SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            ------------------------

                                   FORM 10-KSB

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

                          Commission File No.: 0-26192

                           CODA MUSIC TECHNOLOGY, INC.
           (Name of Small Business Issuer as specified in its charter)

        Minnesota                                              41-1716250
(State or other jurisdiction of                               (IRS Employer
incorporation or organization)                            Identification Number)

               6210 Bury Drive, Eden Prairie, Minnesota 55346-1718
               (Address of principal executive offices)(Zip Code)

         Issuer's telephone number, including area code: (612) 937-9611

    Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act:Common Stock

Check whether the Issuer (1) has 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

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained herein, and will not be contained, to the best of
Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

Issuer's revenues for its most recent fiscal year:  $6,413,045

The aggregate market value of the Common Stock held by nonaffiliates of the
Registrant as of March 15, 1999 was approximately $11,615,123 based upon the
closing price of the Registrant's Common Stock on such date.

There were 6,194,732 shares of Common Stock outstanding as of March 15, 1999.
                            ------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended December 31, 1998 are incorporated into Part II and portions of the
Registrant's definitive Proxy Statement for its 1999 Annual Meeting are
incorporated by reference into Part III.

Transitional Small Business Disclosure Format (check one).  Yes      No     X 



<PAGE>

                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

General

         Coda Music Technology, Inc. ("Coda" or the "Company") develops and
markets proprietary music technology products designed to enhance music learning
and composition, increase productivity and make practicing and performing music
fun. Since 1988, the Company and its predecessor have marketed the award-winning
Finale(R) music notation software products which eliminate the restrictiveness
and tedium of music notation and have established the Company as a leader in
this market. In June 1994, the Company introduced the Vivace(R) system,
currently called SmartMusic(TM), an innovative musical accompaniment system that
responds to the musician in real-time. For students, educators, adult music
hobbyists, professional musicians and composers in the approximately $6 billion
music products industry, Coda's innovative products provide easy-to-use,
efficient alternatives to traditional practice, education and composition
techniques.

Coda Strategy

         The Company's objective is to use modern technology to provide products
that enhance the process of learning, performing and composing music. The
SmartMusic system provides Intelligent Accompaniment(R) which follows the tempo
of the musician in an effort to enhance the process of learning, practicing and
performing music. In 1998 the Company successfully transitioned this product to
a software-based product. The Company's Finale music notation software products,
which include Finale and Finale Allegro(R), allow musicians to enter
compositions into a computer electronically while playing or through a standard
computer keyboard, thus freeing them from the tedious task of handwriting notes
as they are played, and allows musicians to manipulate, edit, play back and
print compositions. The Company intends to implement the following strategies in
pursuing its objectives:

o        Expand applications for listening & playback technology. Utilizing
technologies included in both Finale and SmartMusic products, the Company plans
to develop new software applications which assist in training the musician.

o        Continue to develop the accompaniment library. Coda has created over 
5,000 classical, jazz and musical theatre accompaniments contained on over 500
computer floppy disks for use with the SmartMusic product and plans to create
additional accompaniments covering a broad spectrum of musical genres,
instruments and skill levels. In 1998, the Company introduced SmartMusic
accompaniments for the Belwin 21st Century Band Method II, a standardized method
of instruction targeting elementary students. The Company intends to continue to
select popular titles from the world's existing and growing body of music to
develop additional accompaniments for each of its market segments. Selections
from the Beatles and other popular artists were added in 1998.

o        Expand the markets for and distribution of all of the products. All of 
the products are now software based. The Company intends to utilize the World 
Wide Web and direct marketing techniques to sell SmartMusic and Finale and 
Finale Allegro upgrades and increase effectiveness of current channels of 
distribution, and to continue to develop products at lower price points 
directed at the retail channel.

o        Establish Finale music notation software as the industry standard. 
Coda has established a reputation of quality and power for its Finale notation 
software products, and major music publishers are embracing Finale as their 
de-facto notation standard. As publishers move toward electronic distribution 
and sale of sheet music, the Company intends to work toward positioning Finale 
as the de-facto standard for transmission of electronic files.

<PAGE>

Products

    SmartMusic Studio

         The SmartMusic (formerly Vivace) technology is currently offered in a
CD-ROM format, with optional hardware accessories available to enable the
technology to work on slower computers. The prototype technology upon which the
SmartMusic system is based was patented by Carnegie Mellon University and
licensed to the Company. Coda then significantly enhanced the prototype
technology with its own proprietary technology and additional patented features,
producing a marketable product.

