U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

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

(X)     Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
        Act of 1934 for the fiscal year ended March 31, 1997 or
( )     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: 333-1182
                              ____________________

                        THE ASHTON TECHNOLOGY GROUP, INC.
             (Exact name of registrant as specified in its charter)

                DELAWARE                              22-6650372
   (State or other jurisdiction of         (I.R.S. Employer Identification No.)
   incorporation or organization) 


                          1900 MARKET STREET, SUITE 701
                        PHILADELPHIA, PENNSYLVANIA 19103

               (Address of principal executive offices) (Zip Code)

               Registrant's telephone number, including area code:

                                 (215) 751-1900

          (Address and telephone number of principal executive offices)

        SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT: NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:

                          Common Stock, par value $.01

                    Redeemable Common Stock Purchase Warrants

                                (Title of Class)
<PAGE>

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) for 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 by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. (X)

     The aggregate  market value of the voting stock held by  non-affiliates  of
the registrant based on the closing selling price as reported on NASDAQ on March
31, 1997 was $13,143,937.50.

     The number of shares outstanding of the registrant's Common Stock, $.01 par
value, was 7,562,500 at March 31, 1997.

     Documents incorporated by reference: None.

<PAGE>
                                TABLE OF CONTENTS

                                                                            Page
PART I

ITEM 1.       DESCRIPTION OF BUSINESS..........................................1
ITEM 2.       PROPERTIES.......................................................7
ITEM 3.       LEGAL PROCEEDINGS................................................8
ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............9

PART II

ITEM 5.       MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
              MATTERS..........................................................9
ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
              AND RESULT OF OPERATIONS........................................10
ITEM 7.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.....................16
ITEM 8.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
              AND FINANCIAL DISCLOSURE........................................34

PART III

ITEM 9.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..............35
ITEM 10.      EXECUTIVE COMPENSATION..........................................36
ITEM 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..39
ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................42
ITEM 13.      EXHIBITS AND REPORTS ON FORM 8-K................................44

SIGNATURES    ................................................................51

<PAGE>
                           FORWARD-LOOKING STATEMENTS

          Certain  statements  in this Form 10-KSB  constitute  "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and Exchange Act of 1934, as amended,
and the Private Securities  Litigation Reform Act of 1995. Such  forward-looking
statements  involve known and unknown risks,  uncertainties  and other important
factors that could cause the actual results,  performance or achievements of the
Registrant  to  differ  materially  from  any  future  results,  performance  or
achievements  expressed  or implied  by such  forward-looking  statements.  Such
risks,  uncertainties and other important factors include, among others: general
economic and business conditions; industry trends; competition;  material costs;
ability to develop markets;  changes in business strategy or development  plans;
availability,  terms  and  deployment  of  capital;  availability  of  qualified
personnel; changes in government regulation and other factors referenced in this
Form 10-KSB. Such  forward-looking  statements speak only as of the date of this
Form 10-KSB.  For discussion of the factors that might cause the difference with
actual  results,  see Item 1:  Description of Business and Item 6:  Management's
Discussion  and Analysis of Financial  Condition and Result of  Operations.  The
Registrant  expressly disclaims any obligation or undertaking to disseminate any
updates  or  revisions  to any  forward-looking  statement  contained  herein to
reflect any change in the Registrant's  expectations  with regard thereto or any
change in events,  conditions or  circumstances  on which any such  statement is
based.

                                  PART I

Item 1.  DESCRIPTION OF BUSINESS

INTRODUCTION

     The Ashton Technology  Group, Inc.  ("Ashton" or the "Company") was founded
in March 1994 to exploit  opportunities  in the rapidly  evolving  businesses of
Internet  and  electronic  commerce  through the  application  of its skills and
advanced  technologies  in  securities  trading  and  information  security.  In
furtherance of such goals, in 1995 and 1996, Ashton acquired majority  interests
in two companies: Computer Science Innovations, Inc. ("CSIA(R)"), an information
technology  company  headquartered in Melbourne,  Florida and Universal  Trading
Technologies  Corporation  ("UTTC"),  a company  headquartered  in Philadelphia,
Pennsylvania, that designs, develops and operates electronic transaction systems
for the financial services market.

ASHTON

     Ashton designs,  develops,  and integrates  information  security (INFOSEC)
technologies,   with  particular  emphasis  on  transactional   systems.   These
technologies  cover  the  spectrum  of  computer  and  communications  security,
including encryption,  firewalls/access  control, trusted systems and electronic
authentication to guarantee anonymity. To date, Ashton has:

          *    Designed  and built the  Ashton  Technologies  Encryption  Device
               ("ATED"), an advanced, triple DES, evolving key encryption device
               (classified  in the  industry as "very  strong  encryption")  and
               associated encryption  client-server  technology to service users
               worldwide and augment user password authentication approaches;

          *    Integrated B-2 level firewall  technology  into UTTC's  Universal
               Trading System  ("UTS(TM)") and  incorporated  B-2 level firewall
               components  into the  UTS(TM)  installation  on the  floor of the
               Philadelphia  Stock  Exchange  (the  "PHLX").  (B-2 is a National
               Security Agency ("NSA") standard for implementing trusted systems
               at the hardware level thereby making it more difficult to copy or
               reverse engineer than software encryption);

          *    Designed and  implemented  a unique  client-server  file-transfer
               protocol   (FTP)  to  enhance   access   control  beyond  current
               capabilities of the Windows NT operating system.

          *    Designed  and  developed  the trusted  system  components  of the
               UTS(TM) system thereby  guaranteeing  anonymity for users of this
               highly transactional system.

UNIVERSAL TRADING TECHNOLOGIES CORPORATION

     UTTC was  incorporated  in  Delaware  in  February  1995 with the  business
objective  of  developing  and  marketing  electronic  pricing  and  transaction
products for the securities trading market.

     UTTC's first  product will be the  Universal  Trading  System  ("UTS(TM)"),
which will provide an electronic pathway for execution of block trades in equity
securities.  UTS(TM) also  provides  end-to-end  anonymity to its users  through
advanced   certified   security  features   including   encryption,   electronic
authentication,   trusted  systems  and  fire-walls.  UTS(TM)  is  available  to
exchanges,  broker-dealers,  NASDAQ participants,  financial  intermediaries and
institutional  investors.  Users can enter and execute  orders to receive system
information  via encrypted  public phone lines or through the Worldwide  Web. In
addition  to  pre-trade  information  and  order  execution,   UTS(TM)  provides
automated  post-market clearing and settlement in conjunction with the PHLX, its
clearing corporation and its members.

The benefits of the UTS(TM) system to market participants include:

          *  Fair competition for all including public orders
          *  Price discovery, price efficiency, and price improvement 
          *  Best execution opportunity without the imposition of a dealer 
          *  Public order display mechanisms 
          *  Decimal pricing for all securities
          *  Guaranteed anonymity and data security 
          *  Electronic linkage to all markets 
          *  Enhanced transparency  
          *  Decision flexibility to seek best price and execution 
          *  Interactive, displayed public limit order book 
          *  Public order preference and protection
          *  Ability to obtain the Volume Weighted Average Price (VWAP(TM))

     On April 22, 1995,  the PHLX and UTTC agreed to integrate and deploy UTTC's
Universal  Trading  System,  an electronic  trading and pricing system that will
initially  provide  a  pre-opening  morning  session  to trade  PHLX-listed  and
NASDAQ-NMS  securities at the daily volume  weighted  average  price (VWAP).  On
September 18, 1995, UTTC and the PHLX  memorialized  the April 22 agreement in a
formal five year contract.  On September 4, 1996, in release No.  34-37640 (File
No. SR-PHLX 96-14), the Securities and Exchange Commission (the "SEC") published
a notice in the Federal Register  regarding a proposal by the PHLX to adopt PHLX
Rule 237 to accommodate  the UTS(TM)  pre-opening  morning  session.  During the
period  provided by the SEC for public comment on the proposed rule change,  the
SEC commenced a special  investigation of the PHLX. In addition,  on October 24,
1996, the SEC commenced a private  investigation  concerning  the  circumstances
under which UTTC obtained its agreement with the PHLX,  including the timing and
issuance of Ashton common stock to Medford Financial, Inc. ("Medford"),  Vincent
Casella ("Casella"),  and other persons at Medford;  Casella's position with the
PHLX; and Casella's role in the PHLX's determination to enter into the agreement
with UTTC.  In March 1997,  the SEC  reportedly  recommended  that the PHLX make
certain  changes  in its  corporate  governance,  and in  April  1997  the  PHLX
announced  a  reorganization  of its  Board  of  Governors  and  changes  in its
governance  procedures.  The  Company  believes  that  the  investigations  have
resulted in delays in consideration of the rule change and, consequently, in the
introduction  of the  Universal  Trading  System  on  the  floor  of  the  PHLX.
Management  expects  that the  proposed  rule,  plus new  amendments  reflecting
enhancements to the Universal  Trading System,  will be submitted by the PHLX to
the SEC by September  30, 1997.  If the SEC chooses to  re-publish  the proposed
rule and amendments in the Federal Register,  the notification  period will be a
minimum of 35 days and a maximum of 90 days after publication.

     In the  twenty-three  months  since  the  April  1995  agreement,  UTTC has
enhanced,  expanded and implemented  the UTS(TM) Volume  Weighted  Average Price
(VWAP(TM)) Trading System.

     On April 8,  1997,  the  Company  announced  that the  UTS(TM) is ready for
operational  use  pending the final  approval by the SEC of the PHLX's  proposed
Rule 237.

     Until the SEC approves the PHLX proposed Rule 237, the UTS(TM)  System will
not be  introduced  at the PHLX and the UTS(TM)  will not  generate any revenue.
Failure of the UTS(TM) system to generate revenue for UTTC could have an adverse
effect on the financial position of the Company.  There can be no assurance that
the SEC will approve the rule change.

COMPUTER SCIENCE INNOVATIONS, INC.

     CSI(R)  was  incorporated  in  Florida  in March  1983 and  specializes  in
utilizing  computer  technologies and sophisticated  mathematical  techniques to
address  complex  information   retrieval  and  management  problems.   CSI(R)'s
principal business is the development of sophisticated  custom software products
for both governmental and commercial customers.

     In the 1980's, CSI(R) specialized in a segment of the U.S. defense industry
commonly  referred  to  as  "C(3)I"  (Command,   Control,   Communications   and
Intelligence).  To compete in this market, CSI(R) conducted some pioneering work
in the use of "trainable"  mathematical  systems using neural network technology
and knowledge based expert systems for resolving  "real-world"  problems.  These
systems  utilize various  techniques to "learn" and  "recognize"  patterns which
enable  these  systems to absorb,  process and analyze  vast amounts of data and
predict  outcomes.  CSI(R)'s efforts produced several systems for its customers,
which provided  solutions to problems which the Company believes were insolvable
by other means.  CSI(R)'s clients in the U.S. defense industry include: The NSA,
the White House  Communications  Agency,  the United  States Army and the United
States  Air Force.  Government  contracts  accounted  for  approximately  20% of
CSI(R)'s revenues in fiscal 1997.

          Currently,  CSI(R) is  maintaining  its core  intelligence  agency and
defense   business   while   applying   technologies   developed   through   its
defense-related business to commercial applications. These crossover initiatives
have  resulted in CSI(R)'s  receipt of a commercial  contract  from  Motorola to
integrate  and test a subsystem  of  Motorola's  Iridium(R)  cellular  telephone
system,  a system  being  designed to enable  handheld  wireless  telephones  to
receive  voice,  data,  paging and facsimile  information  anywhere in the world
through a network of 66 low earth orbit satellites. The contract was executed in
1995 and extends to December  31, 1997 and was  responsible  for 63% of CSI(R)'s
revenues in fiscal 1997.  CSI(R) has completed  multi-year  contracts,  totaling
approximately  $1.8 million,  with Ashton and UTTC for software  engineering for
the encryption client-server and UTS(TM) system. CSI(R)'s new initiatives are in
the healthcare information industry.

CAPITALIZATION, OWNERSHIP OF SUBSIDIARIES AND ORGANIZATION

INITIAL PUBLIC OFFERING

     On  May  2,  1996,   Ashton  completed  an  initial  public  offering  (the
"Offering")  of 2,472,500  shares of common stock at an offering  price of $4.50
per share and 2,472,500  redeemable  common stock purchase  warrants at $.25 per
warrant. The common stock and the warrants are separately tradable.  As a result
of the Offering, the Company received net proceeds of approximately $10,395,000.

UTTC PRIVATE PLACEMENT

     On December  26, 1996,  UTTC  commenced  and on April 25, 1997  completed a
private offering of units of a 9% Subordinated  Non-Convertible  Promissory Note
(the  "Non-Convertible  Note")  in the  principal  amount  of  $42,500  and a 9%
Subordinated  Convertible  Promissory Note (the "Convertible Note," and together
with the  Non-Convertible  Note, the "Notes") in the principal amount of $7,500.
The net proceeds of this private  offering  were  $2,631,013.  The Notes are due
January 31,  1999.  Interest is payable  annually in arrears on January 31, 1998
and on January 31, 1999 or after the earlier conversion,  prepayment or due date
of the Notes. See Item 7: Financial  Statements Note 13-Subsequent  Events. UTTC
intends to use the proceeds of the private offering for the software development
and systems  integration of two new  transaction  products,  the UTTC Electronic
Auction System and the UTTC NASDAQ Transaction System.

OWNERSHIP OF SUBSIDIARIES

     Ashton  owns  (i) 80% of the  outstanding  common  stock  of UTTC  and (ii)
approximately 86% of the outstanding Class A Common Stock of CSI(R) (the "CSI(R)
Class A Common Stock") and approximately 81% of the outstanding Non-Voting Class
B Common  Stock of CSI(R) (the  "CSI(R)  Class B Common  Stock") of CSI(R) . The
Company used a portion of the proceeds  from the Offering to acquire  additional
CSI(R) Class A and Class B Common Stock  sufficient  to achieve  greater than an
80% equity interest in CSI(R).

ORGANIZATION

     In September 1996, Robert A. Eprile, Fredric W. Rittereiser, John A. Blohm,
The Dover Group,  Inc.  (the "Dover  Group") and  affiliates  of the Dover Group
(collectively, the "Group Members") were concerned that the management of Ashton
was not  taking  appropriate  measures  to protect  the  interests  of  Ashton's
stockholders  and to  enhance  the  value of the  stockholders'  investments  in
Ashton.  Through legal counsel,  the Group Members  commenced  discussions  with
Ashton's  legal  counsel and counsel for Ashton's then  Chairman,  President and
Chief Executive Officer,  Raymond T. Tate ("Mr. Tate"). These discussions led to
a resolution  of the Group  Members'  differences  with Mr. Tate. On October 22,
1996,  the  Company  entered  into  a  settlement   agreement  (the  "Settlement
Agreement") with the Group Members,  Mr. Tate, Helen J. Tate, as trustee for the
Andrew  Patrick Tate Trust,  Helen J. Tate,  as trustee for the Susan  Katherine
Tate  Burrowbridge  Trust and Helen J. Tate, as trustee for the  Elizabeth  Tate
Winters Trust  (collectively,  the "Tate  Trusts").  Pursuant to the  Settlement
Agreement,  on October 22, 1996, Mr. Tate resigned from his position as director
of the Company and its subsidiaries and all officer positions held by him in the
Company and its subsidiaries. The Board of Directors of the Company elected Fred
S. Weingard,  Executive  Vice  President for  Technology  and Advanced  Computer
Systems of UTTC, to fill the vacancy on the Company's Board of Directors created
by the resignation of Mr. Tate.

