                        |   |                                     | **746**       |                                     |   | 775 |   |   | **2,471** |   |   | 2,087 |   |
| Selling                  and marketing expenses              |   |                                     | **942**       |                                     |   | 836 |   |   | **2,754** |   |   | 2,651 |   |
| General                  and administrative expenses         |   |                                     | **727**       |                                     |   | 732 |   |   | **2,414** |   |   | 2,365 |   |
|                                                         |   |                                     |          |                                     |   |   |   |   |   |   |   |   |   |
| Total                  operating expenses                    |   |                                     | **2,415**     |                                     |   | 2,343 |   |   | **7,639** |   |   | 7,103 |   |
|                                                         |   |                                     |          |                                     |   |   |   |   |   |   |   |   |   |
| INCOME                  (LOSS) FROM OPERATIONS               |   |                                     | **932**       |                                     |   | (114 | ) |   | **(590** | **)** |   | (300 | ) |
|                                                         |   |                                     |          |                                     |   |   |   |   |   |   |   |   |   |
| Interest                  income net                         |   |                                     | **12**        |                                     |   | 2 |   |   | **15** |   |   | 4 |   |
| Other                  income (expense)                      |   |                                     | **(4**        | **)**                                    |   | 0 |   |   | **16** |   |   | 108 |   |
| Net                  income (loss) before income tax         |   |                                     | **940**       |                                     |   | (112 | ) |   | **(559** | **)** |   | (188 | ) |
|                                                         |   |                                     |          |                                     |   |   |   |   |   |   |   |   |   |
| Income                  tax                                  |   |                                     | **0**         |                                     |   | 0 |   |   | **2** |   |   | 2 |   |
| Net                  income (loss )                          |   | **$**                                    | **940**       |                                     | $      | (112 | ) | **$** | **(561** | **)** | $ | (190 | ) |
|                                                         |   |                                     |          |                                     |   |   |   |   |   |   |   |   |   |
| Income                  (loss) per common share:             |   |                                     |          |                                     |   |   |   |   |   |   |   |   |   |
| Basic                                                        |   |                                     | **0.27**      |                                     |   | (0.03 | ) |   | **(0.16** | **)** |   | (0.06 | ) |
| Diluted                                                      |   |                                     | **0.23**      |                                     |   | (0.03 | ) |   | **(0.16** | **)** |   | (0.06 | ) |
|                                                         |   |                                     |          |                                     |   |   |   |   |   |   |   |   |   |
| Weighted                  average common shares outstanding: |   |                                     |          |                                     |   |   |   |   |   |   |   |   |   |
| Basic                                                        |   |                                     | **3,497,749** |                                     |   | 3,380,762 |   |   | **3,457,132** |   |   | 3,367,894 |   |
| Diluted                                                      |   |                                     | **4,085,181** |                                     |   | 3,380,762 |   |   | **3,457,132** |   |   | 3,367,894 |   |