         The Intelligent Accompaniment software allows the user to start playing
at any point in the musical piece, repeat difficult-to-play segments, change
instrumentation and adjust the degree to which the accompaniment follows the
musician. In addition, the musician can control tempo and reverb, transpose the
music into any key, play with or without repeats and designate sections of the
music to cut. With a feature called "Remember Tempos," the system can adjust the
accompaniment to handle even the most extreme interpretation of a passage where
there is little input, or few notes, from the musician. The products also
feature warm-up exercises for vocalists, the ability to tap in tempo changes
with variations in speed, and the ability to insert breath marks and cues to
wait for a particular tone. These "variables" can be saved with the music,
creating a personally customized version of the accompaniment.

         The Company's Intelligent Accompaniment technology is available for 17
standard band instruments, such as flutes, clarinets, saxophones, trumpets,
trombones and tubas; in 1996, it also became available for vocal applications.

    SmartMusic Accompaniments

         The sale of a single SmartMusic Studio system has the ability to
generate multiple and ongoing sales of repertoire as musicians build their own
library of accompaniments. The accompaniment delivery system consists of a
computer floppy disk. The accompaniment computer floppy disk will only work with
the Company's SmartMusic Studio system and has been specially designed by the
Company to protect against illegal duplication. A typical accompaniment computer
floppy disk retails for $24.95 and typically contains more than one musical
accompaniment.

         Coda has entered into license agreements with top music publishers,
including Hal Leonard Publishing Corporation and Warner Bros. Publications Inc.
These license agreements allow the Company to produce synthesized versions of
musical arrangements for use with the SmartMusic Studio system. The Company's
royalty arrangements range from payments of $.75 per accompaniment SKU to five
percent of the suggested retail price of the accompaniment SKU. Coda has also
received the exclusive rights from certain major publishers to all solo
classical works for voice, wind, brass, percussion, string and keyboard for the
purpose of musical accompaniment products which respond in real-time to the
musician.

         Coda has created over 5,000 individual classical and jazz
accompaniments contained on approximately 500 computer floppy disks for its
SmartMusic Intelligent Accompaniment product as well as accompaniments for the
Belwin 21st Century Elementary Band Methods I and II. The Company made its
accompaniment selection based on a review of the most frequently performed
titles in state academic soloist contests as well as popular titles of sheet
music sold at retail. These accompaniments vary in complexity from easy to
challenging and cover a broad range of musical genres for almost all band
instruments and voices. The Company intends to use its relationships with key
publishers and other sources to select the most popular titles for development
as accompaniments for SmartMusic products. Further, the Company plans to expand
its library of accompaniments to cover a broad spectrum of music genres,
instruments and skill levels.


<PAGE>


    Finale

         Coda is a market leader in music notation software with its Finale
family of products for use with Macintosh(R) and PC Windows(R) operating
systems. Music notation software enables a musician to enter musical data into a
computer using either the computer keyboard, a MIDI equipped electronic music
keyboard or other MIDI equipped instrument and contemporaneously display the
data on a computer screen as a musical score. The dramatic improvements in speed
and flexibility provided by programs like Finale software have made such
software the dominant method for composers, arrangers, publishers and music
teachers to create printed music.

         The Finale product is among those products generally recognized as one
of the most powerful and comprehensive notation software products in the world.
Finale music notation software products retail for $545. Finale software is
differentiated from other music notation software by its breadth and depth of
features, including patented capabilities such as its "hyperscribe" feature.
Hyperscribe(TM) allows users to freely play music with varying tempos via a MIDI
keyboard while the software interpolates the rhythms and accurately notates the
music in real time.

         Coda also produces an Academic Edition of the Finale product that is
sold exclusively to schools, school teachers and college students at a suggested
retail price of $275. The Finale Academic Edition product has also been a key
source of revenue and registered user base growth for the Company and it
represents a market that is continually being replenished with new student
users. Pursuant to the terms of a written agreement, Douglas Stewart Company
("Douglas Stewart") acts as the Company's exclusive distributor of the Finale
Academic Edition products to "college stores" (as defined in the agreement) and
as a nonexclusive distributor of the same products to nonprofit educational
institutions and authorized resellers other than "college stores." Douglas
Stewart has agreed to limit its distribution of music notation software products
exclusively to those of the Company. Coda is obligated to provide Douglas
Stewart reasonable sales literature, support and training upon request and to
notify Douglas Stewart of all upgrades. The agreement provides limited
restocking rights to Douglas Stewart. In 1998 and 1997, respectively, Douglas
Stewart returned $160,000 and $110,000 related to the release of new versions of
the product. The agreement renews monthly unless either party provides the other
with 30 days written notice or it is otherwise earlier terminated.

