UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                 FORM 10-KSB/A
      [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                    For the fiscal year ended June 30, 1998
                                       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 0-16730

                         MARKETING SERVICES GROUP, INC.
                         ------------------------------
                 (Name of small business issuer in its charter)

               Nevada                                   88-0085608
               ------                                   ----------
    (State or other jurisdiction of                (I.R.S. Employer 
      incorporation or organization)                Identification No.)
 
        333 Seventh Avenue, 20th Floor
            New York, New York                           10001         
            ------------------                           -----         
   (Address of principal executive offices)            (Zip Code)

Issuer's telephone number, including area code:              (212) 594-7688
                                                             --------------
Securities registered pursuant to Section 12(b) of the Act:       None
                                                             --------------
Securities registered pursuant to Section 12(g) of the Act:       None
                                                             --------------

                     Common Stock, par value $.01 per share
                                (Title of class)

Check  whether  the Issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months (or for such shorter  period that the  Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
                                  Yes X   No
                                     ---    ---
Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  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.  [ ]

The issuer's  revenues for its fiscal year ended June 30, 1998 are $51,174,063.

As of October 19, 1998, the aggregate market value of the voting stock held by
non-affiliates  of the  Registrant was approximately $29,755,934.

As of October 19, 1998, there were 13,023,005 shares of the Registrant's common
stock  outstanding.

Transitional  Small  Business Disclosure Format (check one):  Yes     No X
                                                                 ---    ---


<PAGE>
Introduction
------------

On September 28, 1998, Marketing Services Group, Inc. ("MSGI" or the "Company"),
filed with the Securities and Exchange  Commission (the "Commission") its Annual
Report on Form  10-KSB  for its  fiscal  year  June 30,  1998  (the  "1998  Form
10-KSB").  The  information  called for by items 9, 10, 11 and 12 of Part III of
Form 10-KSB was not  included  in the body of the 1998 Form 10KSB as filed,  but
was  incorporated  by  reference  to the  Company's  Proxy  Statement  which was
expected to be filed with the Commission within the 120-day period.  Because the
Company is not in fact filing its Proxy  Statement  with in such 120 day period,
this Form 10-KSB/A amends the 1998 Form 10-KSB by deleting therefrom the caption
and first paragraph and  substituting  therefore the following  replacements for
Items 9, 10, 11 and 12.


Item 9 - Executive Officers and Directors of the
         Registrant and Significant Employees
         ------------------------------------

The Company's executive officers,  directors and significant employees and their
positions with MSGI are as follows:

Name                   Age  Position                                     
--------------------   ---  ----------------------------------------------------
J. Jeremy Barbera      42   Chairman of the Board of Directors,
                               Chief Executive Officer, President and
                               Chief Operating Officer
Cindy H. Hill          29   Chief Financial Officer
Scott Anderson         41   Vice President, Finance and Treasurer
Alan I. Annex          36   Director and Secretary
James Brown            33   Director
S. James Coppersmith   65   Director
John T. Gerlach        65   Director
Seymour Jones          67   Director
Michael E. Pralle      42   Director
C. Anthony Wainwright  65   Director
Robert M. Budlow       37   Vice President of MSGI and President of Metro Direct
Janet Sautkulis        42   Chief Operating Officer, Metro Direct
Krista Mooradian       32   President, SD&A
Thomas Scheir          45   Chief Operating Officer, SD&A
Stephen M. Reustle     43   President and Chief Executive Office,
                               Media Marketplace, Inc.
Brian Coughlan         30   President, Pegasus Internet, Inc.

Mr.  Barbera  has been  Chairman,  Chief  Executive  and  Operating  Officer and
President of the Company since April 1997 and was a Director and Vice  President
of the Company  from  October  1996 to April 1997.  He has been Chief  Executive
Officer of Metro since its formation in 1987.  Mr. Barbera has eighteen years of
experience in data management  services,  and over twenty years of experience in
the  entertainment  marketing area.

<PAGE>

Ms. Hill has been Chief Financial Officer of the Company since June 1, 1998, and
was Corporate Controller of the Company from January to May 1998. Prior thereto,
she was a manager in the Business Assurance Division of Coopers & Lybrand,  LLP,
where she was  employed  for the  previous  six years.  Ms.  Hill is a Certified
Public Accountant

Mr.  Anderson has been Vice  President,  Finance  since June 1, 1998,  Treasurer
since  May 1997  and was  Chief  Financial  Officer  from May 1996 to May  1998,
Controller from May 1995 to May 1996 and a Director of the Company from May 1996
to  August  1996.  Prior  thereto,  from  December  1994 to April  1995,  he was
associated with the accounting  firm of Coopers & Lybrand L.L.P.  and, from 1998
to 1994,  he was manager in the  assurance  department  of an  affiliate  of the
accounting  firm of Deloitte & Touche LLP.  Mr.  Anderson is a Certified  Public
Accountant.

