##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
  þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2006
 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
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)
 
 (Address of Principal Executive Offices)
  (Issuers Telephone Number, Including Area Code)
  þ o
  o þ
   o þ




---



##### 



MakeMusic, Inc.
 INDEX
 Page No.PART I. FINANCIAL INFORMATIONItem 1
    
    Condensed Consolidated Financial Statements
    
    
    3Condensed Consolidated Balance Sheets
September 30, 2006 and December 31, 2005
    
    
    3Condensed Consolidated Statement of Operations
Three- and nine-month periods ended September 30, 2006 and 2005
    
    
    4Condensed Consolidated Statements of Cash Flows
Three- and nine-month periods ended September 30, 2006 and 2005
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2
    
    Managements Discussion and Analysis or Plan of Operation
    
    
    11Item 3
    
    Controls and Procedures
    
    
    16PART II. OTHER INFORMATIONItem 1
    
    Legal Proceedings
    
    
    17Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    17Item 3
    
    Defaults Upon Senior Securities
    
    
    17Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    17Item 5
    
    Other Information
    
    
    17Item 6
    
    Exhibits
    
    
    17Signatures
    
    
    18Exhibit Index
    
    
    19Separation Agreement of Alan G. ShulerCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  2




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Condensed Consolidated Financial Statements.
 MakeMusic, Inc.
 
 Condensed Consolidated Balance Sheets
 (In thousands of U.S. dollars)
 September 30,
    
    Dec. 31,2006
    
    2005(unaudited)AssetsCash
    
    $
    2,524
    
    
    $
    2,952Accounts receivable, net of allowances
    
    
    1,492
    
    
    
    1,004Inventories, net of reserves
    
    
    384
    
    
    
    435Prepaid expenses and other current assets
    
    
    81
    
    
    
    161Total current assets
    
    
    4,481
    
    
    
    4,552Property and equipment, net
    
    
    648
    
    
    
    323Goodwill, net
    
    
    3,630
    
    
    
    3,630Capitalized software
    
    
    734
    
    
    
    471Other non-current assets
    
    
    60
    
    
    
    66Total assets
    
    $
    9,553
    
    
    $
    9,042Liabilities and Shareholders EquityCurrent portion of capital lease obligations
    
    $
    10
    
    
    $
    6Accounts payable
    
    
    277
    
    
    
    441Accrued compensation
    
    
    921
    
    
    
    681Other accrued liabilities
    
    
    228
    
    
    
    238Post-contract support
    
    
    181
    
    
    
    181Reserve for product returns
    
    
    440
    
    
    
    339Current portion of deferred rent
    
    
    23
    
    
    
    20Deferred revenue
    
    
    1,010
    
    
    
    842Total current liabilities
    
    
    3,090
    
    
    
    2,748Capital lease obligations, net of current portion
    
    
    18
    
    
    
    9Deferred rent, net of current portion
    
    
    102
    
    
    
    120120
    
    
    
    129Shareholders Equity:Common stock, $0.01 par value:Authorized shares  10,000,000
    
    
    39
    
    
    
    39Issued and outstanding shares  3,937,562 and 3,856,654
in 2006 and 2005, respectivelyAdditional paid-in capital
    
    
    62,832
    
    
    
    62,459Accumulated deficit
    
    
    (56,528
    )
    
    
    (56,347
    )Other comprehensive income
    
    
    0
    
    
    
    14Total shareholders equity
    
    
    6,343
    
    
    
    6,165Total liabilities and shareholders equity
    
    $
    9,553
    
    
    $
    9,042
  3




---



##### Table of Contents



MakeMusic, Inc.
 
 Condensed Consolidated Statements of Operations
 (In thousands of U.S. dollars, except share and per share data)
  Three Months
    
    Nine MonthsEnded September 30,
    
    Ended September 30,2006
    
    2005
    
    2006
    
    2005Notation Revenue
    
    
    3,208
    
    
    
    3,391
    
    
    
    7,312
    
    
    
    7,083SmartMusic Revenue
    
    
    621
    
    
    
    403
    
    
    
    1,558
    
    
    
    1,070Other Revenue
    
    
    196
    
    
    
    187
    
    
    
    389
    
    
    
    375NET REVENUE
    
    
    4,025
    
    
    
    3,981
    
    
    
    9,259
    
    
    
    8,528COST OF REVENUES
    
    
    540
    
    
    
    634
    
    
    
    1,307
    
    
    
    1,479GROSS PROFIT
    
    
    3,485
    
    
    
    3,347
    
    
    
    7,952
    
    
    
