SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB
(Mark One)
[X]      Quarterly  report under Section 13 or 15(d) of the Securities  Exchange
         Act of 1934 For the quarterly period ended September 30, 1997

[   ]    Transition report under Section 13 or 15(d) of the Exchange Act
         For the transition period from _________ to ____________

         Commission file number     0-26192


                           Coda Music Technology, Inc.
-------------------------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in its Charter)

   Minnesota                                               41-1716250
  (State or Other Jurisdiction of                      (I.R.S. Employer
  Incorporation or Organization)                       Identification No.)

                                 6210 Bury Drive
                       Eden Prairie, Minnesota 55346-1718
-------------------------------------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (612) 937-9611
-------------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)


-------------------------------------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)

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

As of November 5, 1997, there were 6,199,732 shares of Common Stock outstanding.

Transitional Small Business Disclosure Format (check one):

         Yes          No   X




<PAGE>


                          Part 1. Financial Information

                          Item 1. Financial Statements

                           Coda Music Technology, Inc.

                            Condensed Balance Sheets

                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                September 30,           December 31,
                                                                                    1997                   1996
                                 ASSETS                                         ------------            ------------
<S>                                                                            <C>                     <C>   
CURRENT ASSETS:
   Cash and short-term investments                                             $  2,199,073             $  1,174,293
   Accounts receivable                                                              329,139                  596,946
   Inventories                                                                      852,104                  983,375
   Prepaid royalties                                                                128,974                  118,470
   Other current assets                                                              66,138                   53,102
                                                                                -----------               ----------
               Total current assets                                               3,575,428                2,926,186
EQUIPMENT, FURNITURE AND FIXTURES                                                   371,550                  494,811
REPERTOIRE DEVELOPMENT COSTS                                                        613,748                  476,921
OTHER ASSETS                                                                        121,712                  183,916
                                                                                -----------               ----------
                                                                               $  4,682,438             $  4,081,834
                                                                                ===========               ==========
                  LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                           $     267,348            $     366,271
   Accrued expenses                                                                 380,114                  516,146
   Deferred revenue                                                                 182,285                  201,927
                                                                                -----------               ----------
               Total current liabilities                                            829,747                1,084,344

SHAREHOLDERS' EQUITY                                                              3,852,691                2,997,490
                                                                                -----------               ----------
                                                                               $  4,682,438             $  4,081,834
                                                                                ===========               ==========

            See accompanying notes to condensed financial statements

</TABLE>


<PAGE>


                           Coda Music Technology, Inc.

                       Condensed Statements of Operations

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                         Nine Months Ended
                                                           Quarter Ended September 30,                    September 30,
                                                             1997                1996                1997                1996
                                                           -------              ------              ------              ------
<S>                                                   <C>                 <C>                 <C>                <C>    
NET REVENUES                                          $      952,080      $    1,209,440      $   3,584,135      $     3,756,532

COST OF SALES                                                335,844             482,817          1,097,802            1,335,433
                                                        ------------        ------------        -----------         ------------
GROSS PROFIT                                                 616,236             726,623          2,486,333            2,421,099
                                                        ------------        ------------        -----------         ------------
OPERATING EXPENSES:
   Sales and marketing                                       610,742             592,830          1,598,115            2,071,453
   Product development                                       419,061             361,460          1,122,531              952,745
   General and administrative                                421,135             386,808          1,237,843            1,116,896
                                                        ------------        ------------        -----------         ------------
               Total operating expenses                    1,450,938           1,341,098          3,958,489            4,141,094
                                                        ------------        ------------        -----------         ------------
LOSS FROM OPERATIONS                                        (834,702)           (614,475)        (1,472,156)          (1,719,995)

Interest Income, net                                          36,105              21,096             68,252              101,400
                                                        ------------        ------------        -----------         ------------
NET LOSS                                              $     (798,597)     $     (593,379)     $  (1,403,904)     $    (1,618,595)
                                                        ============        ============        ===========         ============
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
   SHARES OUTSTANDING
                                                           6,199,832           4,326,867          5,177,637            4,291,536
                                                        ============        ============        ===========         ============

NET LOSS PER COMMON AND COMMON EQUIVALENT SHARE
                                                      $         (.13)     $         (.14)     $        (.27)     $          (.38)
                                                        ============        ============        ===========         ============


                                           See accompanying notes to condensed financial statements


</TABLE>


<PAGE>


                           Coda Music Technology, Inc.

