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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

   [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For The Quarterly Period Ended June 30, 1999
                                       or

   [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934

                 For The Transition Period From _____ to ______


                        Commission File Number 000-22172

                              MIDISOFT CORPORATION
        (Exact name of small business issuer as specified in its charter)


        Washington                                      91-1345532
(State of incorporation)                   (I.R.S. Employer Identification No.)


                        1605 NW Sammamish Rd., Suite 205
                           Issaquah, Washington 98027
                    (Address of principal executive offices)

                                                            (425) 391-3610
                           (Issuer's telephone number)



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 X No


State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

                 Common stock, no par value; shares outstanding;
                          6,387,954 as of July 31, 1999



<PAGE>


                              MIDISOFT CORPORATION
                              INDEX TO FORM 10-QSB


                                     PART I

                              FINANCIAL INFORMATION
                                                                           Page

Item 1.    Financial Statements............................................. 3

           a)     Balance Sheets - June 30, 1999 and December 31, 1998

           b)     Statements of Operations - For the Three and Six Months Ended
                  June 30, 1999 and 1998

           c)     Statements of Cash Flows - For the Six Months Ended
                  June 30, 1999 and 1998

           d)     Notes to Financial Statements - For the Three and Six Months
                  Ended June 30, 1999 and 1998

Item 2.    Management's Discussion and Analysis or
           Plan of Operation ............................................... 7


                                     PART II

                                OTHER INFORMATION

Item 1.    Legal Proceedings .............................................. 15

Item 2.    Changes in Securities and Use of Proceeds ...................... 15

Item 3.    Defaults Upon Senior Securities ................................ 16

Item 4.    Submission of Matters to a Vote of Security Holders ............ 16

Item 5.    Other Information .............................................. 16

Item 6.    Exhibits and Reports on Form 8-K ............................... 16


SIGNATURE ................................................................. 17





<PAGE>


ITEM 1.  Financial Statements
<TABLE>
<CAPTION>
                         MIDISOFT CORPORATION
                            BALANCE SHEETS

                                ASSETS
<S>                                             <C>                <C>

                                               (Unaudited)         (Audited)
                                               At June 30,       At December 31,
                                                  1999                1998
                                            ----------------    ----------------
Current assets:
  Cash and cash equivalents                       $  85,000          $  270,000
  Accounts receivable - net of allowances of
    $252,000 in 1999 and $245,000 in 1998           120,000             183,000
  Inventories                                       143,000             115,000
  Prepaid expenses and other receivable              58,000              42,000
                                            ----------------    ----------------
    Total current assets                            406,000             610,000
Long-term receivable                                195,000             195,000
Property & equipment, net of depreciation            88,000             116,000
Debt issuance costs, net of accumulated
  amortization of $37,000 in 1999
  and $23,000 in 1998                                63,000              56,000
                                            ----------------    ----------------
         Total assets                             $ 752,000           $ 977,000
                                            ================    ================


                       LIABILITIES & SHAREHOLDERS' EQUITY

Current liabilities:
  Trade accounts payable                        $ 1,255,000         $ 1,181,000
  Line of credit                                    315,000                   -
  Current portion of long-term debt                 250,000             250,000
  Accrued wages & payroll taxes                     107,000              93,000
  Other accrued expenses                            215,000             273,000
  Deferred revenue                                   74,000               6,000
                                            ----------------    ----------------
Total current liabilities                         2,216,000           1,803,000
Long-term debt, net of discount                   2,661,000           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                      3,476,000           3,026,000
  Notes receivable from shareholders               (191,000)           (191,000)
  Retained deficit                              (27,979,000)        (26,488,000)
                                            ----------------    ----------------
Total shareholders' deficit                      (4,206,000)         (3,165,000)
                                            ----------------    ----------------
Total liabilities and shareholders' deficit       $ 752,000           $ 977,000
                                            ================    ================

</TABLE>



                 See accompanying  notes to financial statements.


<PAGE>
<TABLE>
<CAPTION>

                                           MIDISOFT CORPORATION
                                         STATEMENTS OF OPERATIONS
                                                (Unaudited)

<S>                        <C>         <C>          <C>           <C>

                               Three Months Ended          Six Months Ended
                                    June 30,                    June 30,
                             ----------------------   --------------------------
                                1999        1998          1999          1998
                             ----------  ----------   ------------  ------------
Revenues                     $ 157,000   $ 389,000    $   290,000   $   754,000
Cost of revenues                14,000     167,000         55,000       307,000
                             ----------  ----------    -----------  ------------
Gross profit                   143,000     222,000        235,000       447,000
Operating expenses:
  Sales and marketing          157,000     365,000        360,000       674,000
  General and administrative   391,000     410,000        748,000       789,000
  Research and development      79,000     197,000        180,000       422,000
                             ----------  ----------   ------------  ------------
  Total operating expenses     627,000     972,000      1,288,000     1,885,000
                             ----------  ----------   ------------  ------------
Operating loss                (484,000)   (750,000)    (1,053,000)   (1,438,000)
Interest and other
  income/(expense)            (190,000)    (60,000)      (437,000)     (836,000)
                             ----------  ----------   ------------ -------------
Net loss                     $(674,000)  $(810,000)   $(1,490,000)  $(2,274,000)
                             ==========  ==========   ============ =============

Net loss per share **          $ (0.09)    $ (0.13)       $ (0.21)      $ (0.36)
                             ==========  ==========   ============ =============
** Common stock equivalents are not included, as it would be anti-dilutive

Weighted average shares
outstanding                  7,251,000*  6,297,000      7,251,000*    6,297,000
                             ==========  ==========   ============ =============
</TABLE>

*  1999 weighted average shares outstanding include 862,000 shares the Company
   was obligated to issue.


           See accompanying notes to financial statements.


