<PAGE>
                       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, 2001

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

     Commission file number 0-26192

                                 Net4Music Inc.
-------------------------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in its Charter)

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

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

                                 (952) 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 October 24, 2001, there were 20,893,472 shares of Common Stock
outstanding.

Transitional Small Business Disclosure Format (check one):

                 Yes          No   X
                    -------     -------

     See accompanying notes to condensed consolidated financial statements

                                       1
<PAGE>


                                 NET4MUSIC INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                         (In thousands of U.S. dollars)


<TABLE>
<CAPTION>
                                                                       SEPTEMBER 30,              DECEMBER 31,
                                                                           2001                       2000
                                                                      --------------              ------------
                                                                       (unaudited)                   (Note)
                                                                                                    Restated
<S>                                                             <C>                        <C>
ASSETS
Current assets:
   Cash and cash equivalents                                     $             3,293        $             9,090
   Short-term investments                                                         --                        917
   Accounts receivable                                                           559                        580
   Notes receivable                                                            1,171                         --
   Inventories                                                                   394                        312
   Value added tax receivable                                                     89                        932
   Prepaid expenses and other current assets                                     342                        485
                                                                 -------------------        -------------------
Total current assets                                                           5,848                     12,316
Property and equipment, net                                                    1,225                      1,710
Intangible assets, net                                                        23,147                     26,748
Other non-current assets                                                         640                        491
                                                                 -------------------        -------------------
TOTAL ASSETS                                                     $            30,860        $            41,265
                                                                 ===================        ===================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                              $               754        $             1,427
   Accrued expenses and other current liabilities                              1,670                      1,992
   Current portion of long-term debt and capital
     lease obligations                                                           470                        802
                                                                 -------------------        -------------------
Total current liabilities                                                      2,894                      4,221
Long-term debt and capital lease obligations, net of
   current portion                                                               458                        709
Shareholders' equity:
   Common stock                                                               57,929                     55,826
   Subscription shares receivable                                                (88)                        --
   Accumulated deficit                                                       (29,082)                   (18,656)
   Accumulated other comprehensive income                                       (432)                        83
   Deferred compensation                                                        (819)                      (918)
                                                                 -------------------        -------------------
Total shareholders' equity                                                    27,508                     36,335
                                                                 -------------------        -------------------
Total liabilities and shareholders' equity                       $            30,860        $            41,265
                                                                 ===================        ===================
</TABLE>


 NOTE: The Balance Sheet at December 31, 2000 has been derived from the audited
 financial statements at that date but does not include any of the information
 and footnotes required by General Accepted Accounting Principles for complete
 financial statements.


    See accompanying notes to condensed consolidated financial statements

                                       2
<PAGE>

                                 NET4MUSIC INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

         (In thousands of U.S. dollars, except share and per share data)

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                  QUARTER ENDED SEPTEMBER 30,               NINE MONTHS ENDED
                                                                                              SEPTEMBER 30,
                                                ---------------------------------  -------------------------------------
                                                     2001              2000             2001                 2000
                                                ---------------   ---------------  -------------------  ----------------
<S>                                            <C>               <C>                <C>                <C>

NET REVENUE                                       $     1,950      $        23       $    5,027           $        88

COST OF REVENUES                                          354               31            1,064                     9
                                                  -----------      -----------       ----------           -----------

GROSS PROFIT (LOSS)                                     1,596               (8)           3,963                    79

OPERATING EXPENSES:
     Website development expenses                          55              257              599                   941
     Content and product development expenses             644              190            1,959                   745
     Selling and marketing expenses                       898            1,041            3,635                 3,546
     General and administrative                         2,151            1,054            6,502                 2,942
     Restructuring charges                                386               --            1,031                    --
     Impairment of license rights                         796               --              796                    --
                                                  -----------      -----------       ----------           -----------
Total operating expenses                                4,930            2,542           14,522                 8,174
                                                  -----------      -----------       ----------           -----------
LOSS FROM OPERATIONS                                   (3,334)          (2,550)         (10,559)               (8,095)