                       Condensed Statements of Cash Flows

                     For the Nine Months Ended September 30,

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                                    1997                1996
                                                                                                   ------              ------
<S>                                                                                          <C>                <C>    
OPERATING ACTIVITIES:                                                                 
   Net loss                                                                                  $  (1,403,904)     $  (1,618,595)
   Adjustments to reconcile net loss to net cash used in operating activities-
         Depreciation and amortization                                                             414,487            259,462
         Change in current assets and liabilities:
            Accounts receivable                                                                    267,807           (146,505)
            Inventories                                                                            131,271           (435,262)
            Prepaid royalties                                                                      (10,504)           (16,739)
            Other current assets                                                                   (13,036)            62,609
            Accounts payable                                                                       (98,923)           (29,844)
            Accrued expenses                                                                      (136,032)          (101,946)
            Deferred revenue                                                                       (19,642)            20,938
                                                                                                ----------         ----------
               Net cash used in operating activities                                              (868,476)        (2,005,882)
                                                                                                ----------         ----------
INVESTING ACTIVITIES:
   Purchases of equipment, furniture and fixtures                                                  (84,833)          (289,359)
   Capitalized repertoire development cost                                                        (259,345)          (419,654)
   Other assets, principally patents and trademarks                                                (21,671)          (120,294)
                                                                                                ----------         ----------
              Net cash used in investing activities                                               (365,849)          (829,307)
                                                                                                ----------         ----------
FINANCING ACTIVITIES:
   Proceeds from exercise of stock options and warrants                                                  -            111,564
   Proceeds from sale of common stock, net of offering costs                                     2,259,105                  -
   Repayment of long-term debt                                                                           -             (3,838)
                                                                                                ----------         ----------
               Net cash provided by financing activities                                         2,259,105            107,726
                                                                                                ----------         ----------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS
                                                                                                 1,024,780         (2,727,463)

CASH AND SHORT-TERM INVESTMENTS, beginning of period                                             1,174,293          3,960,274
                                                                                                ----------         ----------
CASH AND SHORT-TERM INVESTMENTS, end of period                                              $    2,199,073     $    1,232,811
                                                                                                ==========         ==========

                                           See accompanying notes to condensed financial statements

</TABLE>


<PAGE>

                           Coda Music Technology, Inc.

                          Notes to Financial Statements

                                   (Unaudited)





Note 1     Accounting  Policies.  The information  furnished in this report is
           unaudited but reflects all  adjustments  which are necessary,  in the
           opinion of  management,  for a fair  statement of the results for the
           interim  period.  The  operating  results for the nine  months  ended
           September  30, 1997 are not  necessarily  indicative of the operating
           results to be expected  for the full fiscal  year.  These  statements
           should be read in  conjunction  with the Company's most recent Annual
           Report on Form 10-KSB.



Note 2     New Accounting Pronouncement.  The Company will adopt in the fiscal
           year ending  December  31, 1997,  Statement  of Financial  Accounting
           Standards No. 128 "Earnings Per Share" (SFAS No. 128), which requires
           disclosure  of basic  earnings  per share (EPS) and diluted  EPS. The
           Company  anticipates  that  adoption of this standard will not have a
           material impact on previously reported EPS.



Note 3     Private  Placement of Common  Stock.  On May 29, 1997,  the Company
           sold an aggregate  of 1,872,697  shares of Common Stock at a price of
           $1.30 per share and issued warrants to purchase,  at $2.00 per share,
           an aggregate of 936,357  shares of Common Stock.  The net proceeds of
           the offering totaled $2,259,105.







<PAGE>


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
           RESULTS OF OPERATIONS



General

     The Company develops and markets proprietary music technology products that
enhance  music  learning  and  composition,   increase   productivity  and  make
practicing and performing music fun.

     Through 1994, the primary  business of the Company  consisted of enhancing,
marketing  and  selling   Finale(R)  music  notation   software  products  while
developing Vivace(R)  Intelligent  Accompaniment(R)  products. In June 1994, the
first test markets of the Vivace  product were launched with a modular system at
a suggested retail price of $2,295.  In the spring of 1996, the Company released
new  configurations  of the Vivace product at lower suggested retail prices,  as
well as an application  and repertoire for vocalists.  The Company  announced in
July 1997 the introduction of a software version of the product with a suggested
retail price of $199 and repositioned the product as a complete practice system,
the Vivace Practice Studio(TM).  The Company began shipping this new product for
the  Macintosh(R)  platform at the beginning of October,  1997.  The  Windows(R)
version of this product is still in development.

     Initially,  the Company's marketing efforts were primarily directed towards
the retail music dealer channel,  with a long-term  objective of penetrating the
amateur musician market.  As the Company adapts its product to technologies with
lower cost and continues to expand the amount and styles of repertoire available
for use with the Vivace product, the Company's distribution channels will expand
beyond the retail music dealer  channel.  The Company cannot predict the time it
will take to establish new methods of distribution  which will more  effectively
reach the student and home markets.  However, the Company intends to continue to
work  with  the  retail   music  dealer   channel  to  penetrate   the  academic
institutional  market and to solicit students renting  instruments through these
dealers.