<PAGE>
<TABLE>
<CAPTION>



                             MIDISOFT CORPORATION
                           STATEMENTS OF CASH FLOWS
                                 (Unaudited)

<S>                                        <C>                   <C>
                                                    Six Months Ended
                                                         June 30,
                                            -----------------------------------
                                                 1999                  1998
                                            -------------      ----------------
Cash flows used for operations:
Net loss                                     $(1,490,000)          $(2,274,000)
                                            -------------      ----------------
Adjustments to  reconcile  net loss to net cash  provided  by  operating
activities:
     Depreciation & amortization                  46,000                83,000
     Non-cash interest expense to APIC           450,000               722,000
    (Increase) decrease in assets:
         Accounts receivable, net                 63,000               280,000
         Inventories                             (28,000)              (36,000)
         Prepaid expenses & other assets         (22,000)              (51,000)
     Increase (decrease) in liabilities:
         Trade accounts payable                   74,000               205,000
         Accrued wages & payroll taxes            14,000                16,000
         Other accrued expenses                  (58,000)              (15,000)
         Deferred revenue                         68,000                (4,000)
                                            -------------      ----------------
      Total adjustments                          607,000             1,200,000
                                            -------------      ----------------
      Net cash used for operations              (883,000)           (1,074,000)
                                            -------------      ----------------
Cash flows used for investing:
Additions to plant & equipment                    (5,000)               (5,000)
                                            -------------      ----------------
      Net cash used for investing                 (5,000)               (5,000)
                                            -------------      ----------------
Cash flows from financing:
Bank - Line of Credit                            315,000                     -
Proceeds from issuance of long-term debt
and warrants, net of debt issue costs            388,000             1,165,000
                                            -------------      ----------------
      Net cash provided by financing             703,000             1,165,000
                                            -------------      ----------------


Net change in cash and cash equivalents         (185,000)               86,000
Cash and cash equivalents, beginning of year     270,000                90,000
                                            -------------      ----------------
Cash and cash equivalents, end of period        $ 85,000             $ 176,000
                                            =============      ================

</TABLE>


              See accompanying notes to financial statements.


<PAGE>


                              MIDISOFT CORPORATION

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

            For the Three and Six Months Ended June 30, 1999 and 1998


Interim Financial Information

         The condensed  financial  statements included herein have been prepared
by Midisoft  Corporation (the "Company")  without audit,  according to the rules
and regulations of the Securities and Exchange  Commission.  Certain information
and footnote  disclosures  normally included in financial statements prepared in
accordance  with  generally  accepted  accounting  principles  have been omitted
pursuant  to such  rules and  regulations.  In the  opinion of  management,  the
accompanying unaudited financial statements contain all adjustments  (consisting
of only normal recurring  accruals)  considered  necessary to present fairly the
results for the interim periods presented.  The accompanying condensed financial
statements  and related notes should be read in  conjunction  with the Company's
1998 audited financial statements included in its Annual Report on Form 10-KSB/A
filed April 30, 1999.

         The results of operations  for the three and six months ended June 30,
1999 are not  necessarily  indicative of the results tobe expected for the full
calendar year.

Accounts Receivable and Major Customer Information

         Accounts  receivable from Original  Equipment  Manufacturers  (OEM) and
other resellers are summarized as follows:
<TABLE>
<CAPTION>

<S>                                        <C>                      <C>
                                             June 30,              December 31,
                                               1999                      1998
OEM                                          $78,000                  $ 17,000
Resellers and other                          294,000                   411,000
                                          ----------             -------------
   Subtotal                                  372,000                   428,000
Less:  Allowance for doubtful accounts       (54,000)                  (72,000)
       Allowance for sales returns          (198,000)                 (173,000)
                                          ==========             =============
Total accounts receivable                   $120,000                 $ 183,000
                                          ==========             =============
</TABLE>

         Accounts  receivable  consist  principally of amounts due from OEMs and
reseller  customers for licensing fees,  royalties and direct sales of products.
OEM  customer  payment  terms  typically  are one year in  duration  and require
payments to be made in quarterly  installments.  At June 30, 1999,  OEM accounts
receivable  amounts  not  yet  due  were  $64,000,  equal  to 17% of  total  OEM
receivables compared to $1,000, equal to 6% of total OEM receivables at December
31, 1998. Reseller payment terms typically are standardized and similar to those
given software  distributors.  At June 30, 1999,  reseller  accounts  receivable
amounts not yet due were  $91,000,  equal to 31% of total  reseller  receivables
compared to $257,000, equal to 63% at December 31, 1998.

         The  Company's  primary  credit  concentrations  involve  domestic  and
foreign OEM and reseller  customers.  Foreign customers are primarily located in
Western Europe, Taiwan, Singapore, Korea and Japan. Domestic customers comprised
$356,000  of  accounts  receivable  at June 30,  1999,  compared  to $415,000 at
December 31, 1998. Foreign customers comprised $16,000 of accounts receivable at
June 30, 1999 compared to $13,000 at December 31, 1998.

Income Taxes

         No income  taxes were payable at June 30,  1999,  due to the  Company's
year-to-date  loss. The Company had Federal net operating loss  carryforwards at
December 31, 1998 of  approximately  $26.1  million that may reduce taxes due in
future  periods  and expire  beginning  in 2008.  In certain  circumstances,  as
specified in the Internal Revenue Code, a 50% or more change in ownership of the
Company  during  any  three-year  period  would  result  in  limitations  on the
Company's ability to utilize its net operating loss carryforward.  Such a change
may have  occurred as defined in Section 382 of the Internal  Revenue  Code.  An
investor who owns $3,200,000 in principal  amount of convertible  debentures and
associated  warrants,  has the  right to  purchase  an  additional  $800,000  of
convertible  debentures  in 1999.  If this  investor  were to  exercise  all its
warrants and convert all the debt it holds and has a right to acquire,  a change
in control of the Company would result.