     In  addition,   on  October  22,  1996,   after  closing  the  transactions
contemplated  by  the  Settlement  Agreement,  the  newly-constituted  Board  of
Directors  of the Company took the  following  actions:  (i) amended  Article V,
Section 6 of the By-Laws of the Company to permit the  positions  of Chairman of
the Board and Chief Executive Officer to be held by different individuals;  (ii)
elected  Robert A.  Eprile,  currently  a director of the Company as well as the
President  and Chief  Operating  Officer of UTTC,  as  Chairman of the Board and
Treasurer of the Company;  (iii)  appointed  Fredric  Rittereiser  President and
Chief  Executive  Officer of the Company  and  Chairman of the Board of UTTC and
(iv) authorized the Company to reimburse the Group Members for any and all legal
services  rendered on behalf of the Group Members in connection with or relating
to the  Settlement  Agreement,  the  transactions  contemplated  thereby and the
disputes settled pursuant thereto.

     On October 23, 1996,  Vice Admiral (U.S.  Navy retired) Albert J. Baciocco,
Jr.  resigned  from his  positions  as a director of the Company and CSI(R).  On
October 25, 1996,  Dr. Ruth M. Davis also resigned her position as a director of
the Company. On December 20, 1996, Fredric W. Rittereiser was elected a director
of the Company to fill one of the vacancies created by such resignations.

COMPETITION

     Ashton's  competition  in the  commercial  markets  principally  comes from
larger,  better-established  companies, many of which have financial,  sales and
marketing resources  substantially  greater than Ashton. The UTS(TM) system will
compete with other electronic trading systems,  including Reuters, N.A. Instinet
system and  Investment  Technology  Group,  Inc.'s  POSIT  system.  The  Company
believes that competitive  criteria include quality of trade execution,  pricing
and  reliability of  post-execution  processing and settlement  operations.  The
UTS(TM) system will also compete with various  national and regional  securities
exchanges  for trade  execution  services.  The  automated  trade  execution and
analytical  services  to be offered by the  UTS(TM)  system  will  compete  with
services offered by leading  brokerage firms and other  information  service and
transaction processing firms.

DEVELOPMENT COSTS

     During  the  fiscal  year  ended  March  31,  1997,  the  Company  incurred
$3,382,848  of  development  costs  on a  consolidated  basis.  Ashton  incurred
development  costs of  $2,049,651  for the  design and  development  of the ATED
encryption  device  and the  encryption  client-server.  The ATED  will  provide
information   security,    including   encryption   and   authentication,    for
communications with a host computer. The encryption  client-server will enable a
host computer to  simultaneously  communicate  with multiple ATEDs. The ATED and
encryption  client-server technology will be used by UTTC to provide information
security  and  complete  anonymity  for all trades  through the UTS(TM)  system.
Separately, UTTC incurred costs of $1,333,197 for the development of the UTS(TM)
system which will be an electronic pricing and transaction  facility for trading
exchange listed and NASDAQ NMS securities in conjunction with the PHLX.

PROPRIETARY RIGHTS

     Ashton and its subsidiaries regard their respective products as proprietary
and rely  primarily on a combination  of trademark and trade secret  protection,
employee and third party confidentiality and non-disclosure agreements,  license
agreements and other intellectual  property  protection methods to protect their
proprietary rights.  Neither Ashton, UTTC or CSI(R) currently holds any material
patents or has filed for copyright  protection.  CSI(R)'s products are generally
licensed to customers on a "right to use" basis  pursuant to a  non-transferable
license that generally restricts the customer's use to internal purposes.

GOVERNMENT REGULATION

     The  UTS(TM)  system  has been  developed  as a  facility  of the  PHLX,  a
self-regulatory  organization,  and is subject to regulation by the SEC. Section
19(b)  of the  Securities  Exchange  Act of 1934,  as  amended,  and Rule  19b-4
promulgated  thereunder require the PHLX to file any proposed rules changes with
the SEC. The concept of the UTS(TM)  system,  which would  constitute a new PHLX
facility accompanied by new PHLX rules, must be filed as a proposed rule change.
In this regard,  PHLX  management  was  authorized  by its Board of Governors to
submit a proposed  rule change  filing  relating to the UTS(TM)  system with the
SEC, which published a notice of the terms of the substance of the proposed rule
change on September 4, 1996 and gave interested persons an opportunity to submit
written data, views, and arguments  concerning such proposed rule change.  Since
publication of the notice,  the application has been amended pursuant to the SEC
requests and a decision is still  pending.  The Company's  proposed new products
will also require either the SEC approval or exemptive  orders.  There can be no
assurance  that any such  approval  or orders will be obtained or the failure to
obtain such approval or order would not materially  affect the operations of the
Company.

EMPLOYEES

     As of March 31, 1997, the Company and its subsidiaries  employed a total of
43 people, of whom 34 are employed by CSI(R).

SUBSEQUENT EVENTS

     In May 1997, the Company formed a wholly-owned subsidiary,  Gomez Advisors,
Inc., which will be headquartered at 101 Federal Street,  Boston,  Massachusetts
02110, and Mr. Julio Gomez, a leading independent  authority on the Internet and
the world of on-line  investing,  was named its  President  and Chief  Executive
Officer. Also joining Gomez Advisors Inc. is Mr. John Robb who previously worked
with Mr. Gomez at Forrester Research in Cambridge, Massachusetts.

     Gomez  Advisors,  Inc.  will  provide  banks,   broker-dealers,   insurance
companies and other financial intermediaries with advice concerning the business
potential of the Internet as a tool for use in marketing and in the  interactive
distribution of financial products.  The range of services that will be provided
by Gomez Advisors,  Inc. include strategy  development,  marketing,  product and
interface design and implementation planning.


ITEM 2.  PROPERTIES

     Ashton and UTTC lease  approximately  10,000 square feet of office space at
1900 Market Street, Suite 701,  Philadelphia,  Pennsylvania 19103. Ashton leases
approximately  2,500  square  feet of  office  space  at 10420  Little  Patuxent
Parkway,  Columbia,  Maryland 21044. CSI(R) leases  approximately  20,000 square
feet of office space at 1235 Evans Road, Melbourne,  FL 32904, and approximately
7,000  square feet of office space at 1445 North  Fiesta  Boulevard,  Suite 101,
Gilbert, Arizona 85234.


ITEM 3.  LEGAL PROCEEDINGS

     On October 24, 1996, the SEC commenced a private  investigation  concerning
the circumstances  under which UTTC obtained a contract with the PHLX to develop
and install an electronic trading and pricing system.  Ashton provided testimony
to the SEC on February 12, 1997 through its Chairman,  Robert A. Eprile, and has
not been  contacted  about the matter  since that date.  In March 1997,  the SEC
directed the PHLX to make certain  changes in its  governance  procedures and in
April 1997 the PHLX  announced a  reorganization  of its Board of Governors  and
changes in its governance procedures.

     Alliant  Techsystems,  Inc.,  with whom the Company has a contract  for the
production of certain encryption devices,  has demanded payment of approximately
$292,000 under that contract, which the Company is contesting.

     On May 1, 1997, David N. Rosensaft ("Mr. Rosensaft") commenced an action in
the United States District Court for the Southern  District of New York entitled
"David N. Rosensaft v. The Ashton  Technology  Group,  Inc.,  Universal  Trading
Technologies  Corporation,  The Dover Group,  Inc.  and Frederic W.  Rittereiser
(collectively,  the  "Defendants")"  No.  97  Civ.  3138  ("Rosensaft  Action"),
asserting ten claims  against the  Defendants  including  breach of contract and
securities fraud and seeking, inter alia, specific performance of the Settlement
Agreement,  dated  January  30,  1997,  between  and among the parties or in the
alternative, actual and consequential damages in an amount to be proved at trial
in addition to punitive damages.  On June 11, 1997, Mr. Rosensaft served a First
Amended  Complaint  adding  three  additional  claims  against  the  Defendants,
relating to Ashton's refusal to allow Rosensaft's sale of his Ashton shares.

     On June 26, 1997,  the  Defendants  filed their  answers and  counterclaims
generally  denying the  allegations of the First Amended  Complaint and alleging
six  counterclaims  against  Mr.  Rosensaft  including  that  (i) Mr.  Rosensaft
acquired  1,100,000  shares of Ashton  common  stock from Ashton on the basis of
false and  misleading  statements  and common  law fraud and (ii) Mr.  Rosensaft
breached  his January  19,  1996  Consulting  Agreement  with the  Company  (the
"Agreement")  by (a) failing to carry out his duties as a  consultant  under the
Agreement,  (b) violating the provisions of the Agreement restricting his use of
confidential   information  of  the  Company,  (c)  failing  to  adhere  to  the
non-competition  provisions of the Agreement,  (d)  misappropriating for himself
the property rights of UTTC relating to the Company's UTS(TM) and (e) failing to
return to UTTC  and/or  Ashton  valuable  property  and  information,  including
confidential documents and computer equipment, belonging to UTTC and/or Ashton.

     The Company  believes  that none of the above  matters will have a material
adverse effect upon the Company.


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

     No matters were  submitted to a vote of security  holders during the fiscal
year ended March 31, 1997.


                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

     On May 2, 1996,  Ashton  completed an initial public  offering of 2,472,500
shares of common stock ("Common  Stock") at an offering price of $4.50 per share
and 2,472,500  redeemable common stock purchases warrants  ("Warrants") at $0.25
per  warrant.  The Common  Stock and the Warrants are traded on the NASDAQ Small
Cap Market.

     The following sets forth the initial offering,  high and low prices for the
Common Stock during the periods indicated:

                                                       HIGH($)          LOW($)

INITIAL OFFERING PRICE                                   4.50            4.50

MAY 2, 1996 THROUGH JUNE 30, 1996:                      15.50            7.00

JULY 1, 1996 THROUGH SEPTEMBER 30, 1996:                11.625           4.25

OCTOBER 1, 1996 THROUGH DECEMBER 31, 1996:               8.125           5.00

JANUARY 1, 1997 THROUGH MARCH 31, 1997:                  7.6875          3.00

     The following sets forth the initial offering,  high and low prices for the
Warrants during the periods indicated:

                                                       HIGH($)          LOW($)

INITIAL OFFERING PRICE                                   0.25            0.25

MAY 2, 1996 THROUGH JUNE 30, 1996:                       9.25            3.25

JULY 1, 1996 THROUGH SEPTEMBER 30, 1996:                 5.375           1.25

OCTOBER 1, 1996 THROUGH DECEMBER 31, 1996:               4.00            2.00

JANUARY 1, 1997 THROUGH MARCH 31, 1997:                  3.25            1.625


     On March 31, 1997, the closing price of the Common Stock was $3.375 and the
closing price of the Warrants was $1.625.

     As of March 31,  1997,  there  were  approximately  74 holders of record of
Common Stock in "Street Name"  representing  approximately 1200 stockholders and
approximately  17 holders of record of  Warrants in "Street  Name"  representing
approximately 1200 stockholders.

DIVIDEND POLICY

     No dividends  have been  declared on the Common Stock through June 30, 1997
and the Board of Directors has no current  intention to declare or pay dividends
on the Common Stock in the foreseeable future.


ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
          OF OPERATIONS

     The  following  discussion  of the  Company's  results  of  operations  and
liquidity  and  capital  resources  should  be  read  in  conjunction  with  the
consolidated financial statements and related notes of the Company for the years
ended March 31, 1996 and 1997.

     In the first  quarter  of the  fiscal  year  ended  March 31,  1997  Ashton
completed its initial  public  offering  (the  "Offering"),  which  provided the
Company with the capital to:

     *    Acquire a majority interest in CSI;

     *    Develop  Ashton's   information   security   technology   capabilities
          including  the  design  and  development  of  the  Ashton   Technology
          Encryption Device (ATED);

     *    Establish UTTC in the Philadelphia  Stock Exchange building and hire a
          technology  team  headed  by Fred S.  Weingard  who was  previously  a
          principal at the consulting firm of Booz, Allen & Hamilton and was the
          founder and director of Booz's Advanced  Computation  Technologies and
          Systems Group; and

     *    Build the UTS(TM) System.

REVENUES AND EXPENSES

     The Company had  consolidated  revenues of  $4,938,330  for the fiscal year
ended March 31, 1997.  All of the  Company's  revenues and the related  "cost of
revenues" were generated by the CSI. (The  consolidated  revenues do not include
$1,386,143 paid by Ashton and UTTC to CSI for software engineering services.) In
the financial  statements  included in the Company's  quarterly  filings on Form
10-QSB  for the year  ended  March  31,  1997,  the  Company  did not  eliminate
intercompany  transactions  between  Ashton  and  its  Subsidiaries.   See  Item
7: Financial Statements-Note 14, Quarterly Results.

     During the twelve months ended March 31, 1997,  the Company  incurred a net
loss of  $6,842,406.  These  losses  include  significant  expenses for start-up
costs, system development and corporate restructuring.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     During  the  fiscal  year  ended  March  31,  1997,  the  Company  incurred
$3,479,660 of selling,  general and administrative  ("SG&A") expenses.  On a per
subsidiary basis, Ashton incurred $2,140,582 of SG&A expense,  UTTC $876,069 and
CSI $463,009.  The largest  components of Ashton's SG&A expenses were  salaries,
professional  fees and public  company  expenses  which  include  directors  and
officers insurance.  Additionally,  during the fiscal year ended March 31, 1997,
the Company incurred considerable one-time SG&A expenses related to:

     *    opening  offices for Ashton and UTTC and building a computer  facility
          for UTTC (The total  cash  outlay for this  period was  $1,256,329  of
          which $381,311 was capitalized and $875,018 was expensed.)

     *    hiring key technical people for UTTC including Fred S. Weingard, the
          Executive Vice President for Advanced Programs and  Technologies,  and
          three senior  technologists.  (Relocation costs paid during the period
          were $195,000.)

DEVELOPMENT COSTS

     During  the  fiscal  year  ended  March  31,  1997,  the  Company  incurred
$3,382,848  of  development  costs  on a  consolidated  basis.  Ashton  incurred
development costs of $2,049,651  primarily for the design and development of the
ATED encryption device and the encryption  client-server.  The ATED will provide
information   security,    including   encryption   and   authentication,    for
communications with a host computer. The encryption  client-server will enable a
host computer to  simultaneously  communicate  with multiple ATEDs. The ATED and
encryption  client-server technology will be used by UTTC to provide information
security  and  complete  anonymity  for all trades  through the UTS(TM)  system.
Separately, UTTC incurred costs of $1,333,197 for the development of the UTS(TM)
system which will be an electronic pricing and transaction  facility for trading
exchange listed and NASDAQ NMS securities in conjunction with the PHLX.

COST OF CORPORATE RESTRUCTURING

     The Company has recorded a charge of $957,487 for  corporate  restructuring
costs related to the  resignation of Raymond T. Tate as Chairman,  President and
Chief Executive Officer of Ashton;  the subsequent closing of Ashton's corporate
offices in  Columbia,  Maryland;  the  transfer of all  corporate  functions  to
Philadelphia,  Pennsylvania;  and the  termination  of the eight person staff in
Maryland.

LIQUIDITY AND CAPITAL RESOURCES

     For the  year  ended  March  31,  1997,  the  Company  had  cash  and  cash
equivalents  of  $2,691,854  after giving  pro-forma  effect to the UTTC private
placement  offering that was consummated in April 1997. See Item 1:  Description
of Business:  UTTC Private  Placement.  Management  expects to raise  additional
capital for the development of new online  transactional  products for both UTTC
and Ashton from future  private  placements  or other  sources.  There can be no
assurances,  however,  that the  Company  will be able to raise such monies on a
timely basis or on terms acceptable to the Company,  if at all.  Management also
expects to generate  revenues from the UTS(TM) system after the SEC approves the
PHLX rule change,  upon which the Company can begin marketing the product to the
professional  investment  community.   See  Item  1:  Description  of  Business:
Universal Trading Technologies Corporation and Government Regulations.

