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 September 30, 1997

OR
     	Transition report pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934 Commission 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 October 23, 1997, there were 3,383,694 shares of the Registrant's
Common Stock outstanding.


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<PAGE>2



                              MUSTANG SOFTWARE, INC.

                                   FORM 10-QSB

                                      INDEX


                                                                           Page

PART I.   Financial Information:

Balance Sheets as of September 30, 1997 and December 31, 1996                 3

Statements of Operations for the three and nine months
ended September 30, 1997 and 1996                                             4

Statements of Cash Flows for the nine months ended
September 30, 1997 and 1996                                                   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

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<PAGE>3
<TABLE>
                        MUSTANG SOFTWARE, INC.
                           BALANCE SHEETS

                                ASSETS
<CAPTION>
                                                                September 30,   December 31, 
                                                                    1997             1996
                                                                 (Unaudited)
<S>                                                             <C>             <C>
CURRENT ASSETS:                 
   Cash and cash equivalents                                     $ 1,646,233     $ 2,920,231  
	Accounts receivable, net of allowance for doubtful
        accounts of $400,000 and $185,000 at December 31, 1996
        and September 30, 1997, respectively                          80,096          63,529  
   Income taxes receivable                                           173,540         173,540  
   Inventories                                                       150,567         228,136  
   Other                                                              46,788          55,500  
- - - ---------------------------------------------------------------------------------------------
                Total current assets                               2,097,224       3,440,936  
- - - ---------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT:


  Property and equipment                                           1,256,337       1,256,337  
  Accumulated depreciation                                          (505,296)       (393,337) 
- - - ---------------------------------------------------------------------------------------------
                Net property and equipment                           751,041         863,000
- - - ---------------------------------------------------------------------------------------------
OTHER ASSETS:
  
  Capitalized software development costs, net                          4,422           5,475  
  Other                                                                   --           1,300  
- - - ---------------------------------------------------------------------------------------------
                Total other assets                                     4,422           6,775
- - - ---------------------------------------------------------------------------------------------
                                                                  $2,852,687      $4,310,711  
= = = =============================================================================================


                         LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:


  Accounts payable                                                  $337,004        $859,053  
  Accrued payroll and liabilities                                     90,783         163,056  
  Accrued warranty and support                                        45,000          45,000  
  Deferred revenue                                                    80,000          80,000  
- - - ---------------------------------------------------------------------------------------------
                Total current liabilities                            552,787        1,147,109  
- - - ---------------------------------------------------------------------------------------------
CAPITAL LEASE OBLIGATION, net of current portion                     291,416          337,221  
- - - ---------------------------------------------------------------------------------------------
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--3,374,967 and 3,383,694 shares at  
         December 31,1996 and September 30, 1997, respectively     6,634,286        6,628,722  

                Retained earnings                                 (4,625,802)      (3,802,341) 
- - - ---------------------------------------------------------------------------------------------
                        Total shareholders' equity                 2,008,484        2,826,381  
- - - ---------------------------------------------------------------------------------------------
                                                
                                                                  $2,852,687       $4,310,711  
= = = =============================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<PAGE>4
<TABLE>
                                MUSTANG SOFTWARE, INC.

                               STATEMENTS OF OPERATIONS
<CAPTION>
			        Three Months Ended Sept 30,   Nine Months Ended Sept 30,
                                    1997         1996             1997         1996
<S>                              <C>            <C>              <C>           <C>
REVENUE                           $   331,365    $   755,235      $ 1,589,914   $ 3,224,233  
COSTS OF REVENUE                       58,419        114,903          273,283       579,122  
- - - ---------------------------------------------------------------------------------------------
Gross profit                          272,946        640,332        1,316,631     2,645,111  
- - - ---------------------------------------------------------------------------------------------
OPERATING EXPENSES:

Research and development              181,048        242,096          523,157       733,144  
Selling and marketing                  80,350      1,028,439          614,743     2,780,308  
General and administrative            273,871        518,917        1,059,290     1,716,235  
- - - ---------------------------------------------------------------------------------------------
    Total operating expenses          535,269      1,789,452        2,197,190     5,229,687  
- - - ---------------------------------------------------------------------------------------------
    Income(loss)from operations    (  262,323)    (1,149,120)      (  880,559)   (2,584,576) 
- - - ---------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):

    Interest expense                   (8,961)       (10,424)         (28,013)      (32,591) 
    Interest income                    22,189         41,377           85,911       197,436  
    Gain/loss on sale of asset             --             --               --         2,000  
- - - ---------------------------------------------------------------------------------------------
           Total other income (exp)    13,228         30,953           57,898       166,845  
- - - ---------------------------------------------------------------------------------------------
Income (loss) before
        provision for income taxes  (  249,095)   (1,118,167)      (  822,661)   (2,417,731) 


PROVISION (BENEFIT)
        FOR INCOME TAXES                    --           --               800            --  
- - - ---------------------------------------------------------------------------------------------

NET INCOME (LOSS)                  $(  249,095)  $(1,118,167)     $(  823,461)  $(2,417,731) 
= = = ============================================================================================= 

NET INCOME (LOSS)
        PER COMMON SHARE           $      (.07)  $      (.33)     $      (.24)  $      (.72)
= = = =============================================================================================


WEIGHTED AVERAGE NUMBER
        OF SHARES OUTSTANDING        3,383,694     3,362,940        3,380,785     3,360,570  
= = = =============================================================================================


The accompanying notes are an integral part of these financial statements.

</TABLE>
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<PAGE>5
<TABLE>
                                MUSTANG SOFTWARE, INC.

                               STATEMENTS OF CASH FLOWS
<CAPTION>
                                                    Nine Months Ended September 30,
                                                           1997             1996
<S>                                                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income(loss)                                   $(823,460)          $(2,417,731) 
  Adjustments to reconcile net income to net cash 
            provided by operating activities:                            
            Depreciation and amortization              113,013               145,044  
            Net changes in assets and liabilities     (523,309)              128,962  
- - - ---------------------------------------------------------------------------------------------

              Net cash used by operating activities (1,233,756)           (2,143,725)
- - - ---------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITES:

        Purchase of property and equipment                  --               (51,459)
- - - ---------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

        Net proceeds from issuance of stock              5,563                 5,751  
        Payments on capital lease obligation           (45,805)              (41,523)
- - - ---------------------------------------------------------------------------------------------
              Net Cash provided (used) by financing
               activities                              (40,242)              (35,772) 
- - - ---------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH                     (1,273,998)           (2,230,956) 
 
CASH BALANCE, beginning of period                    2,920,231             5,615,404  
- - - ---------------------------------------------------------------------------------------------
CASH BALANCE, end of period                         $1,646,233            $3,384,448  
= = = =============================================================================================

SUPPLEMENTAL DISCLOSURES:

        Interest paid                                   28,013                32,591  
        Taxes paid                                         800                    --  

	
	The accompanying notes are an integral part of these financial statements.
</TABLE>
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<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, 1996,
included in the 1996 Form 10KSB.

The condensed Balance Sheet at December 31, 1996 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, 1996. 

Results of Operations:

Three Months Ended September 30, 1997 and 1996

Revenues for the three months ended September 30, 1997 were $331,365 a decrease
of $423,870 or 56% under revenues for the same period in 1996.  As a percentage
of revenues by product category for the third quarter 1997 vs. 1996 showed the
QmodemPro line at 19% and 9%, the Wildcat! line at 88% and 79%, and other
products at 2% and 2%, respectively. The greater Wildcat! revenues in 1996 were
directly related to the release of Wildcat! version 5 in March 1996.

Gross profit for the quarter decreased from $640,332 in 1996 to $272,946 in
1997, and increased slightly as a percentage of revenues from 84.8% in 1996 to
82.4% in 1997.  Gross profit percentage has averaged approximately 80-84% over
the last three calendar years.