Mr. Annex has been a Director and  Secretary of the Company  since May 1997.  He
has been a partner  in the law firm of Camhy  Karlinsky  & Stein LLP since  July
1995,  where he practices  corporate and securities law. Camhy Karlinsky & Stein
LLP is the Company's  legal counsel.  From July 1994 to June 1995, Mr. Annex was
Counsel to said firm.  Prior thereto he was associated  with Proskauer  Rose,
LLP. Mr. Annex is also a director of Pacific Coast Apparel, Inc.

Mr. Brown has been a Director of the Company since  February  1998. Mr. Brown is
currently  Vice  President and Industry  Leader in GE Capital's  Equity  Capital
Group, where he is responsible for making strategic private equity  investments.
From 1994 to 1995,  Mr. Brown joined Lehman  Brothers in its Corporate  Planning
area to restructure  the firm.  From 1992 to 1994, Mr. Brown was with Bain & Co.
where he  consulted  with  Fortune 500  clients on  strategic,  operational  and
financial issues. Prior thereto, he was an analyst for CBS and AC Nielsen.

Mr. Coppersmith has been a Director of the Company since June 1996.
He was Chairman of the Board of Trustees of Boston's  Emerson  College from 1994
until his term  expired in December  1997.  Until his  retirement  in 1994,  Mr.
Coppersmith held various senior executive positions with Metromedia Broadcasting
where he managed its television  operations in Los Angeles, New York, and Boston
and  served as  President  and  General  Manager  of  Boston's  WCVB-TV,  an ABC
affiliate  owned by The Hearst  Corporation.  Mr.  Coppersmith  also serves as a
director for B.J.'s  Wholesale Club, Sun America Asset  Management  Corporation,
Uno Restaurant Corp.,  Kushner-Locke,  Inc., and The Boston Stock Exchange.

Mr.  Gerlach has been a Director  of the  Company  since  December  1997.  He is
presently  Director of the graduate business program and an associate  professor
of finance at Sacred Heart University in Fairfield, CT. Previously,  Mr. Gerlach
was an Associate  Director in Bear Stearns' corporate finance  department,  with
responsibility  for  mergers  and  financial   restructuring  projects;  he  was
President and Chief Operating Officer of Horn & Hardart,  supervising restaurant
and mail order  subsidiaries,  including Hanover Direct;  and he was the Founder
and President of Consumer  Growth  Capital,  a venture capital firm. Mr. Gerlach
also serves as a director for Uno Restaurant  Co.; SAFE Inc.; LB USA (subsidiary
of a French company); Akona Corp.; the Board of Regents at St. John's University
in  Collegeville,  MN; and is a member of an  advisory  board for the College of
Business & Administration at Drexel University.

Mr. Jones has been a Director of the Company  since June 1996.  Since  September
1995, Mr. Jones has been a professor of accounting at New York University. Prior
thereto,  from April 1974 to September  1995,  Mr. Jones was a senior partner of
the accounting firm of Coopers & Lybrand,  L.L.P. Mr. Jones has over 35 years of
accounting  experience  and over ten years of experience as an arbitrator and as
an expert witness, particularly in the area of mergers and acquisitions.

Mr.  Pralle has been a Director of the  Company  since May 1998.  Mr.  Pralle is
currently   the  President  of  GE  Capital's   Equity   Capital   Group,   with
responsibility  for making common equity,  convertible  preferred stock and debt
investments  in private  and public  companies  in the US,  Europe and Asia.  He
joined GE Capital in 1989 and,  prior to his current  appointment  in 1996,  was

<PAGE>

most recently President, GE Capital Asia Pacific. Before joining GE Capital, Mr.
Pralle  spent six years  with  management  consultants,  McKinsey & Co. in their
London and Hong Kong offices.

Mr. Wainwright has been a Director of the Company since August 1996 and was also
a Director  of the  Company  from the  acquisition  of SD&A until May 1996.  Mr.
Wainwright  is currently  Vice  Chairman of the  advertising  agency  McKinney &
Silver and was  Chairman and Chief  Executive  Officer of the  advertising  firm
Harris Drury Cohen,  Inc.,  from 1995 to 1996. From 1994 to 1995, he served as a
senior executive with Cordient PLC's Compton Partners, a unit of the advertising
firm Saatchi & Saatchi  World  Advertising,  and, from 1989 to 1994, as Chairman
and Chief Executive Officer of Campbell Mithun Esty, a unit of Saatchi & Saatchi
in  New  York.   Mr.   Wainwright   also  serves  as  a  director  of  Caribiner
International,  Gibson  Greetings,  Inc.,  Del  Webb  Corporation  and  American
Woodmark Corporation.

Mr.  Budlow  has been Vice  President  of the  Company  since  October  1996 and
President  of Metro since April  1997.  Prior  thereto,  he was  Executive  Vice
President and Chief  Operating  Officer of Metro since 1990. He has twelve years
of experience in database management  services and subscription,  membership and
donor renewal programs.