     Interest income, net                                  21              175              109                   262
     Foreign exchange income/(loss)                        (2)              (6)              (1)                   (5)
     Other income, net                                     55                4               25                    25
                                                  -----------      -----------       ----------           -----------

Net loss                                          $    (3,260)      $   (2,377)     $   (10,426)          $    (7,813)
                                                  ===========      ===========       ==========           ===========

Basic and diluted loss per common share

                                                $       (0.16)     $     (0.19)     $     (0.50)         $      (0.77)
                                                  ===========      ===========       ==========           ===========

Weighted average common shares outstanding         20,985,799       12,635,053       20,935,574            10,092,729
                                                  ===========      ===========       ==========           ===========
</TABLE>


     See accompanying notes to condensed consolidated financial statements


                                       3
<PAGE>


                                 NET4MUSIC INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (In thousands of U.S. dollars)

<TABLE>
<CAPTION>

                                                                        SEPTEMBER 30,                 SEPTEMBER 30,
                                                                           2001                          2000
                                                                    -----------------------      ----------------------
<S>                                                                 <C>                         <C>
OPERATING ACTIVITIES
Net loss                                                            $          (10,426)        $              (7,813)
Adjustments to reconcile net loss to net cash used in operating
   activities:
   Impairment of license rights                                                    796                             -
   Amortization of intangible assets                                             2,961                           223
   Depreciation and amortization of property and equipment                         625                            81
   Amortization of deferred compensation                                            99                             -
   Restructuring                                                                   483                             -
   Issuance of stock options and warrants for services                             291                             -
   Increase (decrease) in cash from:
     Accounts receivable                                                           778                          (157)
     Inventories                                                                   (83)                            -
     Prepaid expenses and other current assets                                    (123)                         (438)
     Accounts payable                                                             (774)                         (101)
     Accrued expenses and other liabilities                                       (396)                          351
                                                                    -----------------------      ----------------------
Net cash used in operating activities                                           (5,769)                       (7,854)

INVESTING ACTIVITIES
Purchases of property and equipment and intangibles                               (410)                         (280)
Net redemptions of short-term investments                                          917                             -
                                                                    -----------------------      ----------------------
Net cash provided by (used in) investing activities                                507                          (280)

FINANCING ACTIVITIES
Cash proceeds from issuance of shares                                              258                        15,281
Increase in long-term debt                                                           -                           560
Payments on long-term debt                                                        (553)                         (355)
                                                                    -----------------------      ----------------------
Net cash (used in) provided by financing activities                               (295)                       15,486

Effect of exchange rate changes on cash                                           (240)                           44
                                                                    -----------------------      ----------------------
Net (decrease) increase in cash and cash equivalents                            (5,797)                        7,396
Cash and cash equivalents, beginning of period                                   9,090                         4,105
                                                                    -----------------------      ----------------------
Cash and cash equivalents, end of period                            $            3,293           $            11,501
                                                                    =======================      ======================

Supplemental Non-cash items:
Notes receivable on share subscriptions in September 2001           $               1,169                         --
</TABLE>

      See accompanying notes to condensed consolidated financial statements

                                       4
<PAGE>


                                 NET4MUSIC INC.
              NOTES TO CONDENSED CONSOLIDATED 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, 2001 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/A.

           Certain amounts as presented in the 2000 financial statements, as
           previously reported, have been reclassified to conform to the 2001
           presentation. Amortization of capitalized repertoire development cost
           has been reclassified from content development expense to cost of
           revenues.

Note 2     RESTATEMENT. Based on a Securities and Exchange Commission review,
           the consolidated financial statements for the year ended December
           31, 2000 and the quarter ended March 31, 2001 have been restated.
           Refer to those previously filed documents. The effects of those
           restatements have been included in the nine months ended September
           30, 2001.