     There  can  be no  assurance,  however,  that  the  Company's  actual  cash
requirements   will  not  exceed  its  anticipated  cash  requirements  or  that
additional cash requirements or additional  financing will not be required.  The
Company may require  additional  funds to provide working capital and to sustain
its  operations  until it  generates  positive  cash flow from  operations.  The
Company's estimates of its cash requirements are forward-looking statements that
involve a number of risks and uncertainties.

CAPITAL EXPENDITURES

     During the fiscal year ended March 31, 1997,  the Company spent  $1,104,336
for the  acquisition  of capital  equipment  (primarily  computer  hardware  and
software for the UTS(TM) system) and for leasehold improvements.

YEAR ENDED MARCH 31, 1997 COMPARED TO YEAR ENDED MARCH 31, 1996

     The results for the fiscal year ended March 31, 1997 are not  comparable to
the prior fiscal year because:

     *    At the beginning of the fiscal year ended March 31, 1996, Ashton was a
          development  stage  company  and did not become an  operating  company
          until it acquired a controlling  but minority  interest in CSI in June
          1995;

     *    Ashton  completed its Offering in the first quarter of the fiscal year
          ended March 31, 1997.  The  proceeds  enabled the Company to (i) build
          the infrastructure  (facilities,  people,  equipment etc.) required to
          complete the  development  of the Ashton's ATED and UTTC's UTS(TM) and
          (ii) acquire a majority interest in CSI.

ASHTON

     During  the  year  ended  March  31,  1996,  Ashton  incurred  $346,504  of
development  costs for the design and development of ATED.  Ashton also incurred
$438,555 of selling,  general and administrative expenses which include $160,058
of executive compensation and $89,863 of professional services. Expenses for the
year ended March 31, 1997 are not comparable  with the previous  fiscal year for
the reasons given above.

UTTC

     During  the  year  ended  March  31,  1996,  UTTC  incurred  $1,571,748  of
development  costs (including  $1,349,952  related to the acquisition of UTTC by
Ashton) for the UTS(TM)  system.  UTTC also  incurred  $133,175 of labor  costs.
Expenses for the year ended March 31, 1997 are not comparable  with the previous
fiscal year for the reasons given above.

CSI

     CSI's  revenues for the years ended March 31, 1997 increased by $2,657,000,
or 72.5%, to approximately  $6,324,000,  from  approximately  $3,667,000 for the
year ended March 31, 1996. CSI recorded revenue of approximately  $1,386,000 and
$314,000 from Ashton for the years ended March 31, 1997 and 1996,  respectively.
This increase was  attributable to an increase in commercial sales of $2,872,000
from approximately $2,260,000 for the year ended March 31, 1996 to approximately
$5,132,000 for the year ended March 31, 1997, while government  revenue declined
by $215,000, from approximately  $1,407,000 for the year ended March 31, 1996 to
approximately  $1,192,000  for the year ended March 31,  1997.  The  increase in
commercial  sales was  primarily  due to existing  contracts  with  Motorola and
Ashton.  There is no assurance that the existing contracts with Motorola will be
extended or new contracts will be executed.  The decrease in government  revenue
was primarily due to fewer government contracts.

     Costs of revenues are direct costs, which include labor costs,  subcontract
costs,  material  costs and other direct costs  related to contract  revenue and
overhead.  Direct  costs  for  the  year  ended  March  31,  1997  increased  by
$1,739,000, or 58.2%, to approximately $4,725,000, from approximately $2,986,000
for the year ended March 31, 1996. This change has occurred primarily due to the
higher concentration of commercial sales.

     Operating  expenses include selling and  administrative,  material handling
and bid and proposal  expenses.  Operating expenses for the year ended March 31,
1997  increased  by  $120,000,  or  28.0%,  to  approximately   $549,000,   from
approximately  $429,000  for the year  ended  March  31,  1996.  Expressed  as a
percentage of total revenues,  operating  expenses  decreased for the year ended
March  31,  1997 to 8.7% from  11.7% for the year  ended  March  31,  1996.  The
decrease is a result of  continuing  cost  restraints  and less bid and proposal
expenses.

     Interest expense for the year ended March 31, 1997 decreased by $13,600, or
90.7%, to approximately  $1,400,  from approximately  $15,000 for the year ended
March 31, 1996. This decrease was due to less of the credit facility being used.
See "Credit  Facility" below. The credit facility is used primarily for accounts
receivable financing, with borrowing capped at $500,000 for fiscal year 1997. At
March 31, 1997, the outstanding balance on the credit line was zero. Future debt
levels of CSI will be  determined  by ongoing  working  capital  needs,  capital
expenditures and other financing requirements.

     Income  taxes for the year  ended  March 31,  1997  were  calculated  using
statutory rates and are payable to Ashton under a tax allocation agreement dated
March 27, 1997, under which Ashton and its Subsidiaries will file a consolidated
federal tax return.

     Net income for the year ended  March 31, 1997  increased  by  $357,000,  or
146.9%, to approximately $600,000, from approximately $243,000 in the year ended
March 31, 1996, based upon increased revenues.

TAX ALLOCATION AGREEMENT

     On or about March 27, 1997, the Company entered into an agreement with each
of its  subsidiaries,  CSI and UTTC (together with the Company,  the "Affiliated
Group"),  providing for the allocation of the  consolidated tax liability of the
Affiliated  Group among its members,  for reimbursing the Company for payment of
such tax  liability,  for  compensating  any party for use of its  losses or tax
credits,  and for the  allocation  and  payment  of any  refund  arising  from a
carryback of losses or tax credits from subsequent tax years.

SHORT-TERM LOAN AND SECURITY AGREEMENT

     On or about February 18, 1997, the Company  entered into a short-term  loan
and security  agreement with CSI pursuant to which the Company borrowed $500,000
from CSI secured by a promissory note, bearing interest at eight and one-quarter
percent  (8  1/4%)  due on or  before  November  18,  1997,  and a Stock  Pledge
Agreement in which the Company pledged all of its right, title and interest in a
percentage  of CSI's  common  stock  (approximately  50 percent of CSI's Class A
Shares and 50.6 percent of CSI's Class B Shares).

     The  Company  believes  that the  transactions  between the Company and its
officers,  directors and other affiliates described above were on terms at least
as favorable to the Company as could be obtained from independent third parties.
The  Company  has  adopted a policy  that any future  transactions  between  the
Company and its officers,  directors or other  affiliates will be reviewed on an
ongoing basis and be submitted to the Audit  Committee or other  comparable body
for review where appropriate. Such future transactions will be on terms at least
as favorable to the Company as could be obtained from independent  third parties
and will be approved by a majority of the directors  that are not  interested in
such transactions.

CREDIT FACILITY

     CSI has a line of credit  arrangement with Sun Bank,  National  Association
effective  September  5, 1996,  under  which it may borrow up to $500,000 at the
bank's  prime rate.  The  borrowing  capability  is  calculated  based on 80% of
commercial  accounts receivable less than 90 days and 90% of assigned government
receivables,  but in no event can the  borrowing  exceed  $500,000.  The  credit
facility  must be retired 30 days annually and CSI must  maintain,  on a monthly
basis,  minimum net worth,  working capital and other financial  ratios. It also
includes  certain  covenants   restricting,   among  other  things,  mergers  or
acquisitions, sale of assets, additional borrowings, affiliated transactions and
certain other matters.  The borrowings are  collateralized  by all  receivables,
contract  rights,  inventory  and  equipment.  At  March  31,  1997,  CSI was in
compliance  with all  covenants  of the credit  facility  and had no  borrowings
outstanding.


ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
The Ashton Technology Group, Inc.


We have  audited  the  accompanying  consolidated  balance  sheet of The  Ashton
Technology  Group,  Inc. and  Subsidiaries  as of March 31, 1997 and the related
statements of operations,  stockholders'  equity, and cash flows for each of the
two  years  in the  period  then  ended.  We have  also  audited  the pro  forma
consolidated  balance  sheet which gives effect to the receipt of proceeds  from
the sale of convertible and nonconvertible  notes as described in Note 13 to the
consolidated   financial   statements.   These  financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of  The  Ashton
Technology  Group, Inc. and Subsidiaries as of March 31, 1997 and the results of
its  operations  and its cash flows for each of the two years in the period then
ended in conformity with generally accepted accounting principles.  Also, in our
opinion,  the pro forma balance sheet presents fairly the financial  position of
The Ashton  Technology Group, Inc. and Subsidiaries as it would have appeared at
March 31, 1997 had the transaction described in Note 13 been consummated at that
date.


/s/ Goldstein Golub Kessler & Company, P.C.
-------------------------------------------

GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
New York, New York

June 24, 1997,  except for the ninth  paragraph of Note 12, 
as to which the date is June 26, 1997


<PAGE>
               THE ASHTON TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

                                                     CONSOLIDATED BALANCE SHEET
===============================================================================

                                             MARCH 31,                PRO FORMA
                                               1997                   (NOTE 13)
------------------------------------------------------------------------------- 
ASSETS

Current Assets:
   Cash and cash equivalents (Note 1)        $   60,841              $2,691,854
   Contracts receivable, net of 
     allowance for doubtful accounts 
     of $62,500 in 1997 (Note 2)              1,483,163               1,483,163
   Prepaid expenses and other 
     current assets                              98,903                  98,903
-------------------------------------------------------------------------------
        TOTAL CURRENT ASSETS                  1,642,907               4,273,920

Property and Equipment, net 
     (Notes 1 and 3)                          1,041,449               1,041,449

Goodwill, net (Notes 1 and 8)                   575,581                 575,581

Deferred Income Tax Asset, 
     net of valuation allowance 
     of $2,740,000                                    -                       -

Other Assets                                    106,693                 475,680
-------------------------------------------------------------------------------
        TOTAL ASSETS                         $3,366,630              $6,366,630
=============================================================================== 

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current Liabilities:
   Accounts payable and accrued 
     expenses (Note 4)                       $1,937,752              $1,937,752
   Billings in excess of costs 
     and estimated earnings (Note 1)             52,722                  52,722
------------------------------------------------------------------------------- 
        TOTAL CURRENT LIABILITIES             1,990,474               1,990,474

Long-term Debt (Note 6)                          13,000               3,013,000
------------------------------------------------------------------------------- 
        TOTAL LIABILITIES                     2,003,474               5,003,474
------------------------------------------------------------------------------- 
Commitments and Contingencies (Note 12)
Minority Interest (Note 1)                      300,279                 300,279
------------------------------------------------------------------------------- 
Stockholders' Equity:
   Preferred stock - $.01 par value; 
     authorized 1,000,000 shares,
     none issued
   Common stock - $.01 par value; 
     authorized 20,000,000 shares,
     issued and outstanding 
     7,562,500 shares                            75,625                  75,625
   Additional paid-in capital                10,482,197              10,482,197
   Accumulated deficit                       (9,494,945)             (9,494,945)
------------------------------------------------------------------------------- 
     STOCKHOLDERS' EQUITY                     1,062,877               1,062,877
------------------------------------------------------------------------------- 
     TOTAL LIABILITIES AND 
       STOCKHOLDERS' EQUITY                  $3,366,630              $6,366,630
===============================================================================
                                 See Notes to Consolidated Financial Statements

<PAGE>
               THE ASHTON TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

                                           CONSOLIDATED STATEMENT OF OPERATIONS
===============================================================================

YEAR ENDED MARCH 31,                                  1996                 1997
------------------------------------------------------------------------------- 

Net revenue (Notes 1 and 2)                              -           $4,938,330
------------------------------------------------------------------------------- 
Costs and expenses:
   Cost of revenue                                       -            3,544,556
   Development costs, including 
     $1,349,952 write-off of intangible
     asset in 1996 (Note 8)                     $1,918,252            3,382,848
   Selling, general and administrative 
     expenses (Note 12)                            648,732            3,479,660
   Depreciation and amortization                         -              280,678
------------------------------------------------------------------------------- 

Total costs and expenses                         2,566,984           10,687,742
------------------------------------------------------------------------------- 

Other income (expenses):
   Interest income                                      -               144,341
   Interest expense                               (66,727)              (39,792)
   Equity earnings in unconsolidated 
     investee (Note 8)                             45,732                     -
   Corporate restructuring costs (Note 12)              -              (957,487)
------------------------------------------------------------------------------- 

Total other income (expenses)                     (20,995)             (852,938)
------------------------------------------------------------------------------- 

Loss before provision for income taxes 
     and minority interest in
     earnings of subsidiary                    (2,587,979)           (6,602,350)

Provision for income taxes (Note 9)                     -               110,000
------------------------------------------------------------------------------- 

Loss before minority interest in 
     earnings of subsidiary                    (2,587,979)           (6,712,350)
Minority interest in earnings of 
     subsidiary                                         -                130,056
------------------------------------------------------------------------------- 

Net loss                                      $(2,587,979)          $(6,842,406)
===============================================================================

Net loss per common share                           $(.49)               $(.93)
===============================================================================

Weighted average number of common 
     shares outstanding                         5,240,000            7,341,314
===============================================================================
                                 See Notes to Consolidated Financial Statements

<PAGE>
               THE ASHTON TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                                      CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED MARCH 31, 1996 AND 1997
------------------------------------------------------------------------------------------------------------------------------------
                                   Common Stock
                                                           ADDITIONAL                                                  SHAREHOLDERS'
                                NUMBER OF                  PAID-IN       TREASURY     ACCUMULATED     SUBSCRIPTION        EQUITY
                                SHARES         AMOUNT      CAPITAL        STOCK         DEFICIT        RECEIVABLE      (DEFICIENCY)
-------------------------       ---------      -------     -----------   --------     -----------     ------------     ------------
<S>                             <C>            <C>         <C>           <C>          <C>             <C>              <C>
Balance at March 31, 1995       2,650,000      $26,500    $    47,509           -     $  (64,560)     $  (24,332)      $   (14,883)

Issuance of common stock
  in connection with
  acquisition (Note 8)          2,640,000       26,400      1,293,600           -             -               -          1,320,000

Purchase of treasury stock
  (Note 7)                             -            -              -     $(300,000)           -               -           (300,000)

Collection of receivable               -            -              -            -             -           24,332            24,332

Net loss                               -            -              -            -     (2,587,979)             -         (2,587,979)
-------------------------       ---------      -------     -----------    --------    ------------    ------------     ------------

Balance at March 31, 1996       5,290,000       52,900      1,341,109     (300,000)   (2,652,539)             -         (1,558,530)

Issuance of common stock and
  warrants in initial public
  offering                      2,272,500       22,725      9,141,088      300,000           -                -          9,463,813

Net loss                               -            -            -              -     (6,842,406)             -         (6,842,406)
-------------------------       ---------      -------     -----------     --------   ------------    ------------     ------------

Balance at March 31, 1997       7,562,500      $75,625    $10,482,197      $ - 0 -    $(9,494,945)    $    - 0 -        $1,062,877
=========================       =========      =======     ===========     ========   ============    ============     ============

                                  See Notes to Consolidated Financial Statements
</TABLE>

<PAGE>
               THE ASHTON TECHNOLOGY GROUP, INC. AND SUBSIDIARIES


                                                        STATEMENT OF CASH FLOWS
===============================================================================

YEAR ENDED MARCH 31,                                       1996            1997
-------------------------------------------------------------------------------
Cash flows from operating activities:

   Net loss                                         $(2,587,979)    $(6,842,406)
   Adjustments to reconcile net loss to net 
     cash used in operating activities:
       Bad debt expense                                       -          50,000
       Depreciation and amortization                     74,492         280,678
       Write-off of intangible asset                  1,349,952               -
       Equity earnings in unconsolidated 
         investee                                       (45,732)              -
       
