Nature of business:

Garritan Corporation (the Company) conceives, develops and implements sound software libraries. These libraries allow the user to create music using their own computers and integrates with other programs to record and notate the user’s music. The Company is worldwide in distribution (DVD and download) and sells mostly by download directly to customers via the web.

Accounts receivable, trade:

The Company extends unsecured credit to its customers in the ordinary course of business. Based on management’s evaluation of uncollected accounts receivable at the end of each year, all open invoices are considered collectible and no allowance for bad debt is recorded. Interest is not charged on past due accounts.

Inventories:

Inventory consists of DVD’s used in producing software libraries. DVD’s are stated at the lower of cost or market with cost being determined on a weighted average cost method.

Property and equipment:

Property and equipment are stated at cost and are being depreciated using the straight-line method over five to seven years.

Total depreciation expense was $8,081 and $6,365 for the years ended December 31, 2010 and 2009, respectively.

Capitalized software development costs:

Capitalized software consists of costs to develop player technology software and sound library software. Software development costs incurred subsequent to establishing technological feasibility through the release date of the software products are capitalized. Technological feasibility is demonstrated by the completion of a working model or a base sound platform for new release.

Sound libraries:

Capitalized costs for sound libraries are amortized using the straight-line method over twenty-four months, which management has generally identified as the best estimate of a library’s useful life.

Total amortization expense was $136,676 and $129,771 for the years ended December 31, 2010 and 2009, respectively.

Amortization expense will be incurred in future years as follows:

GIGA rights:

The Company purchased certain technology assets (GIGA rights) in March 2009 for $75,000. The GIGA rights are embedded and integral in a number of the Company’s sound libraries. The technology assets have a greater use as a baseline for multiple versions of each of the Company’s sound libraries. Hence, the GIGA rights are being amortized using the straight-line method over thirty-six months.

Total amortization expense was $25,000 and $18,750 for the years ended December, 31, 2010 and 2009, respectively.

Amortization expense will be incurred in future years as follows:

ARIA Player Costs:

ARIA Player technology consists of costs to develop a media player specific to the sound libraries. This media player is embedded in the sound libraries. Costs incurred subsequent to establishing technological feasibility through the release date of each version of the ARIA Player are capitalized. As the technology to develop the ARIA Player is inherent to multiple versions of sound libraries, management has estimated the costs to be amortized using a straight-line method over sixty months.

Total amortization expense was $79,984 and $60,833 for the years ending December 31, 2010 and 2009, respectively.

Amortization expense will be incurred in future years as follows:

Advertising costs:

Advertising costs, included in operating expenses, are expensed as incurred and were $0 and $15,890 for the years ended December 31, 2010 and 2009, respectively.

Revenue recognition:

Revenues from software libraries are recognized when all the following conditions are met: there is evidence of an agreement with the customer, shipment has occurred or if downloaded, transmission has occurred, the total sales price is fixed and determinable and collection is probable and any uncertainties with regard to customer acceptance are insignificant. Charges to customers for shipping and handling are included in revenue. Revenue is recorded net of any sales tax or use tax. Sales taxes collected from customers are included in accounts payable until remitted to the appropriate taxing jurisdiction.

Income taxes:

The Company, with the consent of its stockholders, has elected to be taxed under sections of federal and state income tax law, which provide that, in lieu of corporation income taxes, the stockholders separately account for their pro rata shares of the Company’s items of income, deductions, losses and credits. As a result of this election, no income taxes have been recognized in the accompanying financial statements.

The Financial Accounting Standards Board issued guidance on accounting for uncertainty in income taxes. The Company adopted this new guidance for the year ended December 31, 2010 and 2009. Management evaluated the Company’s tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. With few exceptions, the Company is no longer subject to income tax examinations by the U.S. federal, state or local tax authorities for years before 2008.

Use of estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentrations:

The Company maintains its cash balances in one financial institution. Cash balances at times may exceed FDIC limits, however, no losses have been experienced.

We had three customers representing 44%, 20% and 10% of outstanding accounts receivable at December 31, 2010. None of these customers represented a concentration in revenue. As of December 31, 2009, we

had five customers representing 33%, 21%, 14%, 11% and 11% of outstanding accounts receivable with no customer representing a concentration of revenue.

Research and development:

All research and development costs, included in operating expenses, are charged to operations as incurred and were $138,848 and $76,023 for the years ended December 31, 2010 and 2009, respectively.

Impairment of long-lived assets:

The Company will record impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts.

Product warranty obligation:

Based on historical data, the Company has experienced very little return on products sold. On occasion, a software library downloaded or DVD sold may not work properly and has been replaced. It is management’s evaluation that, due to the infrequent nature and small amount, no product warranty obligation should be established.

Subsequent events:

Management evaluated for subsequent events through March 14, 2012 the date the financial statements were available for issuance.

The Company has a Simplified Employee Pension (SEP) covering the stockholders. The Company’s contribution was $20,000 and $15,000 for the years ended December 31, 2010 and 2009, respectively.

The Company has contractual relationships and license agreements with various resellers and third parties in the ordinary course of business. These arrangements subject the Company or the third parties to certain individual performance standards. The Company has not determined or recorded any minimum gain or loss accruals related to these arrangements.

For the year ending December 31, 2009, the Company had an unsecured demand note for $75,000 with the stockholders, which bears no interest and was repaid during 2010.

The Company rents office space, on a month-to-month lease, from the stockholders. Annual rent expense was $6,000 for December 31, 2010 and 2009 there are no future rent obligations.

The Company executed a stock purchase agreement with MakeMusic, Inc. on December 21, 2011 and closed on the transaction effective December 30, 2011. Under terms of the agreement, Garritan Corporation became a wholly owned subsidiary of MakeMusic, Inc.