Note 3     BUSINESS COMBINATION. Net4Music Inc., formerly known as Coda Music
           Technology, Inc. ("Coda"), is the result of the October 2000 reverse
           acquisition of Coda and Net4Music SA. The transaction was accounted
           for as a reverse acquisition using purchase accounting and the
           purchase price of approximately $26,764,000 and the
           acquisition-related costs of $1,234,000 were allocated based on the
           estimated fair value of the assets and liabilities of Coda.

           The excess purchase price deemed paid by Net4Music S.A. for the net
           assets of Coda over the fair value of those assets was $25,191,000
           which was allocated to identifiable intangible assets and goodwill,
           and is being amortized using the straight-line method over a range of
           3 to 10 years.


    See accompanying notes to condensed consolidated financial statements

                                       5
<PAGE>


           For comparison purposes, third quarter and nine months ended
           September 30, 2001 and September 30, 2000 pro forma results are
           presented below as if the reverse acquisition had occurred at the
           beginning of each fiscal year (in thousands, except share and per
           share data):

<TABLE>
<CAPTION>

                                                         THIRD QUARTER ENDED                NINE MONTHS ENDED
                                                             SEPTEMBER 30                     SEPTEMBER 30
                                                   -----------------------------    ----------------------------------
                                                          2001           2000             2001            2000
                                                   -----------------------------    ----------------------------------
<S>                                                   <C>            <C>               <C>             <C>
            Net revenues                                $ 1,950        $ 2,739          $ 5,027          $ 5,673
            Operating loss                               (3,334)        (2,611)         (10,559)         (10,059)
            Net loss                                   $ (3,260)      $ (2,426)        $(10,426)        $ (9,732)
            Basic and diluted net loss per share       $  (0.16)      $  (0.13)        $  (0.50)        $  (0.59)
            Basic and diluted weighted average       20,985,799     19,103,345       20,935,574       16,501,684
             common shares
</TABLE>

           The pro forma results are not necessarily indicative of what
           actually would have occurred if the acquisition had been completed as
           of the beginning of each of the periods presented, nor are they
           necessarily indicative of future consolidated results.

Note 4     RESTRUCTURING CHARGES. On August 10, 2001, the Company announced a
           restructuring plan affecting the digital sheet music operations in
           its European and Madagascar locations. The plan, which will reduce
           fixed costs relating to the production of digital sheet music and
           transition to the use of outside contractors, is expected to include
           a reduction of approximately 90 employees in Europe and Madagascar
           and the closure of leased facilities in Lyon, France and Madagascar.
           As the result of this plan to reduce operating costs, Net4Music
           recorded a restructure related charge of $386,000 in the third
           quarter.

<TABLE>
<CAPTION>


                                           Balance        Nine Months Ended      Nine Months Ended        Balance
                                          12/31/00          9/30/01 Accrual         9/30/01 Paid          9/30/01
                                          --------        -----------------      -----------------        --------
         <S>                            <C>              <C>                   <C>                    <C>
          Non-Cash Items:
          Severance and related         $        0        $      295,000                               $          0
            personnel expenses
          Fixed asset write-off                  0               188,000                                          0
          Cash Items:
          Severance and related                  0               486,000             $346,000               140,000
            personnel expenses
          Lease Termination                      0                32,000               20,000                12,000
          Moving/Storage                         0                22,000               10,000                12,000
          Other                                  0                 8,000                    0                 8,000
                                        --------------    -------------------    ------------------    -----------------
          TOTAL                         $        0         $   1,031,000           $  376,000           $   172,000
                                        ==============    ===================    ==================    =================
</TABLE>




                                    6
<PAGE>

Note 5    PRIVATE PLACEMENT. On September 28, 2001 the Company sold pursuant to
          a private placement, 2,298,394 shares of its common stock at a price
          of $0.66 per share, based on a 30-day average of the closing price of
          the company stock preceding September 20, 2001. The private placement
          of $1,517,000 included notes receivable for 1,772,000 shares, of which
          $1,169,000 was paid in October 2001 and are classified as current
          assets at September 30, 2001. In addition, with each share purchased,
          investors received one warrant exercisable for three and one-half
          years to purchase one common share for $0.66. Management and employees
          purchased over 207,210 shares, with $88,000 of the purchases being
          made with non-interest bearing loans to be paid from earned bonuses.
          Any unpaid balances are due fully by September 28, 2002. A portion of
          the shares and warrants that equal 20% or more of shares outstanding
          prior to completion of the private placement are subject to
          shareholder approval.