       Minority interest in earnings 
         of subsidiary                                        -         130,056
       Changes in operating assets and 
         liabilities:
           Increase in contracts receivable                   -        (553,816)
           Increase in prepaid expenses and 
             other current assets                             -         (23,784)
           Decrease in other assets                           -          60,392
           Increase in accounts payable and 
             accrued expenses                         1,067,327         468,576
           Increase in billings in excess 
             of costs and estimated earnings                  -          52,722
-------------------------------------------------------------------------------
               NET CASH USED IN OPERATING 
               ACTIVITIES                              (141,940)     (6,377,582)
-------------------------------------------------------------------------------
Cash flows from investing activities:
           Purchase of property and equipment           (21,014)     (1,104,336)
           Purchase of CSI net of cash acquired        (679,024)       (600,160)
-------------------------------------------------------------------------------
               CASH USED IN INVESTING ACTIVITIES       (700,038)     (1,704,496)
-------------------------------------------------------------------------------
Cash flows from financing activities:
           Issuance costs for initial 
             public offering                           (614,856)       (316,040)
           Issuance costs for private placement         (67,340)              -
           Net proceeds from the sale of stock 
             and warrants                                     -      10,394,709
           Proceeds from notes payable                1,530,863               -
           Payments of notes payable                          -      (1,966,771)
           Collection of stock subscription 
             receivable                                  24,332               -
-------------------------------------------------------------------------------
               NET CASH PROVIDED BY FINANCING 
               ACTIVITIES                               872,999       8,111,898
-------------------------------------------------------------------------------
Net increase in cash and cash equivalents                31,021          29,820

Cash and cash equivalents at beginning 
   of the year                                                -          31,021
-------------------------------------------------------------------------------
Cash and cash equivalents at end of the year        $    31,021         $60,841
-------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW 
   INFORMATION: 
     Cash paid during the year for:
       Interest                                               -         $84,796
===============================================================================
       Income taxes                                           -          $5,694
===============================================================================
SUPPLEMENTAL SCHEDULE OF NONCASH 
   INVESTING ACTIVITY:
     Purchase of treasury stock in exchange 
       for note payable                             $   300,000               -
===============================================================================
                                 See Notes to Consolidated Financial Statements

<PAGE>
               THE ASHTON TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===============================================================================
1.  ORGANIZATION,                  The   accompanying   consolidated   financial
    PRESENTATION,                  statements include the accounts of The Ashton
    PRINCIPAL                      Technology  Group,  Inc.  ("Ashton")  and its
    BUSINESS                       Subsidiaries,  Universal Trading Technologies
    ACTIVITY AND                   Corporation  ("UTTC")  and  Computer  Science
    SIGNIFICANT                    Innovations  Inc. ("CSI")  (collectively  the
    ACCOUNTING                     "Company").   All  significant   intercompany
    POLICIES:                      transactions    and   balances    have   been
                                   eliminated.   As  described  in  Note  8,  in
                                   October  1995,  Ashton  acquired  80%  of the
                                   common   stock   of   UTTC.    The   business
                                   combination  has  been  accounted  for  as  a
                                   purchase.  The results of  operations of UTTC
                                   are included in the accompanying consolidated
                                   financial   statements   since  the  date  of
                                   acquisition.
                                   
                                   Additionally, as described in Note 8, in June
                                   1995,  Ashton acquired 650,798 Class A voting
                                   shares and 16,726  Class B  nonvoting  common
                                   shares of Computer Science Innovations,  Inc.
                                   ("CSI").   On  November  16,   1995,   Ashton
                                   acquired an  additional  2,000 Class A voting
                                   common  shares and 42,000  Class B  nonvoting
                                   common shares which  increased its investment
                                   to 29% of the total  number of common  shares
                                   outstanding.  For the year  ended  March  31,
                                   1996,  this investment has been accounted for
                                   by Ashton using the equity method.  On May 2,
                                   1996,  the  effective  date of the  Company's
                                   initial  public  offering  (the  "Offering"),
                                   Ashton purchased additional shares of Class A
                                   voting and Class B nonvoting  common stock of
                                   CSI which  enabled  Ashton to own 80% of each
                                   class of CSI's common  stock.  The results of
                                   operations   of  CSI  are   included  in  the
                                   accompanying      consolidated      financial
                                   statements  since  May 2,  1996,  the date of
                                   acquisition.

                                   The    Company   was   founded   to   exploit
                                   opportunities   in   the   rapidly   evolving
                                   businesses   of   Internet   and   electronic
                                   commerce   through  the  application  of  its
                                   skills   and   advanced    technologies    in
                                   securities trading and information  security.
                                   The  Company  designs,  develops  and markets
                                   online transactional systems,  especially for
                                   the  securities  industry,   and  information
                                   security  technologies.  Ashton has  designed
                                   and   developed    the   Ashton    Technology
                                   Encryption   Device  ("ATED")  and  UTTC  has
                                   designed and developed the Universal  Trading
                                   System ("UTS(TM)").

                                   CSI's  revenue  on  time  and  materials-type
                                   contracts is recognized as work is performed.
                                   Revenue from cost-reimbursement  contracts is
                                   recorded as costs are  incurred  and includes
                                   estimated  earned fees in the proportion that
                                   costs   incurred   to  date   bear  to  total
                                   estimated costs. CSI recognizes  revenue from
                                   long-term   fixed-price   contracts   on  the
                                   percentage-of-completion  method, measured by
                                   the  percentage of contract costs incurred to
                                   date to estimated  total  contract  costs for
                                   each contract.

                                   Cost of revenue  includes all direct material
                                   and  labor  costs and  those  indirect  costs
                                   related to contract  performance.  Provisions
                                   for   estimated    losses   on    uncompleted
                                   fixed-price  contracts are made in the period
                                   in which such losses are first estimated. The
                                   cumulative  effect of  revisions to estimated
                                   total  contract costs and revenue is recorded
                                   in the  period in which  the facts  requiring
                                   the revision become known. Claims,  including
                                   change  orders,  are  reflected  at estimated
                                   recoverable   amounts.   An   allowance   for
                                   doubtful  accounts  is recorded in the period
                                   in which such  accounts are  determined to be
                                   uncollectible.

                                   Development  costs are  expensed  as incurred
                                   until  the   UTS(TM)   and  ATED  models  are
                                   functional.    Subsequent   costs   will   be
                                   capitalized  and  reported  at the  lower  of
                                   unamortized cost or net realizable value.

                                   The  preparation  of financial  statements in
                                   conformity with generally accepted accounting
                                   principles   requires   management   to  make
                                   estimates  and  assumptions  that  affect the
                                   reported  amounts of assets  and  liabilities
                                   and  disclosure  of  contingent   assets  and
                                   liabilities  at the  date  of  the  financial
                                   statements   and  the  reported   amounts  of
                                   revenue  and  expenses  during the  reporting
                                   period.  Actual  results  could  differ  from
                                   those estimates.

                                   The   Company    considers    highly   liquid
                                   investments  with  an  original  maturity  of
                                   three months or less to be cash equivalents.

                                   In February  1997,  the Financial  Accounting
                                   Standards Board issued Statement of Financial
                                   Accounting   Standards   ("SFAS")   No.  128,
                                   Earnings  per  Share.   Management  does  not
                                   believe  SFAS No.  128 or any other  recently
                                   issued,  but  not yet  effective,  accounting
                                   standards, if currently adopted, would have a
                                   material    effect   on   the    accompanying
                                   consolidated financial statements.

                                   Depreciation  of property  and  equipment  is
                                   provided for using the  straight-line  method
                                   over the estimated useful life of the related
                                   assets.     Amortization     of     leasehold
                                   improvements   is  provided   for  using  the
                                   straight-line  method  over  the  term of the
                                   lease.

                                   Offering  costs are  comprised  primarily  of
                                   accounting,   legal,   printing  and  certain
                                   underwriting  fees. Upon  consummation of the
                                   Offering  described  in Note 5,  these  costs
                                   were  offset  against the  proceeds  from the
                                   transaction.

                                   At  each  balance   sheet  date  the  Company
                                   evaluates  the  period  of   amortization  of
                                   intangible   assets.   The  factors  used  in
                                   evaluating   the   period   of   amortization
                                   include: (i) current operating results,  (ii)
                                   projected future operating results, and (iii)
                                   any other  material  factors  that affect the
                                   continuity of the business.

                                   Net loss per common share was computed  based
                                   upon the  weighted  average  number of common
                                   shares outstanding.  For the year ended March
                                   31, 1996, pursuant to Securities and Exchange
                                   Commission Staff Accounting  Bulletin No. 83,
                                   shares  of  common   stock  issued  or  stock
                                   options  granted  during the 12-month  period
                                   preceding the date of the initial filing of a
                                   Registration  Statement  at prices  below the
                                   Offering  price  have  been  included  in the
                                   weighted average number of shares outstanding
                                   since inception.

                                   In 1997,  the Company  adopted  SFAS No. 123,
                                   Accounting for Stock-Based Compensation.  The
                                   Company  has elected to apply APB Opinion No.
                                   25 and related  interpretations in accounting
                                   for its stock options issued to employees and
                                   has adopted the disclosure-only provisions of
                                   SFAS No. 123.

2.   CONTRACTS           Contracts receivable consist of the following at March
     RECEIVABLE AND      31, 1997:
     MAJOR
     CUSTOMERS:          U.S. government-defense (prime and subcontracts):
                             Amounts billed                          $  364,403
                             Retainages, representing unbilled 
                               costs and estimated earnings on
                               progress completed                        82,145
                         ------------------------------------------------------
                                                                        446,548
                         ======================================================
                         Commercial and other governmental:
                         Amounts billed                               1,086,732
                         Unbilled costs and estimated earnings 
                           on progress completed                         12,383
                         ------------------------------------------------------ 
                                                                      1,099,115

                         -------------------------------------------------------
                         Allowance for doubtful accounts                (62,500)
                         ------------------------------------------------------
                                                                     $1,483,163
                         ======================================================
                         There were no progress billings on U.S. 
                           government fixed contracts.

                         The portions of revenue derived from 
                           contracts with major customers for the
                           year ended March 31, 1997 were as follows:
                         
                         One U.S. government agency                           6%
                         ------------------------------------------------------
                         One U.S. Armed Forces branch                         5%
                         ------------------------------------------------------
                         One U.S. government subcontract                      1%
                         ------------------------------------------------------
                         One commercial customer                             63%
                         ------------------------------------------------------
                         All U.S. government branches and agencies           23%


3.   PROPERTY AND        Property and equipment, at cost, consist 
     EQUIPMENT           of the following as of March 31, 1997:
                                                                      Estimated
                                                                    Useful Life
                         ------------------------------------------------------
                         Office equipment         $188,887         3 to 5 years
                         Computer equipment      1,228,149              3 years
                         Furniture and fixtures    239,606              7 years
                         Leasehold improvements    140,552        Term of lease
                         ------------------------------------------------------
                                                 1,797,194
                         Less accumulated 
                         depreciation and
                         amortization              755,745
                         ------------------------------------------------------
                                                $1,041,449
===============================================================================
                         Depreciation and amortization expense for the years 
                         ended March 31, 1996 and 1997 was $5,348 and $242,255, 
                         respectively.

 4.  ACCOUNTS            Accounts  payable and  accrued expenses consist of the 
     PAYABLE AND         following:
     ACCRUED 
     EXPENSES:           Trade accounts payable                        $792,622
                         Accrued compensation                           640,930
                         Accrued professional fees                      281,639
                         Accrued other expenses                         222,561
                         ------------------------------------------------------
                                                                     $1,937,752
                         =======================================================

5.   INITIAL PUBLIC      On May 2, 1996,  the Company  completed  an Offering of
     OFFERING:           2,150,000  shares of common stock at an offering  price
                         of $4.50 per share and  2,150,000  warrants at $.25 per
                         warrant.   The  common   stock  and  the  warrants  are
                         separately  tradeable.   The  Company  granted  to  the
                         underwriters  the  right  to  exercise   over-allotment
                         options  of  322,500  shares  of  common  stock  and/or
                         322,500 warrants at the Offering price,  within 45 days
                         of  May 2,  1996.  On May  7,  1996,  the  underwriters
                         exercised  the  over-allotment  options  and offered an
                         additional  322,500  shares of common stock and 322,500
                         warrants  to the public at $4.50 per share and $.25 per
                         warrant.  As a  result  of the  Offering,  the  Company
                         received net proceeds of approximately  $10,395,000 and
                         increased its total shares of common stock and warrants
                         outstanding  by 2,472,500  each.  The net proceeds from
                         the  Offering  were used to repay all notes  payable to
                         stockholders, certain notes payable and related accrued
                         interest in existence  through the date of the Offering
                         and provided  working  capital.  The net proceeds  were
                         also  used to  purchase  the  additional  shares of CSI
                         stock as described in Note 8.

6.   LONG-TERM           In October 1995, the Company raised $650,000 by issuing
     DEBT:               13  units  through  a  private  placement.   Each  unit
                         consisted  of a $49,000 10%  nonconvertible  promissory
                         note due in April  1997  and a $1,000  10%  convertible
                         promissory   note  due  in  October  1998.  The  $1,000
                         convertible  notes are  convertible  into  warrants  to
                         purchase  20,000 shares of common stock through October
                         1998 at $8 per share.  Interest is payable semiannually
                         on these notes. The nonconvertible notes were repaid in
                         May 1996 with the  proceeds of the  Offering  (see Note
                         5).

7.   NOTES PAYABLE       At March 31,  1996,  the Company had a note  payable in
     TO STOCK-           the  amount  of   $615,176  to  The  Dover  Group  Inc.
     HOLDERS             ("Dover"), a stockholder of the Company, which note was
                         issued in connection with the acquisition of the common
                         stock of CSI (see Note 8). In  addition,  during  1995,
                         Dover loaned UTTC $43,430.

                         As of March 31, 1996,  the Company had a $100,000  loan
                         payable  to  Medford  Financial,  Inc.  ("Medford"),  a
                         company  whose   principals  are  stockholders  of  the
                         Company.   Medford   has  agreed  to  provide   certain
                         consulting  services to the Company  over a  three-year
                         period.

                         In January 1996, the Company  purchased  200,000 shares
                         of its common stock from a stockholder for an aggregate
                         purchase price of $300,000. The purchase price was paid
                         by Ashton with a promissory note.

                         In  January  1996,  an  officer/stockholder  loaned the
                         Company $150,000.  Additionally,  the company had other
                         stockholder loans totaling $36,165.

                         All of the loans  mentioned  above  were  repaid in May
                         1996 with the proceeds of the Offering (see Note 5).

8.   ACQUISITIONS:       In  October  1995,  Ashton  acquired  4,000,000  common
                         shares  of UTTC in  exchange  for  2,640,000  shares of
                         Ashton's common stock. This acquisition  represents 80%
                         of the outstanding  common shares of UTTC. The purchase
                         price  of  $1,320,000  resulted  in  an  allocation  of
                         approximately   $1,349,952   to  UTTC's   UTS(TM),   an
                         intangible  asset with no alternative  future use. This
                         amount has been  considered  to be a  development  cost
                         which has been charged to  operations in the year ended
                         March 31, 1996.

                         In June 1995,  Ashton  acquired  650,798 Class A voting
                         common  shares  and  16,726  Class B  nonvoting  common
                         shares of CSI, which represents 26% of the total number
                         of common shares  outstanding,  47% of the  outstanding
                         voting  shares  and 1.5% of the  outstanding  nonvoting
                         shares of CSI for a purchase price of $667,524, paid in
                         cash.  Dover advanced Ashton  substantially  all of the
                         funds  for  this   acquisition.   Additionally,   Dover
                         received  warrants  to purchase  500,000  shares of the
                         Company's  common stock at an exercise  price of $8 per
                         share.  The  warrants  are  exercisable  on  or  before
                         October 10, 1998. In November 1995,  Ashton acquired an
                         additional  2,000  Class A  voting  common  shares  and
                         42,000 Class B nonvoting  common  shares for a purchase
                         price of $11,500, paid in cash. The purchases increased
                         Ashton's  investment  to  29% of the  total  number  of
                         common shares outstanding.