Inventories

Inventories are summarized as follows:
<TABLE>
<CAPTION>

<S>                                  <C>                          <C>
                                        June 30,                   December 31,
                                          1999                         1998
Raw materials                          $118,000                     $ 106,000
Finished goods                           49,000                        29,000
Less: Allowance for obsolescence        (24,000)                      (20,000)
                                   -------------             -----------------
      Total inventory                  $143,000                     $ 115,000
                                   =============             =================
</TABLE>

Subsequent Events

On July 14, 1999 the Company entered into  Subscription and Registration  Rights
Agreements  to sell  781,250  shares  of the  Company's  common  stock  to a new
investor for total consideration of $1,000,000.  The funds were received on July
14, 1999. As part of the transaction, the Company agreed to pay a finders fee of
$30,000 to an unrelated third party. The finders fee may be paid in cash, common
stock of the Company or some combination of the two.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

         The  following  discussion  should  be read  in  conjunction  with  the
financial  statements  and the notes  thereto  appearing  elsewhere in this Form
10-QSB.

General

   Midisoft, founded in 1986, provides innovative applications and utilities for
the  control  and  enhancement  of sound on  personal  computers.  Over the past
thirteen   years,   the  use  of  hardware  for  sound   creation  has  expanded
dramatically. While sound was initially available on only a small segment of PCs
used mainly by computer hobbyists,  it is now a feature on nearly every computer
that ships from every system manufacturer.  Emergence of the Internet has fueled
this  expansion  by  permitting  global  distribution  of music and other  audio
embellished communication, which web-based businesses increasingly desire to use
in creating compelling online experiences.

Midisoft is pursuing a strategy focused on two groups which share a desire for a
compelling "musical experience:" (i) those who seek an engaging music listening
experience  from their PC  desktop,  and (ii)  those who  desire to create  this
musical  experience  for others to enjoy.  For example,  in the first quarter of
1999, the Company completed  engineering that customized its Desktop Sheet Music
product  for the  Christian  music  market.  This  customized  version  features
functionality  tailored to the needs of music  pastors and directors who require
numerous  pages of easily  modified  sheet  music  each week for use by  soloist
performers or choirs.  In addition,  this product  contains a large selection of
hymns,  which can be  transposed  and modified  with the  Company's  proprietary
software  to fit  particular  voices  of  the  choir  and  individual  parts  of
accompanying instruments.

         The Company  believes that it has identified  other groups which desire
compelling  online  musical  experiences,  and will benefit  from the  Company's
expertise  in music  creation  and  Internet-centric  audio and music  delivery.
Development of these products is in the planning stages.

         Midisoft's  strategy is based on its belief that the Internet  provides
the ideal  platform  for  promoting,  marketing  and  selling  music and related
products and  services.  For example,  MP3, the file format for  compression  of
audio files,  is one of the most frequently  searched terms on leading  Internet
search engines,  according to Searchterms.com.  Jupiter Communications estimates
music  downloads  and other  music  sales will reach $1.4  billion by 2002.  The
Company is seeking to position its Internet  products to exploit  these  trends.
For  example,  Internet  Media  Player is a candidate  for  private  labeling on
destination  and portal websites.  The Company has  initiated  arrangements with
content aggregators and providers for download of its Internet Media Player.

         Success of the Company's  strategy  depends in large part on the global
development of an  infrastructure  for providing  Internet  access and services.
Because  global  e-commerce and online  exchange of  information  and compelling
music  content on the Internet and other similar open wide area networks are new
and  evolving,  it is not  possible to  anticipate  with  assurance  whether the
Internet  will prove to be a viable  commercial  marketplace  for the  Company's
technology.  Even  though the  Internet  has  experienced,  and is  expected  to
continue to experience  significant and rapid growth in the number of users  and
amount of traffic,  there can be no assurance  that the Internet  infrastructure
will continue to be able to support the demands  placed on it by this  continued
growth. In addition,  the Internet could lose its viability because of delays in
the  development or adoption of new standards and protocols to handle  increased
levels of  Internet  activity,  or  increased  governmental  regulation.  If the
necessary  infrastructure  or  complementary  services  or  facilities  are  not
developed,  or if the Internet does not become a viable commercial  marketplace,
the  Company's  ability to execute its strategy  could be seriously  limited and
this would  materially  and  adversely  affect its  results  of  operations  and
financial position.

         With these  strategies  the  Company  is  seeking  to enhance  its core
technologies,  in which it has continued to invest over the past 24 months,  and
augment  its retail  distribution  model with more direct  distribution  models,
including  web-based  sound  and  music  delivery.  The  Company  believes  that
successful  execution  of these  strategies  will result in growth and  improved
gross  margins.  Midisoft's  development  efforts  may not  result in the timely
introduction  of new  products,  and these new products may not be  commercially
successful.  Inability  to  successfully  develop  new  products,  delays in the
introduction of these new products, or  lower-than-anticipated  demand for these
products could have a material and adverse effect on the Company's  business and
results of operations.

         The Company  markets its products on a worldwide basis to: (i) original
equipment  manufacturers  (OEMs),  which  "bundle"  one or  more  of  Midisoft's
products  with  their own  products,  (ii)  distributors  and  resellers,  which
directly  supply  the retail  distribution  channel,  (iii) end  users,  catalog
companies,  and businesses;  and (iv) through on-line  Internet sales.  Sales to
software distributors and resellers, together with direct sales, represented 22%
of  revenues  in the three and six  months  ended June 30,  1999,  and OEM sales
represented  78% during the same periods.  International  sales accounted for 4%
and 7% of the Company's  revenues during the three and six months ended June 30,
1999.  During  the three and six  months  ended  June 30,  1999,  two  customers
individually  accounted  for more than 10% of the Company's  total  revenues and
together represented 72% and 64% of net revenues for those periods.