Note 6    INCOME (LOSS) PER COMMON SHARE. Basic and diluted net loss per common
          share was computed by dividing the net loss by the weighted average
          number of shares of Common Stock outstanding plus the 2,315,773 shares
          issuable under the put and call agreement from the Coda reverse
          acquisition and deemed outstanding for purposes of loss per share.

Note 7    INCOME TAX EXPENSE.   Because of net operating losses the Company
          has not incurred income tax expense.

Note 8    COMPREHENSIVE  INCOME  (LOSS).  As of September  30, 2001 the effect
          of foreign  currency  translation  is a $515,000 loss for the
          nine months ended September 30, 2001.

Note 9    IMPAIRMENT OF LONG LIVED ASSETS. The Company intangible assets include
          license rights for digital sheet music, which were $1,639,000 less
          $276,000 accumulated amortization as of September 30, 2001, for a
          preadjusted net value of $1,363,000. During the quarter ended
          September 30, 2001, the Company put into effect a restructuring of its
          digital sheet music operations which resulted in the revaluation of
          the recoverability of the license rights as described in Statement of
          Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
          Impairment of Long-Lived Assets and for Long-Lived Assets to be
          Disposed Of." Management concluded from the results of this evaluation
          that an impairment of license rights had occurred and approximately
          $800,000 was written off.

          In September 2001, the Financial Accounting Standards Board issued
          Statement of Financial Accounting Standard No. 141, Business
          Combinations, and No. 142, Goodwill and Other Intangible Assets,
          effective for the first quarter of fiscal years beginning after
          December 15, 2001. Under the new rules, goodwill and intangible assets
          deemed to have indefinite lives will no longer be amortized but will
          be subject to annual impairment tests in accordance with the
          Statements. Other intangible assets will continue to be amortized over
          their useful lives. The Company has not yet completed its analysis of
          the required transitional impairment test for goodwill required upon
          adoption of FAS 142. However, it is possible that such an impairment
          adjustment could be required.



                                       7
<PAGE>

           The Company will apply the new rules on accounting for goodwill and
           other intangible assets beginning in the first quarter of 2002.
           Absent any transitional impairment charges, the application of this
           non-amortization provision for goodwill is expected to result in an
           annual increase in net income of $1,968,000 or $0.09 per share per
           year.

Note 10    RECLASSIFICATIONS. Certain amounts in fiscal 2000 financial
           statements have been reclassified to conform to current year
           presentation.



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

GENERAL

Net4Music Inc. ("Net4Music" or the "Company"), a Minnesota corporation, provides
products to music educators, music makers and the music publishing industry that
enhance the processes of composing, distributing, teaching, learning and playing
music. Net4Music provides the technologies, products and services that are
intended to optimize the entire music maker supply chain.

Net4Music believes it is uniquely positioned to provide a range of independent
yet complementary products to the music industry in such areas as digital music
rights and rights management technologies, in music notation software,
accompaniments and education software and content. Net4Music is currently an
international company with a comprehensive set of rights to compositions,
software and other technologies and content, all of which Net4Music anticipates
managing in such a way as to significantly change the supply chain of creating,
publishing, distributing, teaching, learning and performing music.

The Company has incurred losses from operations since inception and has an
accumulated deficit of $29,082,000 as of September 30, 2001.

