UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                                       
                                       
                                  Form 10-QSB


(Mark One)

  X       Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the period ended March 31, 1998.
                                      OR
          Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934Commission File Number: 0-25678


                            MUSTANG SOFTWARE, INC.
            (Exact name of registrant as specified in its charter)
                                       
                                  California
                           (State of incorporation)
                                       
                                  77-0204718
                               (I.R.S.  employer
                            identification number)
                                       
                              6200 Lake Ming Road
                         Bakersfield, California 93306
                   (Address of principal executive offices)
                                       
                                (805) 873-2500
             (Registrant's telephone number, including area code)
                                       
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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      X                    No

     As of May 11, 1998, there were 3,425,011 shares of the Registrant's 
Common Stock outstanding.

===============================================================================

<PAGE> 2

                                       

                          MUSTANG SOFTWARE, INC.
                                       
                                  FORM 10-QSB
                                       
                                     INDEX


                                                                           Page

PART I.   Financial Information:

Balance Sheets as of March 31, 1998 and December 31, 1997                  3

Statements of Operations for the three months ended March 31,1998 
and 1997                                                                   4

Statements of Cash Flows for the three months ended March 31, 1998 
and 1997                                                                   5

Notes to Financial Statements                                              6

Management's  Discussion  and Analysis of Financial Condition  
and  Results  of Operations                                                7

PART II.   Other Information:

Report of sales of  securities  and  use  of proceeds therefrom 
FORM SR                                                                    9

Signatures                                                                12



============================================================================
<PAGE> 3
<TABLE>



                            MUSTANG SOFTWARE, INC.
                                BALANCE SHEETS
                                       
                                    ASSETS
       
<CAPTION>
                                                       March 31,  December 31
                                                          1998       1997
                                                       (Unaudited)             
<S>
CURRENT ASSETS:                                         <C>        <C>               
  Cash and cash equivalents                              $ 992,919  $ 1,403,776
                                                              
Accounts receivable, net of allowance for doubtful          73,964        6,378
accounts of $160,000 December 31, 1997 and                                      
March 31,1998

Income taxes receivable                                         --       97,004
Inventories                                                 74,868       99,915
Other                                                       27,503       28,215
-------------------------------------------------------------------------------
        Total current assets                             1,169,254    1,635,288
-------------------------------------------------------------------------------     
PROPERTY AND EQUIPMENT:                                                        
  Property and equipment                                 1,245,263    1,238,713
  Accumulated depreciation                                (561,772)    (527,279)
-------------------------------------------------------------------------------  
                                                         
        Net property and equipment                         683,491      711,434                         
-------------------------------------------------------------------------------      
OTHER ASSETS:                                                                  
  
  Capitalized software development costs, net                3,732        4,083
-------------------------------------------------------------------------------        
        Total other assets                                   3,732        4,083            
-------------------------------------------------------------------------------
                                                                               
                                                        $1,856,477   $2,350,805
===============================================================================          
                                                                   
                     LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:                                                           
  Accounts payable                                         $259,646    $242,451
  Accrued payroll and liabilities                           132,660     217,318
  Accrued warranty and support                               45,000      45,000
  Deferred revenue                                           80,000      80,000
-------------------------------------------------------------------------------       
       Total current liabilities                            517,306     584,769
-------------------------------------------------------------------------------
CAPITAL LEASE OBLIGATION, net of current portion            252,573     269,005                   
-------------------------------------------------------------------------------                                             
COMMITMENTS AND CONTINGENCIES                                                  
SHAREHOLDERS' EQUITY:                                                          
  Preferred stock, no par value:                                               
     Authorized 10,000,000 shares                                              
       None issued or outstanding                               --           --
  Common stock, no par value:                                                  
     Authorized--30,000,000 shares                                             
       Issued and outstanding--3,392,728 and 3,417,961    6,673,163   6,640,045                     
       at December 31,1997 and March 31, 1998,
       respectively                                              
     Retained earnings                                   (5,586,565) (5,143,014)
-------------------------------------------------------------------------------       
       Total shareholders' equity                         1,086,598   1,497,031
-------------------------------------------------------------------------------                           
                                            
                                                         $1,856,477  $2,350,805
===============================================================================
 The accompanying notes are an integral part of these financial statements.   
                                                                          
</TABLE>                                                         
=============================================================================== 
<PAGE>4                                                                        
<TABLE>  
                            MUSTANG SOFTWARE, INC.