         The principal competitive factors affecting the music creation software
and Internet music distribution markets include product  functionality,  ease of
use,  performance  and  reliability;   customer  service  and  support;  product
availability;  vendor  credibility;  brand awareness;  ability to keep pace with
technological change; and price. Although the Company believes that its products
currently  compete  favorably  with  respect to these  factors,  there can be no
assurance that the Company can achieve an improved  competitive  position in the
face of increasing competition from new products and enhancements  introduced by
existing  competitors  and new companies  entering its markets.  Markets for the
Company's products are characterized by significant price  competition,  and the
Company expects it will continue to face increasing pricing pressures. There can
be no assurance  that the Company will be able to compete  successfully  against
current  and  future  competitors  or that  competitive  pressures  faced by the
Company will not materially  adversely affect its business,  financial  position
and results of operations.

         Certain  of  the  Company's   competitors  have  substantially  greater
financial,  marketing or technical  resources than the Company.  There can be no
assurance  that other  companies  have not  developed  or  marketed  or will not
develop or market  products that are superior to those of the Company,  that are
offered at substantially  lower prices than those of the Company or that have or
will achieve greater market acceptance than those of the Company.

         The Company's revenues include sales of software, software licenses and
services,  less  returns.  Cost of  revenues  includes  the  costs  of  manuals,
diskettes and  duplication,  packaging materials, paper goods, product assembly,
warehousing and logistics services. Cost of revenues as a percentage of sales is
lower for OEM sales than for  distributor  and direct sales because fewer direct
costs are involved.  Sales and marketing  expenses consist primarily of salaries
of sales and marketing personnel,  customer service and technical support costs,
advertising and promotion expenses.  General and administrative expenses reflect
salaries of  administrative  personnel,  legal and accounting  costs and general
operating  expenses  including  rent and  insurance.  Research  and  development
expenses consist mainly of personnel and equipment costs required to conduct the
Company's  development  efforts.  Software  development  costs are  expensed  as
incurred.

         Revenues from sales to distributors  and resellers and direct sales are
recognized when products are shipped.  The Company's  software sales  agreements
generally do not involve significant support obligations to customers subsequent
to delivery.  Revenues  from products  licensed to OEMs,  consisting of one-time
license fees,  are  recognized at the time the software  master is delivered and
when the criteria for fixed fee revenue  recognition under Statement of Position
No. 97-2 "Software Revenue Recognition" are satisfied. Additional royalty use or
unit copy royalty fees are recognized when they are received pursuant to license
agreements upon notification of shipment from OEMs.

Seasonality

         Sales to  distributors  tend to be  greater  in the  fourth  quarter as
consumers buy software to supplement their holiday computer hardware  purchases.
OEM sales are  concentrated  in a small number of large  customer  contracts and
tend to occur  sporadically.  Direct  sales  generally  increase  when  software
upgrades become available.

Comparison of three and six months ended June 30, 1999 and 1998

         This table provides comparative results of the periods ended  June 30,
1999 and 1998. A general discussion of these results follows.
<TABLE>
<CAPTION>

<S>                              <C>         <C>             <C>         <C>

                         Three months ended June 30,   Six months ended June 30,
                                   1999        1998            1999        1998
                                     % of Revenue                % of Revenue
Net Sales Revenue                  100%        100%            100%        100%
Gross Profit                        91%         57%             81%         59%
Sales & Marketing Expense          100%         94%            124%         89%
General & Administrative Expense   249%        105%            258%        105%
Research & Development              50%         51%             62%         56%
Total Operating Expenses           399%        250%            444%        250%
Net Operating Income (Loss)       -308%       -193%           -363%       -191%
Other (Income) Expense            -121%        -15%           -151%       -111%
Net Income (Loss)                 -429%       -208%           -514%       -302%

</TABLE>

         Revenues  for the three  months  ended June 30, 1999 were  $157,000,  a
decrease of $232,000,  or 60%, compared to $389,000 for the same period in 1998.
Revenues for the first six months of 1999 were $290,000, a decrease of $464,000,
or 62%,  compared  to $754,000  for the same  period in 1998.  Sales to software
distributors and resellers, together with direct sales were $34,000 and $64,000,
representing  22% of revenues in the three and six months  ended June 30,  1999,
compared to $311,000 and $583,000 which  represented 80% and 77% of revenues for
the same periods in 1998. OEM sales were $123,000 and $226,000  representing 78%
of  revenues  in the three and six months  ended June 30,  1999 and  $78,000 and
$171,000  representing 20% and 23% of revenues respectively for the same periods
in 1998.  International  sales accounted for 4% and 7% of the Company's revenues
for the  three and six  months  ended  June 30,  1999 and 5% and 4% for the same
periods in 1998.

         The Company has begun  positioning  its Worship  StudioTM  6.0 into the
Christian music market with enhanced  features  tailored to meet requirements of
music  pastors.  With this emphasis on special  feature sets  enhancing its core
technologies,  the Company hopes to lessen its reliance on relatively low margin
retail distribution.  The Company began shipping Worship StudioTM 6.0 during the
second  quarter of 1999.  This effort  required  marketing and sales  resources,
which the Company would otherwise have applied to its traditional retail channel
sales efforts.  The Company believes that this  transitioning  process,  and the
resources it has  required,  is the  principal  reason for  significantly  lower
revenues in the quarters  ended March 31 and June 30, 1999  compared to the same
periods in 1998.  These  efforts  are an element of the  Company's  strategy  to
enhance its core  technologies  and augment  its retail  distribution  with more
direct distribution  models.  The Company believes that successful  execution of
this  strategy  will result in higher gross  margins for its  packaged  software
business. These development efforts may not result in timely introduction of new
products, and these new products may not be commercially  successful.  Inability
to successfully  develop new products,  delays in the  introduction of these new
products,  or  lower-than-anticipated  demand  for these  products  could have a
material and adverse effect on the Company's business and results of operations.

