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 March 31, 1998

[   ]    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 May 12, 1998, 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

<TABLE>
<CAPTION>


                                                                               March 31, 1998       December 31, 1997
                                                                                 (Unaudited)
                                  ASSETS

<S>                                                                               <C>                   <C> 
CURRENT ASSETS:
   Cash and cash equivalents                                                      $  959,758            $1,233,454
   Short-term investments                                                            979,000               979,000
   Accounts receivable                                                               334,791               477,960
   Inventories                                                                       360,528               616,696
   Other current assets                                                               94,499                93,200
                                                                                  ----------           -----------
               Total current assets                                                2,728,576             3,400,310
EQUIPMENT, FURNITURE AND FIXTURES                                                    325,967               370,105
REPERTOIRE DEVELOPMENT COSTS                                                         629,463               591,445
PREPAID ROYALTIES                                                                    185,567               181,105
OTHER ASSETS                                                                          86,954                88,279
                                                                                  ----------           -----------
                                                                                  $3,956,527            $4,631,244
                                                                                  ==========           ===========
                   LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                              $   210,642            $  294,398
   Accrued expenses                                                                  706,150               389,885
   Deferred revenue                                                                  204,103               202,603
                                                                                  ----------           -----------
               Total current liabilities                                           1,120,895               886,886

SHAREHOLDERS' EQUITY                                                               2,835,632             3,744,358
                                                                                  ----------           -----------
                                                                                  $3,956,527            $4,631,244
                                                                                  ==========           ===========


                 See accompanying notes to financial statements

</TABLE>


<PAGE>


                           Coda Music Technology, Inc.

                       Condensed Statements of Operations

                         For the Quarter Ended March 31,

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                   1998               1997
                                                                                               -----------        -----------
<S>                                                                                            <C>                 <C>   
NET REVENUES                                                                                    $1,560,484         $1,617,473

COST OF SALES                                                                                      377,834            458,249
                                                                                               -----------        -----------
GROSS PROFIT                                                                                     1,182,650          1,159,224
                                                                                               -----------        -----------
OPERATING EXPENSES:
   Sales and marketing                                                                             541,638            541,907
   Product development                                                                             432,479            333,884
   General and administrative                                                                      464,791            441,938
   Product repositioning (Note 4)                                                                  680,000                  -
                                                                                               -----------        -----------
               Total operating expenses                                                          2,118,908          1,317,729
                                                                                               -----------        -----------
LOSS FROM OPERATIONS                                                                              (936,258)          (158,505)

INTEREST INCOME, net                                                                                27,532             11,529
                                                                                               -----------        -----------
               Net loss                                                                         $ (908,726)        $ (146,976)
                                                                                               ===========        ===========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                                       6,199,732          4,327,035
                                                                                               ===========        ===========

BASID AND DILUTED NET LOSS PER SHARE                                                            $    (0.15)        $    (0.03)
                                                                                               ===========        ===========



                                    See accompanying notes to financial statements

</TABLE>


<PAGE>


                           Coda Music Technology, Inc.

                       Condensed Statements of Cash Flows

                         For the Quarter Ended March 31,

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                                   1998               1997
                                                                                               -----------        -----------
<S>                                                                                            <C>                <C>   
OPERATING ACTIVITIES:
   Net loss                                                                                    $  (908,726)       $  (146,976)
   Adjustments to reconcile net loss to net cash used in operating activities-
         Depreciation and amortization                                                             134,044            115,268
         Change in current assets and liabilities:
            Accounts receivable                                                                    143,169            157,450
            Inventories                                                                            256,168            169,730
            Prepaid royalties                                                                       (4,462)              (515)
            Other current assets                                                                    (1,299)             8,720
            Accounts payable                                                                       (83,756)          (138,235)
            Accrued expenses                                                                       316,265           (207,895)
            Deferred revenue                                                                         1,500            (19,642)
                                                                                               -----------        -----------
               Net cash used in operating activities                                              (147,097)           (62,095)
                                                                                               -----------        -----------
INVESTING ACTIVITIES:
   Purchases of equipment, furniture and fixtures                                                   (5,356)           (25,077)
   Capitalized repertoire development cost                                                        (118,072)           (76,435)
   Capitalized patents and trademarks                                                               (3,171)            (7,337)
                                                                                               -----------        -----------
              Net cash used in investing activities                                               (126,599)          (108,849)
                                                                                               -----------        -----------
NET DECREASE IN CASH AND SHORT-TERM INVESMENTS                                                    (273,696)          (170,944)

CASH AND SHORT-TERM INVESTMENTS, beginning of period                                             2,212,454          1,174,293
                                                                                               -----------        -----------
CASH AND SHORT-TERM INVESTMENTS, end of period                                                  $1,938,758         $1,003,349
                                                                                               ===========        ===========


                                             See accompanying notes to 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 three  months ended
           March  31,  1998  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     Net 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. In accordance with the requirements
           of Financial  Accounting  Standard No. 128, which the Company adopted
           as of December 31, 1997,  common stock equivalents have been excluded
           from the calculation as their inclusion would be anitdilutive.