                           STATEMENTS OF OPERATIONS

<CAPTION>

                                  Three Months Ended March 31,
                                         1998            1997                                                                   
<S>                              <C>              <C>
REVENUE                           $    398,480     $   799,922
COSTS OF REVENUE                        66,409         122,366                            
-------------------------------------------------------------------------------
                                                                                             
Gross profit                           332,071         677,556                            
-------------------------------------------------------------------------------
                                     
OPERATING EXPENSES:                                                
  Research and development             174,278         171,207
  Selling and marketing                247,018         328,440
  General and administrative           360,585         421,863  
-------------------------------------------------------------------------------                                     
                                                                   
   Total operating expenses            781,881         921,510 
-------------------------------------------------------------------------------
                                                                                                             
  Income(loss)from operations         (449,810)       (243,954)                    
-------------------------------------------------------------------------------                                     

OTHER INCOME (EXPENSE):                                            
  Interest expense                      (8,174)         (9,711) 
  Interest income                       14,433          36,654
-------------------------------------------------------------------------------
   Total other income (exp).             6,259          26,943                      
----------------------------------------------------------------------------
                                                                   
Income (loss) before                                               
  provision for income taxes          (443,551)       (217,011)
                                                                   
PROVISION (BENEFIT)                                                
  FOR INCOME TAXES                        --                -- 
------------------------------------------------------------------------------- 
                                                                   
NET INCOME (LOSS)                 $   (443,551)    $  (217,011)
===============================================================================               
NET INCOME (LOSS)                                                  
  PER COMMON SHARE                $       (.13)    $      (.06)
=============================================================================== 
                                                                   
WEIGHTED AVERAGE NUMBER                                            
  OF SHARES OUTSTANDING              3,417,961       3,374,967                                                                  
===============================================================================

  The accompanying notes are an integral part of these financial statements.
                            
                                       
</TABLE>
===============================================================================
<PAGE>5
<TABLE>
                            MUSTANG SOFTWARE, INC.
                                       
                           STATEMENTS OF CASH FLOWS


<CAPTION>

                                                  Three Months Ended March 31,
                                                         1998         1997

<S>                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:      
   Net income(loss)                                $  (443,551)   $   (217,011)
   Adjustments to reconcile net income to net 
   cash provided by operating activities:                                        
     Depreciation and amortization                      34,842          37,670            1
     Net changes in assets and liabilities             (12,289)       (233,374)
-------------------------------------------------------------------------------
                                                                               
     Net  cash  provided  (used)  by  operating                            
     activities                                       (420,998)       (412,715)
-------------------------------------------------------------------------------
                                                                               
CASH FLOWS FROM INVESTING ACTIVITES:                                           
  Purchase of property and equipment                    (6,545)             -                           
-------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:                                          
  Net proceeds from issuance of stock                   33,118         
  Payments on capital lease obligation                 (16,432)        (14,895)
-------------------------------------------------------------------------------                           
         Net  Cash  provided  (used)  by  
         financing activities                           16,686         (14,895)
-------------------------------------------------------------------------------
                                                                               
NET INCREASE (DECREASE) IN CASH                       (410,857)       (427,610)
                                                                               
CASH BALANCE, beginning of period                    1,403,776       2,920,231
-------------------------------------------------------------------------------       
                                                                         
CASH BALANCE, end of period                        $   992,919    $  2,492,621
=============================================================================== 

SUPPLEMENTAL DISCLOSURES:                                                      
  Interest paid                                          8,174           9,711
  Taxes paid                                                --              --
                                                                             
  
  The accompanying notes are an integral part of these financial statements.

</TABLE>
===============================================================================
<PAGE>6

                             MUSTANG SOFTWARE, INC.
                                       
                          NOTES TO FINANCIAL STATEMENTS

Note 1. Accounting Policies

   The accompanying unaudited Condensed Financial Statements have been prepared
pursuant   to  the  rules  and  regulations  of  the  Securities  and  Exchange
Commission.  Certain information and footnote disclosures normally included  in
annual  financial  statements prepared in accordance  with  generally  accepted
accounting principles have either been condensed or omitted pursuant  to  those
rules   and  regulations.   In  the  opinion  of  management,  all  adjustments
(consisting  of  normal recurring accruals) considered  necessary  for  a  fair
presentation have been included.  The results of operations and cash flows  for
the periods presented are not necessarily indicative of the results that may be
expected  for  the  full fiscal year.  For further information,  refer  to  the
financial  statements and notes thereto for the year ended December 31,  1997,
included in the 1997 Form 10KSB.

   The  condensed Balance Sheet at December 31, 1997 has been taken  from  the
audited financial statements at that date and condensed.

===============================================================================
<PAGE>7
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   In addition to the comments that follow, further information can be obtained
by referring to the management's discussion and analysis of financial condition
and  results  of operations section included in the Form 10KSB, filed  for  
the year ended December 31, 1997.