     The Company has incurred losses from operations  since inception and has an
accumulated deficit of $9,859,881 as of September 30, 1997.

Results of operations

For the periods ended September 30, 1997 compared to the periods ended September
30, 1996

     Net Revenues. Revenues of $952,080 for the quarter ended September 30, 1997
decreased  $257,360 over the quarter ended  September 30, 1996. The net decrease
in revenues  between the two periods reflects a 9% increase in revenues from the
Finale music notation  software  product and a 63% decrease in revenues from the
Vivace Intelligent  Accompaniment(R) product. Revenues for the nine months ended
September  30, 1997 were  $3,584,135,  a 5% decrease  over revenues for the nine
months ended September 30, 1996. Finale product revenues  increased  $437,715 or
20% in this period while Vivace product revenues  decreased 40%. The increase in
Finale  revenue  results  from a change in the timing of the  release of product
upgrades between years as well as an increase in the price of the Finale for Mac
upgrade  between years.  The decrease in Vivace revenue is primarily  associated
with unit volume decreases, as represented in the table below:

<PAGE>


                              Quarter Ended              Nine Months Ended

                        -------------------------     -------------------------
                         9/30/97         9/30/96        9/30/97         9/30/96
                         -------         -------        -------         -------
Applications                 220             478            952           1,642
Repertoire cartridges      3,790           7,566         13,014          17,504


     During 1996, the Company  promoted the Vivace product with a special offer,
whereby music  educators  received a free  soundcard if they  purchased  $995 of
repertoire.  In addition,  the Company benefited from inventory  stocking orders
placed  by  several  of the  music  retail  dealers  and a  large  international
distributor.  These factors were not  significant to 1997 results.  In addition,
delays  in  shipping  the  software  version  of the  Vivace  product  may  have
negatively  affected 1997 results.  Until the Windows version of this product is
shipping,  the Company  does not expect  Vivace  revenues  to exceed  those from
comparable periods of the prior year.

     The  Company  released  an upgrade to the Finale  product  for the  Windows
platform on October  14th,  and expects to begin  shipping  this  upgrade on the
Macintosh  platform in November,  1997. The timing of the release is expected to
result in a favorable Finale revenue comparison in the fourth quarter of 1997.

     Gross profit.  The gross profit of $616,236 for the quarter ended September
30, 1997  represented  a gross profit margin of 65%. For the third quarter ended
September  30, 1996,  the gross profit margin was 60%. The increase in the gross
margin percentage is primarily attributable to the higher mix of Finale sales in
the 1997 quarter compared to 1996.

     The gross  profit for the first nine months of 1997 was 69% compared to 64%
in the first nine months of 1996. The increase principally relates to a stronger
mix of the  higher  margin  Finale  products  in the first  nine  months of 1997
compared to the first nine months of 1996.  It is expected that the gross profit
percentage  will decline as Vivace  products  constitute a higher  percentage of
total revenues of the Company.

     Sales and  marketing  expenses.  For the quarter  ended  September 30, 1997
sales and  marketing  expenses  of  $610,742  are 3% higher than for the quarter
ended  September 30, 1996.  Sales and marketing  expenses of $1,598,115  for the
first nine months of 1997  decreased  23% or $473,338 over the first nine months
of 1996. Of this decrease,  approximately $110,000 is related to lower personnel
costs,  $255,000 is related to decreased travel and attendance at educator trade
shows,  and $105,000 is attributable to lower  advertising and public  relations
costs.  The Company  intentionally  postponed  certain selling  expenses pending
announcement of the software version of the Vivace product,  which  announcement
was made in July 1997.

     Product development expenses.  Product development expenses of $419,061 for
the quarter ended September 30, 1997 were  approximately 16% higher than for the
quarter ended  September 30, 1996. For the nine months ended September 30, 1997,

<PAGE>

product  development  expenses of $1,122,531  were $169,786  higher than for the
nine months  ended  September  30,  1996.  The major  reason for the increase in
expense is related to  increased  amortization  of  repertoire  development  and
software translation costs in 1997.

