##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-QSB (Mark One) þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2005
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _______ To _______

Commission file number0-26192
 MakeMusic! Inc.  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   (952) 937-9611   6210 Burry Drive, Eden Prairie, Minnesota 55346-1718   Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d)
of the Exchange Act during the past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes þ     No o As of April 19, 2005, there were 3,447,043 shares of Common Stock outstanding. Transitional Small Business Disclosure Format (check one): Yes o     No þ   1




---



MakeMusic! Inc. INDEX  
 Page No.PART I. FINANCIAL INFORMATIONItem 1.
    
    Condensed Consolidated Financial Statements
    
    
    3Condensed Consolidated Balance Sheets
March 31, 2005 and December 31, 2004
    
    
    3Condensed
Consolidated Statement of Operations
Three-month periods ended March 31, 2005 and 2004
    
    
    4Condensed Consolidated Statement of Cash Flows
Three-month periods ended March 31, 2005 and 2004
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis or Plan of Operation
    
    
    7Item 3.
    
    Controls and Procedures
    
    
    11PART II. OTHER INFORMATIONItem 5.
    
    Other Items
    
    
    12Item 6.
    
    Exhibits
    
    
    12Signatures
    
    
    13Exhibit Index
    
    
    14LeaseCertification 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) March 31,
    
    
    December 31,2005
    
    
    2004(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    1,577
    
    
    $
    2,215Accounts receivable, net
    
    
    779
    
    
    
    830Inventories
    
    
    461
    
    
    
    332Prepaid expenses and other current assets
    
    
    216
    
    
    
    241Total current assets
    
    
    3,033
    
    
    
    3,618Property and equipment, net
    
    
    262
    
    
    
    250Goodwill, net
    
    
    3,630
    
    
    
    3,630Capitalized software products
    
    
    357
    
    
    
    347Intangible assets, net
    
    
    499
    
    
    
    725Other non-current assets
    
    
    105
    
    
    
    83Total assets
    
    $
    7,886
    
    
    $
    8,653Liabilities and shareholders equityCurrent liabilities:Current portion of long-term debt and capital
lease obligations
    
    $
    6
    
    
    $
    6Accounts payable
    
    
    569
    
    
    
    494Accrued compensation
    
    
    579
    
    
    
    1,024Accrued expenses and other current liabilities
    
    
    371
    
    
    
    402Reserve for product returns
    
    
    290
    
    
    
    203Deferred revenue
    
    
    785
    
    
    
    697Total current liabilities
    
    
    2,600
    
    
    
    2,826Capital lease obligations, net of current portion
    
    
    14
    
    
    
    16Shareholders equity:Common stock
    
    
    34
    
    
    
    34Additional paid-in capital
    
    
    61,696
    
    
    
    61,626Accumulated deficit
    
    
    (56,458
    )
    
    
    (55,849
    )Total shareholders equity
    
    
    5,272
    
    
    
    5,811Total liabilities and shareholders equity
    
    $
    7,886
    
    
    $
    8,653
 3




---



##### Table of Contents



MakeMusic! Inc.
Condensed Consolidated Statements of Operations(In thousands of U.S. dollars, except share and per share data)
(Unaudited) Quarter Ended March 31,2005
    
    
    2004NET REVENUE
    
    $
    2,524
    
    
    $
    3,195COST OF REVENUES
    
    
    469
    
    
    
    514GROSS PROFIT
    
    
    2,055
    
    
    
    2,681OPERATING EXPENSES:Development expenses
    
    
    812
    
    
    
    674Selling and marketing expenses
    
    
    1,024
    
    
    
    905General and administrative expenses
    
    
    850
    
    
    
    759Total operating expenses
    
    
    2,686
    
    
    
    2,338INCOME (LOSS) FROM OPERATIONS
    
    
    (631
    )
    
    
    343Interest income (expense), net
    
    
    2
    
    
    
    (1
    )Other income
    
    
    21
    
    
    
    10Net income (loss) before income tax
    
    
    (608
    )
    
    
    352Income tax
    
    
    (1
    )
    
    
    (2
    )Net income (loss)
    
    $
    (609
    )
    
    $
    350Income (loss) per common share:Basic
    
    $
    (0.18
    )
    
    $
    0.10Diluted
    
    $
    (0.18
    )
    
    $
    0.09Weighted average common shares outstanding:Basic
    
    
    3,420,524
    
    
    
