-------------------------------------------------------------------------

                       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 September 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

                              recordLab CORPORATION
        (Exact name of small business issuer as specified in its charter)
                         [formerly Midisoft Corporation]


      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;
                        7,291,749 as of November 12, 1999
   -------------------------------------------------------------------------



<PAGE>


                              recordLab CORPORATION
                              INDEX TO FORM 10-QSB




                                                                     Page

                                     PART I

                              FINANCIAL INFORMATION

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

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

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

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

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

Item 2.  Management's Discussion and Analysis or
         Plan of Operation ........................................     8


                                     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>

                              recordLab Corporation

                                  BALANCE SHEETS

                                      ASSETS
<S>                                          <C>                <C>

                                                (Unaudited)
                                              At September 30,   At December 31,
                                                   1999               1998
                                             -----------------  ----------------
Current assets:
  Cash and cash equivalents                         $ 242,000         $ 270,000
  Accounts receivable - net of allowances of
    $419,000 in 1999 and $245,000 in 1998             383,000           183,000
  Inventories                                         126,000           115,000
  Prepaid expenses and other receivable                49,000            42,000
                                             -----------------  ----------------
       Total current assets                           800,000           610,000

Long-term receivable                                  195,000           195,000
Property & equipment, net of depreciation             128,000           116,000
Debt issuance costs, net of accumulated amortization
  of $44,000 in 1999 and $23,000 in 1998               56,000            56,000
                                             -----------------  ----------------
Total assets                                      $ 1,179,000         $ 977,000
                                             =================  ================


                    LIABILITIES & SHAREHOLDERS' DEFICIT

Current liabilities:
  Trade accounts payable                          $ 1,098,000       $ 1,181,000
  Line of credit                                      400,000                -
  Current portion of long-term debt                        -            250,000
  Accrued wages & payroll taxes                       106,000            93,000
  Other accrued expenses                              173,000           273,000
  Deferred revenue                                     12,000             6,000
                                             -----------------  ----------------
      Total current liabilities                     1,789,000         1,803,000

Long-term debt, net of discount                     2,728,000         2,258,000
Warrant obligations                                        -             81,000

Shareholders' deficit
  Common stock, no par value; 25,000,000 shares authorized,
    8,626,000 issued and outstanding in 1999 and
    7,251,000 issued and outstanding in 1998       22,059,000        20,488,000
  Additional paid-in capital                        3,477,000         3,026,000
  Notes receivable from shareholders                 (109,000)         (191,000)
  Accumulated deficit                             (28,765,000)      (26,488,000)
                                             -----------------  ----------------
      Total shareholders' deficit                  (3,338,000)       (3,165,000)
                                             -----------------  ----------------
Total liabilities and shareholders' deficit       $ 1,179,000         $ 977,000
                                             =================  ================
</TABLE>


              See accompanying  notes to financial statements.
<PAGE>

<TABLE>
                             recordLab Corporaton

                           STATEMENTS OF OPERATIONS

<S>                        <C>          <C>           <C>           <C>
                                 (Unaudited)
                             Three Months Ended          Nine Months Ended
                                September 30,               September 30,
                           ------------------------   --------------------------
                              1999         1998           1999         1998
                           -----------  -----------   ------------  ------------
Revenues                    $ 493,000    $ 582,000      $ 783,000   $ 1,336,000
Cost of revenues               83,000      244,000        138,000       551,000
                           -----------  -----------   ------------  ------------
Gross profit                  410,000      338,000        645,000       785,000
Operating expenses:
  Sales and marketing         348,000      322,000        708,000       996,000
  General and administrative  673,000      400,000      1,422,000     1,188,000
  Research and development     90,000      112,000        269,000       535,000
                           -----------  -----------   ------------  ------------
  Total operating expenses  1,111,000      834,000      2,399,000     2,719,000
                           -----------  -----------   ------------  ------------
Operating loss               (701,000)    (496,000)    (1,754,000)   (1,934,000)
Interest and other (expense)  (85,000)    (489,000)      (522,000)   (1,325,000)
                           -----------  -----------   ------------  ------------