----

** MakeMusic!        Inc.**

**Condensed        Consolidated Statements of Cash Flows**

*(In        thousands of U.S. dollars)*

|                                                                                                                                                  |   | **Three                  Months** |      | Three                  Months |   | **Nine                  Months** |   | Nine                  Months |      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-----------|-------------------------------|--------|----------------------------------|--------|------------------------------|-----------|
|                                                                                                                                                  |   | **Ended**                         |      | Ended                         |   | **Ended**                        |   | Ended                        |      |
|                                                                                                                                                  |   | **2005**                          |      | 2004                          |   | **2005**                         |   | 2004                         |      |
| **Operating                  activities**                                                                                                             |   |                              |      |                          |   |                             |   |                         |      |
| Net                  income (loss)                                                                                                                    |   | **$**                             | **940**   |                          | $      | (112                             | )      | **$**                        | **(561**  | **)** | $ | (190 | ) |
| Adjustments                  to reconcile net income (loss) to net cash provided by (used in)                  operating                  activities: |   |                              |           |                          |   |                             |   |                         |           |   |   |   |   |
| Amortization                  of intangible assets                                                                                                    |   |                              | **272**   |                          |   | 318                              |   |                         | **813**   |   |   | 990 |   |
| Depreciation                  and amortization of property and equipment                                                                              |   |                              | **39**    |                          |   | 47                               |   |                         | **117**   |   |   | 146 |   |
| Amortization                  of deferred compensation                                                                                                |   |                              |      |                          |   | 35                               |   |                         |      |   |   | 110 |   |
| Issuance                  of stock options and warrants for services                                                                                  |   |                              | **(2**    | **)**                         |   | 2                                |   |                         | **4**     |   |   | 7 |   |
| Changes                  in assets and liabilities:                                                                                                   |   |                              |      |                          |   |                             |   |                         |      |   |   |   |   |
| Accounts                  receivable                                                                                                                  |   |                              | **(422**  | **)**                         |   | 115                              |   |                         | **(175**  | **)** |   | (173 | ) |
| Inventories                                                                                                                                           |   |                              | **(20**   | **)**                         |   | (79                              | )      |                         | **(285**  | **)** |   | (69 | ) |
| Prepaid                  expenses and other current assets                                                                                            |   |                              | **(30**   | **)**                         |   | 0                                |   |                         | **32**    |   |   | 3 |   |
| Accounts                  payable                                                                                                                     |   |                              | **(265**  | **)**                         |   | (24                              | )      |                         | **(254**  | **)** |   | (46 | ) |
| Accrued                  liabilities and product returns                                                                                              |   |                              | **32**    |                          |   | (158                             | )      |                         | **(93**   | **)** |   | (60 | ) |
| Deferred                  revenue                                                                                                                     |   |                              | **(15**   | **)**                         |   | (40                              | )      |                         | **38**    |   |   | (93 | ) |
| Net                  cash provided by (used in) operating activities                                                                                  |   |                              | **529**   |                          |   | 104                              |   |                         | **(364**  | **)** |   | 625 |   |
|                                                                                                                                                  |   |                              |      |                          |   |                             |   |                         |      |   |   |   |   |
| **Net                  cash used in investing activities**                                                                                            |   |                              |      |                          |   |                             |   |                         |      |   |   |   |   |
| Purchases                  of property & equipment                                                                                                |   |                              | **(59**   | **)**                         |   | (44                              | )      |                         | **(201**  | **)** |   | (107 | ) |
| Capitalized                  development and other intangibles                                                                                        |   |                              | **(69**   | **)**                         |   | (30                              | )      |                         | **(191**  | **)** |   | (134 | ) |
| Net                  cash used in investing activities                                                                                                |   |                              | **(128**  | **)**                         |   | (74                              | )      |                         | **(392**  | **)** |   | (241 | ) |
|                                                                                                                                                  |   |                              |      |                          |   |                             |   |                         |      |   |   |   |   |
| **Net                  cash provided by (used in) financing activities**                                                                              |   |                              |      |                          |   |                             |   |                         |      |   |   |   |   |
| Proceeds                  from stock options & warrants exercised                                                                                 |   |                              | **119**   |                          |   | 3                                |   |                         | **279**   |   |   | 15 |   |
| Payments                  on long-term debt and capital leases                                                                                        |   |                              | **(1**    | **)**                         |   | (2                               | )      |                         | **(4**    | **)** |   | (51 | ) |
| Net                  cash provided by (used in) financing activities                                                                                  |   |                              | **118**   |                          |   | 1                                |   |                         | **275**   |   |   | (36 | ) |
|                                                                                                                                                  |   |                              |      |                          |   |                             |   |                         |      |   |   |   |   |
| Net                  increase (decrease) in cash and cash equivalents                                                                                 |   |                              | **519**   |                          |   | 31                               |   |                         | **(481**  | **)** |   | 348 |   |
| Cash                  and cash equivalents, beginning of period                                                                                       |   |                              | **1,215** |                          |   | 1,784                            |   |                         | **2,215** |   |   | 1,467 |   |
| Cash                  and cash equivalents, end of period                                                                                             |   | **$**                             | **1,734** |                          | $      | 1,815                            |   | **$**                        | **1,734** |   | $ | 1,815 |   |
|                                                                                                                                                  |   |                              |      |                          |   |                             |   |                         |      |   |   |   |   |
| **Supplemental                  disclosure of cash flow information**                                                                                 |   |                              |      |                          |   |                             |   |                         |      |   |   |   |   |
| Interest                  paid                                                                                                                        |   |                              | **1**     |                          |   | 0                                |   |                         | **5**     |   |   | 2 |   |
| Income                  taxes paid                                                                                                                    |   |                              | 0         |                          |   | 0                                |   |                         | 1         |   |   | 2 |   |

