SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                                    FORM 10-Q




[X]    Quarterly  Report under section 13 or 15 (d) of the  Securities  Exchange
       Act of 1934 for the quarterly period ended December 31, 1995

[  ]  Transition  Report  pursuant  to Section 13 or 15 (d) of the  Securities
      Exchange Act of 1934 for the  transition  period from        to         .


       Commission File Number 0-16154


                             AUDIO KING CORPORATION
             (Exact name of registrant as specified in its charter)


              Minnesota                                        41-1565405
  (State or other jurisdiction of               (I.R.S. Employer Identification
   incorporation or organization)                               Number)

                             3501 South Highway 100
                          Minneapolis, Minnesota 55416
                     (Address of principal executive office)

                                 (612) 920-0505
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 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 ___

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
Common Stock, as of the last practicable date.


                  Class                        Outstanding at February 12, 1996

     Common Stock, $.001 par value                           2,772,223


<PAGE>

                         PART I - FINANCIAL INFORMATION




Item 1.    Financial Statements


                     AUDIO KING CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                     December 31, 1995  June 30, 1995
                                                                        ------------    ------------
CURRENT ASSETS:
<S>                                                                     <C>             <C>

Cash and cash equivalents                                               $     20,248    $     28,629
Vendor and other accounts receivable,
  net of allowance of $156,211 and $105,472                                5,536,681       2,953,338
Inventories                                                               10,601,235       8,398,227
Prepaid  income taxes and other                                              552,548         422,525
                                                                        ------------    ------------


      Total current assets                                                16,710,712      11,802,719
                                                                        ------------    ------------

PROPERTY AND EQUIPMENT, at cost:

Furniture, fixtures, and equipment                                         3,412,601       2,948,868
Leasehold improvements                                                     4,613,741       3,515,677
Building and equipment under capital leases                                1,262,163       1,195,486
Construction work in progress                                                214,174            --
Accumulated depreciation and amortization                                 (2,993,855)     (2,335,410)
                                                                        ------------    ------------

      Net  property and equipment                                          6,508,824       5,324,621
                                                                        ------------    ------------


OTHER ASSETS, principally goodwill                                         1,255,545       1,270,271
                                                                        ------------    ------------


                                                                        $ 24,475,081    $ 18,397,611
                                                                        ============    ============

</TABLE>


     See accompanying notes to condensed consolidated financial statements.

<PAGE>
                                    
                     AUDIO KING CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


                    LIABILITIES AND SHAREHOLDERS' INVESTMENT
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                     December 31, 1995  June 30, 1995
                                                        -----------      -----------
CURRENT LIABILITIES:
<S>                                                      <C>           <C>
Vendor and other accounts payable                        $ 5,660,146   $ 3,999,408
Checks issued not yet presented for payment                  599,391       172,338
Current portion of long-term obligations                      52,001       102,223
Accrued liabilities                                        1,570,852       894,213
Income taxes payable                                         118,738        22,690
Deferred revenue related to extended service
   program                                                    24,804        24,804

     Total current liabilities                             8,025,932     5,215,676
                                                         -----------   -----------

LONG-TERM OBLIGATIONS, less current portions               8,832,415     6,201,105

LONG-TERM LIABILITIES,
   primarily deferred lease incentives                       446,670       270,111
                                                         -----------   -----------

SHAREHOLDERS' INVESTMENT:

Preferred stock, 6,000,000 shares authorized;
   no shares issued and outstanding                             --            --
Common stock, $.001 par, 20,000,000 shares authorized;
   2,721,729 and 2,713,329 issued and outstanding              2,721         2,713
Additional paid-in capital                                 4,452,664     4,440,720
Retained earnings                                          2,714,679     2,267,286
                                                         -----------   -----------

     Total shareholders' investment                        7,170,064     6,710,719
                                                         -----------   -----------

                                                         $24,475,081   $18,397,611
                                                         ===========   ===========

</TABLE>


     See accompanying notes to condensed consolidated financial statements.