    3,356,330Diluted
    
    
    3,420,524
    
    
    
    3,814,016
 4




---



##### Table of Contents



MakeMusic! Inc.
Condensed Consolidated Statements of Cash Flows(In thousands of U.S. dollars)
(Unaudited) Quarter Ended March 31,2005
    
    
    2004Operating activitiesNet income (loss)
    
    $
    (609
    )
    
    $
    350Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Amortization of intangible assets
    
    
    269
    
    
    
    352Depreciation and amortization of property and equipment
    
    
    38
    
    
    
    52Amortization of deferred compensation
    
    
    
    
    
    
    38Issuance of stock options and warrants for services
    
    
    4
    
    
    
    2Increase (decrease) in cash from:Accounts receivable
    
    
    51
    
    
    
    (160
    )Inventories
    
    
    (129
    )
    
    
    33Prepaid expenses and other assets
    
    
    3
    
    
    
    (4
    )Accounts payable
    
    
    75
    
    
    
    (190
    )Accrued liabilities and product returns
    
    
    (389
    )
    
    
    (160
    )Deferred revenue
    
    
    88
    
    
    
    (87
    )Net cash provided by (used in) operating activities
    
    
    (599
    )
    
    
    226Net cash used in investing activitiesPurchases of property & equipment
    
    
    (50
    )
    
    
    (25
    )Capitalized development and other intangibles
    
    
    (53
    )
    
    
    (47
    )Net cash used by investing activities
    
    
    (103
    )
    
    
    (72
    )Net cash provided by (used in) financing activitiesProceeds from stock options & warrants exercised
    
    
    66
    
    
    
    Payments on long-term debt and capital leases
    
    
    (2
    )
    
    
    (57
    )Net cash provided by (used in) financing activities
    
    
    64
    
    
    
    (57
    )Net (decrease) increase in cash and cash equivalents
    
    
    (638
    )
    
    
    97Cash and cash equivalents, beginning of period
    
    
    2,215
    
    
    
    1,467Cash and cash equivalents, end of period
    
    $
    1,577
    
    
    $
    1,564Supplemental disclosure of cash flow informationInterest paid
    
    $
    2
    
    
    $
    1
 5




---



##### Table of Contents



MakeMusic! Inc. Notes to Condensed Consolidated Financial Statements (Unaudited)  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 months ended March 31,
2005 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.Certain amounts as presented in the 2004 financial statements, as previously reported,
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 quarters ended March 31, 2005 and 2004 in accordance with FASB Statement 128 (FAS 128),
Earnings per Share: Quarter Ended March 31,2005
    
    
    2004Weighted-average common shares outstanding
    
    
    3,420,524
    
    
    
    3,356,330Dilutive effect of stock options and
warrants
    
    
    
    
    
    
    457,686Equivalent average common shares
outstanding  diluted
    
    
    3,420,524
    
    
    
    3,814,016
  The effect of options and warrants are excluded for 2005 because the effect is
anti-dilutive.Note 3
    Income Tax Expense.The Company did not record a provision for
income tax in the quarter ended March 31, 2005 due to the fact the
Company recorded a net loss for the period. The Company did not
record a provision for income tax in the quarter ended March 31,
2004 because of the availability of net operating loss
carry-forwards from prior years. The only income tax expense
recorded in the quarters ended March 31, 2005 and 2004 was for
minimum state income tax payments. Due to the uncertainty regarding
the realization of our Federal deferred income tax assets and
specifically the net operating loss carry-forwards, we have
recorded a valuation allowance against our income tax benefit for
2004 and 2005. 6




---



##### Table of Contents



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 Compensationand Statement of Accounting Standards No.
148, Accounting for Stock-Based Compensation  Transition and
Disclosure: Quarter Ended March 31,2005
    
    
    2004(In thousands, except per share date)Net income (loss):Net income (loss) as reported
    
    $
    (609
    )
    
    $
    350Stock compensation recorded
under APB 25
    
    
    4
    
    
    
    39Stock compensation under FAS
123
    
    
    (86
    )
    
    
    (96
    )Pro forma net income (loss)
    
    $
    (691
    )
    
    $
    293Income (loss) per share:BasicAs reported
    
    $
    (0.18
    )
    
    $
    0.10Pro forma
    
    $
    (0.20
    )
    
