Higher Gross Margin, Reduced Net Loss, Lower Revenues ---------------------------------------------------------------------- ISSAQUAH, Wash.--(BUSINESS WIRE)--May 20, 1999--Midisoft Corporation (OTC BB:MIDI), music technology pioneer and recognized leader of innovative applications for creation of music and audio on personal computers and the Internet, today announced results for the quarter ending March 31, 1999. Midisoft reported a gross margin of 69% for the quarter ending March 31, 1999, compared to 62% for the same period last year, on a comparable quarter revenue decrease from $365,000 to $133,000. The Company also reported a net loss of $816,000 compared to $1,463,000, representing a $647,000, or 44%, reduction in the net loss compared to the same period last year. On a per share basis, this represents a 52% reduction in net loss over the same quarter last year. "While we would have benefited from higher shipment numbers in the first quarter, it is usually our lowest quarter for sales. We've taken this time to accelerate refocusing our music software technology into direct sales channels and our Internet products into innovative licensing programs, In addition, we've identified others whose needs converge on a desire for compelling online musical experiences and who we believe will benefit from our expertise in music creation and Internet-centric music and audio delivery," commented Larry Foster, President and C.E.O.. Mr. Foster continued, "I think its also noteworthy that our gross margins have improved 11% and operating expenses are down 28%, compared to last year's first quarter." The Company reported that it applied substantial resources during this year's first quarter to introduction of its Desktop Sheet Music(tm) 2.0 into direct sales channels, slated to begin shipping during the second quarter of 1999. Foster elaborated, "We remain fully committed to our research and development program, expenditures for R&D remained at a substantial level directed at enhancements to our core technology. For example, we recently completed engineering features into Desktop Sheet Music(tm) 2.0 for one of a number of specialty markets we have targeted." Foster continued, "We are positioning our music creation and Internet products to exploit trends in online promoting, marketing and selling of music and related products. Internet Media Player(tm) is a candidate for private labeling on destination and portal websites. In April, we introduced a new licensing program for independent content providers for player branding and promotion of digital audio and video. This product provides enhanced content organization and management capabilities and incorporates current Internet market dynamics for media players. It contains an ad banner that reflects a potential additional revenue stream for the Company." Midisoft Corporation is the music technology pioneer and a recognized leader of sound applications for use on personal computers and the Internet. The Company develops and sells music creation software for musicians to compose, edit and record music and print engraver-quality sheet music. It develops and markets sound management products for users to conveniently access Internet content, sound controls and media files directly from their desktops. Midisoft's products help make the wealth of web-based content available and accessible for the enjoyment of the increasing number of consumers who join the Internet daily. Based in Issaquah, Washington, the Company develops award-winning consumer and business products that are sold at retail and licensed to third-party manufacturers, destination websites and content portals. For further information on the Company, please visit the Midisoft web site at www.midisoft.com. All statements in this press release other than statements of historical fact are forward-looking statements that involve substantial risks and uncertainties There can be no assurance that the Company's capital requirements will not increase in the future that the Company's operations will improve, or that revenues will increase. Reference is made to Midisoft's Annual Report on Form 10-KSB for the year ended December 31, 1998 and to the Company's other reports filed with the Securities and Exchange Commission for a discussion of such risks and uncertainties and other factors that may have a material effect on the Company's business. (TABLES FOLLOW) MIDISOFT CORPORATION BALANCE SHEETS ASSETS (Unaudited) (Audited) At March 31, At Dec. 31, 1999 1998 Current assets: Cash and cash equivalents $139,000 $270,000 Accounts receivable - net of allowances of $245,000 in 1999 and 1998 94,000 183,000 Inventories 112,000 115,000 Prepaid expenses and other receivable 40,000 42,000 -------- -------- Total current assets 385,000 610,000 Long-term receivable 195,000 195,000 Property & equipment, net of depreciation 99,000 116,000 Debt issuance costs, net of accumulated amortization of $29,000 in 1999 and $23,000 in 1998 50,000 56,000 -------- -------- Total assets $729,000 $977,000 ======== ======== LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 1,452,000 $ 1,181,000 Current portion of long-term debt 250,000 250,000 Accrued wages & payroll taxes 94,000 93,000 Other accrued expenses 84,000 273,000 Deferred revenue 9,000 6,000 ------------ ------------ Total current liabilities 1,889,000 1,803,000 Long-term debt, net of discount 2,490,000 2,258,000 Warrant obligations 81,000 81,000 Shareholders' (deficit) equity Common stock, no par value; 25,000,000 shares authorized, 7,251,000 issued and outstanding in 1999 and 1998 20,488,000 20,488,000 Additional paid-in capital 3,277,000 3,026,000 Notes receivable from shareholders (191,000) (191,000) Retained deficit (27,305,000) (26,488,000) ------------ ------------ Total shareholders' deficit (3,731,000) (3,165,000) ------------ ------------ Total liabilities and shareholders' deficit $ 729,000 $ 977,000 ============ ============ MIDISOFT CORPORATION STATEMENTS OF OPERATIONS (Unaudited) Quarter Ended March 31, 1999 1998 Revenues $ 133,000 $ 365,000 Cost of revenues 41,000 140,000 ----------- ----------- Gross profit 92,000 225,000 Operating expenses: Sales and marketing 203,000 310,000 General and administrative 357,000 377,000 Research and development 101,000 225,000 ----------- ----------- Total operating expenses 661,000 912,000 Operating loss (569,000) (687,000) Interest expense (240,000) (765,000) Other expense (7,000) (11,000) =========== =========== Net loss $ (816,000) $(1,463,000) =========== =========== Net loss per share (basic) $ (0.11) $ (0.23) =========== =========== Net loss per share (diluted)(a) $ (0.11) $ (0.23) =========== =========== Weighted average shares outstanding 7,251,000 6,298,005 =========== =========== (a) Common stock equivalents not included, as it would be anti-dilutive  