On October 19, 2000, Coda Music Technology, Inc. changed its name to Net4Music
Inc. in connection with its acquisition of Net4Music S.A. Under Generally
Accepted Accounting Principles ("GAAP"), the Net4Music S.A. and Coda business
combination was deemed to be a reverse acquisition of Coda by Net4Music S.A.
According to GAAP, upon an acquisition, the acquired company's results of
operations are not included in the acquirer's results of operations prior to the
date of acquisition.

RESULTS OF OPERATIONS

FOR THE PERIODS ENDED SEPTEMBER 30, 2001 COMPARED TO THE PERIODS ENDED
SEPTEMBER 30, 2000

     NET REVENUES. Net revenues of $1,950,000 for the quarter ended September
30, 2001 were $1,927,000 higher than for the quarter ended September 30, 2000.
Net revenues of $5,027,000 for the nine months ended September 30, 2001 were
$4,939,000 higher than for the nine months ended September 30, 2000. As a result
of the reverse acquisition completed on October 19, 2000, revenues for the Coda
operations, previously called Coda Music Technology, Inc., were


                                       8
<PAGE>

included in the 2001 results, but not in the 2000 results. If the Coda operation
revenues had been included in the 2000 results, revenues on a pro forma basis
for the quarter ended and the nine months ended September 30, 2000 would have
been $2,739,000 and $5,673,000, respectively.

     Net revenues were $1,950,000 for the quarter ended September 30, 2001, a
$789,000, or 29%, decrease from pro forma revenues results for the quarter ended
September 30, 2000. The revenue decrease relates to a one month delay in the
release of Finale(R) 2002 and a slowing economy coupled with the September 11
terrorist attack on America. Upgrade sales started especially strong for this
upgrade cycle; however, this strong start has been offset by the slowdown
subsequent to the terrorist acts of September 11, 2001.

     Net revenues for the nine months ended September 30, 2001 were $5,027,000,
a $646,000, or 11%, decrease from pro forma net revenue for the nine months
ended September 30, 2000. Once again, the revenue decrease relates to a one
month delay in the release of Finale(R) 2002 and a slowed economy exasperated by
the September 11 terrorist attack. We expect that a good portion of the sales
decrease will be recovered in the fourth quarter. Notation and SmartMusic sales
in October were $864,000, $396,000, or 85%, higher than October 2000 sales. This
October increase offsets over 66% of the Notation and SmartMusic year-to-date
sales decrease.

     GROSS PROFIT. Gross Profit of $1,596,000 for the quarter ended September
30, 2001 was $1,604,000 higher than for the quarter ended September 30, 2000.
Gross profit of $3,963,000 for the nine months ended September 30, 2001 was
$3,884,000 higher than for the nine months ended September 30, 2000. The
increases reflect the Company's addition of Coda software sales after the date
of the reverse acquisition as described above. Gross profit on a pro forma basis
for the quarter ended and the nine months ended September 30, 2000 would have
been $2,210,000 and $4,348,000, respectively. Gross profit of $1,596,000 for the
quarter ended September 30, 2001 decreased $614,000 from the same period last
year. The gross profit of $3,963,000 for the nine months ended September 30,
2001 decreased by $385,000 from the same period last year. The decrease of gross
profit on a pro forma basis is a result of lower revenue due to the conditions
described above.

     SELLING AND MARKETING EXPENSES. Selling and marketing expenses were
$898,000 for the third quarter ended September 30, 2001, a 14% decrease from
selling and marketing expenses of $1,041,000 for the quarter ended September 30,
2000. Selling and marketing expenses were $3,635,000 for the first nine months
of 2001, a 3% increase from selling and marketing expenses of $3,546,000 for the
nine months ended September 30, 2000. The change in the third quarter is related
to the reduced workforce due to the restructure efforts announced on March 16,
2001 and August 10, 2001. The increase in the nine month period is primarily
related to personnel costs for marketing the Finale and SmartMusic product lines
acquired in the reverse acquisition on October 19, 2000, offset by a reduction
in expenses due to restructuring charges during the nine months ended September
30, 2001.