         Gross  profit  for the three and six  months  ended  June 30,  1999 was
$143,000  and  $235,000,  a decrease  of  $79,000  and  $212,000,  respectively,
compared to $222,000 and  $447,000 for the same periods in the prior year.  As a
percentage of revenues,  gross margin  increased to 91% and 81% in the three and
six months  ended June 30,  1999 from 57% and 59% for the same  periods in 1998.
This difference  occurred because of a higher percentage of OEM sales,  compared
to other software  sales, in the three and six month periods ended June 30, 1999
versus the same periods in 1998. OEM sales generate licensing  royalties without
distribution  or packaging  costs,  resulting  in higher gross  margins than the
Company's other products.

         Sales and  marketing  expenses  for the three and six months ended June
30, 1999 were  $157,000 and  $360,000,  a reduction  of $208,000  and  $314,000,
compared to $365,000 and  $674,000 for the same periods in the prior year.  This
decrease  resulted from targeted  reductions in advertising  and fewer personnel
during  the three and six  months  ending  June 30,  1999  compared  to the same
periods in 1998.  As a percentage  of  revenues,  sales and  marketing  expenses
increased  to 100% and 124% in the three and six months ended June 30, 1999 from
94% and 89% for the same periods in 1998.  This  increase was a direct result of
comparably lower revenues in the first and second quarters of 1999.

         General and administrative  expenses for the three and six months ended
June 30, 1999 were  $391,000  and  $748,000,  a decrease of $19,000 and $41,000,
respectively,  compared to $410,000  and  $789,000  for the same  periods of the
prior year.  As a percentage of revenues,  these  expenses for the three and six
months  ended June 30,  1999  increased  to 249% and 258% from 105% for the same
periods  in 1998,  as a result  of lower  revenues  in the  three  and six month
periods ending June 30, 1999.

         Research  and  development  expenses for the three and six months ended
June 30, 1999 were $79,000 and  $180,000,  a decrease of $118,000 and  $242,000,
respectively,  compared to $197,000  and  $422,000  for the same  periods in the
prior year.  As a percentage  of revenues,  research  and  development  expenses
changed  slightly to 50% and 62% in the three and six months ended June 30, 1999
from 51% and 56% for the same periods in 1998.

         Interest  and other  income for the three and six months ended June 30,
1999 was $6,000 and $11,000, compared to $3,000 and $10,000 for the same periods
of the prior year. Interest and other expense for the three and six months ended
June 30, 1999 was $196,000 and $448,000 compared to $63,000 and $846,000 for the
same periods in 1998.  Interest  expense includes  one-time  non-cash charges of
$106,000 and $280,000 in the three and six months ended June 30, 1999,  relating
to the  valuation of the $450,000 of  convertible  debt and $57,000 and $107,000
for the same periods for amortization of the discount on the detachable warrants
issued through June 1999.  Interest  expense for the three and six month periods
ended June 30,  1998  included  one-time  non-cash  charges of $0 and  $722,000,
relating to the  valuation  of the  $1,000,000  of  convertible  debentures  and
$36,000  and  $66,000,   respectively,  for  amortization  of  the  discount  on
detachable  warrants  issued  through  June 1998.  The  balance of the  expense,
totaling  $61,000 in the first half of 1999 and  $58,000 in the same period last
year, represents accrued interest, penalties and issuance costs on the Company's
debt.

         No income  taxes were payable at June 30,  1999,  due to the  Company's
year-to-date  loss. The Company had Federal net operating loss  carryforwards at
December 31, 1998 of  approximately  $26.1  million that may reduce taxes due in
future  periods  and expire  beginning  in 2008.  In certain  circumstances,  as
specified in the Internal Revenue Code, a 50% or more change in ownership of the
Company  during  any  three-year  period  would  result  in  limitations  on the
Company's ability to utilize its net operating loss carryforward.  Such a change
may have  occurred as defined in Section 382 of the Internal  Revenue  Code.  An
investor who owns $3,200,000 in principal  amount of convertible  debentures and
associated  warrants,  has the  right to  purchase  an  additional  $800,000  of
convertible  debentures  in 1999.  If this  investor  were to  exercise  all its
warrants and convert all the debt it holds and has a right to acquire,  a change
in control of the Company would result.


Liquidity and Capital Resources

         As of June 30,  1999,  the  Company's  principal  sources of  liquidity
included  cash and cash  equivalents  of $85,000 and net accounts  receivable of
$120,000.  This compares to cash, cash equivalents and short term investments of
$270,000 and net  accounts  receivable  of $183,000 at December  31,  1998.  The
change in liquidity  and capital  resources is the result of negative  cash flow
from operations  during the first and second quarters of 1999,  partially offset
by bank borrowings and proceeds from the issuance of long term debt.

         The  Company's  current  liabilities  at June 30, 1999 were  $2,216,000
compared to  $1,803,000  at December  31,  1998.  As of June 30,  1999,  working
capital totaled a negative  $1,810,000.  The Company's operating activities used
cash of $527,000 and $883,000 for the three and six month periods ended June 30,
1999,  primarily  caused by operating  losses of $484,000 and $1,053,000 for the
same  periods,  net of non-cash  charges.  This use of cash of $527,000  for the
three month  period  ended June 30,  1999,  is an increase of $232,000  from the
second quarter of 1998. Lower collections of accounts  receivable and payment of
some of the overdue accounts payable contributed to the increased use of cash in
the second quarter of 1999.