    $
    0.09DilutedAs reported
    
    $
    (0.18
    )
    
    $
    0.09Pro forma
    
    $
    (0.20
    )
    
    $
    0.08
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Executive Overview We are a world leader in music education technology with a mission to enhance and transform
the experience of making, teaching and learning music. Among our leading products are SmartMusic®,
a complete music practice system that features Intelligent Accompaniment® and the worlds largest
interactive accompaniment library, and Finale®, the worlds best-selling music notation software. SmartMusic® is a complete, interactive, computer-based practice system for
woodwinds, brass players, vocalists and strings. SmartMusic enhances and transforms the process of
practicing music by accompanying musicians while they practice  following their spontaneous tempo
changes like a human accompanist. Offered through subscription, SmartMusic gives musicians access
to a library of more than 30,000 professionally performed and recorded accompaniments. We expect SmartMusic to act as our growth engine to take us beyond our traditional strength in
notation software. With its recurring revenues, SmartMusic is an important part of our business
with a subscription-based model that leverages relationships with music educators and 7




---



##### Table of Contents



their students. We expect alliances with industry leading partners such as Hal Leonard and
Conn-Selmer to provide significant growth opportunities beginning this year and growing over time.
While it is difficult to predict the volume increase these alliances may produce, we are confident
that we will be ready for the growth these relationships may present. For over a decade, Finale has been the worlds best-selling music notation software. We
believe it has transformed the very process by which composers, arrangers, musicians, teachers,
students and publishers create, edit, audition, print and publish musical scores. In the world of
music software, Finale is analogous to what Adobe® PageMaker® or
Adobe® Illustrator® are to the print publication industry. We have traditionally derived a substantial portion of our revenues from sales of Finale and
its related notation products, which generally are sold throughout the world. These products
continue to provide revenue through regular upgrade releases and customer renewal in the education
market. We continue to work on developing their full potential internationally. Our continued focus on developing our market opportunities and achieving positive operating
cash flow resulted in positive operating cash flow and revenue growth during the last fiscal year.
The strength of our Finale 2004 product, which included the first version compliant with Macintosh
OS X released in January 2004, the timely release in August 2004 of our Finale 2005 version, in
which both Windows and Macintosh were together on the same disk for the first time as well as an
upgrade release of our PrintMusic® software product, helped us to become operating cash
positive in 2004. We expect to achieve positive operating cash flow again in 2005 but, with
negative operating cash flow of $599,000 in the first quarter of 2005 and a similar expectation in
the second quarter of 2005 due to traditional seasonality, achievement of operating cash flow for
the year will depend on a strong revenue performance in the third and fourth quarters of 2005. With Finale and SmartMusic, we have the marketing and development platform for building a
growing business in music education software. We are exploring opportunities to introduce our
existing products into new geographic markets through existing distribution partners and new
relationships. We are also exploring opportunities to develop and launch new products based on our
core music education technologies: the editing, display, printing and playback of music notation,
pitch recognition, assessment, recording, and Intelligent Accompaniment. In our Form 10-KSB filed with the Securities and Exchange Commission for the year ended
December 31, 2004, we identified critical accounting policies and estimates for our business. 8




---



##### Table of Contents



Results of Operations The following table summarizes key operating information for the quarter ended March 31, 2005
and 2004. March 312005
    
    
    2004
    
    
    Incr (Decr)
    
    
    %Notation revenue
    
    $
    2,179
    
    
    $
    2,994
    
    
    $
    (815
    )
    
    
    (27
    )SmartMusic revenue
    
    
    344
    
    
    
    197
    
    
    
    147
    
    
    
    75Other revenue
    
    
    1
    
    
    
    4
    
    
    
    (3
    )
    
    
    (75
    )Net revenue
    
    
    2,524
    
    
    
    3,195
    
    
    
    (671
    )
    
    
    (21
    )Cost of revenues
    
    
    469
    
    
    
    514
    
    
    
    (45
    )
    
    
    (9
    )Gross profit
    
    
    2,055
    
    
    
    2,681
    
    
    
    (626
    )
    
    
    (23
    )Percentage of net sales
    
    
    81.4
    %
    
    
    83.9
    %Development expenses
    
    
    812
    
    
    
    674
    
    
    
    138
    
    
    
    20Selling and marketing
expense
    
    
    1,024
    
    
    
    905
    
    
    