    7,049OPERATING EXPENSES:Development expenses
    
    
    901
    
    
    
    746
    
    
    
    2,623
    
    
    
    2,471Selling and marketing expenses
    
    
    1,051
    
    
    
    942
    
    
    
    3,088
    
    
    
    2,754General and administrative expenses
    
    
    720
    
    
    
    727
    
    
    
    2,497
    
    
    
    2,414Total operating expenses
    
    
    2,672
    
    
    
    2,415
    
    
    
    8,208
    
    
    
    7,639INCOME (LOSS) FROM OPERATIONS
    
    
    813
    
    
    
    932
    
    
    
    (256
    )
    
    
    (590
    )Interest income
    
    
    17
    
    
    
    12
    
    
    
    68
    
    
    
    15Other income (expense)
    
    
    14
    
    
    
    (4
    )
    
    
    16
    
    
    
    16Net loss before income tax
    
    
    844
    
    
    
    940
    
    
    
    (172
    )
    
    
    (559
    )Income tax expense
    
    
    (1
    )
    
    
    0
    
    
    
    (9
    )
    
    
    (2
    )Net income (loss)
    
    
    843
    
    
    
    940
    
    
    
    (181
    )
    
    
    (561
    )Income (loss) per common share:Basic
    
    
    0.22
    
    
    
    0.27
    
    
    
    (0.05
    )
    
    
    (0.16
    )Diluted
    
    
    0.17
    
    
    
    0.23
    
    
    
    (0.05
    )
    
    
    (0.16
    )Weighted average common shares outstanding:Basic
    
    
    3,913,251
    
    
    
    3,497,749
    
    
    
    3,904,041
    
    
    
    3,457,132Diluted
    
    
    4,866,195
    
    
    
    4,085,181
    
    
    
    3,904,041
    
    
    
    3,457,132
  4




---



##### Table of Contents



MakeMusic, Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (In thousands of U.S. dollars)
  Three
    
    Three
    
    Nine
    
    NineMonths
    
    Months
    
    Months
    
    MonthsEnded
    
    Ended
    
    Ended
    
    Ended2006
    
    2005
    
    2006
    
    2005Operating activitiesNet income (loss)
    
    
    843
    
    
    
    940
    
    
    
    (181
    )
    
    
    (561
    )Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:Amortization of intangible assets
    
    
    0
    
    
    
    226
    
    
    
    0
    
    
    
    679Depreciation and amortization of property
and equipment
    
    
    69
    
    
    
    39
    
    
    
    167
    
    
    
    117Other amortization
    
    
    57
    
    
    
    46
    
    
    
    132
    
    
    
    135Stock based compensation expense
    
    
    69
    
    
    
    (2
    )
    
    
    239
    
    
    
    4Increase (decrease) in cash from:Accounts receivable
    
    
    (664
    )
    
    
    (422
    )
    
    
    (488
    )
    
    
    (175
    )Inventories
    
    
    (76
    )
    
    
    (20
    )
    
    
    51
    
    
    
    (285
    )Prepaid expenses and other current assets
    
    
    37
    
    
    
    (30
    )
    
    
    66
    
    
    
    32Accounts payable
    
    
    62
    
    
    
    (265
    )
    
    
    (164
    )
    
    
    (254
    )Accrued liabilities and product returns
    
    
    224
    
    
    
    32
    
    
    
    316
    
    
    
    (93
    )Deferred revenue
    
    
    128
    
    
    
    (15
    )
    
    
    168
    
    
    
    38Net cash provided by (used in) operating activities
    
    
    749
    
    
    
    529
    
    
    
    306
    
    
    
    (364
    )Investing activitiesPurchases of property and equipment
    
    
    (66
    )
    
    
    (59
    )
    
    
    (463
    )
    
    
    (201
    )Capitalized software development and other intangibles
    
    
    (172
    )
    
    
    (69
    )
    
    
    (389
    )
    
    
    (191
    )Net cash used in investing activities
    
    
    (238
    )
    
    
    (128
    )
    
    
    (852
    )
    
    
    (392
    )Financing activitiesProceeds from the exercise of stock options and warrants
    
    
    13
    
    
    
    119
    
    
    
    134
    
    
    
    279Payments on capital leases
    
    
    (14
    )
    
    
    (1
    )
    
    
    (16
    )
    
    
    (4
    )Net cash provided by (used in) financing activities
    
    
    (1
    )
    
    
    118
    
    
    
    118
    
    
    
    275Net increase (decrease) in cash
    
    
    510
    
    
    
    519
    
    
    