Net loss                    $(786,000)  $ (985,000)  $ (2,276,000) $ (3,259,000)
                           ===========  ===========   ============  ============

Basic and diluted
       net loss per share     $ (0.10)     $ (0.16)       $ (0.30)      $ (0.52)
                           ===========  ===========   ============  ============

Weighted average shares
              outstanding   7,990,000    6,329,000      7,503,000     6,308,000
                           ===========  ===========   ============  ============

</TABLE>

              See accompanying  notes to financial statements.
<PAGE>

<TABLE>

                              recordLab Corporation

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<S>                                            <C>               <C>

                                                      Nine Months Ended
                                                         September 30,
                                               ---------------------------------
                                                     1999              1998
                                               ---------------   ---------------
Cash flows used in operating ctivities:
  Net loss                                        $(2,276,000)      $(3,259,000)
                                               ---------------   ---------------
  Adjustments  to  reconcile  net loss to net
  cash used in operating activities:
    Depreciation & amortization                        47,000           123,000
    Non-cash interest expense to APIC                 721,500         1,500,000
   (Increase) decrease in assets:
    Accounts receivable, net                         (200,000)          216,000
    Inventories                                       (11,000)           73,000
    Prepaid expenses & other assets                    (7,000)          (48,000)
    Increase (decrease) in liabilities:
    Trade accounts payable                            (83,000)          119,000
    Accrued wages & payroll taxes                      13,000             4,000
    Other accrued expenses                           (100,000)           10,000
    Deferred revenue                                    6,000            (4,000)
                                               ---------------   ---------------
      Total adjustments                               386,500         1,993,000
                                               ---------------   ---------------
      Net cash used for operations                 (1,889,500)       (1,266,000)
                                               ---------------   ---------------
Cash flows used in investing activities:
    Additions to property & equipment                 (59,000)           (4,000)
                                               ---------------   ---------------
      Net cash used in investing activities           (59,000)           (4,000)
                                               ---------------   ---------------
Cash flows from financing activities:
    Borrowings under line of credit                   400,000                -
    Proceeds from issuance of long-term debt
    and warrants,                                     427,000         1,265,000
    Proceeds from issuance of common stock          1,094,000             2,000
                                              ----------------   ---------------
      Net cash provided by financing activities     1,921,000         1,267,000
                                              ----------------   ---------------

Net change in cash and cash equivalents               (27,500)           (3,000)
Cash and cash equivalents, beginning of year          270,000            90,000
                                              ----------------   ---------------
Cash and cash equivalents, end of period            $ 242,500          $ 87,000
                                              ================   ===============

</TABLE>

             See accompanying  notes to financial statements.


<PAGE>


                              recordLab Corporation
                         (formerly Midisoft Corporation)

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

         For the Three and Nine Months Ended September 30, 1999 and 1998


Interim Financial Information

         The inancial statements included herein have been prepared by recordLab
Corporation  (the  "Company"),  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  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 nine months ended September
30, 1999 are not  necessarily  indicative  of the results to be expected for the
full calendar year.

<TABLE>
Accounts Receivable and Major Customer Information

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

<S>                                            <C>              <C>

                                               (Unaudited)
                                               September 30,     December 31,
                                                   1999              1998

 OEM                                              $ 14,000         $ 17,000
 Resellers and other                               788,000          411,000
                                               ------------     ------------
         Subtotal                                  802,000          428,000

   Less:  Allowance for doubtful accounts          (39,000)         (72,000)
          Allowance for sales returns             (380,000)        (173,000)
                                               ============     ============
     Total accounts receivable                    $383,000        $ 183,000
                                               ============     ============
</TABLE>

         Accounts receivable  consists  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  September  30,  1999,  OEM
accounts  receivable  amounts  not yet due  were $0,  equal  to 0% 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 September 30, 1999, reseller accounts receivable
amounts not yet due were $536,000,  equal to 70% 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
$760,000 of accounts  receivable at September 30, 1999,  compared to $415,000 at
December 31, 1998. Foreign customers comprised $16,000 of accounts receivable at
September 30, 1999 compared to $13,000 at December 31, 1998.