<PAGE>


                     AUDIO KING CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                Three Months Ended December 31,       Six Months  Ended December  31,
                                                      1995             1994              1995              1994
                                                    ---------         ---------         --------          ---------  

<S>                                               <C>               <C>              <C>               <C> 

NET SALES                                         $ 19,660,671      $ 17,503,738     $ 34,996,362      $ 29,846,184
COST OF MERCHANDISE SOLD                            12,138,661        11,470,792       21,785,345        19,168,977
                                                    ----------        ----------       ----------        ----------

       Gross Profit                                  7,522,010         6,032,946       13,211,017        10,677,207

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                            6,621,526         5,104,650       12,200,295         9,509,799
                                                     ---------         ---------       ----------         ---------

       Operating Income                                900,484           928,296        1,010,722         1,167,408

INTEREST EXPENSE, net                                  137,012            68,063          239,335           126,228

       Income before income taxes                      763,472           860,233          771,387         1,041,180

 INCOME TAX PROVISION                                  320,700           361,000          324,000           437,000

NET INCOME                                          $  442,772        $  499,233       $  447,387        $  604,180
                                                       =======           =======          =======           =======

NET INCOME PER SHARE                                $      .16        $      .18       $      .16        $      .21
                                                      ========           =======          =======          ========

Weighted average  shares of common
  stock  outstanding  for three and 
  six months ended December 31, 1995
  and 1994                                           2,779,678         2,823,113        2,770,649         2,826,676
                                                       =======           =======          =======           =======


</TABLE>




      See accompanying notes to condensed consolidated financial statements

<PAGE>


                     AUDIO KING CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994
                                   (Unaudited)
<TABLE>
<CAPTION>


OPERATING ACTIVITIES:                                                1995           1994
                                                                    ------         ------
<S>                                                             <C>            <C>
Net income                                                      $   447,387    $   604,180
Adjustments required to reconcile net income
  to net cash provided or (used) by  operating activities:
    Depreciation and amortization                                   654,130        385,065
    Changes in other operating items:
    Vendor and other accounts receivable                         (2,583,343)    (1,257,434)
    Inventories                                                  (2,203,008)    (1,496,666)
    Prepaid income taxes and other                                 (130,012)        36,319
    Checks issued not yet presented for payment                     376,831        725,336
    Vendor and other accounts payable                             1,660,738      1,911,334
    Income taxes payable                                             96,048        312,011
    Accrued liabilities                                             676,639        261,949
    Deferred lease incentives                                       176,559         31,959
    Other                                                            (4,814)       (13,727)
                                                                -----------    -----------
    Net cash provided by or
      (used for) operating activities                              (832,845)     1,420,522
                                                                -----------    -----------

INVESTING ACTIVITIES:
Purchases of property and equipment                              (1,604,629)      (160,764)
Deposits on construction work in progress                          (214,174)       (93,931)
                                                                -----------    -----------
    Net cash used for investing activities                       (1,818,803)      (254,695)
                                                                -----------    -----------

FINANCING ACTIVITIES:

Net borrowings (repayments)
   under line-of-credit agreement                                 2,575,000     (1,175,000)
Net borrowings (repayments)
   under capital lease obligations                                   56,310        (29,544)
Sale of common stock                                                 11,957         53,293
                                                                -----------    -----------
   Net cash provided by (used for) financing activities           2,643,267     (1,151,251)
                                                                -----------    -----------

NET  INCREASE (DECREASE)  IN CASH                                    (8,381)        14,576
CASH, beginning of period                                            28,629         17,224
                                                                -----------    -----------
CASH, end of period                                             $    20,248    $    31,800
                                                                ===========    ===========

Additional supplementary cash flow information is as follows:
   Interest paid                                                $   239,000    $   126,000
   Income taxes paid, net of refunds received                       120,000        300,000
                                                                ===========    ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.



<PAGE>

                     AUDIO KING CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


(1)    Nature of Business

       The condensed  consolidated  financial  statements  have been prepared by
       Audio  King  Corporation,  without  audit,  pursuant  to  the  rules  and
       regulations of the Securities and Exchange  Commission.  The  information
       furnished in the condensed  consolidated  financial  statements  includes
       normal recurring  adjustments and reflects all adjustments  which are, in
       the opinion of  management,  necessary  for a fair  presentation  of such
       financial  statements.   Certain  information  and  footnote  disclosures
       normally  included in financial  statements  prepared in accordance  with
       generally accepted  accounting  principles have been condensed or omitted
       pursuant to such rules and  regulations.  Although  the Company  believes
       that the disclosures  are adequate to make the information  presented not
       misleading,  it is suggested that these condensed  consolidated financial
       statements  be  read  in  conjunction  with  the  consolidated  financial
       statements for the year ended June 30, 1995 and the related notes thereto
       included in the Company's latest Annual Report on Form 10-K.