         Product manuals are currently available in German, French, Italian,
Dutch and Japanese. The Company believes the international market is a key
growth opportunity as computer penetration increases worldwide. International
revenues, primarily from the sale of Finale products, represented 13% and 18% of
1998 and 1997 revenues, respectively.

   Finale Allegro

         The Company introduced the Finale Allegro product, a value version of
the powerful Finale music notation software product, in 1993. The Finale Allegro
music notation software product retails for $199 and contains a subset of the
notation tools contained in the Finale product. The Company released Allegro 98
in November, the first update since the product was first developed.

   Finale PrintMusic!

         The Company plans to introduce the Finale PrintMusic!(TM) product, an
entry-level powerful music notation software product, in Spring 1999. The Finale
PrintMusic! music notation software product will retail for $69.95 and contains
a subset of the notation tools contained in the Finale and Finale Allegro
products. The Finale PrintMusic! product allows the Company to offer an
entry-level product to the retail customer, thereby expanding the base of
registered users and increasing the potential for sales of notation software
upgrades.

<PAGE>

Marketing, Sales and Distribution

         In 1998 the Company has realigned its sales and marketing staff to
present a more cohesive approach to the marketing of all of its products.

         SmartMusic products are currently being sold through domestic and
international distributors. Distributors service the music instrument retailers,
college bookstore and educational software markets. The Company is also selling
directly on the Web and through its customer service department. Finale products
are sold through distributors. In addition, Finale products are also sold
through music instrument retailers, mail order software retailers, and computer
dealers.

         The Company believes it can significantly build on its Finale and
Finale Allegro software business by continuously expanding the installed base of
users and regularly providing them with upgrades, increasing retail
distribution, producing additional international versions of the products and
establishing the products as a means for electronic transmission of music. The
Company introduced upgrades on both the Windows platform and Macintosh platform
in each of the last four years. The Company also introduced the first upgrade
for Finale Allegro in 1998.

         A key marketing strategy of the Company is to introduce both the
SmartMusic and Finale products to students as they learn so they are more likely
to continue to use the product during their lives. To improve its position in
the education market, the Company introduced a low-priced Finale Academic
Edition for students and teachers, developed product lab packs consisting of
five copies of the Finale product sold at a reduced price per copy, which allow
schools and universities to cost-effectively bring Finale music notation
software products into their curriculum, and added an on-campus direct seller
network The Company is testing various marketing initiatives for SmartMusic
Studio to determine the most viable methods of penetrating the student market.

         Coda currently sells its products in over 30 countries around the
world. The products are distributed by leading music software distributors in
each of the international markets who are responsible for sales, marketing and
technical support.

Product Development

         During 1998 and 1997, the Company incurred $1,657,213 and $1,555,660 in
product development expenses. The Company intends to continue to expand its
current product offerings by developing products for new applications and
markets.

    SmartMusic Studio

         Using the core technologies behind its SmartMusic products, the Company
was able to transition its product to a software based system and open a whole
new market at a much lower price point for students and music hobbyists.

    SmartMusic Accompaniments

         The Company plans to continue adding to the existing accompaniment
catalog, creating additional accompaniments and generally broadening the
accompaniment library to include other musical genres (such as popular, rock and
country). SmartMusic accompaniment development has limited risk and short
development cycles that range from one month (solo collection of ten to twelve
basic solos with piano accompaniment) to four months (musical theatre collection
with orchestral accompaniment). The Company has established an expertise in
accompaniment development by creating methods to synthesize classical music and
mark music sequences. Additionally, the Company has automated some of the
process and developed a technical specification that is used to standardize both
quality and process. Unlike a game manufacturer which must continually invent
new games, the Company need only look to the most popular titles in the large
and growing supply of musical compositions to develop additional SmartMusic
accompaniments.