    (428
    )
    
    
    (481
    )Cash, beginning of period
    
    
    2,014
    
    
    
    1,215
    
    
    
    2,952
    
    
    
    2,215Cash, end of period
    
    
    2,524
    
    
    $
    1,734
    
    
    
    2,524
    
    
    $
    1,734Supplemental disclosure of cash flow informationInterest paid
    
    
    0
    
    
    
    1
    
    
    
    0
    
    
    
    5Income taxes paid
    
    
    1
    
    
    
    0
    
    
    
    9
    
    
    
    1Other non-cash investment and financing activitiesEquipment acquired under capital lease
    
    
    29
    
    
    
    0
    
    
    
    29
    
    
    
    0
  5




---



##### Table of Contents



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 three and nine months ended
September 30, 2006 are not necessarily indicative of the operating results to be expected for
the full fiscal year. These statements should be read in conjunction with the Companys most
recent Annual Report on Form 10-KSB.
  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, 2006 and 2005 in accordance with FASB Statement
128 (SFAS 128), Earnings per Share:
 Three Months
    
    Nine MonthsEnded September 30,
    
    Ended September 30,2006
    
    2005
    
    2006
    
    2005Weighted-average
common shares
outstanding
    
    
    3,913,251
    
    
    
    3,497,749
    
    
    
    3,904,041
    
    
    
    3,457,132Dilutive effect of
stock options and
warrants
    
    
    952,944
    
    
    
    587,432
    
    
    
    
    
    
    
    Equivalent average
common shares
outstanding 
diluted
    
    
    4,866,195
    
    
    
    4,085,181
    
    
    
    3,904,041
    
    
    
    3,457,132
  Note 3
    
    Income Tax Expense.The Company did not record a provision for
income tax in the three or nine months ended September 30, 2006 and
2005 as the provision was offset by a reduction in the deferred tax
asset valuation allowance. The only income tax expense recorded in
the three and nine months ended September 30, 2006 and 2005 was for
minimum state and federal income tax payments. Due to the
uncertainty regarding the realization of the Companys Federal
deferred income tax assets and specifically the net operating loss
carry-forwards, the Company has recorded a valuation allowance
against its deferred income tax assets for 2006 and 2005.
 6




---



##### Table of Contents



Note 4
    
    Stock-Based Compensation.The Company currently offers a stock
based compensation plan to its employees, directors and
consultants. These plans are administered by the
compensation committee of the Board of Directors, which recommends to the Board persons
eligible to receive awards and the number of shares and/or options subject to each award,
the terms, conditions, performance measures, and other provisions of the award. Readers
should refer to Note 6 of the Companys consolidated financial statements in its Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2005 for additional information
related to the Companys stock based compensation plans.
    7




---



##### Table of Contents



3 Months Ended
    
    9 Months EndedSeptember 30,
    
    September 30,2005
    
    2005(In thousands, except per share data)Net income (loss) as reported
    
    
    940
    
    
    
    (561
    )Stock compensation under SFAS 123
    
    
    (55
    )
    
    
    (46
    )Pro forma net income (loss)
    
    
    885
    
    
    
    (607
    )Income (loss) per share:BasicAs reported
    
    
    0.27
    
    
    
    (0.16
    )Pro forma
    
    
    0.25
    
    
    
    (0.18
    )DilutedAs reported
    
    
    0.23
    
    
    
    (0.16
    )Pro forma
    
    
    0.22
    
    
    
    (0.18
    )
 Stock Options
  September 30,
    
    September 30,2006
    
    2005Black-Scholes Model:Risk-free interest rate
    
    
    3.2
    %
    
    
    3.4
    %Expected life, in years
    
    
    3.8
    
    
    
    3.4Expected volatility
    
    
    87.7
    %
    
    
    80.1
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Binomial Model:Risk-free interest rate
    
    
    3.6
    %
    
    
    Expected life, in years
    
    
    6.0
    
    
    
    Expected volatility
    
    
    136.3
    %
    
    
    Dividend yield
    
    
    0.0
    %
    
    
    
  8




---



##### Table of Contents



WeightedWeighted
    
    
    AverageShares
    
    
    
    
    
    
    Average
    
    
    RemainingReserved
    
    
    
    
    
    
    Exercise
    
    
    Contractfor Grant
    
    
    Plan Options
    
    
    Price
    
    
    LifeOutstanding at Dec. 31, 2005
    
    
    16,675
    
    
    
    712,473
    
    
    $
    3.96Granted
    
    
    (12,000
    )
    
    
    12,000
    
    
    $
    10.32Expired
    
    
    