         The Company sold  $250,000 of  convertible  notes on March 30, 1999, in
accordance  with the Securities  Purchase  Agreement  discussed in the Company's
10-KSB/A  filed with the SEC on April 30, 1999.  The notes bear  interest at the
rate of 1% per annum payable annually in cash, or shares of the Company's common
stock,  and are convertible into 1,000,000 shares of the Company's common stock.
The note holder also received five-year  detachable warrants to purchase 500,000
shares of common  stock for $0.75 per share.  On April 30, 1999 the Company sold
another $200,000 of convertible notes bearing interest at 1% per annum,  payable
annually in cash, or shares of the Company's  common stock, and convertible into
250,000 shares of common stock.  The note holder received  five-year  detachable
warrants to purchase  250,000 shares of the Company's common stock for $1.75 per
share.  The note  holder has the right to  purchase  an  additional  $800,000 of
convertible  debentures  in 1999.  If the note holder  were to exercise  all its
warrants and convert all the debt it holds and has a right to acquire,  a change
in control of the Company would result.

         In June 1999 the  Company  opened two lines of credit  with Key Bank of
Washington  for $750,000  each,  or $1,500,000  combined.  These lines of credit
jointly  obligate  the Company and the  Company's  largest  creditor,  who holds
$3,200,000 of the Company's  convertible  debt. These credit lines were expanded
to $1,000,000  each, or $2,000,000  combined,  on July 15, 1999. All outstanding
principal and interest  must be paid on both lines by March 4, 2000.  The amount
borrowed  under the lines at June 30, 1999 was  $315,000,  which was  completely
repaid on July 16,  1999 after  receipt of the new equity  investment  described
below, putting the cash availability under the lines at $2,000,000.

         On July 14, 1999 the Company entered into Subscription and Registration
Rights  Agreements to sell 781,250 shares of the Company's common stock to a new
investor for total consideration of $1,000,000.  The funds were received on July
14, 1999. As part of the  transaction,  the Company agreed to pay a finder's fee
of $30,000 to an unrelated  third  party.  The finder's fee may be paid in cash,
common stock of the Company or some  combination  of the two. The 781,250 shares
of common stock have not been issued.

         To date,  the Company has financed its operations  principally  through
net  proceeds  from two public  offerings  and  private  placements  of debt and
equity.  The Company  believes that cash on hand, along with cash generated from
the sale of products and collections of accounts receivable,  will be sufficient
to meet the Company's requirements for the next few months and that the lines of
credit,  so long as they are available,  will provide  working  capital  through
early 2000 . The  Company's  ability to fund  continued  operations  beyond that
point  depends on raising  additional  capital.  Should the Company be unable to
raise additional capital,  the Company will be required to significantly  reduce
operations,  reduce  expenses,  and may find it necessary to file for protection
under the  bankruptcy  code.  Such steps would  likely  have a material  adverse
effect on the  Company's  ability  to  establish  profitable  operations  in the
future.  The Company will  continue to pursue other  financing  arrangements  to
increase  its cash  reserves.  There can be no  assurance  the  Company  will be
capable of raising  additional capital or that the terms upon which such capital
will be available to the Company will be acceptable.

Trade Debt and Other Matters

         As of June 30, 1999,  the Company had $37,000 of accounts  payable that
were current, $24,000 extended to between 31 and 60 days and $1,194,000 extended
over 60 days. The level of extended  accounts payable results from the Company's
negative  operating  cash. The Company has entered into plans to extend payments
beyond due dates in the original  purchase  orders.  While the Company  believes
that payment plans will continue to be accepted,  there is no certainty that the
Company will be able to continue to meet extended payment terms. The Company has
received demand letters from certain  vendors  requesting  immediate  payment of
amounts owing them totaling approximately  $793,000.  Nine of these vendors have
initiated  litigation and received  judgments.  The remaining  unpaid balance of
these  judgments is  approximately  $117,000.  Some vendors have  declined sales
on credit terms to the Company and others have required cash on delivery  terms.
The Company  has negotiated  changes in delivery dat  commitments,  but has  not
failed to make product shipments because of supply problems from its vendors.

YEAR 2000 Issues

         The Year 2000 or Y2K problem is somewhat predictable in its timing, but
unpredictable in its effects. In order to conserve limited computer memory, many
computer systems,  software programs, and other microprocessor dependent devices
were created using only two digit dates,  such that 1998 was  represented as 98.
These  systems  may not  recognize  certain  1999  dates,  and the year 2000 and
beyond,  with the result that  processors  and programs may fail to complete the
processing  of  information  or revert back to the year 1900. As we approach the
year 2000, we expect  computer  systems and software used by many companies in a
wide variety of applications to experience  operating  difficulties  unless they
are  modified  or  upgraded  to process  information  involving,  related to, or
dependent upon the century change. Failures could incapacitate systems essential
to the functioning of commerce, building systems, consumer products,  utilities,
and government  services locally as well as worldwide.  Significant  uncertainty
exists concerning the scope and magnitude of problems associated with Y2K.

         The Company has  established  a Y2K Task Force to address  these risks.
The Y2K Task  Force,  comprised  of the CEO,  CFO and  Director  of  Information
Technology, is leading the Year 2000 risk management efforts. The Y2K Task Force
is coordinating the identification and testing of computer hardware and software
applications,   with  a  goal  to  ensure  availability  and  integrity  of  the
information  systems and the reliability of the operational  systems utilized by
the Company.

The Year 2000  Project at Midisoft  Corporation  uses the  following  five-phase
methodology and approach:

The first two phases are "work in progress"  and are being updated on an ongoing
basis.

Phase I - Inventory.  Collect a  comprehensive  list of  components  that may be
affected by the Year 2000 issues.  Components are categorized  into  facilities,
hardware, software, and services.