----

**MakeMusic!        Inc.**

**Notes        to Condensed Consolidated Financial Statements**

| Note                  1 | **Accounting                    Policies.**The                    information furnished in this report is unaudited but reflects                    all                    adjustments that are necessary, in the opinion of management,                    for a fair                    statement of the results for the interim period. The operating                    results for                    the three and nine months ended September 30, 2005 are not necessarily                    indicative of the operating results to be expected for the full                    year.                    These statements should be read in conjunction with the Company's                    most                    recent Annual Report on Form 10-KSB. |
|-------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | Certain amounts as presented                    in the 2004                    financial statements have been reclassified to conform to the                    2005                    presentation. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Note                2 | **Net** **Income**(**Loss)                  Per Share.**                  Net income (loss ) per share was calculated by dividing the net                  income                  (loss) by the weighted average number of shares outstanding during                  the                  period. The following table summarizes the shares of stock included                  in                  calculating earnings per share for the three and nine months ended                  September 30, 2005 and 2004 in accordance with FASB Statement 128                  (“FAS                  128”), *Earnings                  per Share*: |
|-----------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                    |   | **Three                  Months Ended****September                  30,** |      | **Nine                  Months Ended****September                  30,** |   |
|-------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|-----------|--------------------------------------------------------------------------|--------|
|                                                                    |   | **2005**                                                                  |      | 2004                                                                     |   | **2005** |   | 2004 |   |
| Weighted-average                  common shares outstanding             |   |                                                                      | 3,497,749 |                                                                     |   | 3,380,762 |   |   | 3,457,132 |   |   | 3,367,894 |   |
| Dilutive                  effect of stock options and warrants          |   |                                                                      | 587,432   |                                                                     |   | - |   |   | - |   |   | - |   |
| Equivalent                  average common shares outstanding - diluted |   |                                                                      | 4,085,181 |                                                                     |   | 3,380,762 |   |   | 3,457,132 |   |   | 3,367,894 |   |