                         In  connection   with  the  May  2,  1996  Offering  as
                         described  in Note 5, Ashton  purchased  an  additional
                         469,155  shares  of CSI's  Class A voting  stock and an
                         additional 1,557,210 shares of Class B nonvoting common
                         stock for $865,565.  On June 11, 1996,  Ashton acquired
                         an  additional  12,053 of Class A voting  common shares
                         and 1,261  Class B nonvoting  common  shares of CSI for
                         $6,100, and subsequently  purchased  additional shares.
                         After such  purchases,  Ashton  now owns  83.18% of the
                         aggregate Class A and Class B common stock.

                         The total cumulative purchase price of $1,591,189 as of
                         March 31, 1997 in this step acquisition  resulted in an
                         excess of cost over Ashton's proportionate share of its
                         equity  in the  fair  value  of the net  assets  of CSI
                         (goodwill)  of  approximately  $640,000  which is being
                         amortized over 15 years.  Amortization  of goodwill for
                         the years ended March 31, 1996 and 1997 was $25,900 and
                         $38,423, respectively.

                         The  following  pro  forma  information   presents  the
                         results  of  operations  of the  Company  as though the
                         acquisitions occurred on April 1, 1995 and 1996.


<PAGE>
                         Year ended March 31,             1996             1997
                         ------------------------------------------------------ 
                         Net revenue                $3,667,000       $5,341,000
                         Net loss                   (2,431,000)      (6,813,000)
                         Loss per common share           $(.46)           $(.93)

                         The   following  is  a  condensed   balance  sheet  and
                         statement of  operations  for CSI,  the  unconsolidated
                         investee, at and for the year ended March 31, 1996:

                         Current assets                             $ 1,048,097
                         Property and equipment, net                    165,015
                         Other assets                                    18,712
                         ------------------------------------------------------
                         Total assets                                $1,231,824
                         ======================================================
                         Current liabilities                           $431,305
                         Stockholders' equity                           800,519
                         ------------------------------------------------------
                         Total liabilities and
                         stockholders' equity                        $1,231,824
                         ======================================================
                         Revenue                                     $3,666,864
                         Expenses                                     3,423,651
                         ------------------------------------------------------
                         Net income                                    $243,213
                         ======================================================
                         Net income per common 
                         share                                             $.10
                         ======================================================
                         Weighted average number of
                         common shares outstanding                    2,491,234
                         ======================================================

9.   INCOME TAXES:       The  provision   for  income  taxes   consists  of  the
                         following for the year ended March 31, 1997:

                         Current - state                                $59,000
                         ------------------------------------------------------
                         Deferred:
                            Federal                                      48,000
                            State                                         3,000
                         ------------------------------------------------------
                                                                         51,000
                         ------------------------------------------------------
                                                                       $110,000
                         ======================================================

                         The company has net  operating  loss  carryforwards  at
                         March 31, 1997 of approximately $5,800,000,  which will
                         begin to expire  in 2011,  available  to reduce  future
                         federal  taxable income.  Additionally,  the income tax
                         basis of  intangibles  exceeds the basis for  financial
                         reporting  purposes by  approximately  $1,400,000.  The
                         carryforwards and the temporary  difference result in a
                         deferred tax asset of approximately $2,740,000 at March
                         31,  1997 for which the  Company  has  provided  a full
                         valuation  allowance due to the  uncertainty  about the
                         future realization of this tax benefit.

                         The  components  of deferred  income taxes at March 31,
                         1997 were as follows:

                         Net operating loss carryforward             $2,200,000
                         Basis of intangible asset                      540,000
                         Valuation allowance                         (2,740,000)
                         ------------------------------------------------------
                                                                            $-0-
                         ======================================================
                         The difference between the income tax benefit  computed
                         at the federal  statutory rate and the actual provision
                         for income taxes is accounted for as follows:

                         Year ended March 31,          1996                1997
                         ------------------------------------------------------

                         Tax benefit computed  
                           at the federal 
                           statutory rate         $(880,000)        $(2,290,000)
                         Change in valuation 
                           allowance                880,000           2,290,000
                         State income taxes, net 
                           of federal                  
                           income tax effect              -             110,000
                         ------------------------------------------------------

                                                        $-0-           $110,000
                         ======================================================

                         The Company  files a  consolidated  federal  income tax
                         return.  In 1997, Ashton entered into an agreement with
                         CSI and UTTC. The agreement provides that any member of
                         the group which has taxable income must  compensate any
                         other  member for the use of net  operating  losses and
                         tax credits.
                         ======================================================

10.  RELATED PARTY       During 1996, the Company paid approximately $314,000 to
     TRANSACTIONS:       CSI for the  development  of encryption  coding and the
                         UTS(TM) on-line transaction system.  These expenses are
                         reflected in development costs as of March 31, 1996.

11.  EMPLOYEE            Stock   options  are  granted  to   employees   at  the
     STOCK OPTIONS:      discretion of the board of directors.  A summary of the
                         status of the  Company's  employee  stock options as of
                         March 31, 1996 and 1997 and changes  during those years
                         are as follows:
                                                  1996                     1997
                         ------------------------------------------------------
                                                   Weighted-           Weighted-
                                                   Average             Average
                         Fixed                     Exercise            Exercise
                         Options         Options   Price     Options   Price
                         ------------------------------------------------------
                         Outstanding
                         at beginning
                         of year              -        -     350,000    $4.00

                         Granted
                         during year     350,000    $4.00    100,000    14.25

                         Outstanding
                         at end of
                         year            350,000    $4.00    450,000    $6.28
                         ======================================================

                         The following table summarizes information about stock
                         options outstanding and exercisable at March 31, 1997:

                                                     Weighted-
                                                     Average
                         Range of                    Remaining
                         Exercise       Number       Contractual      Exercise 
                         Price          Outstanding  Life             Price
                         ------------------------------------------------------

                         $4.00-$14.25   450,000      9 years          $6.28
                         ======================================================

                         None of the above options were exercisable at March 31,
                         1997.

                         In addition, a summary of the status of UTTC's employee
                         stock  options as of March 31, 1997 and changes  during
                         the year ended is as follows:

                                                               Weighted-Average
                                                    Options    Exercise Price
                         ------------------------------------------------------
                         Granted during year
                         and outstanding at
                         end of year                400,000        $1.50
                         ======================================================

                         The following table summarizes  information about stock
                         options outstanding and exercisable at March 31, 1997:

                                                     Weighted-
                                                     Average
                         Range of                    Remaining
                         Exercise     Number         Contractual      Exercise 
                         Price        Outstanding    Life             Price
                         ------------------------------------------------------
                         $1.50        400,000        4.36 years       $1.50
                         ======================================================

                         None of the above options were exercisable at March 31,
                         1997. 

                         Had the Company elected to recognize  compensation cost
                         based on the fair value of the  options  granted at the
                         grant date as  prescribed by SFAS No. 123, net loss and
                         loss  per  share  would  not  have  materially  changed
                         because  the  options  issued had no value at the grant
                         date based on an independent valuation of the Company.

                         Concurrent  with the Offering,  the Company  registered
                         760,000  additional  warrants to purchase common stock.
                         Such warrants are  identical to the warrants  described
                         in Notes 6 and 8 and were issuable  automatically  upon
                         the  completion  of the  Offering in  exchange  for the
                         already existing outstanding common stock warrants.

12.  COMMITMENTS,        The Company leases office  facilities  under  operating
     CONTINGENCIES,      leases  expiring  through  May  2005.   Future  minimum
     SETTLEMENTS         operating lease payments are as follows:
     AND                 
     CORPORATE           Year ending March 31,
     RESTRUCTURING            1998                                    $ 441,000
     COSTS:                   1999                                      392,000
                              2000                                      337,000
                              2001                                      337,000
                              2002                                      154,000
                           Thereafter                                   501,000
                         ------------------------------------------------------
                                                                     $2,162,000
                         ======================================================

                         Rent expense under these  operating lease for the years
                         ended  March 31,  1996 and 1997  totaled  approximately
                         $24,000 and $390,000, respectively.

                         The Company has employment agreements which require the
                         Company  to  pay   approximately   $1,257,000   through
                         September 1999.

                         In September  1995, UTTC entered into an agreement with
                         the  Philadelphia  Stock Exchange  ("PHLX") whereby the
                         PHLX has agreed to employ UTTC's  UTS(TM) on its equity
                         trading floor. In connection with this agreement,  UTTC
                         is required to  reimburse  the PHLX up to $100,000  for
                         the first year of the  agreement  for  marketing  costs
                         incurred by the PHLX.  UTTC is also  required to assume
                         up  to  $200,000  of  the  PHLX's  initial   technology
                         development costs in implementing the UTS(TM).  UTTC is
                         required to  contribute to a PHLX  administered  "claim
                         fund" for  potential  claims  relating  to the  UTS(TM)
                         operations.  UTTC is  required to  contribute  $100,000
                         after  commencement  of the  UTS(TM)  trading  and,  if
                         necessary,  to make additional  contributions  of up to
                         $100,000 per year to such claim fund.  The PHLX is also
                         entitled to receive an annual  royalty  from UTTC of 3%
                         of annual gross revenue based on UTTC's average revenue
                         in the first  three years of  operations  for each year
                         the PHLX  agreement  is in effect.  These  payments are
                         required to begin at the end of the second full year of
                         operation  and  continue  for  the  life  of  the  PHLX
                         agreement.

                         CSI has a line of credit  arrangement with a bank under
                         which it may borrow up to $500,000,  payable on demand.
                         The bank has limited CSI's borrowing availability under
                         the line of credit to the lesser of  $500,000 or 80% of
                         billed  contracts  receivable  less  than 90 days  from
                         invoice date ($881,821 at March 31, 1997).  Interest is
                         charged  at the  bank's  prime  rate (8.5% at March 31,
                         1997).  CSI must  maintain  minimum net worth,  working
                         capital and  maintain  certain  financial  ratios.  The
                         borrowings   are   collateralized   by  all   contracts
                         receivable,  contract rights,  inventory and equipment.
                         Additionally,  five specific government  contracts have
                         also been assigned as additional  collateral.  At March
                         31,  1997,  CSI had no  borrowings  under  this line of
                         credit.

                         Each  year,   CSI's  records  are  subject  to  Defense
                         Contract Audit Agency review.  During March 1996, CSI's
                         records were reviewed as of March 31, 1995 and 1994. No
                         adjustments  or  substantive  issues were raised during
                         the current year review.

                         On January 30, 1997,  Ashton,  along with UTTC, Fredric
                         W.  Rittereiser  ("Rittereiser")  and  Dover  (of which
                         Rittereiser is the chairman)  entered into a Settlement
                         Agreement  related to a dispute with David N. Rosensaft
                         ("Rosensaft")  (a  cofounder  of  UTTC)  under  which a
                         consulting  agreement among Ashton,  UTTC and Rosensaft
                         dated  January 19, 1996 was deemed to be void ab initio
                         and each of the parties released and discharged each of
                         the  other  parties  from  any and all  agreements  and
                         claims  which any of them have against any of the other
                         parties.  The Settlement  Agreement  granted  Rosensaft
                         registration  rights under the  Securities Act of 1933,
                         as amended (the  "Securities  Act") under certain terms
                         and  conditions  for the 333,333  shares of UTTC common
                         stock that he owns.  Also on January 30, 1997,  Ashton,
                         Dover,  Rittereiser and Rosensaft  entered into a Stock
                         Purchase Agreement under which Dover and Rittereiser or
                         his or its  designee,  agreed to  purchase  the 750,000
                         shares of Ashton  common  stock owned by  Rosensaft  on
                         April 10, 1997 for a total purchase price of $2,000,000
                         and Ashton granted Dover and  Rittereiser or his or its
                         designees, registration rights under the Securities Act
                         under certain  conditions for the 750,000 shares. On or
                         about April 10, 1997, Ashton advised Rosensaft that the
                         Rosensaft agreement  was null and void and  Rittereiser
                         and Dover declined to purchase the 750,000 shares.

                         On May 1, 1997,  Rosensaft  commenced  an action in the
                         United States District Court for the Southern  District
                         of New York entitled  David N.  Rosensaft v. The Ashton
                         Technology   Group,   Inc.,  UTTC,  Dover  and  Fredric
                         Rittereiser (collectively the "Defendants") No. 97 Civ.
                         3138,   asserting  10  claims  against  the  Defendants
                         including  breach of contract and securities  fraud and
                         seeking,   inter  alia,  specific  performance  of  the
                         Settlement  Agreement  dated January 30, 1997,  between
                         and among the parties or in the alternative, actual and
                         consequential  damages  in an  amount  to be  proved at
                         trial in  addition  to  punitive  damages.  On June 11,
                         1997, Rosensaft served a First Amended Complaint adding
                         three   additional   claims  against  the   Defendants,
                         relating to Ashton's refusal to allow  Rosensaft's sale
                         of his Ashton shares.

                         On June 26, 1997,  the  Defendants  filed their answers
                         and counterclaims  generally denying the allegations of
                         the  First   Amended   Complaint   and   alleging   six
                         counterclaims  against  Rosensaft  including  that  (i)
                         Rosensaft  acquired  1,100,000  shares of Ashton common
                         stock from Ashton on the basis of false and  misleading
                         statements  and common law  fraud,  and (ii)  Rosensaft
                         breached his January 19, 1996 consulting agreement with
                         the Company (the  "Agreement")  by (a) failing to carry
                         out his duties as a consultant under the Agreement, (b)
                         violating the  provisions of the Agreement  restricting
                         his use of confidential information of the Company, (c)
                         failing to adhere to the  noncompetition  provisions of
                         the  Agreement, (d) misappropriating  for  himself  the
                         property  rights  of  UTTC  relating  to the  Company's
                         UTS(TM) and (e) failing to return to UTTC and/or Ashton
                         valuable    property   and    information,    including
                         confidential documents and computer equipment belonging
                         to UTTC and/or Ashton.

                         On  October  22,  1996,  the  Company  entered  into  a
                         settlement   agreement  (the  "Settlement   Agreement")
                         related to a dispute  involving Robert A. Eprile,  John
                         A. Blohm,  Rittereiser,  Dover, F.E. Weimmer, Jr., F.E.
                         Weimmer,  Sr.,  F.E.   Rittereiser,   Sr.,  and  Thomas
                         Rittereiser,  as  trustee  for  Alexis J.  Rittereiser,
                         Amanda  Weimmer  and  John  Weimmer,  Raymond  T.  Tate
                         ("Tate"),  Helen J.  Tate,  as  trustee  for the Andrew
                         Patrick Tate Trust,  Helen J. Tate,  as trustee for the
                         Susan  Katherine Tate  Burrowbridge  Trust and Helen J.
                         Tate, as trustee for the  Elizabeth  Tate Winters Trust
                         (collectively   the  "Tate  Trusts").   The  Settlement
                         Agreement  resolved all  differences  among the parties
                         thereto,  and all parties to the  Settlement  Agreement
                         agreed to release  each of the other  parties  from any
                         and  all  actions  or  claims  arising  out  of  or  in
                         connection  with the matters  covered by the Settlement
                         Agreement.  Pursuant to the  Settlement  Agreement,  on
                         October 22, 1996,  Tate  resigned  from his position as
                         director of the Company  and its  Subsidiaries  and all
                         officer  positions  held by him in the  Company and its
                         Subsidiaries.  Pursuant to the Settlement Agreement, on
                         October 22, 1996, the board of directors of the Company
                         elected Fred S.  Weingard,  executive vice president of
                         UTTC,  to fill the  vacancy on the  Company's  board of
                         directors created by the resignation of Tate.