<PAGE>

   Finale

         To maintain its leadership position in the music notation marketplace,
over the past three years Coda has focused its continuous improvement efforts on
developing upgrades of the Finale product on a regular basis for the Macintosh
and Windows platforms. The Company expects to make annual releases of such
upgrades. After an announcement of an upgrade release but prior to the actual
release, purchasers of a Finale product are offered this upgrade at no charge
for a limited period of time. Other Finale users are required to purchase the
upgrade product at prices ranging from $79.95 to $144.95. In 1997, the Company
added plug-in capabilities that permit the user to add specialized notation
features. The Company expects to allow independent third parties to develop
additional plug-in capabilities in the future to augment the features and
functions developed internally.

         In addition, the Company will continue to explore adapting its Finale
products to allow on-line transmission and viewing of musical scores. Electronic
music transmission would be used by music publishers or distributors to
electronically transmit scores in Finale file format to customers who would be
able to view the music, then purchase and print the score. The Company believes
that the use of the Finale file format as the standard for electronic music
distribution may increase demand for the Finale products. Although a product
that may be used for such a purpose is not yet in commercial production, the
Company has an alpha version of such product, which the Company will demonstrate
to key publishers to obtain market feedback. The Company believes the cost of
developing a commercially viable product is within its product development
budget.

         In January 1996, Warner Bros. Publications Inc. announced that they
required all submission of compositions for publication by Warner Bros. to be in
the Finale file format. The Company believes that this endorsement from the
world leader of sheet music publishing represents significant progress in
establishing Finale as the industry standard.

    Finale Allegro

         In 1998 the Company released the first upgrade of the Finale Allegro
product, which is based on Finale. The Company intends to continue utilizing
development efforts across as many software products as possible.

Competition

         The Company knows of no other musical accompaniment product for band
instruments and vocalists that responds to the musician with the exception of In
Concert(TM), which is an interactive product for midi keyboards. The Company
expects that SmartMusic products will also compete with conventional music
accompaniment products such as Music Minus One and Roland MTS 120. These
products offer students the ability to play along with prerecorded songs. They
differ from the SmartMusic product in that they do not automatically adjust in
real-time to the musician's changes in tempo. The Company believes its
SmartMusic system is unique because this product listens to wind instruments and
voice. In addition, Coda sells accompaniments, while competitors sell only the
applications. However, there can be no assurance that competitors will not enter
the market.

         The market for the Company's Finale and Finale Allegro music notation
software is highly competitive. The competitors in this market tend to be
similar in size to Coda but many have a more comprehensive line of music
software products. The Company regards Passport Designs, Inc.(acquired out of
bankruptcy by Lyrrus Inc.), Opcode Systems, Inc., Sibelius and Steinberg/Jones
as its closest competitors based on product offerings and price points.

         Principal competitive factors in marketing the Company's SmartMusic and
Finale products include product features, quality, brand recognition, ease of

<PAGE>

use, merchandising, access to distribution channels, retail shelf space and
price. The Company believes it competes effectively in these areas. To the
extent that competitors achieve significant advantages in performance, price or
other selling advantages, the Company could be adversely affected. There can be
no assurance that the Company will have the resources to respond to market or
technological changes, or to compete successfully in the future. Some of the
companies with which the Company may compete have significantly greater
financial and other resources than the Company. In addition, increasing
competition in the music software market could cause prices to fall, which could
adversely affect the Company's business, operating results and financial
condition.

Patents

         The Company has licensed, on a worldwide basis for the life of the
patent, from Carnegie Mellon University ("CMU") the use of the U.S. patent which
covers the automated accompaniment that listens to and follows tempo changes
from a live performance. The Company has further developed this technology and
patented additional features. The Company has obtained five patents, in addition
to the CMU patent, that protect improvements to the user control of the
software, certain aspects of the repertoire file which enhance the following
capabilities of the software, enhancements to the following algorithm,
accompaniment controls and repertoire data files and miscellaneous interface
features of the product. As a result of the additional patented features
developed by the Company and the ability of the Company to develop an extensive
library of repertoire over the next several years, the Company does not believe
that it will be materially adversely affected by the expiration of the CMU
patent in 2005.

         The Company's Finale product is covered by three separate patents which
protect the data structure, the ability to enter music into the product by
tapping tempo with a pedal device or computer keyboard, and the method of
automatically assigning guitar fingerboards to a notated chord. These patents
are licensed from Wenger Corporation on a royalty-free, exclusive, worldwide
basis for the life of the patents.