|   | The effect of options and warrants                  are                  excluded for the nine month 2005 and 2004 and the three month 2004                  presentations because the effect is                  anti-dilutive. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| Note                  3 | **Income                    Tax Expense.**The                    Company did not record a provision for income tax in the three                    and nine                    months ended September 30, 2005 and 2004 due to the fact the                    Company                    recorded a net loss for those nine month periods. The only income                    tax                    expense recorded in the three and nine months ended September                    30, 2005 and                    2004 was for minimum state income tax payments. Due to the uncertainty                    regarding future realization of our federal deferred income tax                    assets and                    net operating loss carry-forwards, we have recorded a valuation                    allowance                    against our income tax benefit for 2004 and 2005. |
|-------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Note                4 | **Stock                  Options and Warrants.**The                  Company accounts for stock options under Accounting Principles                  Board                  Opinion No. 25, under which the excess, if any, of the quoted                  market                  price at the date of grant over the amount an employee must pay                  to acquire                  the stock is recognized as compensation expense. The following                  table                  displays pro forma net income and earnings per share as if the                  fair value                  based method of accounting had been applied, as required by Statement                  of                  Financial Accounting Standards No. 123, *Accounting                  for Stock-Based Compensation*and                  Statement of Accounting Standards No. 148, *Accounting                  for Stock-Based Compensation - Transition and                  Disclosure:* |
|-----------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                           |   | **Three                  Months Ended****September                  30,** |     | **Nine                  Months Ended****September                  30,** |   |
|------------------------------------------------|--------|---------------------------------------------------------------------------|----------|--------------------------------------------------------------------------|--------|
|                                           |   | **2005**                                                                  |     | 2004                                                                     |   | **2005** |   | 2004 |   |
|                                           |   | (In                  thousands, except per share data)                    |     |
| Net                  income (loss):            |   |                                                                      |     |                                                                     |   |   |   |   |   |
| Net                  income (loss) as reported |   |                                                                      | **940**  |                                                                     |   | (112 | ) |   | **(561** | **)** |   | (190 | ) |
| Stock                  compensation recorded   |   |                                                                      | **(2**   | **)**                                                                    |   | 35 |   |   | **4** |   |   | 117 |   |
| Stock                  compensation pro forma  |   |                                                                      | **(53**  | **)**                                                                    |   | (118 | ) |   | **(50** | **)** |   | (295 | ) |
| Pro                  forma net income (loss)   |   |                                                                      | **885**  |                                                                     |   | (195 | ) |   | **(607** | **)** |   | (368 | ) |
| Income                  (loss) per share:      |   |                                                                      |     |                                                                     |   |   |   |   |   |   |   |   |   |
| Basic                                          |   |                                                                      |     |                                                                     |   |   |   |   |   |   |   |   |   |
| As                  reported                   |   |                                                                      | **0.27** |                                                                     |   | (0.03 | ) |   | **(0.16** | **)** |   | (0.06 | ) |
| Pro                  forma                     |   |                                                                      | **0.25** |                                                                     |   | (0.05 | ) |   | **(0.18** | **)** |   | (0.11 | ) |
| Diluted                                        |   |                                                                      |     |                                                                     |   |   |   |   |   |   |   |   |   |
| As                  reported                   |   |                                                                      | **0.23** |                                                                     |   | (0.03 | ) |   | **(0.16** | **)** |   | (0.06 | ) |
| Pro                  forma                     |   |                                                                      | **0.22** |                                                                     |   | (0.05 | ) |   | **(0.18** | **)** |   | (0.11 | ) |