Ms.  Sautkulis  serves  as  Chief  Operating  Officer  of Metro  Direct,  having
previously  served as Executive Vice  President.  Prior to joining Metro Direct,
she held  various  positions  at Jetson  Direct Mail and Belth  Associates.  Ms.
Sautkulis  has more than twenty years  experience in database  management,  list
brokerage  and  lettershop  services  specializing  in the  business-to-business
sector.

Ms.  Mooradian has been  President of SD&A since 1997.  For the past five years,
she has held various positions of increasing responsibility within SD&A.

Mr.  Scheir has been Vice  President and Chief  Operating  Officer of SD&A since
September  1996.  Prior  thereto,  from  1990 to  September  1996,  he was Chief
Financial  Officer of SD&A, and from 1983 to 1990, he served as Business Manager
of SD&A.

Mr. Reustle has been President and Chief Executive Officer of MMI since December
1997,  Managing  Partner from June 1980 to December  1997 and Vice  President of
Finance from 1978 to 1980.  Prior thereto,  Mr.  Reustle was a Certified  Public
Accountant at Arthur Andersen LLP, where he was employed from 1976 to 1978.

Mr.  Coughlan has been  President of Pegasus  Internet  since June 1998.  Having
previously served as Creative Director,  he brings over ten years of interactive
design and project management experience to Pegasus.


Compliance with Section 16(A) of the Exchange Act
-------------------------------------------------

Section 16(a) of the Securities Exchange Act of 1934 requires that the Company's
officers  and  directors,  and  persons  who own  more  than  ten  percent  of a
registered class of the Company's equity  securities,  file reports of ownership
on  Forms  3,  4  and  5  with  the  Securities  and  Exchange  Commission  (the
"Commission")  and the NASDAQ National Market.  Officers,  directors and greater
than ten percent  stockholders are required by the  Commission's  regulations to
furnish the Company with copies of all Forms 3, 4 and 5 they file.

Based solely on the Company's review of the copies of such forms it has received
and written  representations  from certain  reporting persons that they were not
required to file reports on Form 5 for the fiscal year ended June 30, 1998,  the
Company  believes that all its officers,  directors and greater than ten percent
beneficial owners complied with all filing requirements  applicable to them with
<PAGE>
respect to transactions  during the fiscal year ended June 30, 1998, except that
Mr.  Barbera,  Mr.  Pralle  and Mr.  Gerlach  each made one late  filing  due to
administrative  timing errors on their part with respect to reporting  repayment
of convertible debt to Mr. Barbera and an initial filing upon being appointed to
the Board of Directors for Messrs. Pralle and Gerlach.

Item 10 - Executive Compensation:
---------------------------------

The following table provides certain information concerning  compensation of the
Company's Chief Executive Officer and any other executive officer of the Company
who  received  compensation  in excess of $100,000  during the fiscal year ended
June 30, 1998:

                           SUMMARY COMPENSATION TABLE

                                Fiscal
                                 Year                              Securities
                                 Ended      Annual     Annual      Underlying
Name and Principal Position    June 30,   Salary ($)  Bonus($)   Options/SARs(#)
---------------------------    -------    ----------  --------   ---------------
J. Jeremy Barbera(1) (2)
Chairman of the Board,           1998      198,077                    50,000
    CEO, President & COO         1997      120,883                 1,000,000

Thomas Scheir(3)                 1998      175,000                     2,500
    Executive VP, SD&A           1997      154,521       60,000       40,000
                                 1996      128,461       60,000       12,500

Krista Mooradian(3)              1998      175,000                    29,625
    President, SD&A              1997      127,936       25,000       20,000
                                 1996       85,092       29,372        5,375

Robert N. Budlow(4)              1998      144,231
    President, Metro Direct      1997       93,750

Janet Sautkulis(4)               1998      144,231
    COO, Metro Direct            1997       93,750

Stephen Reustle(5)               1998      145,833
    President & CEO, MMI

----------
(1) Mr. Barbera was appointed  Chairman of the Board,  Chief Executive  Officer,
    President  and Chief  Operating  Officer  effective  March 31,  1997.  Prior
    thereto,  commencing  with the October 1, 1996  acquisition of Metro, he was
    Vice  President  of MSGI and  President  and CEO of  Metro.  Pursuant  to an
    employment  agreement  dated May 27, 1997, his annual salary  increased from
    $150,000  to  $250,000  through  May 31,  1998.  As of June  30,  1997,  Mr.
    Barbera's  salary  reflects  earnings  for the nine  months from the date of
    Metro's acquisition.

(2) During fiscal year end June 30, 1998, Mr.  Barbera  forgave all interest due
    him on a note payable and forgave an increase in his annual  salary from May
    27, 1997 to December  31,  1997.  In  consideration  for this,  the Board of
    Directors  granted Mr.  Barbera  options to acquire  50,000 shares of Common
    Stock at the then current fair market price.
<PAGE>
(3) During fiscal year end June 30, 1998, Mr. Scheir and Ms.  Mooradian  forgave
    an  increase  in their  salaries  from  January  1,  1998 to June 30,  1998.
    Effective July 1, 1998,  their  salaries were  increased in accordance  with
    their respective employment agreements.