Phase II - Assessment. Evaluate the inventory to determine which components will
function  properly  with the turn of the  century and rank  components  based on
their potential  impact to the Company.  Each component is assigned  priority as
follows:

         Based on assigned  priorities from Phase I and II, the following phases
will be carried out to the  critical  components  first,  followed by  important
components, then inconvenient components and finally non-essential components if
resources  and time are  available.  The  Company has  completed  testing of all
critical and important  components  and is committed to achieving Y2K compliance
for these  components by September  30, 1999.  Testing on all  inconvenient  and
non-essential  components  should be finished by September 30, 1999 and complete
Y2K compliance is scheduled to be accomplished before November 30, 1999.

Phase  III  -  Remediation.  Analyze  all  components  affected  by  Year  2000,
identifying problem areas and repairing / replacing non-compliant components.

Phase IV - Testing.  Thorough testing of all affected systems, including present
and future date testing to simulate Year 2000 dates.

Phase V -  Implementation.  Place all  components  that  have been  successfully
tested into production.

         Information  systems are being tested with a licensed software program,
diagnostic tools designed for personal  computers and servers that will identify
Y2K issues  related to  computer  hardware,  software  and data.  To date,  this
testing appears to have been successful and has yielded no significant problems.
With  the  constant   introduction  of  new  computer  equipment  and  software,
information systems testing will continue throughout the year.

         The Company does not  currently  utilize  Electronic  Data  Interchange
(EDI) with any of its  partners  or  vendors  but will  thoroughly  test any EDI
situation that may arise between now and March 1, 2000. If critical suppliers do
not  satisfy  the  Company's  Year  2000  compliance  requirements,  alternative
suppliers will be identified.  As a contingency  plan,  inventory  levels may be
raised  prior to  December  1999 to assure  continued  delivery  of  products to
customers through March 2000.

Risks

         In the event  such  third  parties  cannot  provide  the  Company  with
products,  services, or systems that meet the Year 2000 requirements on a timely
basis,  or in the event Year 2000 issues  prevent such third parties from timely
delivery of products or services required by the Company,  the Company's results
of operations could be materially  adversely  affected.  To the extent Year 2000
issues cause  significant  delays in, or cancellation of, decisions to purchase,
the  Company's  products  or  services,  the  Company's  business,   results  of
operations,  and financial position would be materially adversely affected.  The
Company  is  assessing  these  risks  and in some  cases  has  initiated  formal
communications with significant  suppliers and customers to determine the extent
to which the Company is vulnerable to these third parties'  failure to remediate
their own Year 2000 issues.  There can be no assurance the Company will identify
and remediate all significant  Year 2000 risks, or that such risks will not have
a material adverse effect on the Company's business,  results of operations,  or
financial   position.   Accordingly,   the  Company  will  continue  to  develop
contingency  plans in anticipation of unexpected Year 2000 events.  Based on its
assessment of year 2000 risks to date, the Company does not believe any material
exposure to significant  business  interruption  exists as a result of Year 2000
compliance issues.

Contingency Plans

         Since the Year 2000 problem is  pervasive,  few, if any,  companies can
make  absolute  assurances  that they will identify and remediate all Y2K risks.
Accordingly, the Company expects the risk assessment and contingency planning to
remain an ongoing  process  leading up to and beyond the year 2000. In addition,
the  potential  Year 2000 problem is being  addressed  as part of the  Company's
overall emergency  preparedness  program that includes  contingency planning for
other potential major catastrophes like earthquakes, fires and floods.

         The Company's  approach to Financial  Risk has two main areas of focus.
Secure the broadest  insurance coverage available at a reasonable cost and avoid
exclusions or  restrictions of coverage,  if possible.  The Company will explore
other Financial Risk Transfer products and/or Y2K specific insurance coverage to
the extent that it becomes available at economically feasible levels.

Estimated Costs

         The Company is continuing to assess the potential impact of the century
change on its business, results of operations, and financial position. The total
cost of these Year 2000 compliance activities is anticipated to be immaterial to
the Company's  financial position or its results of operations.  If there should
be significant problem(s) achieving Year 2000 compliance,  there is no assurance
that the Company will have the financial or other resources to properly  address
the problem(s).  The cost of internal  resources  dedicated to the Year 2000 has
not been estimated at this time.

Forward-Looking Statements

         This report  contains  certain  forward-looking  statements  within the
meaning of Section  27A of the  Securities  Act of 1933 and  Section  21E of the
Securities  Exchange Act of 1934,  and such  statements  are subject to the safe
harbors created thereby. These forward-looking  statements include the plans and
objectives of management for future  operations,  including plans and objectives
relating  to (a) the  ability to fund  continued  operations  out of  additional
capital  infusion and (b) the success of the Company's  approach to dealing with
year 2000 issues. The  forward-looking  statements  included herein are based on
current  expectations  that involve a number of risks and  uncertainties.  These
forward-looking  statements  are  based on  assumptions  that the  Company  will
continue to develop and introduce new music,  strategic and Internet products on
a timely basis,  that rapid  changes in  technology  will not make the Company's
products   obsolete  or  otherwise  reduce  their  ability  to  compete  in  the
marketplace,  that  competitive  conditions  within the industry will not change
materially  or  adversely,  that the use of  multimedia  PC's in homes and small
offices will continue to grow, that management's decision to focus the Company's
resources on music and sound  products  will reduce  certain  expenses  from the
levels  which  were  experienced  in 1997 and 1998,  and that  there  will be no
material  adverse  change in the Company's  operations or business.  Assumptions
relating to the foregoing involve judgments with respect to, among other things,
future  economic,   competitive  and  market  conditions,  and  future  business
decisions,  all of which are difficult or impossible to predict  accurately  and
many of which are  beyond the  control  of the  Company.  Although  the  Company
believes that the  assumptions  underlying  the  forward-looking  statements are
reasonable,  any of the assumptions  could prove inaccurate and, there can be no
assurance that the  forward-looking  information  will prove to be accurate.  In
light  of  the  significant   uncertainties   inherent  in  the  forward-looking
information  included herein,  the inclusion of such  information  should not be
regarded  as a  representation  by the  Company  or any  other  person  that the
objectives or plans of the Company will be achieved.