    119
    
    
    
    13General and
administrative expense
    
    
    850
    
    
    
    759
    
    
    
    91
    
    
    
    12Total operating expense
    
    
    2,686
    
    
    
    2,338
    
    
    
    348
    
    
    
    15Operating income (loss)
    
    
    (631
    )
    
    
    343
    
    
    
    (974
    )
    
    
    (284
    )Other income (expense)
    
    
    22
    
    
    
    7
    
    
    
    14
    
    
    
    200Net income (loss)
    
    $
    (609
    )
    
    $
    350
    
    
    $
    (959
    )
    
    
    (274
    )
 For the quarter ended March 31, 2005 compared to the quarter ended March 31, 2004. Net Revenues.The decrease in notation revenue in the first quarter of 2005 compared to the
first quarter of 2004 is primarily because the first quarter of 2004 included the release of Finale
2004 for Macintosh which contributed approximately $1 million in additional revenue during the
quarter. Finale 2005 was released for both Windows and Macintosh platforms in August of 2004, so
the quarter ended March 31, 2005 was much later in the release cycle of the latest version of
Finale than the same quarter of the prior year. Finale sales customarily are highest upon release
of a new version, and sales decline throughout the year until the next release. Revenue for our SmartMusic subscription service continues to grow. SmartMusic revenue for the
first quarter ended March 31, 2005 increased to $344,000, a 75% increase over the first quarter of
the prior year, on the strength of growth in subscriptions. Total SmartMusic revenue includes
revenue from the subscription service as well as the sale of accessories such as microphones and
foot pedals. Subscription revenue was $256,000 in the quarter ended March 31, 2005, an 82%
increase over subscription revenue of $141,000 in the quarter ended March 31, 2004. 9




---



##### Table of Contents



SmartMusic subscriptions and revenues fall into three main categories: schools,
school-sponsored homes, and regular home subscriptions. The growth in SmartMusic subscriptions is
summarized below: March 31,
    
    
    December 31,
    
    
    March 31,Subscription Type
    
    2005
    
    
    2004
    
    
    2004School Subscriptions
    
    
    11,166
    
    
    
    9,646
    
    
    
    7,081School-Sponsored Home Subscriptions
    
    
    23,839
    
    
    
    22,757
    
    
    
    13,533Home Subscriptions
    
    
    2,423
    
    
    
    2,083
    
    
    
    1,498Total Subscriptions
    
    
    37,428
    
    
    
    34,486
    
    
    
    22,112
 The following is a summary of the growth in SmartMusic accounts: March 31,
    
    
    December 31,
    
    
    March 31,Type of Customer
    
    2005
    
    
    2004
    
    
    2004Schools
    
    
    3,788
    
    
    
    3,298
    
    
    
    2,864Schools Sponsoring Home Subscriptions
    
    
    841
    
    
    
    686
    
    
    
    390Home Users
    
    
    2,378
    
    
    
    2,054
    
    
    
    1,485
 Deferred SmartMusic subscription revenue, to be recognized over the balance of the current
subscription periods, was $664,000 as of March 31, 2005 compared to $378,000 at March 31, 2004, an
increase of 76%. Deferred SmartMusic revenue represents the revenue yet to be recorded on current
subscriptions. The annualized subscription revenue run rate was $1,093,000 as of March 31, 2005, a
65% increase over an annualized run rate of $664,000 as of March 31, 2004. The run rate does not
include any forecasts of new customers, but gives the annual revenue assuming that we maintain our
current customers at their current subscription level. We believe that the presentation of the
annual run rate provides useful information to investors regarding the success of the subscription
program by disclosing the amount of revenue that is earned on an annual basis from all current
customers, as opposed to deferred revenue that shows only a portion of revenue or quarterly posted
revenue that is historical information. These financial measures should be considered in addition
to, and not a substitute for, financial measures prepared in accordance with U.S. generally
accepted accounting principles. Gross Profit.The decrease in gross profit for the quarter ended March 31, 2005 is a direct
result of lower revenues. Gross margin as a percentage of sales was lower than the first quarter of
2004 because the decrease in revenue was in the Finale product line, a relatively high margin
product, and cost of sales includes fixed amortization of capitalized software costs which is
spread over a reduced revenue base. Development Expenses.The increase in development expenses consists primarily of additional
internal payroll, payments to independent contractors, and related expenses for the development,
maintenance and quality testing of Finale and SmartMusic products. Selling and Marketing Expenses.The increase in sales and marketing expenses is primarily
attributable to an increase in advertising, product placement and trade show expenses to promote
and support an expected growth in business. 10