**ITEM        2.** **Management’s        Discussion And Analysis Or Plan Of Operation**

**Executive        Overview**

----

----

**Results        of Operations **

|                                                  |   |   | Three                    Months Ended September 30,  |   |   | Nine                    Months Ended September 30,  |   |
|-------------------------------------------------------|--------|--------|-----------------------------------------------------------|--------|--------|----------------------------------------------------------|--------|
|                                                  |   |   | 2005                                                 |   |   | 2004                                                |   |   | Incr                    (Decr)  |   |   | % |   |   | 2005  |   |   | 2004  |   |   | Incr                    (Decr)  |   |   | % |   |
|                                                  |   |   |                                                      |   |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notation                    revenue                   |   | $      | 3,399                                                     |   | $      | 2,269                                                    |   | $ | 1,130 |   |   | 50 | % | $ | 7,098 |   | $ | 7,209 |   |   | ($111 | ) |   | -2 | % |
| SmartMusic                    revenue                 |   |   | 390                                                       |   |   | 268                                                      |   |   | 122 |   |   | 46 | % |   | 1,059 |   |   | 710 |   |   | 349 |   |   | 49 | % |
| Other                    revenue                      |   |   | 192                                                       |   |   | 125                                                      |   |   | 67 |   |   | n/a |   |   | 371 |   |   | 342 |   |   | 29 |   |   | n/a |   |
| Net                    revenue                        |   |   | 3,981                                                     |   |   | 2,662                                                    |   |   | 1,319 |   |   | 50 | % |   | 8,528 |   |   | 8,261 |   |   | 267 |   |   | 3 | % |
| Cost                    of revenues                   |   |   | 634                                                       |   |   | 433                                                      |   |   | 201 |   |   | 46 | % |   | 1,479 |   |   | 1,458 |   |   | 21 |   |   | 1 | % |
| Gross                    profit                       |   |   | 3,347                                                     |   |   | 2,229                                                    |   |   | 1,118 |   |   | 50 | % |   | 7,049 |   |   | 6,803 |   |   | 246 |   |   | 4 | % |
| Percentage                    of net sales            |   |   | 84                                                        | %      |   | 84                                                       | %      |   |   |   |   |   |   |   | 83 | % |   | 82 | % |   |   |   |   |   |   |
|                                                  |   |   |                                                      |   |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Development                    expenses               |   |   | 746                                                       |   |   | 775                                                      |   |   | (29 | ) |   | -4 | % |   | 2,471 |   |   | 2,087 |   |   | 384 |   |   | 18 | % |
| Selling                    and marketing expense      |   |   | 942                                                       |   |   | 836                                                      |   |   | 106 |   |   | 13 | % |   | 2,754 |   |   | 2,651 |   |   | 103 |   |   | 4 | % |
| General                    and administrative expense |   |   | 727                                                       |   |   | 732                                                      |   |   | (5 | ) |   | -1 | % |   | 2,414 |   |   | 2,365 |   |   | 49 |   |   | 2 | % |
| Total                    operating expense            |   |   | 2,415                                                     |   |   | 2,343                                                    |   |   | 72 |   |   | 3 | % |   | 7,639 |   |   | 7,103 |   |   | 536 |   |   | 8 | % |
| Operating                    income (loss)            |   |   | 932                                                       |   |   | (114                                                     | )      |   | 1,046 |   |   | 918 | % |   | (590 | ) |   | (300 | ) |   | (290 | ) |   | 97 | % |
| Other                    income                       |   |   | 8                                                         |   |   | 2                                                        |   |   | 6 |   |   | 300 | % |   | 30 |   |   | 112 |   |   | (81 | ) |   | -73 | % |
| Net                    income (loss) before taxes     |   | $      | 940                                                       |   |   | ($112                                                    | )      | $ | 1,052 |   |   | 939 | % |   | ($560 | ) |   | ($188 | ) |   | ($371 | ) |   | 196 | % |
| Income                    tax provision               |   |   | 0                                                         |   |   | 0                                                        |   |   | 0 |   |   | 0 | % |   | (1 | ) |   | (2 | ) |   | 1 |   |   | -50 | % |
| Net                    income (loss)                  |   | $      | 940                                                       |   |   | ($112                                                    | )      | $ | 1,052 |   |   | 939 | % |   | ($561 | ) |   | ($190 | ) |   | ($370 | ) |   | 194 | % |

***For        the three- and nine-month periods ended September 30, 2005 compared to the        three- and nine-month periods ended September 30,        2004.***

***Net        Revenues.***

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| **Subscription                  Type** |   | **30-Sep-05** |   | **30-Jun-05** |   | **31-Mar-05** |   | **31-Dec-04** |   | **30-Sep-04** |   |
|----------------------------------------|--------|---------------|--------|---------------|--------|---------------|--------|---------------|--------|---------------|--------|
| School                                 |   |          | 13,485 |          |   | 12,074        |   |          | 11,166 |          |   | 9,646 |   |   | 8,461 |   |
| School-Sponsored                  Home |   |          | 27,189 |          |   | 24,793        |   |          | 23,839 |          |   | 22,757 |   |   | 20,344 |   |
| Home                                   |   |          | 2,525  |          |   | 2,473         |   |          | 2,423  |          |   | 2,083 |   |   | 1,851 |   |
| Total                  Subscriptions   |   |          | 43,199 |          |   | 39,340        |   |          | 37,428 |          |   | 34,486 |   |   | 30,656 |   |

***Gross        Profit.***

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***Development        Expenses.***