<PAGE>


                                     PART II
                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS -

             In 1997,  an entity which sold  substantially  all of its assets to
             the Company in 1995  demanded  that the Company  arbitrate  certain
             claims arising from the sale. The claims aggregated in excess of $1
             million.  The parties  reached an agreement in July 1998 outside of
             arbitration.  In exchange for the mutual  release of all claims and
             counterclaims,  the  Company  agreed to  provide  consideration  of
             $420,000,   $25,000  in  cash  and  the   remainder   comprised  of
             forgiveness  of  $112,000  in debt and  issuance  of  approximately
             630,000  Midisoft  common  shares.  The  Company  agreed  to file a
             registration  statement for these shares within 30 days after final
             authorization  by the  shareholders  in 1998, but has not filed the
             registration  statement as of this date.  Payments totaling $20,000
             have been made.  The debt of $112,000  has been fully  reserved and
             expense  of  $283,000  for the  additional  common  shares has been
             booked  as  of  December  31,  1998.   Midisoft  agreed  to  remove
             restrictive  legends on 166,667 of previously  issued  shares.  The
             Company  believes that the entity's  subsequent  actions  nullified
             this  agreement.  The 630,000 common shares have not been issued In
             July 1999 the Company  demanded the return of the cash payments and
             16,667 shares of the common stock issued,  withdrew its forgiveness
             of the debt and the terms of settlement are being reconsidered. The
             Company has not yet received a response to its demand.

             In March 1997, a former sales representative filed suit in Michigan
             against  Midisoft  under a  certain  manufacturer's  representative
             agreement  entered  into  between  the  parties in  November  1994.
             Plaintiff  claims  that the  Company  breached  this  agreement  by
             failing  to pay  commissions  and is  seeking  damages in excess of
             $75,000.  Midisoft denies that it failed to pay  commissions  under
             the agreement and is asserting  counterclaims for over payments and
             return credits.  Damages  asserted by the Company equal the damages
             claimed by the  plaintiff.  The parties are  awaiting a trial date,
             which is reportedly  to occur  sometime  during 1999.  The ultimate
             outcome cannot be determined at this time, but the Company believes
             that  it  has  meritorious  defenses  and is  vigorously  defending
             against the claim.

             On April 3, 1997 the Company began arbitration  proceedings against
             a former customer. On September 24, 1997, the Company was awarded a
             judgment in the amount of $194,983.37  against the former customer.
             The amount of the award  represents the sum of 1) $160,000.00,  the
             unpaid  portion  of the  base  annual  license  royalty  under  the
             Company's  OEM License  Agreement and 2)  $34,983.37,  representing
             interest on the unpaid installments from their respective due dates
             through  the  date  of the  award  computed  at 12% per  annum.  In
             November 1998, the former  customer  exhausted its appeals when the
             Washington  State  Court of Appeals  denied  the former  customer's
             appeal motion,  thereby terminating the appellate process. In March
             1999, the Company  amended the judgment to add attorneys'  fees and
             interest accrued since the original judgment was entered. The total
             amount of the  amended  judgment  is  $247,925.34.  The  Company is
             pursuing   collection  in  Washington   State  and  has  engaged  a
             California law firm to enforce judgment in the state of California,
             the headquarters location of the former customer.

             The  Company has  received  demand  letters  from  certain  vendors
             requesting   immediate  payment  of  amounts  owing  them  totaling
             approximately  $793,000.  Fifteen of these  vendors have  initiated
             litigation for claims totaling  approximately  $183,000 and nine of
             these have received judgments of which the remaining unpaid balance
             is  approximately  $117,000.  The Company  has  reached  settlement
             agreements with some vendors and is negotiating with the remainder.
             Some vendors have declined sales on credit terms to the Company and
             others have required cash on delivery or in advance terms.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS -

             In  July  1999  the  Company   entered  into  a  Subscription   and
             Registration  Rights  Agreements  to  sell  781,250  shares  of the
             Company's common stock to a new investor for a total  consideration
             of  $1,000,000.  The shares  have not been  issued.  The funds were
             received on July 14, 1999 and will be used for working capital.  As
             part of the  transaction,  the Company agreed to pay a finder's fee
             of $30,000 to an unrelated third party. The finders fee may be paid
             in cash,  common  stock of the Company or some  combination  of the
             two.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES - None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -None

ITEM 5.  OTHER INFORMATION. - None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

            a)  EXHIBITS  - The  following  exhibits  are  filed as part of this
                report:

                Exhibit No.

                10.1   1998 Nonstatutory Option Plan, adopted February 10, 1998,
                       authorizing  500,000 shares of Common Stock for  issuance
                       pursuant to the Plan.

                10.2   1999 Incentive  and  Nonstatutory  Option  Plan,  adopted
                       June 2, 1999, authorizing  1,000,000 of Common Stock  for
                       issuance pursuant to the Plan.

                27     Financial Data Schedule

             b) Reports on Form 8-K - None


<PAGE>


                                    SIGNATURE

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                          MIDISOFT CORPORATION
                              (Registrant)


Date: August 18, 1999

                                  BY:     /S/  Gary M.Cully
                                     -----------------------------------------
                                  Gary M. Cully, Vice President of Finance and
                                                 Chief Financial Officer