                         Pursuant   to   the   Settlement   Agreement   and   in
                         consideration of the payment of $250,000 on October 22,
                         1996,  Helen J.  Tate as  trustee  for the Tate  Trusts
                         granted to  Rittereiser or his designee the option (the
                         "Call  Option"),  exercisable at any time from April 2,
                         1997 through June 2, 1997, to purchase 1,000,000 shares
                         of the Company's common stock, par value $.01 per share
                         (the "Common  Stock"),  from the Tate Trust for a total
                         purchase   price  of   $4,500,000.   Pursuant   to  the
                         Settlement  Agreement  and  in  consideration  for  $1,
                         Rittereiser granted Tate the option (the "Put Option"),
                         exercisable  at any time during the five  business days
                         following  the exercise of the Call Option,  to require
                         Rittereiser to purchase from Tate the 107,500 shares of
                         common  stock of the  Company  owned,  beneficially  or
                         otherwise,  by  Tate  for a  total  purchase  price  of
                         $483,750.  Rittereiser did not exercise the Call Option
                         prior to its expiration.

                         As a result of the Call Option,  Rittereiser was deemed
                         to beneficially own 1,000,000  shares, or approximately
                         13.2%, of the  outstanding  Common Stock of the Company
                         at March 31, 1997.

                         In addition,  on October 22, 1996, Tate and the Company
                         also  entered  in a  license  agreement  (the  "License
                         Agreement").  Under the terms of the License Agreement,
                         the  Company   granted  Tate  a  perpetual,   worldwide
                         license, at his own cost, to use, sublicense, reproduce
                         and  make  derivative  works  and  enhancements  of the
                         technology  used by the  Company to  develop  the ATED,
                         including the ATED Key  Management  System,  encryption
                         software and  crypto-server  technology  (the "Licensed
                         Technology")  in  any  field  of  use  other  than  the
                         Financial Services Industry (as such term is defined in
                         the License  Agreement).  In consideration for granting
                         the license,  Tate (or his permitted  assigns under the
                         License  Agreement) must pay a perpetual annual royalty
                         to the Company  equal to 2% of the total gross  revenue
                         earned from the use of the Licensed Technology.  Tate's
                         right to use the Licensed Technology will be exclusive,
                         provided Tate pays to the Company a cumulative  license
                         fee of at least  $100,000  by  October  22,  2000  (the
                         "License Fee").  The License Fee will be reduced by the
                         total amount of royalties paid to the Company. Tate may
                         assign the  license to any person or entity  controlled
                         by Tate.

                         Additionally,  the Company and Tate also entered into a
                         consulting  agreement,  dated  October  22,  1996  (the
                         "Consulting   Agreement").   Under  the  terms  of  the
                         Consulting Agreement,  the Company retained Tate to act
                         as a consultant  to CSI for the period from October 22,
                         1996 to December 31,  1998.  As  compensation  for such
                         services,  for the period from October 22, 1996 through
                         December  31,  1996,  the Company will pay Tate (or, in
                         the event of his death,  his estate)  $40,000.  For the
                         period from October 22, 1996 through December 31, 1998,
                         the Company also will pay to Raymond  Tate  Associates,
                         Inc. $120,000 per annum which was charged to operations
                         during the year ended March 31, 1997 and is included in
                         corporate  restructuring costs. Tate also agreed not to
                         compete  with the  Company  in the  Financial  Services
                         Industry  (as such term is  defined  in the  Consulting
                         Agreement) during the term of the Consulting Agreement.

                         On  October  24,  1996,  the  Securities  and  Exchange
                         Commission  ("SEC")  commenced a private  investigation
                         concerning  the  circumstances   under  which  Ashton's
                         subsidiary,  UTTC, obtained a contract with the PHLX to
                         develop and install an  electronic  trading and pricing
                         system.   Ashton  provided  testimony  to  the  SEC  on
                         February 12, 1997 through its chairman,  Robert Eprile,
                         and has not been contacted  about the matter since that
                         date. In March 1997,  the SEC directed the PHLX to make
                         certain  changes in its  governance  procedures  and in
                         April 1997 the PHLX announced a  reorganization  of its
                         board  of  governors  and  changes  in  its  governance
                         procedures.

13.  SUBSEQUENT          On April 18, 1997,  UTTC completed a private  placement
     EVENTS:             of  $3,000,000  in  notes,   consisting  of  $2,550,000
                         nonconvertible  and  $450,000   convertible  notes,  to
                         accredited   investors.   The  convertible   notes  are
                         convertible  into 450,000  shares of UTTC common stock.
                         These notes bear  interest at 9% per annum,  payable on
                         January 31, annually, and are due January 31, 1999. The
                         Company   received   net   proceeds  of   approximately
                         $2,600,000,   after   deducting  debt  issue  costs  of
                         approximately  $400,000.  The debt issue  costs will be
                         amortized over the term of the notes.

                         The  accompanying  pro forma balance sheet presents the
                         financial  position  of the  Company  as it would  have
                         appeared at March 31, 1997 had the notes been issued on
                         that date.

                         In  May  1997,   the  Company  formed  a  wholly  owned
                         subsidiary,  Gomez Advisors, Inc. ("Gomez"). Gomez will
                         provide banks, broker-dealers,  insurance companies and
                         other financial  intermediaries  with advice concerning
                         the  business  potential  of the Internet as a tool for
                         use in marketing and in the interactive distribution of
                         financial products.  The range of services that will be
                         provided  by  Gomez   include   strategy   development,
                         marketing,    product   and   interface   design,   and
                         implementation planning.

14.  QUARTERLY           In the financial  statements  included in the Company's
     RESULTS             quarterly  filings  on Form  10-QSB  for the year ended
     (UNAUDITED)         March  31,   1997,   the  Company  did  not   eliminate
                         intercompany   transactions   between  Ashton  and  its
                         Subsidiaries.     After    eliminating     intercompany
                         transactions,  the  financial  position  and results of
                         operations  of the Company as of and for the  quarterly
                         periods were as follows:
<TABLE>
<CAPTION>
                                   June 30, 1996                       September 30, 1996                  December 31, 1996
------------------------------------------------------------------------------------------------------------------------------------
                               As                                  As                                  As
                               Previously         As               Previously         As               Previously         As
                               Reported           Restated         Reported           Restated         Reported           Restated
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                <C>              <C>                <C>              <C>                <C>
Assets                         $7,788,861         $7,661,841       $6,075,412         $5,934,120       $4,594,863         $4,372,505
Liabilities                       507,637            380,617          983,629            842,337        1,442,337          1,219,979
Stockholders' Equity                               Unchanged                           Unchanged                           Unchanged
Net Revenue                     1,413,645          1,016,675        1,748,443          1,265,340        1,501,244          1,144,977
Total costs and expenses        2,230,930          1,833,960        4,029,901          3,546,798        2,667,722          2,311,455
Net Loss                                           Unchanged                           Unchanged                           Unchanged
Loss per common share                              Unchanged                           Unchanged                           Unchanged
</TABLE>


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

     On June 3, 1996, the Company,  with the approval of its Board of Directors,
decided  not  to  continue  its   relationship   with  its  independent   public
accountants,  Goldstein Golub Kessler & Company,  P.C. ("GGK"),  which principal
executive  offices  are in New York,  New  York.  GGK  served  as the  Company's
independent  public accountants for the fiscal year ended March 31, 1995 and for
the Offering.  However, as the Company was located in Columbia, Maryland at that
time, the Board of Directors of the Company  decided to engage a  Maryland-based
accounting  firm.  GGK's reports on the financial  statements of the Company did
not  contain  any  adverse  opinion  or  disclaimer  of  opinion,  nor were they
qualified or modified as to uncertainty,  audit scope or accounting  principles.
There were no disagreements  with GGK on any matter of accounting  principles or
practices, financial statement disclosure or auditing scope or procedure, which,
if not  resolved  to the  satisfaction  of GGK,  would  have  caused  it to make
reference to the subject matter of the  disagreement(s)  in connection  with its
report.

     The Baltimore,  Maryland  office of Arthur  Andersen LLP  ("Andersen")  was
engaged as the Company's  independent public accountants  effective June 3, 1996
and performed the audit for the fiscal year ended March 31, 1996. However, after
the principal  executive  offices of the Company were relocated to Philadelphia,
Pennsylvania,  the Company  decided to  re-engage  GGK.  The  decision to change
accountants was approved by the Company's Board of Directors. On April 30, 1997,
Andersen  was  dismissed as the  principal  independent  accountants  engaged in
auditing  the  financial  statements  of the Company.  Andersen's  report on the
financial statements of the Company for the 1996 fiscal year (which was the only
year  for  which   Andersen  acted  as  the  Company's   principal   independent
accountants)  did not contain an adverse  opinion or a disclaimer of opinion and
was not modified as to uncertainty,  audit scope or accounting principles. There
were no  disagreements  with Andersen on any matter of accounting  principles or
practices, financial statement disclosure or auditing scope or procedure, which,
if not resolved to the  satisfaction  of Andersen,  would have caused it to make
reference to the subject matter of the  disagreement(s)  in connection  with its
report.

     On April 30, 1997, GGK was re-engaged as principal independent  accountants
to audit the financial statements of the Company and its subsidiaries. As noted,
GGK was the  Company's  auditor for its fiscal year ended March 31, 1995 and for
Ashton's Offering.

                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The following table sets forth certain  information  concerning each of the
directors and executive officers of Ashton:


       NAME                  AGE         POSITION

Robert A. Eprile             43          Chairman of the Board and Treasurer

Fredric W. Rittereiser       60          President, Chief Executive Officer
                                         and Director

John A. Blohm                51          Executive Vice President,
                                         Secretary and Director

Fred S. Weingard             43          Executive Vice President and Director


     Robert  A.  Eprile is a  co-founder  of UTTC and has been  involved  in the
development  of the UTS(TM)  system since 1993. He has been  President and Chief
Executive  Officer of UTTC since its  inception;  and has been  Chairman  of the
Board and  Treasurer  since  October 1986. He has served as a Director of Ashton
since  October  1995;  from 1986 to 1994,  Mr.  Eprile was President of Eprile &
Associates,  a management  consulting  firm  specializing  in the turn-around of
troubled companies and the application of quantitative techniques to finance and
trading.  Mr. Eprile's  clients have included major U.S.  securities  exchanges,
commercial,  investment  and merchant  banks,  mutual fund and money  management
firms and companies involved in finance, marketing and real estate. From 1992 to
1993,  Mr. Eprile was also Interim  Chief  Operating  Officer of TW ComCorp.,  a
telecommunications   distribution   company   where  he  managed  a   successful
turn-around.  Mr.  Eprile  received an M.B.A.  degree from  Stanford  University
Graduate School of Business and a B.A. degree from Oberlin College.

     Fredric W.  Rittereiser has been President and Chief  Executive  Officer of
Ashton since  October 1996 and a member of the Board since  December  1996.  Mr.
Rittereiser has been active as an independent  management consultant since 1990,
serving mainly companies  involved in the financial  services  industry,  having
served in senior management  positions with a number of investment banking firms
prior  to his  becoming  an  independent  management  consultant.  He  also  has
extensive   experience  in  the  development  and   introduction  of  electronic
securities trading systems, having served as President,  Chief Operating Officer
and Director of Instinet  Corporation,  a publicly held  corporation,  from 1983
through 1985.

     John A. Blohm has served as  Executive  Vice  President  and a Director  of
Ashton since December 1994, is a co-founder of CSI(R) and has served as Chairman
of the Board of  Directors of CSI(R)  since 1983 and is a former  President  and
Chief Executive Officer of CSI(R). He has over 27 years of experience in systems
development  integration and engineering.  Before co-founding  CSI(R), Mr. Blohm
was the Section Head of Real Time  Software for Harris  Corporation,  Government
Systems  Division.  Mr.  Blohm  serves on several  alumni and  advisory  boards,
including  The Johns  Hopkins  University  Board of the  Society of  Engineering
Alumni and the Florida  Institute  of  Technology  School of  Business  Board of
Overseers.  He received  his M.S.  degree  from The  American  University  and a
Bachelor of Engineering Science degree from The Johns Hopkins University.

     Fred S.  Weingard  has been  Executive  Vice  President of  Technology  and
Advanced  Computing  Programs since July 1996 and a Director since October 1996.
Mr.  Weingard was employed at Booz Allen & Hamilton  Inc. from 1986 through June
1996. From June 1991 through June 1996 he served as a principal at that firm. In
addition,  Mr. Weingard is a Professional Engineer in Mechanical Engineering and
is  registered  in New York State and  Washington  State.  Mr.  Weingard was the
founder and  director of Booz  Allen's  Advanced  Computational  Technologies  &
System.  Mr. Weingard is a nationally  recognized  expert in the field of neural
networks and has been an invited  panelist/lecturer  for  government,  industry,
academia, and professional  societies. He has authored over 12 scientific papers
and publications.  He is the sole inventor of a fundamentally new neural network
called  Self-Organizing  Analog fields  (SOAF)  capable of  discovering  natural
structure  in unlabeled  spatiotemporal  data (US patent No.  5,179,596,  issued
January 12, 1993). A second related patent (US patent No. 5,493,688) was granted
to Mr.  Weingard on February  20,  1996.  Mr.  Weingard  is also  credited  with
inventing five premiere Booz Allen proprietary  technologies/products.  He has a
degree in Engineering  Physics and an M.E.  degree in Nuclear  Engineering  from
Cornell  University,  and  an  M.S.  degree  in  Computer  Science  from  George
Washington University.

ITEM 10.  EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

     The  following  table  sets forth the  amount of all  compensation  paid by
Ashton  during the years  ended  March 31,  1996 and March 31,  1997 to Ashton's
Chairman Robert Eprile,  former Chairman,  President and Chief Executive Officer
Raymond T. Tate, and to Ashton's new Chairman, since October 26, 1996, Robert A.
Eprile,  Ashton's  President and Chief Executive Officer Fredric W. Rittereiser,
Executive  Vice  President  John A. Blohm,  and Executive Vice President Fred S.
Weingard.

<PAGE>

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                                                   ANNUAL COMPENSATION                                     LONG-TERM
COMPENSATION                                       -------------------                                     ---------
------------                                                                             RESTRICTED    NUMBER      LTIP      ALL
NAME AND                                                                                   STOCK         OF       PAYOUTS   OTHER
PRINCIPAL POSITION              YEAR     SALARY($)  FRINGE($)   OTHER($)      TOTAL        AWARDS      OPTIONS      ($)     COMP.($)
-------------------------       ----     ---------  ---------   --------      -----      ----------    -------    -------  -------
<S>                             <C>      <C>        <C>         <C>           <C>        <C>          <C>         <C>      <C>
Raymond T. Tate,                1996      50,000       -0-       78,808(1)    128,808      -0-            -0-        -0-      -0-
former Chairman,                1997     143,937     4,500      531,063(2)    679,500      -0-            -0-        -0-      -0-
President, and Chief
Executive Officer

Robert A. Eprile,(3)            1996      37,500       -0-          -0-        37,500      -0-(4)         -0-        -0-      -0-
Chairman, Ashton                1997      92,308       -0-          -0-        92,308      -0-(4)         -0-        -0-      -0-
President and CEO, UTTC

Fredric W. Rittereiser,(3)      1996         -0-       -0-          -0-           -0-      -0-            -0-        -0-      -0-
President and CEO, Ashton       1997         -0-       -0-          -0-           -0-      -0-            -0-        -0-      -0-
Chairman, UTTC

John A. Blohm, (3)              1996     115,773       -0-          -0-       115,773      -0-        350,000(5)     -0-      -0-
Executive Vice President        1997      76,945     1,410          -0-        78,355      -0-            -0-        -0-      -0-

Fred S. Weingard,               1996         -0-       -0-          -0-           -0-      -0-            -0-        -0-      -0-
Executive Vice President        1997     215,192       -0-          -0-       215,192      -0-        100,000(6)     -0-      -0-
</TABLE>
---------------------------
(1)  Represents  payment  of the  premium  of a life  insurance  policy  for the
     benefit of the family of Mr. Tate in the amount of $1,500,000.