***Sales        and Marketing Expenses.***

***General        and Administrative Expenses.***

***Net        Income from Operations***

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***Net        Income***

***Liquidity        and Capital Resources***
**.**

**ITEM        3. Controls And Procedures**

*        Evaluation of disclosure controls and procedures*

*        Changes in internal controls*

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***Cautionary        Statements***

*This        report may contain forward-looking statements within the meaning of the Private        Securities Litigation Reform Act of 1995. Forward-looking statements provide        current expectations or forecasts of future events and can be identified        by the        use of terminology such as“believe,”“estimate,”“expect,”“intend,”“may,”“could,”“will,” and similar words        or expressions. Our forward-looking statements in this report generally relate        to, the qrowth potential of SmartMusic, our ability to generate positive        cash        flow, our expectations regarding increasing revenue, the impact of strategic        alliances with industry leaders such as Hal Leonard, Conn-Selmer, Garritan        and        Native Instruments, sufficiency of capital, product development, market        introduction and expected increases in sales and marketing expense to support        additional sales efforts. 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. We caution investors that many        important factors have affected, and in the future could affect, our actual        results of operations and cause such results to differ materially from those        anticipated in forward-looking statements made in this release and elsewhere        by        us or on our behalf. These factors include, but are not limited to our sales        efforts and market acceptance of our products; our dependence upon new product        development effort; our dependence on and releasing of annual Finale upgrades;        the maintenance of strategic relationships; the success of our SmartMusic        subscription business; maintaining license agreements with a limited number        of        publishers; the limited and fluctuating sales of certain of our products;        our        ability to implement cost saving measures as necessary to preserve adequate        capital; the intense competition we face; the rapid technological changes        and        obsolescence in our industry; our dependence on key personnel and the        proprietary nature of our technology; other general business and economic        conditions; and those risks described from time to time in our reports to        the        Securities and Exchange Commission (including our Annual Report on Form 10-KSB).        It is not possible to foresee or identify all factors that could cause actual        results to differ from expected or historic results. As such, investors should        not consider any list of such factors to be an exhaustive statement of all        of        the risks, uncertainties or potentially inaccurate assumptions that investors        should take into account when making investment decisions. Shareholders and        other readers are cautioned not to place undue reliance on forward-looking        statements, which speak only as of the date on which they are made. We undertake        no obligation to update publicly or revise any forward-looking        statements.*

**PART        II. OTHER INFORMATION**

**Item        1.** **Legal        Proceedings**

**Item        2.** **Unregistered        Sales of Equity Securities and Use of Proceeds** 

**Item        3.** **Defaults        Upon Senior Securities**

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**Item        4.** **Submission        of Matters to a Vote of Security Holders**

**Item        5.** **Other        Information**

**Item        6.** **Exhibits**

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**SIGNATURES**

| Date: October 26, 2005  |   | MAKEMUSIC! INC.                                             |
|------------------------------|--------|-------------------------------------------------------------|
|                         |   |                                                        |
|                         |   | By: / s/                William R. Wolff               |
|                         |   | William R. Wolff, Chief Executive                Officer    |
|                         |   | (Principal Executive Officer)                               |
|                         |   |                                                        |
|                         |   | And:/s/                Alan G. Shuler                       |
|                         |   | Alan G. Shuler, Chief Financial                Officer      |
|                         |   | (Principal Financial and Accounting                Officer) |
|                         |   |                                                        |

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**EXHIBIT        INDEX**

**Form        10-QSB**

**For        Quarter ended September 30, 2005**

| **Exhibit                No. ** | **Description**                                                                                                                             |
|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|
|                                 |                                                                                                                                        |
| **31.1**                        | Certification                  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley                  Act of 2002.  |
| **31.2**                        | Certification                  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley                  Act of 2002.  |
| **32.1**                        | Certification                  of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley                  Act of 2002.  |
| **32.2**                        | Certification                  of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley                  Act of 2002.  |
|                                 |                                                                                                                                        |
|                                 |                                                                                                                                        |

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