     WEBSITE DEVELOPMENT EXPENSES. Website development expenses of $55,000 for
the quarter ended September 30, 2001 were $202,000, or 79%, lower than for the
quarter ended September 30, 2000. For the nine months ended September 30, 2001,
website development expenses of $599,000 were $342,000, or 36%, lower than for
the nine months ended September 30, 2000. Prior year expenses reflect the
initial website development, which has slowed since the website




                                       9
<PAGE>

has been in operation. Current year website development expense continues to
consist primarily of expenses related to improvement of the design and
development of additional features for the Net4Music website and other
underlying technology infrastructure as well as development of a new website for
Smart Music Studio. During the first nine months of 2001, the Company announced
two restructures of its operation which resulted in a significant reduction of
expenses in website development and a shift of personnel in the European
operation into SmartMusic Online internet development.

     CONTENT AND PRODUCT DEVELOPMENT EXPENSES. Content and product development
expenses of $644,000 for the quarter ended September 30, 2001 were $454,000 or
239% higher than for the quarter ended September 30, 2000. For the nine months
ended September 30, 2001, content and product development expenses of $1,959,000
were $1,214,000, or 163%, higher than for the nine months ended September 30,
2000. The increase is largely due to the addition of personnel costs for
software development and SmartMusic repertoire development as a result of the
reverse acquisition completed on October 19, 2000.

     GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
were $2,151,000 for the third quarter ended September 30, 2001, a $1,097,000, or
104%, increase over the third quarter ended September 30, 2000. General and
administrative expenses of $6,502,000 for the nine months ended September 30,
2001 increased $3,560,000, or 121%, over the nine months ended September 30,
2000. Amortization of goodwill and depreciation of the write up in assets as a
result of the reverse acquisition totaled $678,000 for the period and $2,034,000
for the nine months ended September 30, 2001. General and administrative expense
without amortization of intangible assets for the quarter and nine months ended
September 30, 2001 would have been $1,473,000 and $4,468,000, respectively.
Quarter expenses increased over 2000 due to additional expenses of the Coda
operation. General and administrative on a year to date basis reflect increases
relating to professional fees, public company fees, software expenses, computer
services, the addition of facilities as a result of the reverse acquisition
effective October 19, 2000 and the costs of being a global public company.

     INTEREST INCOME, NET. The Company had interest income of $21,000, net of
$10,000 interest expense for the quarter ended September 30, 2001. Net interest
income decreased $154,000, or 88%, when compared to the quarter ended September
30, 2000. For the first nine months of 2001, the Company had a net interest
income of $109,000 as compared to $262,000 for the same period a year ago.
Decreased interest income relates to lower cash investments.

     NET LOSS. The Company recorded a net loss of $3,260,000, or $0.16 per basic
and diluted share, for the quarter ended September 30, 2001 compared to a net
loss of $2,377,000, or $0.19 per basic and diluted share, for the quarter ended
September 30, 2000. For the nine months ended September 30, 2001, the Company
recorded a net loss of $10,426,000, or $0.50 per basic and diluted share, as
compared to a net loss $7,813,000, or $0.77 basic and diluted share, for the
same period last year. This loss is attributable to the changes in revenues and
expenses described above.

     LIQUIDITY AND CAPITAL RESOURCES. Net cash used in operating activities
totaled $5,769,000 for the nine months ended September 30, 2001. Cash usage was
less than the net loss due to the significant level of non-cash items including
amortization of intangible assets and depreciation

                                       10
<PAGE>

and amortization of property and equipment.

     On September 28, 2001 the Company successfully raised $1.5 million by
issuing shares of stock, $258,000 of cash was received in the third quarter
relating to this financing and the remainder was received in the fourth quarter.
See note 5 to the condensed consolidated financial statements.

     In addition, $917,000 of short-term investments were redeemed in the nine
months ended September 30, 2001.

     The significant reduction in cash usage from operations for the nine month
period ended September 30, 2001 compared to 2000 is attributed to closing the
New York facility and reduction of European operations and the receipt of
$1,000,000 from the French government for VAT receivable relating to prior
purchases.