(4) The annual  salaries for Mr. Budlow and Ms.  Sautkulis are $125,000 each for
    1997.  Due to the  acquisition  of Metro on October 1,  1996,  their  annual
    compensation  only  reflects  nine months of salary.  During fiscal year end
    June 30, 1998,  Mr.  Budlow and Ms.  Sautkulis  forgave an increase in their
    salaries  from October 1, 1997 to December 31, 1997.  As of January 1, 1998,
    salaries  were  increased in  accordance  with their  respective  employment
    agreements.

(5) The  annual  salary  for  Mr.  Reustle  is  $250,000  for  1998.  Due to the
    acquisition  of Media  Marketplace,  Inc. on  December  7, 1997,  his annual
    compensation only reflects seven months of salary.


STOCK OPTION GRANTS

The table below provides  information  relating to stock options  granted to the
Named Executive Officers during the fiscal year ended June 30, 1998.

                     OPTIONS GRANTED IN THE LAST FISCAL YEAR

                                 Individual Grant     
                                 ----------------     

                     Number of      % of Total       Exercise
                     Securities     Options/SARs     or Base
                     Underlying     Granted to       Price
                     Options/SARs   Employees in     ($ per       Expiration
Name                 Granted (#)    Fiscal Year(4)   share(5))    Date
----                 -----------    --------------   ---------    ----
J. Jeremy Barbera...   50,000            3.8%          4.6875       11/04

Thomas Scheir.......    2,500            .02%          4.1875       12/04

Krista Mooradian....   29,625(1)         2.3%          4.1875       12/04

Robert Budlow.......   55,000(2)         4.2%          4.1875       12/04

Janet Sautkulis.....   55,000(3)         4.2%          4.1875       12/04

----------
(1) Ms.  Mooradian's  options are  exercisable  as follows:  10,000  options are
    available  for exercise  immediately,  10,000  options  become  available in
    August 1998, with the remaining 9,625 options exercisable in August 1999.

(2) Mr.  Budlow's  options  are  exercisable  as  follows:  25,000  options  are
    available  for exercise  immediately,  15,000  options  become  available in
    October 1998, with the remaining 15,000 options exercisable in October 1999.

 (3)Ms.  Sautkulis'  options  are  exercisable  as follows:  25,000  options are
    available  for exercise  immediately,  15,000  options  become  available in
    October 1998, with the remaining 15,000 options exercisable in October 1999.

 (4)During  the  fiscal  year  ended  June  30,  1998,  all  employees  and  all
    non-employee  Directors of the Company received stock options for a total of
    1,302,100 shares of Common Stock.
<PAGE>
 (5)Exercise  price is the closing  price of the Common Stock as reported on The
    Nasdaq  SmallCap  Market  on  the  date  of  the  grant,   unless  otherwise
    identified.


AGGREGATE OPTIONS EXERCISED IN THE LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES

The  following  table sets forth  information  regarding the number and value of
securities  underlying  unexercised  stock  options held by the Named  Executive
Officers as of June 30, 1998.

                     Number of Securities Underlying     Value of Unexercised
                        Unexercised Options/SARs      In-the-Money Options/ SARs
                         at Fiscal Year End (#)       at Fiscal Year End ($) (1)
Name                    Exercisable/Unexercisable      Exercisable/Unexercisable
----                    -------------------------      -------------------------
J. Jeremy Barbera..          716,667/333,333               278,001/139,000
Thomas Scheir......           55,000/0                      50,495/0
Krista Mooradian...           35,375/19,625                 23,989/0
Robert Budlow......           25,000/30,000                      0/0
Janet Sautkulis....           25,000/30,000                      0/0

----------
(1)  Fair market value of $3.438 per share at June 30, 1998 was used to
     determine the value of in-the-money options.


COMPENSATION OF DIRECTORS

Commencing  July 1, 1998,  Directors  who are not  employees of the Company will
receive  an annual  retainer  fee of  $10,000,  $1,000  for each  Board  Meeting
attended,  $500 for each standing  committee  meeting attended and $500 for each
standing  committee  meeting for the Chairman of such Committee.  Such Directors
will also be reimbursed for their  reasonable  expenses for attending  board and
committee  meetings,  and will  receive  an annual  grant of  options to acquire
10,000  shares of common  stock for each fiscal year of service,  at an exercise
price equal to the fair market  value on the date of grant.  Any Director who is
also  an  employee  of the  Company  is not  entitled  to  any  compensation  or
reimbursement  of expenses  for serving as a Director of the Company or a member
of any committee  thereof.  Mr. Annex has indicated  that since his firm acts as
counsel to the Company he would waive the described cash retainer.