Research and development expenses decreased $61,048 in the third quarter of
1997 from 1996, but increased as a percentage of revenues from 32.1% in 1996
to 54.6% in 1997. Research and development is concentrated in Windows NT and
Windows 95 and directly targets the expanded use of international networks,
including the Internet. The Company has devoted and is devoting a substantial
portion of its research and development resources to the Windows 95 and
Windows NT environments and now offers a suite of Web server and
internet/intranet utility applications for Windows 95 and Windows NT
environments.  The headcount in this department decreased from 13 at September
1996 to 9 at September 30, 1997. The headcount reduction accounted for the
majority of the decrease in absolute dollars and the decline in revenues
accounted for the increase as a percentage of revenues.

Selling and marketing expenses for the quarter were $80,350, a decrease of
$948,089 over the same quarter the previous year, and they decreased as a
percentage of revenues from 136.2% in 1996 to 24.2% in 1997. The items
primarily accounting for the decrease were a reduction of advertising and
promotional costs for existing products, the fact that 1996 expenses associated
with the launch of Wildcat! 5 were not repeated in 1997 and a reduction in
expenses resulting from a decrease in the number of trade shows attended in
1997. The decrease in headcount from 10 at September 30, 1996 to 6 at
September 30, 1997 also contributed to the decrease.

General and administrative expenses decreased for the quarter over the previous
year, from $518,917 in 1996 to $273,871 in 1997, but increased as a percentage
of revenues, from 68.7% in 1996 to 82.6% in 1997. The items primarily
accounting for the decrease in absolute dollars were salaries and costs
associated with employee benefits eliminated with the decrease in headcount.
The General and administrative headcount decreased 65% from the prior year.
The decline in revenues during the quarter ended September 30, 1997 accounted
for the increase in geneeral and administrative expenses as a percentage of
revenues.

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

Nine Months Ended September 30, 1997 and 1996

Revenues for the nine months ended September 30, 1997 were $1,589,914, a
decrease of $1,634,319 or 50.7% under revenues for the same period in the prior
year.  As a percentage of revenues by product category showed the QmodemPro
line at 14% and 3%, the Wildcat! line at 83% and 95%, and other at 3% and 2%
for the first nine months of 1997 and 1996, respectively. The greater
percentage of revenues in the nine months ended September 30, 1996 for the
Wildcat! line was due to the launch of Wildcat! v.5 for Win95/NT in March 1996. 

Gross profit for the first nine months decreased from $2,645,111 in 1996 to
$1,316,631 in 1997, and increased slightly as a percentage of revenues from
82.0% in 1996 to 82.8% in 1997. Gross profit percentage has averaged
approximately 80-84% over the last three calendar years.

Research and development expenses decreased $209,987 in the first nine months
of 1997 from 1996, but increased as a percentage of revenues from 22.7% in 1996
to 32.9% in 1997.  The headcount in this department decreased from 13 at
September 1996 to 9 at September 30, 1997.  The heacount reduction accounted
for the majority of the decrease in absolute dollars and the decline in 
revenues accounted for the increase as a percentage of revenues.  To maintain 
its competitive market 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 first nine months of 1997 decreased
$2,165,565 over the same period the previous year, from $2,780,308 to
$614,743. As a percentage of revenues selling and marketing expenses
decreased from 86.2% in 1996 to 38.7% in 1997. The items primarily
accounting for the decrease were advertising and promotional costs for existing
products and the launch of Wildcat! Version 5 for Windows 95/NT in March 1996
were not incurred in 1997, a reduction in trade shows and the costs associated
with them and the decrease in headcount from 10 at September 30, 1996 to 6 at
September 30, 1997.