Income Taxes

         No  income  taxes  were  payable  at  September  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 a result of the conversion into
equity in  October  1999 of  $3,200,000  in  principal  amount of the  Company's
convertible debentures.

<TABLE>

Inventories

Inventories are summarized as follows:
<S>                                       <C>                  <C>

                                           (Unaudited)
                                           Sepember 30,         December 31,
                                               1999                 1998

Raw materials                                $ 101,000            $ 106,000
Finished goods                                  50,000               29,000
Less:  Allowance for obsolescence              (25,000)             (20,000)
                                         --------------       --------------
      Total inventory                        $ 126,000            $ 115,000
                                         ==============       ==============
</TABLE>


Net loss per share

         In February  1997,  the  Financial  Accounting  Standards  Board issued
Statement  of Financial  Accounting  Standards  No. 128 (FAS 128),  Earnings per
Share.  FAS 128  replaced  the  previously  reported  primary and fully  diluted
earnings per share with basic and diluted earnings per share. Basic earnings per
share  excludes  any  dilutive  effects of  options,  warrants  and  convertible
securities.  The  adoption  of FAS 128 did not  have a  material  impact  on the
Company's earnings per share. Net loss per share assuming dilution for the three
and nine month periods  ended  September 30, 1999 and 1998 is equal to basic net
loss per  share due to the fact that the  effect  of  common  stock  equivalents
outstanding during the periods is anti-dilutive.

<TABLE>

The following table sets forth the computation of basic and diluted net loss per
share:
<S>                        <C>        <C>            <C>           <C>
                                (Unaudited)                  (Unaudited)
                             Three Months Ended           Nine Months Ended
                             September 30, 1999           September 30, 1998
Numerator:

Net loss                   $(786,000) $ (985,000)    $ (2,276,000) $ (3,259,000)

Denominator:

Weighted average
  shares outstanding       7,990,000   6,329,000        7,503,000     6,308,000

Basic and diluted
  net loss per share         $ (0.10)    $ (0.16)         $ (0.30)      $ (0.52)

Common stock equivalents,  consisting of warrants, stock options and convertible
securities, are anti-dilutive.

</TABLE>

Equity

In July 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 a 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 in  options  to  purchase  the  Company's  Common  Stock,  to an
unrelated third party.

In September 1999 a convertible  note of the Company in the principal  amount of
$250,000  together with accrued  interest of $43,222 were converted into 451,111
shares of the Company's  common stock at a conversion  price of $0.65 per share.
This  conversion  eliminated a total  liability of $293,222 in the quarter ended
September  30,  1999.  In  September  1999 the holder of a warrant  notified the
Company to exercise  the warrant.  The $81,000  liability  associated  with this
warrant was  eliminated  in the quarter ended  September 30, 1999.  The exercise
will result in the issuance of 89,404 shares of the Company's common stock.

In September  1999 the Company  received  payment in full for a promissory  note
from a shareholder,  secured by 75,000 shares of the Compamy's common stock. The
payment of $94,465 for the principal and all accrued interest satisfied the note
and the shares were returned to the shareholder.

Subsequent Events

In late October 1999 the holder of all the Company's long-term  convertible debt
directed  the Company to convert all the debt and accrued  interest to shares of
the Company's  common stock.  When completed,  this  transaction  will eliminate
$3,200,000 of debt and $48,542 of accrued  interest.  The conversion will result
in the issuance of 8,397,054 shares of the Company's common stock.

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

         recordLab Corporation (formerly Midisoft Corporation) provides software
applications  and utilities for the control and enhancement of sound on personal
computers  Since the Company  commenced  operations in 1986, the use of hardware
for sound creation has expanded  dramatically,  and now it is a standard feature
on nearly every computer that ships from every system  manufacturer.  The growth
of the Internet has fueled this expansion by permitting  global  distribution of
music and other audio embellished communications.