Pursuant to a resolution of the Board of Directors on May 27, 1997, non-employee
members of the Board agreed to serve without cash  compensation for fiscal 1998.
It was agreed that each outside director be compensated with options to purchase
100,000 shares of common stock of the Company at an exercise price of $2.625 per
share,  with 50% immediately  exerciseable,  25% exercisable on May 27, 1998 and
25% exercisable on May 27, 1999.

Messrs.  Annex,  Coppersmith,  Jones and  Wainwright  each  received  options to
purchase  100,000  shares of Common  Stock.  Mr.  Gerlach  received  options  to
purchase  50,000 shares of Common Stock at an exercise  price of $4.50 per share
with 1/3  immediately  exercisable  and 1/3 exercisable in December 1998 and 1/3
exercisable in December 1999 upon his appointment to the Board of Directors.
<PAGE>


EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT

The  Company  has  entered  into  employment  agreements  with each of its named
executives.

Mr. Barbera was appointed to the position of Chief Executive  Officer of MSGI by
the Board,  effective March 31, 1997. He had previously  served as President and
CEO of Metro  under an  employment  contract  dated  October 1, 1996.  Under the
contract,  Mr.  Barbera's  base  salary  was  $150,000  for  the  first  year of
employment.  On May 27, 1997,  the Company  amended and  restated Mr.  Barbera's
employment  contract,  based on the  additional  responsibilities  he assumed on
March  31,  1997.  Under  the  terms  of the  amended  contract,  Mr.  Barbera's
employment term is for three years beginning May 27, 1997, and is  automatically
renewable for an additional three year period, unless the Company or Mr. Barbera
gives written  notice;  his amended annual base salary for the first year of the
amended  employment  term is  $250,000,  with  $300,000  for the second year and
$350,000 for the third year.  Mr. Barbera is also eligible to receive raises and
bonuses in each year of the employment  contract,  at the  determination  of the
Compensation  Committee  of the  Board of  Directors  of the  Company,  based on
earnings and other targeted  criteria.  On May 27, 1997, Mr. Barbera was granted
options to acquire  1,000,000  shares of Common  Stock of the  Company;  333,334
exercisable  at $2.625 per  share,  333,333  exercisable  at $3.00 per share and
333,333 exercisable at $3.50 per share. One third of the options in each tranche
vest  immediately and one third of each tranche will become available on each of
the next two anniversary dates. In a separate agreement, Mr. Barbera forgave the
increase in his annual salary from May 27, 1997 to December 31, 1997.

Mr. Barbera has agreed in his employment  agreement (i) not to compete with MSGI
or its subsidiaries,  or to be associated with any other similar business during
the employment term,  except that he may own up to 5% of the outstanding  Common
Stock of  certain  corporations,  as  described  more  fully  in the  employment
agreement,   and  (ii)  upon   termination  of  employment  with  MSGI  and  its
subsidiaries,  not to  solicit  or  encourage  certain  clients  of  MSGI or its
subsidiaries,  to cease doing business with MSGI and its subsidiaries and not to
do business with any other similar business for a period of three years from the
date of such termination.

Mr.  Budlow  and Ms.  Sautkulis  entered  into  separate  employment  agreements
effective October 1, 1996,  providing for employment as Executive Vice President
& Chief  Operating  Officer of Metro and as Executive  Vice  President & General
Manager of Metro,  respectively.  Each  agreement  provides  for an initial term
expiring on September 30, 1999 (the  "Employment  Term") and is renewable for an
additional  three-year  term unless Metro or the employee gives written  notice.
The base salary for each of Mr. Budlow and Ms.  Sautkulis  during the Employment
Term is $125,000  for the first year,  $165,000 for the second year and $200,000
for the third year.  Mr.  Budlow and Ms.  Sautkulis are each eligible to receive
raises and bonuses  based upon the  achievement  of earnings and other  targeted
criteria if and as  determined  by the  Compensation  Committee  of the Board of
Directors.  The  agreements  also provide for the granting to Mr. Budlow and Ms.
Sautkulis of options to acquire  Common Stock if and as determined by the Option
Plan Committee.  Each has agreed in his or her respective  employment  agreement
(i) not to  compete  with  Metro  or to be  associated  with any  other  similar
business  during the Employment  Term,  except that may each own up to 5% of the
outstanding Common Stock of certain corporations, as described more fully in the
relevant  employment  agreement,  and (ii) upon  termination of employment  with
Metro,  not to  solicit  or  encourage  certain  clients of Metro (as more fully
described in the relevant  employment  agreement),  to cease doing business with
Metro, and not to do business with any other similar  business,  for a period of
three years from the date of such termination.
<PAGE>
Mr. Scheir entered into an employment  agreement effective as of April 25, 1995,
providing  for his  employment  as the  Chief  Financial  Officer  of SD&A.  The
agreement  provides  for an initial  term  expiring  on April 25,  1997,  and is
renewable  for an  additional  one-year  term at the  discretion of the employee
covered thereby,  subject to termination as provided therein.  Mr. Scheir's base
salary during his employment  term is $125,000 for the first year,  $150,000 for
the second year and $175,000 for the third year. At the end of each year, in the
sole  discretion  of the board of directors of SD&A and Mr. Scheir may be paid a
cash bonus.  The  agreement  also  provides for other fringe  benefits as may be
approved  by the  board of  directors  of SD&A.  Mr.  Scheir  has  agreed in his
employment  agreement not to (i) own, become employed by, or become a partner of
any similar  business during the term of his employment  agreement,  except that
each may own 1% or less of any similar  business or (ii) compete with SD&A for a
period of three years after the termination of his employment.