       Operating  results  for  the  interim  periods  may  not  be  necessarily
       indicative  of the  operating  results to be expected for the full fiscal
       year,  since the  Company's  business is  seasonal  with higher net sales
       occurring in the fourth calendar quarter.


(2)    Earnings Per Share

       Earnings per common and common stock  equivalent  share are calculated by
       dividing net earnings  applicable to common stock by the weighted average
       of common and common stock equivalent shares outstanding,  computed using
       the treasury stock method.



<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Results of Operations

Net sales for the three-month  period ended December 31, 1995 were approximately
$19,661,000,  an increase of 12.3% from net sales of  approximately  $17,504,000
for the same period in the prior year. Net sales for the six-month  period ended
December 31, 1995 were approximately $34,996,000,  an increase of 17.3% from net
sales of  approximately  $29,846,000  for the same  period  in the  prior  year.
Management believes the sales increase was a result of its promoting  specialist
retail strategy,  which utilizes increased  advertising,  product assortment and
larger stores to increase store  traffic,  as well as extended  consumer  credit
offers and trained  salespeople  to produce  increased  sales.  Management  also
believes that the increase was largely due to an increased  volume of goods sold
rather than increases in price.

Net sales for the three months ended December 31  historically  has  represented
the strongest  sales quarter of the year.  The weakest  demand sales quarter has
historically  been the first quarter which ends  September 30.  Seasonality is a
factor in the Company's results of operations.

Gross profit for the three-month  period ended December 31, 1995 increased 24.7%
to approximately  $7,522,000 from approximately $6,033,000 for the corresponding
period of the prior year. Gross profit, as a percent of net sales, was 38.3% for
the  three-month  period  ended  December  31,  1995  compared  to 34.5% for the
corresponding  period of the prior year. For the six-month period ended December
31,  1995,  gross  profit  increased  23.7% to  approximately  $13,211,000  from
approximately  $10,677,000 for the corresponding  period of the prior year. As a
percent of net sales for the  six-month  period ended  December 31, 1995,  gross
profit was 37.7%  compared  to 35.8% for the  corresponding  period of the prior
year. The increase in gross margin  percentage was due to growth as a percent of
total sales in accessories  and home audio  components  which  typically carry a
higher gross margin .

Selling,  general,  and  administrative  expenses  increased as a percent of net
sales to 33.7% for the  quarter  ended  December  31,  1995  from  29.2% for the
comparable  three-month  period of the preceding  year. The increase in selling,
general, and administrative  expenses is a result of certain costs, such as rent
and  certain   salaries,   relating  to  revenue   increasing  faster  than  and
disproportionately to, sales. Selling,  general, and administrative expenses for
the  three-month   period  ended  December  31,  1995  increased   approximately
$1,517,000 or 29.7%,  over the  comparable  prior period.  The increases for the
three-month period are due primarily to increased sales  commissions,  benefits,
salaries  and  contract  labor of  approximately  $687,000,  increased  consumer
financing  and  promotional  expense of  approximately  $178,000  and  increased
occupancy, insurance and depreciation costs of approximately $501,000, including
a  one-time  charge of  $192,000  for the write  off of  leasehold  improvements
related to the Edina store relocation.

For the six months ended December 31, 1995, selling, general, and administrative
expenses  increased  as a  percent  of net  sales to 34.9%  from  31.9%  for the
comparable  six-month period of the preceding year. As in the three-month period
ended December 31, 1995, the increase in selling,  general,  and  administrative
expenses in the six-month  period ended December 31, 1995 is a result of certain
costs, such as rent and certain salaries,  relating to revenue increasing faster
than and  disproportionately  to, sales.  Selling,  general,  and administrative
expenses  for  the   six-month   period  ended   December  31,  1995   increased
approximately  $2,690,000  or  28.3%,  over the  comparable  prior  period.  The
increases  for  the  six-month  period  are due  primarily  to  increased  sales
commissions,  benefits, salaries and contract labor of approximately $1,283,000,
increased consumer financing and promotional  expense of approximately  $432,000
and increased  occupancy,  insurance  and  depreciation  costs of  approximately
$689,000, including a one-time charge of $192,000 for the write off of leasehold
improvements related to the Edina store relocation.