Note 3     New Accounting Pronouncement.    The Company will adopt in the fiscal
           year  ending  December  31,  1998,  Statement of Financial Accounting
           Standards  No.  131  "Disclosure  About Segments of an Enterprise and
           Related  Information"  (SFAS 131).   Management  is in the process of
           determining  the  impact  of  SFAS No. 131 on the Company's financial
           position, results of operations and footnote disclosures.

Note 4     Product  Repositioning.   The   Company   has   developed  SmartMusic
           Studio(TM),  a  new  and  renamed  version  of  the  Vivace  Practice
           Studio(TM) product. In connection with this introduction, the Company
           will no longer  need to  utilize  some of the  component  parts.  The
           Company has estimated the impact of returns,  exchanges and inventory
           obsolescence resulting from this product repositioning and classified
           the net charge as an operating expense.









<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.

         The Company  acquired the Finale(R) music notation  product on December
31, 1992 and enhanced  and marketed  this  product  while  developing  Vivace(R)
accompaniment  products.  In June  1994,  the first  test  markets of the Vivace
product  were  launched.  Technological  advancements  enabled  the  Company  to
dramatically  reduce  costs and  related  price  points in 1996 and again in the
fourth  quarter of 1997 when the  Company  began  shipping  the Vivace  Practice
Studio(TM).  Ongoing  advancements  enabled  the  Company to develop a more cost
effective  delivery  mechanism for this technology and the product line has been
renamed SmartMusic(TM).

     SmartMusic  products will begin to ship in the second  quarter of 1998, and
include  the basic  software  application  at a nominal  sell price and the full
system sold under the name SmartMusic  Studio(TM) which includes accessory items
at  $99.  These  products  will  be  marketed  with  a  strategy  to  gain  wide
distribution of the software which is expected to drive increased sales revenues
of the related song accompaniment products.

     The Company has incurred losses from operations  since inception and has an
accumulated deficit of $10,876,940 as of March 31, 1998.

Results of operations

For the period ended March 31, 1998 compared to the period ended March 31, 1997

     Net Revenues.  Revenues of $1,560,484  for the quarter ended March 31, 1998
were  $56,989 or 4% lower than for the  quarter  ended March 31,  1997.  Of this
decrease,  approximately $20,000 is due to a decrease in Finale product revenues
and the remainder relates to a decrease in Vivace product  revenues.  The number
of Vivace  applications  sold during the first quarter of 1998 increased 231% to
1,381 units, while the number of accompaniment cartridges increased 50% to 7,921
units.  These unit increases were offset by price  decreases  resulting in lower
revenue. These changes do not reflect the impact of the product repositioning to
SmartMusic Studio discussed below.

Due to the recent  introduction of SmartMusic  Studio,  the Company  anticipates
that  second  quarter  1998  revenues  will be less  than  second  quarter  1997
revenues.

     Gross profit.  The gross profit of  $1,182,650  for the quarter ended March
31, 1998  represented  a gross profit margin of 76%. For the first quarter ended
March 31, 1997, the gross profit margin was 72%. The increase is attributable to
higher  Finale  margins  associated  with  reduction of  component  costs of the
product as well as a higher  percentage  of Finale  revenue to total  revenue in
1998 compared to 1997.

<PAGE>

     Product  Repositioning.  The Company  announced in April 1998 that it would
introduce  SmartMusic  Studio,  a new and renamed version of the Vivace Practice
Studio product.  Because of changes in the components required for this product,
the Company has  established  a reserve for excess and  obsolete  inventory.  In
addition,  the Company  anticipates  accepting returns from music retailers with
inventory in stock.  The Company has  estimated  the total impact of returns and
excess and obsolete  inventory and classified  this cost in the line item titled
"Product Repositioning" in the accompanying statements of operations.

     Sales and marketing  expenses.  For the quarter ended March 31, 1998, sales
and marketing  expenses of $541,638 are  approximately the same as for the first
quarter of 1997.