(2)  Represents  payments  of the  premium  of a life  insurance  policy for the
     benefit  of the  family  of Mr.  Tate  until  the  date  of the  Settlement
     Agreement on October 22, 1996 and certain  expenditures  that benefited Mr.
     Tate  personally  for which he was  provided  a Form 1099 and  $252,000  in
     additional  funds  shown in the  Restructure  Costs  agreed  to  under  the
     Settlement  Agreement of October 22, 1996, of which $53,269 was paid in the
     fiscal year ended  March 31,  1997.  This figure does not reflect  $250,000
     paid to Mr. Tate by Mr. Rittereiser and The Dover Group for a "Call Option"
     on the Tate stock per the  Settlement  Agreement  pursuant  to the terms of
     which Mr. Tate resigned.

(3)  Robert A. Eprile,  Fredric W. Rittereiser and John A. Blohm volunteered not
     to take any cash compensation from the Company since taking over management
     of the Company in November 1996.

(4)  Does not include  1,100,000  shares of Common Stock  received by Mr. Eprile
     from Ashton in exchange  for  1,666,667  shares of common  stock of UTTC on
     October 25, 1995.

(5)  On January 31, 1996,  Ashton's Board of Directors granted Mr. Blohm options
     to purchase 350,000 shares of Common Stock at a purchase price of $4.00 per
     share.  These options shall vest on April 1, 1997 and become exercisable in
     annual  installments of 70,000 options on April 1, 1997,  70,000 options on
     April 1, 1998 and  210,000  options  on April 1,  1999 and shall  expire on
     April 1, 2006.

(6)  On June 21,  1996,  Mr.  Weingard was granted  options to purchase  100,000
     shares of Common  Stock at a  purchase  price of $14.25  per  share.  These
     options  shall  vest on April 1,  1997 and  become  exercisable  in  annual
     installments of 20,000 options on April 1, 1997, 20,000 options on April 1,
     1998 and 60,000 options on April 1, 1999 and shall expire on April 1, 2006.
     These  options  will  terminate  in the  event  that  Mr.  Weingard  is not
     continuously  employed by the Company  from the date of grant  through June
     21, 1997.

     Since  inception,  Ashton  has not  granted  stock  appreciation  rights or
options  (except those  granted to John A. Blohm and Fred S.  Weingard) and does
not have a defined benefit or actuarial plan.

OPTION GRANTS TABLE

     The  following  table sets forth  information  with  respect to  individual
grants of stock  options  during  the year ended  March 31,  1997 of each of the
executive officers named in the summary compensation table above. Ashton did not
grant any stock options or stock appreciation rights during the year ended March
31, 1996 except for stock  options to John A. Blohm and did not grant any in the
year ended March 31, 1997 except for stock options to Fred S. Weingard.

<TABLE>
<CAPTION>
                     OPTION GRANTS IN YEAR ENDED MARCH 31, 1997
                                                                                                      POTENTIAL REALIZABLE
                                                                                                       AT ASSUMED ANNUAL
                                                                                                      RATES OF STOCK PRICE
                                                                                                        APPRECIATION FOR
                                      INDIVIDUAL GRANTS                                                  OPTION TERM(2)
----------------------------------------------------------------------------------------------       ---------------------
                                        % OF TOTAL
                                         OPTIONS
                                        GRANTED TO
                                        EMPLOYEES
                         OPTIONS         IN YEAR       EXERCISE
                         GRANTED          ENDED          PRICE        EXPIRATION
     NAME                   (#)         3/31/97(1)     ($/SHARE)         DATE            5%($)       10%($)
------------------      -----------     ---------      ---------      ----------         -----       ------
<S>                     <C>             <C>            <C>            <C>                <C>         <C>
Fred S. Weingard          100,000          100%          14.25          4/01/06           N/A         N/A          N/A
</TABLE>

(1)  The percentage of total options  granted to employees in the fiscal year is
     based upon options granted to all officers, directors, and employees.

(2)  The potential  realizable  value of each grant of options  assumes that the
     market  price of the  Common  Stock  appreciates  in value from the date of
     grant  to the end of the  option  term at  annualized  rates of 5% and 10%,
     respectively,  and after  subtracting the exercise price from the potential
     realizable value.

AGGREGATED  OPTION  EXERCISES  IN YEAR ENDED  MARCH 31, 1997 AND YEAR END OPTION
VALUES

     No executive officer named in the Summary  Compensation Table exercised any
options  during  the  years  ended  March  31,  1996 and  March  31,  1997.  The
information  provided in the table below with  respect to each of the  executive
officers  named in the Summary  Compensation  Table provides  information  which
reflects that no options were exercised during the year ended March 31, 1997 and
provides  information  as to an  assumed  value  of $4.50 at the end of the year
ended March 31, 1997 and value of unexercised options.

<TABLE>
<CAPTION>
                                                                        NUMBER OF
                            SHARES                                 UNEXERCISED OPTIONS              VALUE OF UNEXERCISED
                          ACQUIRED ON          VALUE                   AT FY-END (#)                OPTIONS AT FY-END ($)
    NAME                   EXERCISES        REALIZED ($)        EXERCISABLE/UNEXERCISABLE        EXERCISABLE/UNEXERCISABLE
--------------------      -----------       ------------        -------------------------        -------------------------
<S>                       <C>               <C>                 <C>                              <C>
John A. Blohm                 -0-               -0-                    -0-/350,000                        -0-/-0-

Fred S. Weingard              -0-               -0-                    -0-/100,000                        -0-/-0-
</TABLE>


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ASHTON

     The following table sets forth certain information regarding the beneficial
ownership  of the Common Stock by (i) each person who is known by the Company to
own  beneficially  more than five  percent  of the  Common  Stock,  (ii) each of
Ashton's officers and directors and (iii) all officers and directors as a group:

                                               NUMBER OF SHARES OF
                                                   COMMON STOCK        PERCENT
NAME /ADDRESS OF STOCKHOLDER                     PRESENTLY OWNED       OWNED (1)

John A. Blohm                                        82,500(2)          1.1(2)
c/o The Ashton Technology Group, Inc.
1900 Market Street
Suite 701
Philadelphia, PA  19103

Robert A. Eprile                                       750,000             9.9
c/o The Ashton Technology Group, Inc.
1900 Market Street
Suite 701
Philadelphia, PA  19103

Fredric W. Rittereiser                                   -0-(3)            -0-
c/o The Ashton Technology Group, Inc.
1900 Market Street
Suite 701
Philadelphia, PA  19103

Fred S. Weingard                                      20,000(4)          0.3(4)
c/o The Ashton Technology Group, Inc.
1900 Market Street
Suite 701
Philadelphia, PA  19103

All officers and directors of the                     852,500(5)        11.1(5)
Company and its subsidiaries as a
group (4 persons)

Raymond T. Tate                                     1,107,500(6)          14.6
17299 Pond Road
Ashton, Maryland  20861

The Dover Group, Inc.                               1,078,500(7)        13.8(7)
70 East Water Street
Toms River, NJ  08753

David N. Rosensaft                                    750,000(8)           9.9
214 East 68th Street
Suite 120
New York, NY 10021

Medford Financial Inc.                                400,000(9)           5.3
26 Highpoint Drive
Medford, NJ 08055


(1)  Assumes 7,562,500 shares of Common Stock outstanding.

(2)  Includes 70,000 shares of Common Stock issuable upon exercise of options to
     purchase Common Stock held by John A. Blohm, which are exercisable on April
     1, 1997.  Pursuant to  Securities  Exchange  Act Rule  13d-3(d)(1)(i),  the
     70,000 shares issuable upon exercise of options shall be deemed outstanding
     for the purpose of computing  the  percentage of  outstanding  Common Stock
     owned  by John A.  Blohm.  Thus,  7,632,500  shares  of  Common  Stock  are
     outstanding for purposes of computing the percentage of outstanding  Common
     Stock owned by John A. Blohm.

(3)  See Item 12: Certain Relationships and Related Transactions.

(4)  Includes 20,000 shares of Common Stock issuable upon exercise of options to
     purchase  Common Stock held by Fred S. Weingard,  which are  exercisable on
     April 1, 1997. Pursuant to Securities Exchange Act Rule 13d-3(d)(1)(i), the
     20,000 shares issuable upon exercise of options shall be deemed outstanding
     for the purpose of computing  the  percentage of  outstanding  Common Stock
     owned by Fred S.  Weingard.  Thus,  7,582,500  shares of  Common  Stock are
     outstanding for purposes of computing the percentage of outstanding  Common
     Stock owned by Fred S. Weingard.

(5)  Includes  70,000  shares and 20,000  shares of Common Stock  issuable  upon
     exercise of options to purchase Common Stock held by John A. Blohm and Fred
     S. Weingard,  respectively,  as explained in footnotes 2 and 4 above, which
     are exercisable on April 1, 1997.  Pursuant to Securities Exchange Act Rule
     13d-3(d)(1)(i),  the 90,000 shares  issuable upon exercise of options shall
     be deemed  outstanding  for the  purpose of  computing  the  percentage  of
     outstanding Common Stock owned by all officers and directors of the Company
     and its subsidiaries as a group. Thus, 7,652,500 shares of Common Stock are
     outstanding for purposes of computing the percentage of outstanding  Common
     Stock  owned  by  all  officers  and  directors  of  the  Company  and  its
     subsidiaries as a group.

(6)  Includes  1,000,000 shares of Common Stock held in trust for the benefit of
     three of Mr.  Tate's  adult  children for which his wife serves as trustee.
     Mr. Tate disclaims beneficial ownership of such shares of Common Stock.

(7)  Includes  240,000  shares of Common  Stock  issuable  upon  exercise of the
     warrants held by Dover.  Also includes  325,000 shares of Common Stock held
     by members of the  extended  Rittereiser  and Weimmer  families  and family
     trusts that  control  Dover held as follows:  (i) Dr. F. E.  Weimmer,  Jr.,
     President and Director of Dover,  owns 10,000 shares of Common Stock,  (ii)
     F. E. Weimmer, Sr., Director of Dover, owns 130,000 shares of Common Stock,
     (iii) F. E.  Rittereiser,  Sr.,  Director of Dover,  owns 75,000  shares of
     Common Stock, (iv) T. Rittereiser,  Director of Dover, holds 100,000 shares
     of Common  Stock as trustee  for A. J.  Rittereiser  and  10,000  shares of
     Common  Stock  as  trustee  for A.  Weimmer  and J.  Weimmer.  Pursuant  to
     Securities  Exchange Act Rule  13d-3(d)(1)(i),  the 240,000 shares issuable
     upon exercise of warrants  shall be deemed  outstanding  for the purpose of
     computing the percentage of outstanding  Common Stock owned by Dover. Thus,
     7,802,500  Shares of Common Stock are outstanding for purposes of computing
     the percentage of outstanding Common Stock owned by Dover.

(8)  See Item 3: Legal Proceedings.

(9)  Consists of Shares of Common Stock beneficially owned by Vincent J. Casella
     (152,000 shares),  Vincent Vendette (152,000 shares), Louis Morales (76,000
     shares),  and Robert Eme (20,000  shares),  each of whom is a principal  of
     Medford Financial, Inc.

UTTC

          The  following  table sets forth  certain  information  regarding  the
beneficial ownership of UTTC's common stock as of the date hereof by (i) each of
the  Company's  executive  officers  and  directors;  and (ii) all  officers and
directors as a group.

                                   NUMBER OF SHARES OF UTTC       APPROXIMATE
                                        COMMON STOCK           PERCENT OF UTTC'S
NAME AND ADDRESS OF STOCKHOLDER        PRESENTLY OWNED         OUTSTANDING STOCK
-------------------------------    ------------------------    -----------------
Robert A. Eprile                           333,333                    6.7%


All officers and directors of                 ___                     ___
the Company and its subsidiaries
as a group


CSI

     No officers of the Company are  beneficial  owners of CSI's common stock as
of the date hereof.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RAYMOND T. TATE

     On October 22,  1996,  Ashton  entered  into a  settlement  agreement  (the
"Settlement  Agreement")  with  Robert A.  Eprile,  John A.  Blohm,  Fredric  W.
Rittereiser ("Mr. Rittereiser"),  The Dover Group, Inc., F.E. Weimmer, Jr., F.E.
Weimmer,  Sr.,  F.E.  Rittereiser,  Sr. and Thomas  Rittereiser,  as trustee for
Alexis J. Rittereiser, Amanda Weimmer and John Weimmer (collectively, the "Group
Members"),  Raymond T. Tate ("Mr.  Tate"),  Helen J.  Tate,  as trustee  for the
Andrew  Patrick Tate Trust,  Helen J. Tate,  as trustee for the Susan  Katherine
Tate  Burrowbridge  Trust and Helen J. Tate, as trustee for the  Elizabeth  Tate
Winters  Trust  (collectively,  the "Tate  Trusts").  The  Settlement  Agreement
resolved  all  differences  among the  parties  thereto,  and all parties to the
Settlement  Agreement  agreed to release each of the other  parties from any and
all actions or claims arising out of or in connection  with the matters  covered
by the Settlement Agreement.  Pursuant to the Settlement  Agreement,  on October
22, 1996, Mr. Tate resigned from his position as director of the Company and its
subsidiaries  and  all  officer  positions  held by him in the  Company  and its
subsidiaries.  In addition, pursuant to the Settlement Agreement, on October 22,
1996, the Board of Directors of the Company elected Fred S. Weingard,  Executive
Vice President of UTTC, to fill the vacancy on the Company's  Board of Directors
created by the resignation of Mr. Tate.

     Pursuant to the Settlement Agreement and in consideration of the payment of
$250,000,  on October 22, 1996,  Helen J. Tate,  as trustee for the Tate Trusts,
granted to Mr.  Rittereiser  or his  designee  the option  (the "Call  Option"),
exercisable  at any time from April 2, 1997  through  June 2, 1997,  to purchase
1,000,000 shares of the Common Stock,  from the Tate Trusts for a total purchase
price of $4,500,000.  Pursuant to the Settlement  Agreement and in consideration
for $1,  Mr.  Rittereiser  granted  Mr.  Tate the  option  (the  "Put  Option"),
exercisable  at any time during the five business days following the exercise of
the Call  Option,  to require  Mr.  Rittereiser  to  purchase  from Mr. Tate the
107,500 shares of common stock of the Company owned,  beneficially or otherwise,
by Mr. Tate for a total purchase price of $483,750. The Put Option is assignable
by Mr. Rittereiser.

     The Call Option was not  exercised  and  expired on June 3, 1997.  Mr. Tate
subsequently filed a Schedule 13D with the SEC, indicating his intention to sell
the outstanding Common Stock of the Company.

     On October 22,  1996,  Mr. Tate and the Company also entered into a license
agreement (the "License  Agreement").  Under the terms of the License Agreement,
the Company granted to Mr. Tate a perpetual,  exclusive  (subject to the payment
by Mr.  Tate of a license  fee)  worldwide  license,  at his own  cost,  to use,
sublicense,  reproduce  and  make  derivative  works  and  enhancements  of  the
technology  used by the  Company to develop  the  Ashton  Technology  Encryption
Devices ("ATED"),  including the ATED Key Management System, encryption software
and  crypto-server  technology  (the "Licensed  Technology") in any field of use
other  than the  Financial  Services  Industry  (as such term is  defined in the
License Agreement).  In consideration for granting the license, Mr. Tate (or his
permitted  assigns  under the License  Agreement)  must pay a  perpetual  annual
royalty to the Company equal to 2% of the total gross  revenues  earned from the
use of the Licensed Technology.  Mr. Tate's right to use the Licensed Technology
will be  exclusive,  provided Mr. Tate pays to the Company a cumulative  license
fee of at least  $100,000 by October 22, 2000 (the "License  Fee").  The License
Fee will be reduced by the total  amount of royalties  paid to the Company.  Mr.
Tate may assign the license to any person or entity controlled by Mr. Tate.