Interest  expense  for the  three-month  period  ended  December  31,  1995  was
approximately  $137,000 compared to approximately  $68,000 for the corresponding
period in 1994.  Interest  expense for the six-month  period ended  December 31,
1995 was  approximately  $239,000  compared to  approximately  $126,000  for the
corresponding period in 1995. The higher interest expense was a result of higher
borrowing levels.

The Company earned net income per share of $.16 for the three-month period ended
December  31,  1995  as  compared  to net  income  per  share  of  $.18  for the
corresponding period in 1994.

<PAGE>

Financial Condition

During the  six-month  period ended  December 31,  1995,  cash of  approximately
$864,000 was used for operations  compared to approximately  $1,421,000 provided
by operating  activities in the  comparable  period the prior year. The cash was
used primarily for increased  inventories  necessary for overall sales increases
and the display requirements of the relocated Edina store and expanded Roseville
store  along  with a one time  $192,000  charge  for the write off of  leasehold
improvements  related to the relocation of the Edina store. Capital expenditures
for  the  six  months  totaled  approximately  $1,686,000,  principally  for the
purchase of leasehold improvements, furniture and fixtures, and other equipment.
The Company has total capital expenditures of approximately $750,000 planned for
the remainder of fiscal 1996,  primarily for the completion of the remodeling of
the Roseville store.

Working capital at December 31, 1995 was $8,685,000 as compared to $6,587,000 at
June 30, 1995. The current ratio was 2.1 to 1 as of December 31, 1995 and 2.3 to
1 as of June 30,  1995.  The  increase in working  capital was  attributable  to
increased   inventories  related  to  the  store  expansions  and  to  increased
receivables related to holiday consumer financing offered by third parties.

Inventories  increased to  $10,601,000  at December 31, 1995 from  $8,398,000 at
June 30,  1995 in order to  support  overall  increased  sales  and the  display
requirements of the relocated Edina store and the remodeled Roseville store.

The Company expects that cash generated from operations and increased borrowings
under its bank line of credit will be sufficient to fund its anticipated working
capital requirements and expected capital expenditures.

The Company  maintains a working capital line of credit which provides for up to
$11,000,000 from October 1 of any one year through February 15 of the succeeding
year at which time available  borrowings  are reduced to $8,000,000.  The credit
facility  bears  interest  at the  bank's  reference  rate  or at  the  adjusted
certificate of deposit rate plus 2%, at the Company's option.

The borrowings under this agreement are collateralized by inventories,  accounts
receivable,  and fixed assets. The Company is in compliance with all of its line
of credit agreement covenants.


<PAGE>

                          PART II - OTHER INFORMATION


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

     (a)  The Company held its Annual Meeting on November 15, 1995.

     (b)  Proxies for the Annual Meeting were  solicited  pursuant to Regulation
          14  under  the  Securities   Exchange  Act  of  1934.   There  was  no
          solicitation in opposition to  management's  nominees as listed on the
          proxy statement, and all of such nominees were elected.

     (c)  By a vote of 2,342,629  share in favor,  with 4,000 shares against and
          4,308  abstaining,  the shareholders set the number of directors to be
          elected at five (5).

     (d)  The  following  persons  were  elected  to serve as  directors  of the
          Company  until the next annual  meeting of  shareholders  by the votes
          indicated:

          Nominee                  Number of Votes For  Number of Votes Withheld

          Randel S. Carlock              2,343,509                7,428
          Henry G. Thorne                2,347,009                3,928
          Sherman A. Swenson             2,346,909                4,028
          Barry R. Rubin                 2,346,009                4,928
          Gary S. Kohler                 2,347,009                3,928


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

     (a)  Exhibit No.       Description 

               27           Financial Data Schedule
                            (filed with electronic version only)

     (b)  Reports on Form 8-K - the Company  filed no reports on Form 8-K during
          the quarter ended December 31, 1995.



<PAGE>


                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the  undersigned on behalf of the registrant and in the
capacities and on the date indicated.



Dated:  February 12, 1996                   AUDIO KING CORPORATION

                                            By:   /s/  H.G. Thorne
                                            H.G. Thorne
                                            President,  Chief Executive Officer,
                                            and Chief Financial Officer