Mr. Scheir entered into an agreement in the subsequent  period to be employed as
SD&A's Chief Operating  Officer  through  December 31, 1999, with an annual base
salary of $175,000  through  December  31, 1997,  $200,000 in calendar  1998 and
$250,000 in calendar 1999.

Effective July 1, 1997, Ms.  Mooradian  entered into an employment  agreement to
serve as President of SD&A until  December 31, 1999,  with an annual base salary
of $175,000 through December 31, 1997, $200,000 in calendar 1998 and $250,000 in
calendar 1999.

Effective December 29, 1997, Mr. Reustle entered into an employment agreement to
serve as President and Chief Executive Officer of Media Marketplace,  Inc. until
December 31,  2000,  with an annual base salary of $250,000 for each year of the
employment term.


Item 11 -  Security Ownership of  Certain Beneficial Owners and Management
--------------------------------------------------------------------------

The following  table sets forth  certain  information  regarding the  beneficial
ownership  of Common Stock as of  September  30, 1998 by: (i) each  Director and
each of the Named Executive Officers;  (ii) all executive officers and Directors
of the  Company as a group;  and (iii) each  person  known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock.

                                                  Amount and Nature of Common
                                                   Stock Beneficially Owned
Name and Address of Beneficial Holder(1)            Number           Percent
----------------------------------------            ------           -------
Directors and Named Executive Officers:
J. Jeremy Barbera(2)............................   4,283,266           26.7%
Robert M. Budlow(3).............................     569,200            4.3%
Janet Sautkulis(3)..............................     206,400            1.6%
Thomas Scheir(4)................................      63,375            *
Krista Mooradian(5).............................      35,375            *
Alan I. Annex(6)................................      82,850            *
S. James Coppersmith(7).........................     125,000            *
Seymour Jones(8)................................     100,000            *
C. Anthony Wainwright(9)........................     143,408            1.1%
John Gerlach(10)................................      20,667            *

All Directors and Named Executive Officers
     as a group (16 persons)(11)................    6,480,783           38.5%
<PAGE>

5% Stockholders:
Naomi Bodner(12)................................    1,266,599            9.7%
Laura Huberfeld(12).............................    1,539,599           11.8%
Morgan Grenfell Asset Management Limited(13)....      709,300            5.4%
General Electric Capital Corporation(14)........    4,451,458           34.0%

----------
* Less than 1%

(1)  Unless otherwise  indicated in these  footnotes,  each stockholder has sole
     voting and investment power with respect to the shares  beneficially owned.
     All share amounts reflect beneficial  ownership determined pursuant to Rule
     13d-3 under the Exchange  Act. All  information  with respect to beneficial
     ownership has been furnished by the respective Director,  executive officer
     or stockholder,  as the case may be. Except as otherwise noted, each person
     has an address in care of the Company.

(2)  Includes  716,667  beneficially  owned shares of Common Stock issuable upon
     the exercise of options which are currently  exercisable or are exercisable
     within 60 days of September 30, 1998. Includes 2,266,599 beneficially owned
     shares  through  Ms.  Huberfeld,   Ms.  Bodnor  and  the   Huberfeld/Bodnor
     Partnership who have appointed Mr. Barbera a their proxy until December 17,
     1998.

(3)  Includes 25,000 beneficially owned shares of Common Stock issuable upon the
     exercise of options  which are  currently  exercisable  or are  exercisable
     within 60 days of September 30, 1998.

(4)  Includes 55,000 beneficially owned shares of Common Stock issuable upon the
     exercise of options  which are  currently  exercisable  or are  exercisable
     within 60 days of September 30, 1998.

(5)  Includes 35,375 beneficially owned shares of Common Stock issuable upon the
     exercise of options  which are  currently  exercisable  or are  exercisable
     within 60 days of September 30, 1998.

(6)  Includes 75,000 beneficially owned shares of Common Stock issuable upon the
     exercise of options  which are  currently  exercisable  or are  exercisable
     within 60 days of September 30, 1998, and 6,250  beneficially  owned shares
     issuable upon the exercise of currently exercisable warrants owned by Camhy
     Karlinsky & Stein, LLP. Mr. Annex is one of thirteen partners in such firm.

(7)  Includes 75,000 beneficially owned shares of Common Stock issuable upon the
     exercise of options  which are  currently  exercisable  or are  exercisable
     within 60 days of September 30, 1998 and 50,000  beneficially  owned shares
     of  Common  Stock  issuable  upon the  exercise  of  currently  exercisable
     warrants.