     The Company and Mr. Tate also entered into a  consulting  agreement,  dated
October 22, 1996 (the "Consulting Agreement"). Under the terms of the Consulting
Agreement,  the Company  retained Mr. Tate to act as a consultant to CSI for the
period from  October 22, 1996 to December  31, 1998.  As  compensation  for such
services,  for the period from October 22, 1996 through  December 31, 1996,  the
Company will pay Mr. Tate (or, in the event of his death,  his estate)  $40,000.
For the period from October 22, 1996 through December 31, 1998, the Company also
will pay to Raymond Tate  Associates,  Inc.  $120,000  per annum.  Mr. Tate also
agreed not to compete with the Company in the  Financial  Services  Industry (as
such  term is  defined  in the  Consulting  Agreement)  during  the  term of the
Consulting Agreement.

     On October 22, 1996,  after closing the  transactions  contemplated  by the
Settlement Agreement,  the  newly-constituted  Board of Directors of the Company
convened a meeting and took  certain  actions,  including  authorization  of the
Company to reimburse the Group Members for any and all legal  services  rendered
on behalf of the Group Members in connection  with or relating to the Settlement
Agreement, transactions contemplated thereby and the disputes settled thereby.

DAVID N. ROSENSAFT

     On January 30, 1997, Ashton, along with UTTC, Mr. Rittereiser and The Dover
Group,  Inc.  ("Dover") (of which Mr.  Rittereiser  was previously the Chairman)
entered into a Settlement  Agreement (the "Rosensaft  Agreement")  with David N.
Rosensaft  ("Rosensaft")  (a  co-founder  of UTTC)  under  which the  consulting
agreement  between Ashton,  UTTC and Rosensaft dated January 19, 1996 was deemed
to be void ab initio and each of the parties released and discharged each of the
other  parties  from any and all  agreements  and claims  which any of them have
against any of the other  parties.  The Rosensaft  Agreement  granted  Rosensaft
registration   rights  under  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act") under certain terms and  conditions for the 333,333 shares of
UTTC  common  stock  that he owns.  Also on January  30,  1997,  Ashton,  Dover,
Rittereiser  and Rosensaft  entered into a Stock Purchase  Agreement under which
Dover, Rittereiser or his or its designee, agreed to purchase the 750,000 shares
of Ashton common stock owned by Rosensaft on April 10, 1997 for a total purchase
price  of  $2,000,000  and  Ashton  granted  Dover,  Rittereiser  or  his or its
designee,  registration rights under the Securities Act under certain conditions
for the 750,000  shares.  On or about April 10, 1997,  Ashton advised  Rosensaft
that the  Rosensaft  Agreement  was null and  void,  and  Rittereiser  and Dover
declined to purchase the 750,000 shares. On May 1, 1997,  Rosensaft commenced an
action in the United States District Court for the Southern District of New York
entitled "David N. Rosensaft v. The Ashton  Technology  Group,  Inc.,  Universal
Trading  Technologies  Corporation,   The  Dover  Group,  Inc.  and  Fredric  W.
Rittereiser" No. 97 Civ. 3138. See Item 3: Legal Proceedings, above.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

      (a)  EXHIBITS

                                                                    Sequentially
Exhibit                                                               Numbered
No.                       Description                                   Page
-------                   -----------                               ------------

1         Form of Underwriting Agreement between The Ashton Technology      *
          Group,   Inc.   ("Ashton")   and   First   United   Equities
          Corporation. (1)

1.1       Form of Consulting Agreement. (1)                                 *

2         Agreement  and Plan of  Reorganization,  dated as of October      *
          25, 1995, among Ashton, Universal Trading Technologies Corp.
          ("UTTC"),  Robert A. Eprile  ("Eprile"),  David N. Rosensaft
          ("Rosensaft"),  The Dover Group, Inc.  ("Dover") and Medford
          Financial Inc. (1)

3.        Certificate  of  Incorporation  of Ashton filed February 16,      *
          1994. (1)

3.1       Certificate  of Amendment of Ashton filed  October 27, 1995.      *
          (1)

3.1A      Certificate  of Amendment of Ashton filed  December 7, 1995.      *
          (1)

3.2       Certificate  of Amendment of Ashton filed in February  1996.      *
          (1)

3.3       Bylaws of Ashton. (1)                                             *

3.4       Amendment to Bylaws of Ashton,  dated October 22, 1996.  See      50
          (3).

4.        Specimen of Common Stock. (1)                                     *

4.1       Form  of  Representative's   Warrant  Agreement   (including      *
          Specimen of Redeemable Common Stock Purchase Warrant). (1)

4.2       Form of Warrant Agreement  (including Specimen of Redeemable      *
          Common Stock Purchase Warrant). (1)

4.3A      Form of 9% Subordinated  Non-Convertible  Promissory Note        52
          issued  pursuant  to UTTC Confidential Private Placement
          dated December 26, 1996.

4.3B      Form of 9% Subordinated  Convertible  Promissory Note            60
          convertible into Shares of UTTC Common Stock at $1.00 per
          share  issued  pursuant  to UTTC Confidential Private Placement
          dated December 26, 1996.

5         Opinion re: legality. (1)                                         *

10        Agreement,  dated as of September 18, 1995, between UTTC and      *
          the Philadelphia Stock Exchange. (1)

10.1      Employment  Agreement  dated as of January 1, 1996,  between      *
          Ashton and Raymond T. Tate ("Tate"). (1)

10.2      Employment Agreement,  dated as of January 22, 1996, between      *
          UTTC and Eprile. (1)

10.3      Agreement  dated  October  27,  1995,  between   Information      *
          Security Systems Incorporated and Ashton. (1)

10.4      Agreement,  dated as of March 7, 1995, among Dover,  Ashton,      *
          Eprile and Rosensaft. (1)

10.5      Agreement, dated as of November 29, 1995, between Ashton and      *
          Computer Science Innovations, Inc. ("CSI"). (1)

10.5A     Agreement,  dated  February 7, 1996 between  Ashton and CSI.      *
          (1)

10.6      Agreement,  dated as of January 19, 1996, among Ashton, UTTC      *
          and Rosensaft. (1)

10.7      Escrow  Agreement,  dated  as of  January  19,  1996,  among      *
          Ashton, Rosensaft and First United Equities Corporation. (1)

10.8      Stock  Purchase  Agreement,  dated as of January  19,  1996,      *
          between Ashton and Rosensaft. (1)

10.9      Assignment and  Termination  Agreement,  dated as of January      *
          19, 1996, among Dover, Ashton, Eprile and Rosensaft. (1)

10.10     Promissory  note, dated as of January 19, 1996, in principal      *
          amount of $300,000  issued by Ashton in favor of Rosensaft.
          (1)

10.11     Agreement,  dated as of August 24, 1995,  between  Motorola,      *
          Inc. and CSI, as amended. (1)

10.12     Letter, dated December 8, 1995, from CSI to Ashton regarding      *
          issuance of Common Stock of CSI. (1)

10.12A    Letter, dated March 20, 1996, from George Milligan to Ashton      *
          regarding the transfer of Common Stock of CSI. (1)

10.13     Sample CSI Stockholder  Letters,  dated February 6, 1995 and      *
          January 18, 1996,  from Ashton to certain CSI  Shareholders.
          (1)

10.13A    Sample CSI  Stockholder  Letter,  dated March 27, 1996, from      *
          Ashton to certain CSI Shareholders. (1)

10.13B    Sample CSI  Stockholder  Letter dated April 25,  1996,  from      *
          Ashton to certain CSI Shareholders. (1)

10.14     Agreement,  dated April 30, 1995,  between Dover and Medford      *
          regarding consulting services to UTTC. (1)

10.15     Lease Agreement,  dated September 8, 1995,  between Columbia      *
          Mall, Inc. and Ashton. (1)

10.16     Lease  Agreement,  dated April 22,  1992,  between  Overlook      *
          Development, Inc. and CSI. (1)

10.17     Promissory Note, dated January 31, 1996, in principal amount      *
          of $150,000 issued by Ashton in favor of John A. Blohm. (1)

10.18     Form of 10% Subordinated Promissory Note due April 10, 1997,      *
          dated  October  10,  1995,  issued by Ashton  pursuant  to a
          private placement. (1)

10.19     Form of 10%  Subordinated  Convertible  Promissory  Note due      *
          October 10, 1998 dated  October 10,  1995,  issued by Ashton
          pursuant to a private  placement  (including Form of Warrant
          issued upon  conversion of the note not pursuant to a public
          offering). (1)

10.20     Promissory  Note, dated October 1, 1995, in principal amount      *
          of $43,430  issued by UTTC in favor of Dover and  guaranteed
          by Ashton. (1)

10.21     Promissory Note, dated October 26, 1995, in principal amount      *
          of $100,000 issued by Ashton in favor of Medford. (1)

10.22     Promissory  Note, dated October 1, 1995, in principal amount      *
          of $615,175.83 issued by Ashton in favor of Dover. (1)

10.23     Common  Stock  Purchase  Warrant of  Ashton,  dated June 27,      *
          1995, held by Dover. (1)

10.24     Common Stock  Purchase  Option of Ashton,  dated January 30,      *
          1996, held by John A. Blohm. (1)

10.25     Letter  agreement,  dated March 21, 1996, from Ashton to CSI      *
          regarding  software  for  ATED,  including  original  letter
          agreement of December 11, 1995 as Exhibit A thereto. (1)

10.26     Promissory Note, dated April 16, 1996 in principal amount of      *
          $250,000 issued by Ashton in favor of Ronnie J. Adams. (1)

10.27     Pledge and Security Agreement, dated April 15, 1996, between      *
          Dover and Ronnie J. Adams. (1)

10.28     Option to purchase Common Stock, dated as of March 15, 1996,      *
          between Rosensaft and Dover. (1)

10.29     Option to Purchase Common Stock, dated as of March 15, 1996,      *
          between Eprile and Dover. (1)

10.29A    Agreement  dated April 24, 1996 between  Dover and Robert A.      *
          Eprile relating to Exhibit 10.29. (1)

10.30     Form of Assignment Agreement,  dated April 16, 1996, between      *
          Dover and Antebe Investment Gp. Limited. (1)

10.31     Employment  Agreement  between  Fred S.  Weingard  and UTTC,      *
          dated June 21, 1996. (4)

10.32     Settlement  Agreement,  dated October 22, 1996, by and among      *
          the Company,  Raymond T. Tate, Helen J. Tate, as trustee for
          the Andrew Patrick Tate Trust, Helen J. Tate, as trustee for
          the Susan Katherine Tate Burrowbridge  Trust, Helen J. Tate,
          as trustee for the  Elizabeth  Tate Winters Trust and Robert
          A. Eprile, John A. Blohm, Fredric W. Rittereiser,  The Dover
          Group,  Inc., F.E.  Weimmer,  Jr., F.E.  Weimmer,  Sr., F.E.
          Rittereiser,  Sr. and,  Thomas  Rittereiser,  as trustee for
          Alexis J. Rittereiser, Amanda Weimmer and John Weimmer. (3)

10.33     License  Agreement  dated  October  22,  1996,  between  the      *
          Company and Tate. (3)

10.34     Consulting  Agreement  dated  October 22, 1996,  between the      *
          Company and Tate. (3)

10.35     Settlement  Agreement by and among Ashton,  UTTC,                 *
          Rittereiser,  Dover and Rosensaft, dated January 30, 1997.
          (5)(7)

10.36     Stock  Purchase  Agreement  by and among  Ashton,  Dover,         *
          Rittereiser, and Rosensaft, dated January 30, 1997. (5)

10.37     Loan   Agreement   between   CSI  and  Sun  Bank,   National      70
          Association  dated January 8, 1991, as amended  September 5,
          1996.

10.38     Short-Term  Loan  and  Security   Agreement  between  Ashton     138
          (Borrower) and CSI (Lender), dated February 18, 1997.

10.39     Tax  Allocation  Agreement,  between Ashton, CSI and UTTC,       166
          dated March 27, 1997.

10.40     Letters from Ashton to Alliant  Techsystems,  dated  January     170
          23, 1996, March 29, 1996 and August 1, 1996.

10.41     Contracts between Motorola, Inc. and CSI: (1) Task Order No.     178
          1,  effective  January 16, 1996;  (2) Change  Order/Contract
          Amendment  No.  2,  dated  February  26,  1996;  (3)  Change
          Order/Contract  Amendment No. 3, dated January 12, 1996; (4)
          Change  Order/Contract  Amendment  No. 4,  dated  August 12,
          1996; (5) Contract  between  Motorola,  Inc.  Government and
          Space Technology Group Satellite Communications Division and
          CSI, effective January 1, 1997.

10.42     Letters  from Ashton to CSI re:  ATED,  dated May 15,  1996,     199
          December 16, 1996, February 5, 1997.

10.43     Letters  from  Ashton to CSI re:  Universal  Trading  System     206
          ("UTS(TM)"),  dated March 22, 1996,  May 15, 1996,  December
          16, 1996, February 5, 1997.

16.1      Letter for Changes in  Registrant's  Certifying  Accountant,      *
          dated June 18, 1996. (2)

16.2      Letter  from  Arthur  Andersen  LLP  to the  Securities  and      *
          Exchange   Commission   regarding   change   in   Certifying
          Accountant, dated May 5, 1997 and received May 14, 1997. (8)

21        Subsidiaries of Ashton.                                          213

23        Consent of Goldstein Golub Kessler & Company, P.C. (1)            *

23.1      Consent of Lester Morse, P.C. (Included in Exhibit 5). (1)        *

23.2      Consents  of Dr.  Ruth M. Davis and Vice  Admiral  Albert J.      *
          Baciocco, Jr. (1)

27        Financial Data Schedule.                                         215

99.1      Press Release of the Company re: Raymond Tate Steps Dover as      *
          Chairman and President of Ashton, dated October 1996. (3)

99.2      Press Release of the Company, dated April 8, 1997 re: Ashton      *
          Completes  Development of Initial Online Trading Product for
          the Financial Securities Industry. (6)


*    Incorporated  by reference as indicated  in the  applicable  footnote.

(1)  Incorporated by reference to the Company's Form SB-2 Registration Statement
     No. 33-1182.

(2)  Incorporated by reference to Form 8-K, filed June 18, 1996.

(3)  Incorporated by reference to Form 8-K, dated October 22, 1996.

(4)  Incorporated  by reference to Form 10-QSB,  for the period ended  September
     30, 1996.

(5)  Incorporated by reference to Form 10-QSB, for the period ended December 31,
     1996.

(6)  Incorporated by reference to Form 8-K, dated April 15, 1997.

(7)  Incorporated  by reference to Amendment No. 1 to Form 10-QSB for the period
     ended December 31, 1996, filed April 18, 1997.

(8)  Incorporated by reference to Form 8-K, dated April 30, 1997.

          (b)  REPORTS ON FORM 8-K

     The Company filed no Reports on Form 8-K during the quarterly  period ended
March 31, 1997.

<PAGE>
                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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 as of July 14, 1997.

                                    THE ASHTON TECHNOLOGY GROUP, INC.


                                    By:  /s/ Fredric W. Rittereiser
                                       --------------------------------------
                                       Fredric W. Rittereiser
                                       Chief Executive Officer, President and
                                       Director

                                    By:  /s/ Robert A. Eprile
                                       --------------------------------------
                                       Robert A. Eprile
                                       Chairman of the Board and Treasurer
     
     Pursuant to the  requirement of the Securities  Exchange Act of 1934,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated as of July 14, 1997.


/s/ Fredric W. Rittereiser                /s/ Robert A. Eprile
---------------------------------         -------------------------------------
Fredric W. Rittereiser                    Robert A. Eprile
Chief Executive Officer,                  Chairman of the Board and Treasurer
   President and Director


/s/ John A. Blohm                         /s/ Fred S. Weingard
----------------------------------        -------------------------------------
John A. Blohm                             Fred S. Weingard
Executive Vice President                  Executive Vice President and Director
   and Director