Trademarks

         The Company owns the registered trademarks in the United States for
Coda(R), Finale(R), Finale Allegro(R), The Art of Music Notation(R), Vivace(R),
Intelligent Accompaniment(R), Intelligent Accompanist(R) and Personal
Accompanist(R). In addition, the names Coda and Finale have been protected in
some foreign countries. The Company has applied for trademark registration in
the U.S. for the name Practice Studio(TM), SmartMusic(TM), SmartMusic
Studio(TM), SmartMusic Accompaniments(TM), Hyperscribe(TM) and Finale
PrintMusic!(TM). In addition, this report contains references to trademarks
owned by third parties.

Manufacturing

         Printing of user manuals and packaging and manufacture of related
materials are performed to the Company's specifications by outside
subcontractors. Currently BBI Computer Systems, Inc. ("BBI") provides key-disk
protection for accompaniment products. While BBI is not the only seller of copy
disk protection, the Company has a significant investment in incorporating their
protection mechanism into the accompaniment product inventory. No other products
are vendor specific. The Company currently uses Advanced Duplication Services,
Inc. to perform standard copying and assembling services, including copying the
accompaniment floppy disks and other product software CD-ROM disks, and
assembling the product manuals, disks and other product literature into
packages.

Employees

         As of December 31, 1998, the Company employed 43 full-time employees.
Of these, 12 served in the product and repertoire development area, 8 in product
testing and end-user support, and 23 in administrative and sales-related

<PAGE>

activities. The Company believes that its relations with its employees are good.
None of the Company's employees are covered by a collective bargaining
agreement. In addition, the Company relies on independent contractors to develop
its repertoire. The Company has had no difficulty contracting with these
individuals and believes that its relationships are good. Should the Company
have difficulty securing the services of such persons in the future, it could
adversely affect operations.

                              CAUTIONARY STATEMENTS

         The Company wishes to caution investors that the following important
factors, among others, in some cases have affected and in the future could
affect the Company's actual results of operations and cause such results to
differ materially from those anticipated in forward-looking statements made in
this document and elsewhere by or on behalf of the Company:

Distribution and Sales Level Issues. The Company's initial Vivace product was
introduced in 1994 and new Vivace products were introduced in 1997 and 1998 but
the Company has achieved only limited sales of Vivace products. Initial
distribution was aimed primarily at schools and made through a network of band
and orchestral instrument dealers. More recently, the Company has also made
SmartMusic Studio (formerly Vivace) sales through catalog companies and direct
sales through the Company's web site (www.codamusic.com). The Company expanded
and utilized new methods of distribution during 1998. While unit sales have
increased, no assurance can be given that sales of SmartMusic products will
achieve significantly higher levels.

Additional Capital. The Company believes that existing cash and proceeds from
line of credit borrowings, together with funds generated from the sale of
products, will be sufficient to fund its possible capital expenditure, product
development and working capital requirements through 1999. Any significant
change in the Company's product development plans or marketing and distribution
methods would require additional capital. If the Company does determine in the
future to seek additional capital through a new line of credit, asset-based
lending or the sale of equity, no assurance can be given that such capital will
be available or available on terms favorable to the Company. The sale of equity
interests would dilute the ownership of current shareholders.

New Product Development. Additional development work is required to increase the
breadth of the Company's repertoire for SmartMusic products. The Company plans
to release PrintMusic! in 1999, which is an introductory version of Finale. The
Company plans to develop new training and assessment products using technologies
developed while producing Finale and SmartMusic. The Company continues to
explore the possibilities in using Finale to develop the ability to sell sheet
music which can be downloaded by the consumer via the internet and change clef
and key as desired. No assurance can be given that the Company's timetable for
any of these development plans will be achieved, that sufficient development
resources will be available or that development efforts will be successful.

Dependence on Accompaniment Sales and Development. The Company's future success
is highly dependent on its ability to obtain significant ongoing accompaniment
sales. The Company has entered into license agreements with leading music
publishers, which provide the Company with access to musical titles for
accompaniment development. While the Company believes that its relationships
with these publishers are good, there can be no assurance that the Company will
be able to maintain these relationships or make satisfactory arrangements to
receive access to additional styles of music in a timely manner. Although the
loss of a license arrangement with any one publisher would not have a materially
adverse effect on the Company's operations, the lack of a sufficient number and
variety of musical arrangements would greatly limit the Company's ability to
market its SmartMusic products.