In  October  1999,  the  Company  changed  its  name to  recordLab  Corporation,
announced  changes in its business and unveiled a new  corporate  identify  that
reflects a  strategy  focused  on  providing  music  creation  and  distribution
technology over the Internet. The Company's strategy is based on its belief that
the Internet  provides an ideal  platform for  promoting,  marketing and selling
music and related  products and services.  The emergence of the MP3  compression
format represented a paradigm shift for the recorded music industry. The Company
intends  to  create  the same  type of  transformation  for the  music  creation
industry that serves an estimated 67 million  amateur  artists in the U.S..  The
Company  derives the  estimated  number of amateur  musicians  from the National
Association of Music Merchants  (NAMM) annual industry  survey,  which estimates
that one-quarter of the U.S.  population is comprised of amateur musicians,  and
from the U.S.  Bureau of Census  annual  survey that the U.S.  population is 270
million. NAMM also reports that one-fourth of the U.S. population spends over $6
billion on musical instruments each year.

The Company  recently  announced  its  planned  website,  recordLab.com,  a rich
media-based  music  destination  that  will  cater to the needs of  millions  of
amateur musicians worldwide, enabling them to realize their musical aspirations.
recordLab.com will introduce a new class of Internet-based products and services
that are "wrapped"  with extensive  expert  know-how in the art of making music.
The  first  product  is  planned  to be  recordLab's  Internet  TapeDeck(TM),  a
multi-track,  digital audio recording  application  which the Company intends to
make freely  available from the  recordLab.com  website.  The Company expects to
sell add-on  applications  and utilities  that provide tools for creating  sound
augmentation  and  other  audio  effects..  The  Company  also  plans to  assist
musicians,  songwriters and artists in using these products by delivering expert
advice  from  legendary  music  producers.  The  website is expected to open for
public access in the fourth quarter of 1999.

Along with these strategies,  the Company seeks to enhance its core technologies
in which it has  continued  to invest and augment it retail  distribution  model
with more direct  distribution.  For example, in the second quarter of 1999, the
Company released a customized version of its Desktop Sheet Music(TM) product for
the religious music creation  market.  This customized  version,  called Worship
Studio(TM),  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 provides 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.


         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.

         The Company  markets its products on a worldwide basis to: (i) original
equipment  manufacturers  (OEMs),  which  "bundle"  one or more  of  recordLab'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 87%
and 73% of revenues in the three and nine months ended  September 30, 1999,  and
OEM and Internet  product sales  represented  13% and 27% of revenues during the
same periods.  International  sales  accounted for 0% of the Company's  revenues
during the three and nine months ended September 30, 1999.  During the three and
nine months ended September 30, 1999, three customers individually accounted for
more than 10% of the Company's  total revenues and together  represented 89% and
90% of net revenues for those periods.

         The principal competitive factors affecting the music creation software
and  Internet  music  creation  and   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 and Internet  product 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.

         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 and others,  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  or
distribution from OEMs and others.

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.

<TABLE>

Comparison of three and nine months ended September 30, 1999 and 1998

         This table  provides  comparative  results of the three and nine month
periods  ended  September 30, 1999 and 1998. A general discussion of these
results follows.
<S>                          <C>          <C>          <C>          <C>
                                  Three months ended        Nine months ended
                                    September 30,             September 30,
                                  1999         1998         1999         1998
                             % of Revenue % of Revenue % of Revenue % of Revenue
Net Sales Revenue                 100%         100%         100%         100%
Gross Profit                       83%          58%          82%          59%
Sales & Marketing Expense          71%          55%          90%          75%
General & Administrative Expense  137%          69%         182%          89%
Research & Development             18%          19%          34%          40%
Total Operating Expenses          225%         143%         306%         204%
Net Operating Income (Loss)      -142%         -85%        -224%        -145%
Other (Income) Expense            -17%         -84%         -67%         -99%
Net Income (Loss)                -159%        -169%        -291%        -244%

</TABLE>

         Revenues for the three months ended September 30, 1999 were $493,000, a
decrease of $89,000,  or 15%,  compared to $582,000 for the same period in 1998.
Revenues  for the first  nine  months  of 1999  were  $783,000,  a  decrease  of
$553,000,  or 41%,  compared to $1,336,000 for the same period in 1998. Sales to
software  distributors  and resellers,  together with direct sales were $429,000
and $572,000,  representing 87% and 73% of revenues in the three and nine months
ended September 30, 1999,  compared to $460,000 and $1,043,000 which represented
79% and 78% of revenues for the same periods in 1998. OEM sales were $64,000 and
$211,000 representing 13% and 27% of revenues in the three and nine months ended
September  30,  1999  and  $122,000  and  $293,000  representing  21% and 22% of
revenues  respectively  for  the  same  periods  in  1998.  International  sales
accounted for 0% of the  Company's  revenues for the three and nine months ended
September 30, 1999 and 14% and 8% for the same periods in 1998.