     The Company has continued to experience operating losses and a resulting
reduction in cash resources. Management has taken steps to reduce costs through
workforce reductions and other restructurings. Based on these changes management
believes that existing cash, together with funds generated by product sales and
the private placement, will be sufficient to fund operations through the end of
2002. Management expects to seek additional equity financing or further reduce
expenses to provide cash resources beyond that date.


CAUTIONARY STATEMENTS

The Private Securities Litigation Reform Act of 1995 (the "Reform Act") provides
a safe harbor for forward-looking statements made by us or on our behalf. We
have made, and may continue to make, various written or verbal forward-looking
statements with respect to business and financial matters, including statements
contained in this document, filings with the Securities and Exchange Commission,
and reports to stockholders. Forward-looking statements provide current
expectations or forecasts of future events and can be identified by the use of
terminology such as "believe," "estimate," "expect," "intend," "may," "could,"
"will," and similar words or expressions. Net4Music's forward-looking statements
generally relate to its growth strategy, sufficiency of cash, financial results,
product development and sales efforts. Forward-looking statements cannot be
guaranteed and actual results may vary materially due to the uncertainties and
risks, known and unknown, associated with such statements. Net4Music undertakes
no obligations to update any forward-looking statements. Net4Music wishes to
caution investors that many important factors, in some cases have affected and
in the future could affect Net4Music'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 Net4Music.
These factors include, but are not limited to, our need for additional capital;
our dependence upon new product development efforts, our Internet business and
accompaniment sales and a limited number of publishers; the limited and
fluctuating sales of certain of our products; our ability to convert website
visits to sales; our expected continuing operating losses; the intense
competition we face; the rapid technological changes and obsolescence in our
industry; the changing governmental regulation we may face; the risks of doing
business internationally, our dependence on key personnel and the proprietary
nature of our technology; the market volatility of our stock and other general
business and economic conditions. It is not possible to foresee or identify all
factors that could cause actual results to differ from expected or historic
results. As such, investors should not consider any list of such factors to be
an exhaustive statement of all risks, uncertainties or potentially inaccurate
assumptions.



                                       11
<PAGE>

PART  2.  OTHER INFORMATION



ITEM 1.       LEGAL PROCEEDINGS:

              None

ITEM 2.       CHANGES IN SECURITIES:

              In July 2001, the registrant issued 21,803 shares of Common Stock
              in exchange for 27,952 shares of Net4Music S.A. and in September
              2001 the registrant issued 44,850 shares of Common Stock in
              exchange for 57,500 shares of Net4Music S.A. Such shares were
              issued pursuant to the exercise of rights under the Put and Call
              Agreement dated August 11, 2000 among the registrant and certain
              security holders of Net4Music S.A. The shares were issued in
              reliance on the exemption from registration provided by Regulation
              S under the Securities Act of 1933, and the certificates
              representing the shares bears a legend to that effect.

              In September 2001, the registrant sold an aggregate of 2,298,394
              shares of Common Stock at a price of $.66 per share and issued
              warrants to purchase 2,298,394 shares of Common Stock at an
              exercise price of $.66 per share to 14 accredited and 22
              non-accredited investors. The securities were issued in reliance
              on the exemption from registration provided by Rule 505 of
              Regulation D under the Securities Act of 1933. The purchasers
              represented their intention to acquire the securities for
              investment and not with a view to the distribution thereof, and a
              restrictive securities legend has been placed on the certificates
              representing the securities.



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:  None

              (b) REPORTS ON FORM 8-K: No reports on Form 8-K were filed by the
               registrant during the quarter ended September 30, 2001.



                                       12
<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 14, 2001                         NET4MUSIC INC.


                                By: /s/ Philip Sean Lafleur
                                   -------------------------------------------
                                   Philip Sean Lafleur, Chief Executive Officer


                              And: /s/ Barbara S. Remley
                                   --------------------------------------------
                                   Barbara S. Remley, Chief Financial Officer


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