<PAGE>


Operating Losses. For the year ended December 31, 1998, the Company incurred a
net loss of $804,455 and since inception has an accumulated deficit of
$10,752,669.

Dependence on Key Personnel. The Company is highly dependent on a limited number
of key management and technical personnel, including software programmers that
are in limited supply in the current labor market. The Company's future success
will depend, in part, on its ability to attract and retain highly qualified
personnel. There can be no assurance that the Company will be successful in
hiring or retaining qualified personnel. The loss of key personnel, or inability
to hire and retain qualified personnel, could have an adverse effect on the
Company's business, financial condition and results of operations. The Company
does not have key-person life insurance on any of its key personnel.

Fluctuations in Operating Results. The Company does not have a significant
history of sales of its SmartMusic products. Sales of Finale products
historically fluctuated with higher sales levels achieved following the release
of product upgrades. The Company believes that its results of operations may
fluctuate as a result of the purchasing cycle of the education market and the
timing of releases of new products and product upgrades.

Competition. While competition for the SmartMusic products is limited, there can
be no assurance that others, such as large electronic and musical instrument
manufacturers, will not enter this market. Competition in the sale of music
notation products such as Finale and Finale Allegro occurs principally on the
basis of price, features and ease of use. Some of the companies with which the
Company may compete have significantly greater financial and other resources
than the Company.

Dependence on Suppliers. The Company is dependent on certain suppliers for
delivery of components and assembly of its SmartMusic products. While the
Company believes that alternative suppliers are available, any interruption of
supply from current vendors could cause significant delays in the shipment of
such products.

Proprietary Technology. The Company is dependent on proprietary technology. A
number of patents have been issued to or licensed by the Company. There can be
no assurance that the Company's proprietary technology will provide it with
significant competitive advantages, that other companies will not develop
substantially equivalent technology or that the Company will be able to protect
its patented and nonpatented technologies. The Company could incur substantial
costs in seeking enforcement of its patents or in defending itself against
patent infringement claims by others. The Company is not aware of any patents
held by others that would prohibit the use of technology currently used by the
Company. Further, there can be no assurance that the Company will be able to
obtain or maintain patent protection in the markets in which it intends to offer
products.


ITEM 2.  DESCRIPTION OF PROPERTY

         The Company leases approximately 12,150 square feet of office and
warehouse space at 6210 Bury Drive, Eden Prairie, Minnesota 55346, for current
annual net rent of approximately $81,000. This lease expires in November 2000.


ITEM 3.  LEGAL PROCEEDINGS

         The Company is not a party to any litigation and is not aware of any
threatened litigation that would have a material adverse effect on its financial
condition or results of operations.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

         Not applicable.


<PAGE>


                                    PART II.

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The information required by Item 5 is incorporated herein by reference
to the section entitled "Common Stock Price Ranges" which appears in the
Registrant's 1998 Annual Report to Shareholders.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The information required by Item 6 is incorporated herein by reference
to the section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" which appears in the Registrant's 1998
Annual Report to Shareholders.


ITEM 7.  FINANCIAL STATEMENTS

         Except for the Report of the Company's previous independent
accountants, which is set forth below, the information required by Item 7 is
incorporated herein by reference to the Financial Statements, Notes thereto and
Reports of Independent Public Accountants thereon which appear in the
Registrant's 1998 Annual Report to Shareholders.

<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Coda Music Technology, Inc.:

We have audited the accompanying balance sheet of Coda Music Technology, Inc. (a
Minnesota corporation) as of December 31, 1997 and the related statements of
operations, shareholders' equity and cash flows for the year then ended.  These
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material 
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Coda Music Technology, Inc. as
of December 31, 1997 and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.

                                               /s/ ARTHUR ANDERSEN LLP


Minneapolis, Minnesota
  February 20, 1998




<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         FINANCIAL DISCLOSURE

         Previously reported in the Company's Form 8-K dated November 3, 1998,
filed on November 9, 1998.