General and administrative expenses decreased $656,945 in the first nine months
of 1997 from $1,716,235 in 1996 to $1,059,290 in 1997, but as a percentage of
revenues increased from 53.2% in 1996 to 66.6% in 1997. The items primarily
accounting for the decrease in absolute dollars were salaries and costs
associated with employee benefits eliminated with the decrease in headcount.
The General and administrative headcount decreased 65% from the prior year.  
The decline in revenues during the quarter ended September 30, 1997 accounted 
for the increase in general and administrative expenses as a perentage of 
revenues. 


Liquidity and Capital Resources

Cash and cash equivalents balance at September 30, 1997 were approximately
$1,646,000, a decrease of approximately $1,274,000 from December 31, 1996.
Accounts receivable increased approximately $17,000 in 1997, fromm $63,529 at
December 31, 1996 to $80,096 aaat September 30, 1997.   Accounts receivable 
average days to collect for the quarter ended September 30, 1996 and 1997 
were 48 and 65 days, respectively, and for the nine months ended 
September 30, 1996 and 1997 were 53 and 58  days, respectively.  Average days to
collect for the year 1996 was 50 days.  Management's goal is to maintain 
receivable collection days at or below 50 for 1997.  Management is 
aggresively pursuing delinquent accounts through collections and increasing 
the credit approval process in an effort to bring the average days to collect
within 50 days.  Inventory levels have decreased approximately $78,000 in
1997 from December 31, 1996 amounts.  

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, 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 will be
sufficient to meet the Company's working capital and capital expenditure 
requirements for at least the next 12 months.

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<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 disclose 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 byt not before the sale of all securities
          registered.
     (ii) The name(s) of the managing underwriter(s) is Cruttenden Roth, Inc.
     (iii)The title of each class of securities registered is Common Stock, no 
          par value and Warrants to purchsssse Common Stock.
     (iv) For each class of secuiries 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:
<S>
                              For the account of the registrant                For the account(s)of any selling security 
                                                                                        holder(s)
Title           Amount          Aggregate       Amount     Aggregrate      Amount      Aggregrate      Amount    Aggregrate
of              registered      price of        sold       offering        registered  price of        sold      offering
Security                        offering                   price                       offering                  price 
                                amount                     of amount                   amount                    of amount
                                registered                 sold                        registered                sold
                <C>             <C>             <C>        <C>             <C>         <C>             <C>       <C>
Common
Stock            1,250,000       8,125,000      1,125,000  8,125,000        187,500     $1,109,063      187,500   $1,109,063

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  

</TABLE>
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<PAGE>10
<TABLE>
<CAPTION>

   (v)  From April 5, 1995 (the effective date of the Securities Act 
registration statement) to September 30, 1997 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:
                                Direct or indirect                            Direct or indirect payment
                                payments to directors                         to others
                                officers, general 
                                partners of the registrantr 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 commissions            [ ]$                                        [ ]$       731,250

(02)Finder's Fees                [ ]                                         [ ]

(03)Expenses paid to or
    for underwriters             [ ]                                         [ ]        243,750

(04)Other expenses               [ ]                                         [ ]        565,315

(05)Total Expenses               [ ]                                         [ ]$     1,540,315
 


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

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

                                Direct or indirect payments to                  Direct or indirect payment
                                directors officers, general                     to others
                                partners of the registrant or their 
                                associated; to persons owning 
                                ten percent or more of any 
                                class of equity securities of 
                                the registant; 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                   [ ]      31,000                                 [ ]          563,196


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

 Other purposes (specify)

(11)Advertising                       [ ]$                                            [ ]$         755,616
(12)Marketing & Trade                 [ ]                                             [ ]        2,539,483
(13)Research & Development            [ ]                                             [ ]        1,389,364
(14)                                  [ ]                                             [ ]        
 
</TABLE>
   (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.
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<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

	
    _____________________	President and Chief Executive 
        James A. Harrer         Officer (Principal Executive 
                                Officer) and a Director       November 14, 1997

    _____________________
     	Donald M. Leonard	Vice President Finance and Chief 
                                Financial Officer (Principal Financial 
                                and Accounting Officer)       November 14, 1997













 



 

 

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