    
    
    
    (15,900
    )
    
    $
    20.11Cancelled
    
    
    1,000
    
    
    
    (1,000
    )
    
    $
    2.35Exercised
    
    
    
    
    
    
    (2,080
    )
    
    $
    5.00Authorized
    
    
    200,000
    
    
    
    0
    
    
    
    Outstanding at September
30, 2006
    
    
    205,675
    
    
    
    705,493
    
    
    $
    3.71
    
    
    4.1 YearsOutstanding exercisable at
September 30, 2006
    
    
    
    
    
    
    337,467
    
    
    $
    4.04
    
    
    3.7 Years
   Note 5
    
    Material Contingencies.On August 1, 2006 the Company entered into a separation agreement
with its Chief Financial Officer. In connection with this agreement the former executive is
entitled to payments of base salary and prorated bonuses. During the quarter ended September
30, 2006 the Company expensed $54,000 under this agreement of which $16,000 remains accrued at
September 30, 2006 and is expected to be paid by December 31, 2006. Additionally, the Company
expects to enter into a similar agreement with its former Chief Executive Officer who resigned
from the Company on October 19, 2006. The Company expects to recognize the expenses for this
agreement during the fourth quarter of 2006.
 9




---



##### Table of Contents



Note 6
    
    New and Pending Accounting Pronouncements.
    10




---



##### Table of Contents



Item 2. Managements Discussion And Analysis Or Plan Of Operation.
 ® ® ®
   ® ® ® ®
   11




---



##### Table of Contents



Results of Operations
  3 Months Ended September 30,
    
    
    9 Months Ended September 30,2006
    
    
    2005
    
    
    Incr (Decr)
    
    
    %
    
    
    2006
    
    
    2005
    
    
    Incr (Decr)
    
    
    %Notation revenue
    
    $
    3,208
    
    
    $
    3,391
    
    
    ($
    183
    )
    
    
    -5
    %
    
    $
    7,312
    
    
    $
    7,083
    
    
    $
    229
    
    
    
    3
    %SmartMusic revenue
    
    
    621
    
    
    
    403
    
    
    
    218
    
    
    
    54
    %
    
    
    1,558
    
    
    
    1,070
    
    
    
    488
    
    
    
    46
    %Other revenue
    
    
    196
    
    
    
    187
    
    
    
    9
    
    
    
    5
    %
    
    
    389
    
    
    
    375
    
    
    
    14
    
    
    
    4
    %Net revenue
    
    
    4,025
    
    
    
    3,981
    
    
    
    44
    
    
    
    1
    %
    
    
    9,259
    
    
    
    8,528
    
    
    
    731
    
    
    
    9
    %Cost of revenues
    
    
    540
    
    
    
    634
    
    
    
    (94
    )
    
    
    -15
    %
    
    
    1,307
    
    
    
    1,479
    
    
    
    (172
    )
    
    
    -12
    %Gross profit
    
    
    3,485
    
    
    
    3,347
    
    
    
    138
    
    
    
    4
    %
    
    
    7,952
    
    
    
    7,049
    
    
    
    903
    
    
    
    13
    %Percentage of net sales
    
    
    87
    %
    
    
    84
    %
    
    
    
    
    
    
    
    
    
    
    86
    %
    
    
    83
    %Development expenses
    
    
    901
    
    
    
    746
    
    
    
    155
    
    
    
    21
    %
    
    
    2,623
    
    
    
    2,471
    
    
    
    152
    
    
    
    6
    %Selling and marketing
expense
    
    
    1,051
    
    
    
    942
    
    
    
    109
    
    
    
    12
    %
    
    
    3,088
    
    
    
    2,754
    
    
    
    334
    
    
    
    12
    %General and
administrative expense
    
    
    720
    
    
    
    727
    
    
    
    (7
    )
    
    
    -1
    %
    
    
    2,497
    
    
    
    2,414
    
    
    
    83
    
    
    
    3
    %Total operating expense
    
    
    2,672
    
    
    
    2,415
    
    
    
    257
    
    
    
    11
    %
    
    
    8,208
    
    
    
    7,639
    
    
    
    569
    
    
    
    7
    %Operating income (loss)
    
    
    813
    
    
    
    932
    
    
    
    (119
    )
    
    
    -13
    %
    
    
    (256
    )
    
    
    (590
    )
    
    
    334
    
    
    
    -57
    %Other income (expense)
    
    
    31
    
    
    
    8
    
    
    
    23
    
    
    
    288
    %
    
    
    84
    
    
    
    30
    
    
    