     Product development expenses.  Product development expenses of $432,479 for
the quarter ended March 31, 1998 were $98,595  higher than for the quarter ended
March 31,  1997.  Approximately  half of this  increase  relates to increases in
software  developer   compensation  and  the  remaining  difference  relates  to
increased amortization of capitalized repertoire development costs.

     General and Administrative  Expenses.  General and administrative  expenses
for the first quarter of 1998 were  $464,791  compared to $441,938 for the first
quarter of 1997,  primarily due to reduced incentive  compensation  accruals for
the first quarter of 1997.

     Interest  Income,  net. The Company had net interest  income of $27,532 for
the quarter ended March 31, 1998 compared to $11,529 for the quarter ended March
31,  1997 due to  higher  levels  of cash  and  short-term  investments  in 1998
compared to 1997. The Company's financing is discussed further under the caption
"Liquidity and Capital Resources".

     Net loss.  The net loss of $908,726 or $.15 per basic and diluted share for
the  quarter  ended March 31, 1998 is  unfavorable  to the  $146,976 or $.03 per
basic and diluted share loss in the quarter ended March 31, 1997.  This increase
in the loss is  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.  The proceeds were
invested in short-term securities.

     The Company has a $500,000 line of credit with a bank which is available to
finance its  working  capital  requirements.  The  borrowings  under the line of
credit are limited to 75% of eligible  accounts  receivable plus 25% of eligible
inventories,  as defined, 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.  As of March 31, 1998 there were no borrowings under
the line of credit.

<PAGE>


     Net cash used in  operating  activities  totaled  $147,097  for the quarter
ended March 31, 1998.  In addition,  the Company made capital  expenditures  for
furniture,  equipment and fixtures of $5,356 and repertoire development costs of
$118,072  in the first  quarter of 1998.  The  Company  used cash for  operating
activities of $62,095 and made capital expenditures for furniture, equipment and
fixtures of $25,077 and repertoire development costs of $76,435 during the three
months ended March 31, 1997.

     The Company anticipates that capital expenditures for 1998 will approximate
$120,000.  Management  believes  existing  cash and proceeds from line of credit
borrowings,  together  with funds  generated  from the sale of products  will be
sufficient  to fund its capital  expenditure,  product  development  and working
capital requirements through 1998.

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  sales  and  distribution  issues,  the  potential  need  for
additional  capital,  the need for  additional  product  and  development  work,
dependence on accompaniment  sales and development,  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, 1997.

<PAGE>


                            PART 2. OTHER INFORMATION

Item 1.  Litigation

         The  Company  has  been   served   with a complaint  dated  February 5,
1998 and filed in United States District Court for the District of Massachusetts
in which Twelve Tone Systems,  Inc.  seeks a  declaratory  judgment that certain
patents  owned by and licensed to the Company are not  infringed by Twelve Tone.
The patents relate to the Company's Intelligent Accompaniment(R) technology. The
Company believes that the patents are valid and intends to enforce its rights.

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

         (a) The  Annual  Meeting  of  the Registrant's shareholders was held on
             April 29, 1998.

         (b) At  the  Annual  Meeting  a  proposal   to   set   the   number  of
             directors at seven  was adopted by a vote of  4,845,923  shares  in
             favor, with 48,857 shares against, 15,700  shares  abstaining and 0
             shares represented by broker nonvotes.

         (c) Proxies  for  the  Annual   Meeting   were   solicited  pursuant to
             Regulation  14A  under   the   Securities   Exchange   Act of 1934,
             there   was   no  solicitation   in   opposition   to  management's
             nominees,  and  the  following  persons  were  elected directors of
             the   Registrant  to  serve   until  the  next  annual  meeting  of
             shareholders  and  until  their   successors  shall  have been duly
             elected and qualified:

                  Nominee         Number of Votes For  Number of Votes Withheld
             John W. Paulson           4,846,263                  64,217
             Ronald B. Raup            4,846,533                  63,947
             David A. Henderson        4,760,289                 150,191
             Gordon R. Stofer          4,846,533                  63,947
             Larry A. Pape             4,846,533                  63,947
             Karl T. Bruhn             4,846,533                  63,947
             Benson K. Whitney         4,846,533                  63,947



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

         (a)  Exhibits:  See Exhibit Index on page following Signature page.

         (b)  Reports on Form 8-K: No reports on Form 8-K were filed by the
              registrant during the quarter ended March 31, 1998.



<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:  May 12, 1998                  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



                                   FORM 10-QSB

                              For the Quarter Ended
                                 March 31, 1997





Exhibit
Number         Description

  27           Financial Data Schedule (filed in electronic format only)