(8)  Includes 75,000 beneficially owned shares of Common Stock issuable upon the
     exercise of options  which are  currently  exercisable  or are  exercisable
     within 60 days of September 30, 1998 and 25,000  beneficially  owned shares
     of  Common  Stock  issuable  upon the  exercise  of  currently  exercisable
     warrants.

(9)  Includes 90,000 beneficially owned shares of Common Stock issuable upon the
     exercise of options  which are  currently  exercisable  or are  exercisable
     within 60 days of September 30, 1998 and 50,000  beneficially  owned shares
     of  Common  Stock  issuable  upon the  exercise  of  currently  exercisable
     warrants.

(10) Includes 16,667 beneficially owned shares of Common Stock issuable upon the
     exercise of options  which are  currently  exercisable  or are  exercisable
     within 60 days of September 30, 1998.

(11) Of the total shares of Common Stock,  convertible  debt,  stock options and
     warrants  beneficially held by the Company's  directors and named executive
     officers, 115,000 shares of Common Stock are owned by family members.

(12) The  address  for each of the 5%  Stockholders  is as  follows:  c/o  Broad
     Capital  Associates,  Inc., 152 West 57th Street, New York, New York 10019.
     Beneficially  owned shares of Common Stock held in  partnerships  and joint
     tenancy include 539,599 shares.

(13) The  address for the 5%  Stockholder  is as  follows:  10 Finsbury  Circus,
     London, EC2M, England.
<PAGE>
(14) Includes 4,451,458  beneficially owned shares of Common Stock issuable upon
     the conversion of 50,000 shares of redeemable  convertible Preferred Stock.
     The address  for the 5%  Stockholder  is as  follows:  260 Long Ridge Road,
     Stamford, Connecticut 06927.


Item 12 - Certain Relationships and Related Transactions
--------------------------------------------------------

Transactions  with Mr. Dunn: In connection with the acquisition of SD&A on April
25, 1995,  Alliance issued promissory notes in an aggregate  principal amount of
$4.5 million to Mr. Dunn.  Interest on such notes was payable  monthly at a rate
equal to the prime rate of Bank of  America,  NT&SA,  as in effect  from time to
time,  subject to a maximum of 10% and a minimum of 8%. Principal  payments were
due  quarterly,  and originally  $1.5 million was due in quarterly  installments
during fiscal 1996. All of the outstanding  common shares of SD&A were initially
pledged  to  collateralize  such  notes  but  were  released  in June  1996.  In
connection with such notes, an operating covenants agreement between the Company
and Mr. Dunn included, among other things, provisions requiring that SD&A have a
minimum level of working capital and cash levels,  subject to periodic increases
based on sales, before dividend payments could be made to the parent company. In
June 1996, the operating covenants agreement was terminated.

Prior to October 1995, the Company made all principal payments when due. Each of
the  principal  payments due October 1, 1995,  January 1, 1996 and April 1, 1996
were deferred as they became due and thereafter from time to time. In June 1996,
principal  payments of  approximately  $2.0 million were made and the  remaining
obligations  were  restructured  such that the  remaining  $2.1  million  is now
payable in  installments  of $58,333 per month,  plus  interest at 8%,  starting
September  19,  1996.  As of June,  1997,  due to a pending  change in financing
relationships, the May and June, 1997 payments had not been made. These payments
were paid in full in August, 1997.

SD&A leases its corporate  business  premises from Mr. Dunn.  The lease requires
monthly rental  payments of $11,805  through  January 1, 1999, with an option to
renew. SD&A incurs all costs of insurance, maintenance and utilities. Total rent
paid by SD&A to Mr.  Dunn during 1998 and 1997 was  approximately  $142,000  and
$138,000, respectively.

Bank Credit Line:  Mr. Dunn was a guarantor of SD&A's credit line until December
1996.

Transactions  with Mr.  Barbera:  In October 1996, the Company  consummated  its
acquisition  of Metro.  In February  1996,  Mr.  Barbera,  then a shareholder of
Metro,  borrowed $50,000 from Metro.  Interest on such indebtedness accrues at a
rate of 6% per annum. The principal of such indebtedness,  together with accrued
interest  thereon,  was repayable in four equal quarterly  installment  starting
March 31, 1998. In December  1997,  Mr.  Barbera  repaid the entire  outstanding
balance plus interest  thereon.  With the October 1, 1996  acquisition of Metro,
Mr.  Barbera  received  a 6%  promissory  note for  $600,000,  due and  payable,
together  with  interest,  on June 30, 1998. In April 1997,  the Company  repaid
$100,000 of the  promissory  note.  In January 1998,  the remaining  $500,000 of
principal was repaid.