---



##### Table of Contents



General and Administrative Expenses.General and administrative expenses consist primarily of
payroll and related expenses for executive and administrative personnel, professional services
expenses, amortization of certain intangible assets with definite lives, facilities, and other
general corporate expenses. The increase in expense in the first quarter of 2005 compared to the
first quarter of 2004 relates primarily to increases in corporate insurance and professional fees
relating to the current regulatory environment. Net Loss from Operations. We recorded a net loss from operations of $631,000 for the quarter
ended March 31, 2005 compared with net operating income of $343,000 for the quarter ended March 31,
2004. The decrease in operating performance is primarily due to the decreases in revenue and
increases in expenses described above. Net Income (Loss). We recorded a net loss of $609,000, or $0.18 per basic and diluted share,
for the quarter ended March 31, 2005 compared to net income of $350,000, or $0.10 per basic share,
for the quarter ended March 31, 2004. Liquidity and Capital Resources.Net cash used by operating activities was $599,000 for the
quarter ended March 31, 2005, compared to $226,000 of cash provided by operating activities in the
quarter ended March 31, 2004. The decrease in operating cash flow is mainly a result of the net
loss for the quarter, an increase in inventory and a reduction in accrued liabilities. These
effects were partially offset by collections on accounts receivable, an increase in accounts
payable, and an increase in deferred revenue attributable to the growth in sales of SmartMusic
subscriptions. SmartMusic deferred revenue represents the portion of subscription revenue that is
deferred and amortized over the term of the subscription. We have significantly improved our operating cash flow over the last two years, but due to
lower first quarter revenue combined with our decision to invest in future company growth, the
quarter ended March 31, 2005 resulted in negative operating cash flow. Our quarterly revenues are
typically seasonal, with the first and second quarters being historically lower than the third and
fourth quarters. This cyclical nature is primarily due to the timing of Finale family upgrade
releases, which typically occur in the third or fourth quarter. If we do not meet our anticipated future revenue levels, management is committed to expense
reductions as necessary to ensure the conservation of adequate cash to continue to finance our
operations. If further expense reductions do not offset the decrease in revenue, we may have to
seek additional financing. However, management believes that we currently have sufficient cash to
finance operations for the foreseeable future. 
 ITEM 3. CONTROLS AND PROCEDURES (a) Evaluation of disclosure controls and procedures. After evaluating the effectiveness of our
disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 (Exchange
Act) Rules 13a-14 and 15d-14) as of the end of the period covered by this quarterly report, our
chief executive officer and chief financial officer, with the participation of our management, have
concluded that our disclosure controls and procedures are effective to ensure that information that
is required to be disclosed by us in reports that we file under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the rules of the Securities
and Exchange commission. (b) Changes in internal controls. There were no changes in our internal controls over financial
reporting that occurred during the period covered by this report that have materially affected, or
are reasonably likely to materially affect, our internal controls over financial reporting. 11




---



##### Table of Contents



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 our ability to generate positive cash flow, our
expectations regarding the growth of SmartMusic, the impact of strategic alliances, the timing of
product updates, product development and new market introductions. 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 the
market acceptance of our products; our dependence upon new product development efforts; our
dependence on timely releasing 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; 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 5. Other Items. The Company entered into a lease dated March 1, 2005 for 22,174 square feet of office and
warehouse space in Eden Prairie, Minnesota, which space is used for the Companys principal
offices. The lease expires on March 31, 2011. 
 Item 6. Exhibits. See the attached exhibit index. 12




---



##### Table of Contents



SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date May 2, 2005
    MAKEMUSIC! INC.By:
    /s/ William R. WolffWilliam R. Wolff, Chief Executive Officer(Principal Executive Officer)And:
    /s/ Alan G. ShulerAlan G. Shuler, Chief Financial Officer(Principal Financial and Accounting Officer) 13




---



##### Table of Contents



EXHIBIT INDEX Form 10-QSB Quarter ended March 31, 2005 Exhibit No.
    
    Description10.1
    
    
    Lease dated March 1, 2005 between the Company and First Industrial, L.P.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.
 14