Results of Operations:

Three Months Ended March 31, 1998 and 1997

      Revenues for the three months ended March 31, 1998 were $398,480,
a  decrease  of $401,442 or 50.2% under revenues for  the  same
period in 1997.  As a percentage of revenues by product category for the first
quarter  1998  vs.  1997 showed the QmodemPro line  at  8%  and  15%,  the
Wildcat!  line  at  52% and 82%, Web Essentials at  32%  and  0%  and  other
products at 8% and 3%, respectively.  Sales were higher in first quarter of 
1997 than in the first quarter of 1998 due to the release of three add-on
products for the Wildcat Line to an established customer base.  First quarter
of 1998 did not benefit from any new releases to an established customer base.
However, first quarter of 1998 did have the release of IMC Enterprise edition
which is a positive move towards the company goal of building a new customer 
base for the Web Essentials product line. 

      Gross  profit for the quarter decreased from $677,556 in 1997  to
$332,071 in 1998, and increased as a percentage  of  revenues  from
84.7%  in 1997 to 83.3% in 1998.  Gross profit percentage has  averaged
between 80-84% over the last three calendar years.

      Research  and development expenses increased $3,071  in  the
first  quarter of 1998 from 1997, and increased as a percentage  of  revenues  
from  21.4% in 1997 to 43.7% in 1998. The  decline  in revenues accounted for 
the increase as a percentage of revenues.  In an  effort to improve its 
competitive position, the Company expects to invest a significant
amount  of  its  resources  for the development of  new  products  and  
product enhancements.

      Selling and marketing expenses for the quarter were $247,018,
a decrease of $81,422 under the same quarter the previous year, and
they  increased  as  a  percentage of revenues from  41.1%  in  1997 to
62.0% in 1998.  The items primarily attributing to the decrease  was  a
reduction  of advertising and promotional costs for  existing  products.
The decrease in headcount from 9 in 1997 to 8 in 1998, also contributed 
to the decrease.

      General  and  administrative expenses decreased for the quarter  
compared to the previous year, from $421,863 in 1997 to $360,585 in 1998, 
but increased as a percentage of revenues, from 52.7% in 1997 to  90.5% 
in 1998.  The items primarily accounting for the decrease  were
salaries  and  costs  associated  with  employee  benefits.   The  General
and administrative headcount decreased 29% from the prior year.



===============================================================================
<PAGE>8

Liquidity and Capital Resources

      Cash  and  cash equivalents balance at March 31, 1998 were approximately
$992,919,   a   decrease   of   approximately   $410,859   from
December 31, 1997. Accounts receivable increased approximately $67,586
and   Accounts  Payable  increased  approximately  $17,195  in  1998.
Accounts  receivable average days to collect for the quarter  ended  
March  31, 1997  and 1998 were 64 and 52 days, respectively.  Average days to 
collect in 1997 was 64 days.  Management's goal is to maintain receivable 
collection days at or below 65 for 1998.  Inventory levels have decreased 
$25,047 in 1998 from December 31, 1997.

      Longer term cash requirements, other than normal operating expenses,  
are anticipated  for  development  of new software  products  and  
enhancements  of existing   products,   launching  new  products  and  
enhancements,   financing anticipated  growth  and  the  possible  acquisition  
of  businesses,  software products or technologies complementary to the 
Company's business.  The  Company believes  that its existing cash, cash 
equivalents, marketable securities,  and cash generated from operations and 
available line of credit, will be sufficient to  meet the Company's working 
capital and capital expenditure requirements for at least the next 12 months.


===============================================================================
<PAGE>9
<TABLE>
<CAPTION>

Part II. Other Information

Item 2. Changes in Securities and Use of Proceeds

(d)
     (1) The effective date of the Securities Act registration statement for
     which this use      of proceeds information is being disclosed and the
     Commission file number assigned      to the registration statement is
     April 5, 1995 and 2-89900-LA, respectively.

     (2) The offering date was April 5, 1995.

     (3) The offering did not terminate before any securities were sold.

          (i) The offering has terminated but not before the sale of all
securities registered.

          (ii) The name(s) of the managing underwriter(s) is Cruttenden Roth,
     Incorporated.

          (iii) The title of each class of securities registered is Common
Stock, no par value and Warrants to purchase Common Stock.