                                    PART III

ITEM 9.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND CONTROL  PERSONS;  
         COMPLIANCE  WITH SECTION  16(a) OF THE EXCHANGE ACT

         The names and ages of the executive officers of the Company and their
positions and offices presently held are as follows:

Name                     Age                           Position
John W. Paulson          51       Chief Executive Officer and Chairman of the
                                  Board of Directors

Ronald B. Raup           48       President, Chief Operating Officer and
                                  Director

Barbara S. Remley        47       Chief Financial Officer, Treasurer and
                                  Secretary

Mark E. Dunn             49       Senior Vice President of Product Development

Glenna A. Dibrell        48       Vice President of Marketing

         John W. Paulson has been Chief Executive Officer and Chairman of the
Board of Directors of Coda since December 1990. From 1982 to 1990, Mr. Paulson
was Chairman of Springboard Software, Inc., a publicly held company he founded
to develop and market educational and consumer software products. Springboard
was subsequently purchased by Spinnaker Software Corp. Prior to founding
Springboard, Mr. Paulson was a public school music teacher for nine years during
which time he taught band, keyboard and electronic music classes. He has a
Master of Arts in Music Education from the Eastman School of Music, is a
published composer, and has performed as a professional musician for over ten
years. Mr. Paulson has served on the Board of Directors of the National
Association of Music Merchants ("NAMM") and the St. Paul Chamber Orchestra.

         Ronald B. Raup has been President and Chief Operating Officer of Coda
since January 1, 1996, and served as Executive Vice President from August 1995
through December 1995. From 1977 through 1995, Mr. Raup was employed by Yamaha
Corporation of America and was Senior Vice President of Sales and Marketing from
1989 through 1995. Mr. Raup served on the Yamaha Board of Directors from 1990 to
1995.

         Barbara S. Remley has been Chief Financial Officer of Coda since May
1998. In 1997 and 1998 Ms. Remley consulted for various entities. From 1992 to
1997, Ms. Remley held various titles including President, Chief Operating
Officer and Chief Financial Officer of Garment Graphics, Inc., a designer,
marketer and distributor of licensed sports apparel. She also has ten years of
public accounting experience with Ernst & Young (formerly Ernst & Ernst).

         Mark E. Dunn has been Senior Vice President of Product Development of
Coda since October 1991. For nine years prior to joining the Company, Mr. Dunn
was Vice President of Product Development for Springboard Software, Inc. and
then Spinnaker Software Corp. upon its acquisition of Springboard.

<PAGE>

         Glenna A. Dibrell has been Vice President of Marketing of Coda since
November 1998. In 1997 and 1998 Ms. Dibrell owned a strategic consulting
business working with Eagle River Interactive (now Agency.com) and 3M. From 1994
to 1997 Ms. Dibrell was Vice President-Management Supervisor at Martin/Williams.
Prior to that she held key executive positions with top marketing agencies and
specialized in response marketing; and served in key marketing positions for
major retailers.

         The information required by Item 9 relating to directors and compliance
with Section 16(a) of the Exchange Act is incorporated herein by reference to
the sections labeled "Election of Directors" and "Section 16(a) Beneficial
Ownership Reporting Compliance" which appear in the Registrant's definitive
Proxy Statement for its 1999 Annual Meeting of Shareholders.


ITEM 10. EXECUTIVE COMPENSATION

         The information required by Item 10 is incorporated herein by reference
to the section labeled "Executive Compensation" which appears in the
Registrant's definitive Proxy Statement for its 1999 Annual Meeting of
Shareholders.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by Item 11 is incorporated herein by reference
to the sections labeled "Principal Shareholders and Management Shareholdings"
which appear in the Registrant's definitive Proxy Statement for its 1999 Annual
Meeting of Shareholders.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by Item 12 is incorporated by reference to the
section labeled "Certain Transactions" which appears in the Registrant's
definitive Proxy Statement for its 1999 Annual Meeting of Shareholders.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits.

                  See "Exhibit Index" immediately following the signature page
of this Form 10-KSB.

         (b)      Reports on Form 8-K

                  Report dated November 3, 1998,  reporting  under Item 4 a 
change in the  Registrant's  Certifying Accountant.


<PAGE>


                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                               CODA MUSIC TECHNOLOGY, INC.

Dated: March 22, 1999                       By:  s/ Ronald B. Raup     
                                                 Ronald B. Raup, President

         In accordance with the Exchange Act, this Report has been signed by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.

                               (Power of Attorney)

         Each person whose signature appears below constitutes and appoints JOHN
W. PAULSON and RONALD B. RAUP as true and lawful attorneys-in-fact and agents,
each acting alone, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments to this Annual Report on Form 10-KSB and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all said attorneys-in-fact and agents,
each acting alone, or his substitute or substitutes, may lawfully do or cause to
be done by virtue thereof. 