         The Company has begun  positioning  itself to provide an array of music
creation  products and services  through the Internet for amateur  musicians and
songwriters.  These efforts are in addition to 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 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 nine months ended September 30, 1999 was
$410,000  and  $645,000,  an  increase  of  $72,000  for the three  months and a
decrease of $140,000 for the nine months, respectively, compared to $338,000 and
$785,000  for the same periods in the prior year.  As a percentage  of revenues,
gross  margin  increased  to 83% and 82% in the  three  and  nine  months  ended
September  30,  1999  from  58% and  59% for the  same  periods  in  1998.  This
difference  is the  result of a higher  percentage  of OEM and  direct  sales of
packaged  software , compared  to other  software  sales,  in the three and nine
month  periods  ended  September  30, 1999 versus the same periods in 1998.  The
Company's  OEM  sales  generate  licensing  royalties  without  distribution  or
packaging  costs,  resulting in higher gross  margins than the  Company's  other
products. Additionally, the Company's direct sales of packaged software makes it
possible for the Company to benefit from retail price  points,  contributing  to
gross margin improvements.

         Sales  and  marketing  expenses  for the three  and nine  months  ended
September 30, 1999 were  $348,000 and  $708,000,  an increase of $26,000 for the
three months and a reduction of $288,000 for the nine months ended September 30,
1999,  compared to $322,000 and $996,000 for the same periods in the prior year.
These changes resulted from reductions in advertising and personnel costs during
the first two  quarters  of 1999  compared  to the same  periods  in 1998.  As a
percentage of revenues, sales and marketing expenses increased to 71% and 90% in
the three and nine months ended September 30, 1999 from 55% and 75% for the same
periods in 1998.  This percentage  increase  resulted from lower revenues in the
first nine months of 1999, as compared to the same period in 1998.

         General and administrative expenses for the three and nine months ended
September  30, 1999 were  $673,000 and  $1,422,000,  an increase of $273,000 and
$234,000, respectively, compared to $400,000 and $1,188,000 for the same periods
of the prior year.  These added costs,  occurring in the third quarter,  reflect
the Company's  preparation for  implementation of its new strategic plan for the
Internet and  e-commerce.  As a percentage of revenues,  these  expenses for the
three and nine months ended  September 30, 1999  increased to 137% and 182% from
69% and 89% for the same  periods in 1998,  as a result of  increased  costs and
lower revenues in the three and nine month periods ending September 30, 1999.

         Research and  development  expenses for the three and nine months ended
September  30,  1999 were  $90,000  and  $269,000,  a decrease  of  $22,000  and
$266,000,  respectively,  compared to $112,000 and $535,000 for the same periods
in the prior  year.  As a  percentage  of  revenues,  research  and  development
expenses changed to 18% and 34% in the three and nine months ended September 30,
1999 from 19% and 40% for the same periods in 1998.

         Interest and other income for the three and nine months ended September
30,  1999 was $8,000 and  $16,000,  compared  to $4,000 and $12,000 for the same
periods of the prior  year.  Interest  and other  expense for the three and nine
months ended  September  30, 1999 was $93,000 and $538,000  compared to $493,000
and $1,337,000 for the same periods in 1998.  Interest expense includes one-time
non-cash charges of $0 and $280,000 in the three and nine months ended September
30, 1999,  related to valuation of $450,000 of convertible  debt and to discount
amortization  of $60,000 and  $167,000,  respectively,  on  detachable  warrants
issued through  September  1999.  Interest  expense for the three and nine month
periods ended September 30, 1998 included  one-time non-cash charges of $432,000
and  $1,154,000,  related to valuation of $1,500,000 of convertible  debentures,
and  to  discount  amortization  of  $43,000  and  $109,000,   respectively,  on
detachable  warrants issued through  September 1998. The balance of the expense,
totaling  $91,000  in the first  nine  months of 1999 and  $74,000  for the same
period  last  year,  represents  accrued  interest  and  issuance  costs  on the
Company's debt.