          (iv) For each class of securities the following table provides
information for the account of the registrant and the selling security holders
with respect to the amount of the securities registered, the aggregate price of
the offering amount registered, the amount sold and the aggregate offering
price of the amount sold to date:

        For the account of the registrant      For the account(s)of any
                                              selling security holder(s)

<S>
  Title      Amount     Aggregate     Amount    Aggregate     Amount     Aggregate    Amount    Aggregate
   of      registered   price of       sold      offering   registered    price of     Sold      offering   
Security                offering                 price of                 offering               price of
                        amount                   amount                   amount                 amount
                        registered               sold                     registered             sold

<C>       <C>          <C>          <C>        <C>          <C>          <C>         <C>       <C> 
 Common    1,250,000    $8,125,000   1,125,000  $8,125,000   187,500      $1,109,063  187,500   $1,109,063
 Stock            
                                         
 Warrants    125,000           125     125,000        $125                              
               
                                                                         
                                                                         
 Total     1,375,000    $8,125,125   1,375,000  $8,125,125   187,500      $1,109,063  187,500   $1,109,063
               

          (v) From April 5, 1995 (the effective date of the Securities Act
registration statement) to March 31, 1998 the following table provides
information as to the amount of expenses incurred for the registrant's account
in connection with the issuance and distribution of the securities registered
for underwriting discounts and commissions, finders fees, expenses paid to or
for underwriters, other expenses and total expenses were as follows:

</TABLE>
===============================================================================
<PAGE>10
<TABLE>
<CAPTION>
                      Direct or indirect     Direct or indirect
                      payments to directors  payment to others
                      officers, general      
                      partners of the        
                      registrant or their    
                      associated; to         
                      persons owning ten     
                      percent or more of     
                      any class of equity             
                      securities of the
                      registrant; and to
                      affiliates of the
                      registrant.
                      
                               (A)                       (B)

<S>                  <C>                    <C>
(01)Underwriting                             
discounts     and     [ ]$                   [ ]$       731,250
commissions
                                             
(02)Finder's Fees     [ ]                    [ ]
                                             
(03)Expenses paid to                         
or for underwriters   [ ]                    [ ]        243,750
                                             
(04)Other expenses    [ ]                    [ ]        565,315
                                             
(05)Total Expenses    [ ]                    [ ]$     1,540,315

          (vi) The net offering proceeds to the registrant after deducting the
total expenses described in paragraph (f)(4)(v) of this Item was $6,584,810.

</TABLE>
===============================================================================
<PAGE>11
<TABLE>
<CAPTION>


          (vii) From April 5, 1995 (the effective date of the Securities Act
registration statement) to March 31, 1998 the following table provides
information with respect to the amount of net offering proceeds to the
registrant used for construction of plant, building and facilities; purchase 
and installation of machinery and equipment; purchases of real estate; 
acquisition of other business(es); repayment of indebtedness;
working capital; temporary investments; and any other purposes for which at
least five (5) percent of the registrant's total offering proceeds or $100,000
(whichever is less) has been used:



                          Direct or indirect         Direct or indirect
                          payments to directors      payment to others
                          officers, general          
                          partners of the            
                          registrant or their        
                          associated; to persons     
                          owning ten percent or      
                          more of any class of                
                          equity securities of the
                          registrant; and to
                          affiliates of the
                          registrant.

                                     (A)                        (B)

<S>                      <C>                        <C>
(01)Construction of                                  
plant, building and       [ ]$                       [ ]$
facilities
                                                     
(02)Purchase and                                     
installation of           [ ]                        [ ]
machinery and equipment
                                                     
(03)Purchase of real      [ ]                        [ ]
estate
                                                     
(04)Acquisition of other                             
business(es)              [ ]                        [ ]
                                                     
(05)Repayment of                                     
indebtedness              [ ]                        [ ]
                                                     
(06)Working capital       [ ]      39,500            [ ]  669,822
                                                     

 Temporary investment (specify)
(07)                      [ ]$                       [ ]$
(08)                      [ ]                        [ ]
(09)                      [ ]                        [ ]
(10)                      [ ]                        [ ]

Other purposes (specify)
                                                     
(11)Advertising           [ ]$                       [ ]$  859,940
                                                     
                                                     
(12)Marketing & Trade     [ ]                        [ ] 2,908,855
                                                     
                                                     
(13)Research &            [ ]                        [ ] 1,738,494
Development                                          
                                                     
(14)                      [ ]                        [ ]


(viii) The use of proceeds disclosed in paragraph (d)(3)(vii) of this Item  did
not  represent  a  material  change in the use of  proceeds  described  in  the
prospectus.

</TABLE>

===============================================================================
<PAGE>12






                                SIGNATURES

      In  accordance with the requirements of the Securities Act of  1934,  the
Registrant  has  duly  caused this report to be signed on  its  behalf  by  the
undersigned, thereunto duly authorized.

         Signature                Title                           Date


____________________
James  A. Harrer         President  and Chief Executive           May 14, 1998
                         Officer (Principal Executive
                         Officer) and a Director              

____________________
Donald M. Leonard        Vice  President and  Chief               May 14, 1998
                         Financial Officer (Principal Financial
                         and  Accounting  Officer) 
                         and a Director