    54
    
    
    
    180
    %Net income (loss)
before taxes
    
    $
    844
    
    
    $
    940
    
    
    ($
    96
    )
    
    
    -10
    %
    
    ($
    172
    )
    
    ($
    560
    )
    
    $
    388
    
    
    
    -69
    %Income tax provision
    
    
    (1
    )
    
    
    0
    
    
    
    (1
    )
    
    
    0
    %
    
    
    (9
    )
    
    
    (1
    )
    
    
    (8
    )
    
    
    800
    %Net income (loss)
    
    $
    843
    
    
    $
    940
    
    
    ($
    97
    )
    
    
    -10
    %
    
    ($
    181
    )
    
    ($
    561
    )
    
    $
    380
    
    
    
    -68
    %
 12




---



##### Table of Contents



For the three-month and nine-month periods ended September 30, 2006 compared to the
three-month and nine-month periods ended September 30, 2005.
 Net Revenues.
    Gross Profit.
 13




---



##### Table of Contents



Development Expenses.
 Sales and Marketing Expenses.
 General and Administrative Expenses.
 Net Income/(Loss) from Operations th th
 14




---



##### Table of Contents



Net Income (Loss)
 Liquidity and Capital Resources .
   15




---



##### Table of Contents



Item 3. Controls and Procedures.
 Evaluation of disclosure controls and procedures
 Changes in internal controls
 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. The
forward-looking statements in this report generally relate to the Companys plans for SmartMusic
Impact and the anticipated effect of Impact on its SmartMusic subscriptions, the timing of Impacts
introduction, the Companys product development, market introduction and sales efforts, the
Companys anticipated cash requirements, the continuing effect of stock option expensing, and the
Companys expectations as to the sufficiency of capital. 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. The Company cautions investors that many important
factors have affected, and in the future could affect, the Companys 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 the Company or on its behalf. These factors include, but are
not limited to, the Companys possible need for and ability to obtain additional capital; the
market acceptance of SmartImpact and other of the Companys products; the Companys dependence upon
new product development effort; the Companys dependence on releasing annual Finale upgrades; the
maintenance of strategic relationships; the success of the Companys SmartMusic subscription
business; maintaining license agreements with a limited number of publishers; the limited and
fluctuating sales of certain of the Companys products; the intense competition the Company faces;
the rapid technological changes and obsolescence in the Companys industry; the Companys
dependence on key personnel and the proprietary nature of its technology; other general business
and economic conditions; and those risks described from time to time in the Companys reports to
the Securities and Exchange Commission (including its 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. The Company undertakes no obligation to update publicly or revise any
forward-looking statements.
 16




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings.
 None
 
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
 Pursuant to the exercise of warrants by one warrant holder on September 25, 2006 an
aggregate of 26,007 shares were sold at $0.50 per share. For these transactions, the
Company relied upon Section 4(2) of the Securities Act for an exemption for transactions
not involving a public offering.
 
 Item 3.
    
    Defaults Upon Senior SecuritiesNone
 
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
 None
 
 Item 5.
    
    Other Information
 Entry into a Material Definitive Agreement.On August 1, 2006, MakeMusic, Inc.
entered into a Separation Agreement and Release (the Agreement) with Alan G. Shuler,
which Agreement provides that, effective July 31, 2006, Mr. Shulers employment and
position as Chief Financial Officer with MakeMusic was terminated. Pursuant to the
Agreement, Mr. Shuler will receive a separation payment equal to five months of his base
salary, payable in full by the end of the year. In addition, Mr. Shuler will receive a
prorated 2006 bonus. Mr. Shuler has agreed to release any and all claims against
MakeMusic.
 
 Item 6.
    
    Exhibits.
 See the attached exhibit index.
 17




---



##### Table of Contents



SIGNATURES
  Date: November 1, 2006
    
    MAKEMUSIC, INC.By:
    
    /s/ John W. PaulsonJohn W. Paulson, Chief Executive Officer(Principal Executive Officer)And:
    
    /s/ Ronald B. RaupRonald B. Raup, Interim Chief Financial Officer(Chief Financial Officer)
 18




---



##### Table of Contents



EXHIBIT INDEX
 Form 10-QSB
 Three and nine months ended September 30, 2006
 Exhibit No.
    
    Description3.1
    
    Bylaws (Incorporated by reference to Exhibit 3.1 to the Registrants
Form 8-K filed on October 24, 2006)10.1
    
    Separation agreement of Alan G. Shuler dated 08/01/06*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.
 
 *
    
    Indicates a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-QSB. 19