Signature and Title                                                  Date

s/ John W. Paulson                                              March 22, 1999
John W. Paulson, Chairman of the Board and Chief 
Executive Officer (principal executive officer)

s/ Ronald B. Raup                                               March 22, 1999
Ronald B. Raup, President, Chief Operating Officer 
and Director

s/ Barbara S. Remley                                            March 22, 1999
Barbara S. Remley, Chief Financial Officer 
(principal financial and accounting officer)

s/ David A. Henderson                                           March 22, 1999
David A. Henderson, Director

s/ Gordon F. Stofer                                             March 22, 1999
Gordon F. Stofer, Director

s/ Larry A. Pape                                                March 22, 1999
Larry A. Pape, Director

s/ Karl T. Bruhn                                                March 22, 1999
Karl T. Bruhn, Director

s/ Benson K. Whitney                                            March 22, 1999
Benson K. Whitney, Director



<PAGE>


                           CODA MUSIC TECHNOLOGY, INC.
                                EXHIBIT INDEX FOR
                        FORM 10-KSB FOR 1998 FISCAL YEAR


    Exhibit
    Number                                         Description

3.1      Restated Articles of Incorporation--incorporated by reference to
         Exhibit 3.1 to the Registrant's Form SB-2 Registration Statement, Reg.
         No. 33-92212C

3.2      Bylaws--incorporated by reference to Exhibit 3.2 to the Registrant's
         Form SB-2 Registration Statement, Reg. No. 33-92212C

10.1     Lease dated October 23, 1992 between the Registrant and Jorandcor,
         Inc.--incorporated by reference to Exhibit 10.1 to the Registrant's
         Form SB-2 Registration Statement, Reg. No. 33-92212C

10.2*    1992 Stock Option Plan--incorporated by reference to Exhibit 10.3 to
         the Registrant's Form SB-2 Registration Statement, Reg. No. 33-92212C

10.3     License Agreement dated June 10, 1992 between the Registrant and
         Carnegie Mellon University, including Amendments 1 and 2--incorporated
         by reference to Exhibit 10.11 to the Registrant's Form SB-2
         Registration Statement, Reg. No. 33-92212C

10.4     License Agreement dated December 31, 1992 between the Registrant and
         Wenger Corporation--incorporated by reference to Exhibit 10.12 to the
         Registrant's Form SB-2 Registration Statement, Reg. No. 33-92212C

10.5*    Form of Nonqualified Stock Option Agreement for Options Granted Outside
         the 1992 Stock Option Plan--incorporated by reference to Exhibit 10.13
         to the Registrant's Form SB-2 Registration Statement, Reg. No.
         33-92212C

10.6     Educational Software Distribution Agreement dated July 26, 1991 between
         the Registrant and The Douglas Stewart Company--incorporated by
         reference to Exhibit 10.17 to the Registrant's Form SB-2 Registration
         Statement, Reg. No. 33-92212C

10.7*    Employment Agreement between Registrant and Ronald B. Raup dated
         January 1, 1996 -- incorporated by reference to Exhibit 10.12 to the
         Registrant's Form 10-KSB for the year ended December 31, 1995

10.8     Amendment No. 3 to License Agreement between the Registrant and
         Carnegie Mellon University dated August 28, 1996 -- incorporated by
         reference to Exhibit 10-QSB for the quarter ended September 30, 1996

10.9     Second Amendment to Lease by and between Jorandcor, Inc. and the
         Registrant--incorporated by reference to Exhibit 10.14 to the
         Registrant's Form 10KSB for the year ended December 31, 1997

10.10    Amendment No. 4 to License Agreement between the Registrant and
         Carnegie Mellon University dated December 30, 1998


<PAGE>



10.11    Loan Agreement dated February 14, 1999 between the Registrant and
         Riverside Bank

13       Portion of Annual Report to Shareholders for fiscal year ended December
         31, 1998 incorporated herein by reference

23.1     Consent of McGladrey & Pullen LLP, independent public accountants

23.2     Consent of Arthur Andersen LLP, independent public accountants

24       Power of Attorney (included on the "Signatures" page of this Form
         10-KSB)

27       Financial Data Schedule

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

*        Indicates a management contract or compensatory plan or arrangement
         required to be filed as an exhibit to this Form 10-KSB.