     General and Administrative  Expenses.  General and administrative  expenses
for the third quarter of 1997 were  $421,135  compared to $386,808 for the third
quarter of 1996. The increase over the  comparable  quarter in 1996 is primarily
attributable to personnel recruiting expenses due to the tight labor market, the
timing of travel and legal  expenses.  General  and  administrative  expenses of
$1,237,843 for the nine months ended  September 30, 1997  increased  $120,947 or
11% over the nine months ended  September 30, 1996. This increase in expenses on
a comparative  basis with the first nine months of 1996 is primarily due to that
period having been abnormally low as adjustments related to employee termination
costs were recorded in the first quarter of 1996.

     Interest  Income  (Expense),  Net. The Company had net  interest  income of
$36,105 for the quarter  ended  September  30, 1997  compared to $21,096 for the
quarter ended September 30, 1996. For the first nine months of 1996, the Company
had interest  income of $68,252  compared to interest income of $101,400 for the
first nine months of 1996.  The lower  interest  income is  attributable  to the
Company's  lower average cash and investment  balances in 1997 compared to 1996.
The Company's  financing is discussed  further under the caption  "Liquidity and
Capital Resources".

     Net loss. The net loss of $798,597 for the quarter ended September 30, 1997
is unfavorable  compared to the $593,379 loss in the quarter ended September 30,
1996.  For the nine months ended  September  30,  1997,  the  Company's  loss of
$1,403,904  was a  favorable  change  of  $214,691  over the nine  months  ended
September 30, 1996. The changes in the loss are  attributable  to the changes in
revenues and costs described above.

Liquidity and Capital Resources

     In May 1997,  the Company  received  net  proceeds of  $2,259,105  from the
private  placement of  1,872,697  shares of its common stock and the issuance of
warrants to purchase  936,357  shares of common  stock at a price of $2.00.  The
proceeds were invested in short-term securities.

     The Company has a $500,000 line of credit with a bank. Borrowings under the
line of  credit  bear  interest  at 1% over the  bank's  reference  rate and are
collateralized  by  all  of  the  accounts  receivable,  inventory  and  general
intangibles  of the  Company.  Among  other  requirements,  the  loan  agreement
requires  the  Company to maintain  minimum  levels of  tangible  net worth,  as
defined in the agreement.  While the agreement is in effect, the Company may not
incur additional indebtedness,  liquidate or merge the Company, pay dividends or
acquire any other entity  without the prior approval of the lender.  Further,  a
25% or more change in ownership of the Company  constitutes  an event of default
under the agreement. As of September 30, 1997 there were no borrowings under the
line of credit.

     Net cash used in operating  activities totaled $868,476 for the nine months
ended September 30, 1997. In addition, the Company made capital expenditures for
furniture, equipment and fixtures of $84,833 and repertoire development costs of
$259,345 in the nine months ended  September  30,  1997.  During the nine months
ended  September  30, 1996,  the Company used cash for  operating  activities of
$2,005,882,  made capital expenditures for furniture,  equipment and fixtures of
$289,359 and repertoire development of $419,654.

<PAGE>

     The Company anticipates that capital expenditures for 1997 will approximate
$150,000 and that increased  working capital will be required to support planned
revenue growth.  Management  believes existing cash and short-term  investments,
proceeds from line of credit  borrowings,  and funds  generated from the sale of
products will be sufficient to fund its capital expenditure, product development
and working capital requirements  through 1998.  Management expects that, in the
future,  cash in excess of current  requirements  will be invested in investment
grade interest-bearing securities.



Cautionary Statements

     The Company cautions investors that actual results of future operations may
differ from those  anticipated in forward looking  statements due to a number of
factors  including  market  acceptance of the  Company's  Vivace  products,  the
potential  need for  additional  capital,  the need for  additional  product and
repertoire  development  work,   competition,   dependence  on  suppliers,   and
dependence on proprietary  technology.  For a more complete  description of such
factors see  "Cautionary  Statements"  under Item 1 of the Company's Form 10-KSB
for the year ended December 31, 1996.

<PAGE>


                            PART 2. OTHER INFORMATION



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

              (a)  Exhibits:  27 - Financial Data Schedule 
                                   (filed in electronic format only)

              (b)  Reports on Form 8-K: No reports on Form 8-K were filed by the
                   registrant during the quarter ended September 30, 1997.



<PAGE>




                                   SIGNATURES





Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.





Date:  November 7, 1997                CODA MUSIC TECHNOLOGY, INC.


                                       By:  s/  Ronald B. Raup
                                            Ronald B. Raup, President and
                                            Chief Operating Officer


                                      And:  s/   Joan K. Berg
                                           Joan K. Berg, Chief Financial Officer

<PAGE>


                                 EXHIBIT INDEX
                          CODA MUSIC TECHNOLOGY, INC.
                                  FORM 10-QSB
                  For Fiscal Quarter Ended September 30, 1997


Exhibit No.              Description

    27             Financial Data Schedule