         No  income  taxes  were  payable  at  September  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 Section 382 ofthe 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  in  October  1999  upon  the
conversion  into  equity of  $3,200,000  in  principal  amount of the  Company's
convertible debentures and associated warrants.

Liquidity and Capital Resources

         As of September 30, 1999, the Company's  principal sources of liquidity
included cash and cash  equivalents  of $242,000 and net accounts  receivable of
$383,000.  This  compares  to cash  and cash  equivalents  of  $270,000  and net
accounts receivable of $183,000 at December 31, 1998.

         The Company's current liabilities at September 30, 1999 were $1,789,000
compared to $1,803,000  at December 31, 1998. As of September 30, 1999,  working
capital  totaled a  negative  $989,000,  compared  to a negative  $1,181,000  at
September 30, 1998. The Company's  operating  activities used cash of $2,161,000
for the nine months  ended  September  30, 1999,  primarily  caused by operating
losses of $1,754,000 for the same period, net of non-cash charges.

         The Company  sold  $250,000 of secured  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.  This creditor held all the Company's  senior secured
convertible  notes of  $3,200,000  at September  30, 1999.  In October 1999 this
creditor  notified  the  Company  that it intends  to  convert  all its debt and
related accrued interest into shares of the Company's common stock.

         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 senior secured  creditor,  who as
indicated above held $3,200,000 of the Company's  secured  convertible  notes at
September  30,  1999.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 September 30, 1999 was $400,000 and at November 17, 1999 was $1,000,000.

         On July 14, 1999 the Company entered into Subscription and Registration
Rights  Agreements to sell 781,250  shares of the Company's  common stock,  in a
private placement exempt from registration  under Regulation D of the Securities
Act of 1933, 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 paid a
finder's  fee of  $30,000  in the  form of the  Company's  common  stock,  to an
unrelated third party.
         To date,  the Company has financed its operations  principally  through
net proceeds from two public offerings and multiple  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  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 September 30, 1999,  the Company had $91,000 of accounts  payable
that were  current,  $64,000  extended  to between  31 and 60 days and  $642,000
extended over 60 days. The level of extended  accounts  payable results from the
Company's  negative operating cash. The Company has entered into plans with some
vendors 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 entered into  settlement  agreements  with some
vendors,  eliminating  the amounts owed. The Company has received demand letters
from certain vendors requesting immediate payment of amounts owing them totaling
approximately  $520,000.  Six of these  vendors have  initiated  litigation  and
received  judgments.   The  remaining  unpaid  balance  of  these  judgments  is
approximately  $172,000. 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  date  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 recordLab  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 November 30, 1999.  Testing on all inconvenient and  non-essential
components  should be finished by November 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 ("Claimant") 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  total
             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 recordLab 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. recordLab agreed to remove
             restrictive  legends on 166,667 of previously  issued  shares.  The
             Company  believes that the Claimant  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  ("Plaintiff")  filed
             suit in Michigan against  recordLab 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.   recordLab  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  $520,000.  Seven of  these  vendors  have  initiated
             litigation for claims  totaling  approximately  $175,000 and six of
             these have received judgments of which the remaining unpaid balance
             is  approximately  $172,000.  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  ,  in a  private  placement  exempt  from
             registration under Regulation D of the Securities Act of 1933, to a
             new investor for a total  consideration  of  $1,000,000.  The funds
             were  received  on July 14,  1999 and have  been  used for  working
             capital. As part of the transaction, the Company to paid a finder's
             fee of  $30,000  to an  unrelated  third  party  in the form of the
             Company's common stock.


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.

                 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.


                                            recordLab CORPORATION
                                                (Registrant)
Date: November 18, 1999

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