In November 1997, Mr. Barbera forgave all interest due him on notes payable from
July 1, 1997,  through  December 31, 1997, and forgave an increase in his annual
salary from May 27, 1997 to December 31, 1997. In  consideration  for this,  the
Board of  Directors  granted Mr.  Barbera  options to acquire  50,000  shares of
Common Stock at the then current fair market price.
<PAGE>
Transactions  with Mr.  Budlow  and Ms.  Sautkulis:  With the  October  1,  1996
acquisition  of Metro,  Mr. Budlow and Ms.  Sautkulis,  former  shareholders  of
Metro,   received  6%   promissory   notes   totaling   $300,000  and  $100,000,
respectively.  Such  notes  were  originally  due  and  payable,  together  with
interest, on June 30, 1998. In July 1997, the Company prepaid the full principal
amounts  due to Mr.  Budlow and Ms.  Sautkulis.

Mr. Budlow and Ms. Sautkulis  forgave an increase in their  respective  salaries
from October 1, 1997 to December 31, 1997.

Transactions with Mr. Annex: Mr. Annex, Secretary and a Director of the Company,
is a partner  in the law firm of Camhy  Karlinsky  & Stein LLP,  which  provides
legal  services  to the  Company.  The  Company  incurred  expenses  aggregating
approximately  $176,000 and $110,000 during fiscal 1998 and 1997,  respectively.
Mr. Annex has informed the Company that such fees did not represent more than 5%
of such firms  revenues  for its fiscal years ending  during such  periods.  The
Company  believes  that the fees for  services  provided by the law firm were at
least  as  favorable  to  the  Company  as  the  fees  for  such  services  from
unaffiliated third parties.

Transactions  with the Company's  Outside Board of Directors:  In May 1997,  the
Company's  outside  directors  each received  options for 100,000  common shares
(400,000 in the  aggregate),  exercisable at $2.625 per share, of which one half
vested immediately and one fourth vest in each of May 1998 and May 1999.

In  August  1996,  Mr.  Jones  purchased  from the  Company,  for  $2,500 in the
aggregate, warrants exercisable for 50,000 shares of Common Stock at an exercise
price of $2.50 per share for the first  25,000  shares,  $3.00 per share for the
next 15,000  shares and $3.50 per share for the  remaining  10,000  shares.  The
warrants are currently  exercisable and expire on April 15, 2000.  Subsequently,
Mr. Jones gifted warrants for 25,000 shares to an unaffiliated third party.

In September 1996, Mr. Coppersmith purchased from the Company, for $2,500 in the
aggregate, warrants exercisable for 50,000 shares of Common Stock at an exercise
price of $2.50 per share for the first  25,000  shares,  $3.00 per share for the
next 15,000  shares and $3.50 per share for the  remaining  10,000  shares.  The
warrants are currently exercisable and expire on May 15, 2000.

On June 3, 1996,  the Company  entered  into an  agreement  with Mr. C.  Anthony
Wainwright to retain his services as a financial  consultant  and advisor to the
Company on a non-exclusive  basis for a period of two years. As compensation for
such services, Mr. Wainwright is entitled to receive the sum of $1,000 per month
for the term of the agreement plus all  out-of-pocket  expenses  incurred by Mr.
Wainwright  in  the   performance   of  such   services,   provided  that  prior
authorization from the Company shall have been received with respect to any such
expense.  In addition,  pursuant to the terms of such agreement,  Mr. Wainwright
has the right,  which right, as of the date hereof,  has not been exercised,  to
purchase from the Company,  for $2,500 in the aggregate warrants exercisable for
50,000  shares of Common  Stock at an exercise  price of $4.00 per share for the
first 25,000  shares,  $4.50 per share for the next 15,000  shares and $5.00 per
share for the  remaining  10,000  shares.  The warrants may be exercised  over a
four-year  period  commencing  June 3, 1996.  The  agreement is only  assignable
without the prior  written  consent of the other party in the event of a sale of
all or  substantially  all of the  business of the party  desiring to assign the
agreement. The agreement also provides for indemnification of Mr. Wainwright and
his affiliates (and their respective directors, officers, stockholders,  general
and  limited  partners,  employees,  agents  and  controlling  persons  and  the
successors and assigns of all of the foregoing) by the Company for any losses or
claims arising out of the rendering of the services called for in the agreement,
other than for negligence or willful misconduct.
<PAGE>
Transactions   with  5%  Stockholders.   Each  of  2,000  shares  of  redeemable
convertible  preferred  stock  held by Naomi  Bodner  and Laura  Huberfeld  plus
accumulated  accrued  dividends  thereon  and  the  235  shares  held  by  their
partnership  plus accrued  dividends were  converted  into 826,302,  826,302 and
97,091   shares  of  Common  Stock,   respectively,   in  a  December  23,  1996
recapitalization.

In March 1997,  the Company  accepted  offers from  certain  warrant-holders  to
exercise  their  warrants for  3,152,500  shares of Common  Stock at  discounted
exercise  prices.  In this  transaction,  Ms.  Bodner,  Ms.  Huberfeld and their
partnership  exercised  warrants for 1,000,000,  1,000,000 and 117,500 shares of
Common Stock respectively.

Ms. Huberfeld,  Ms. Bodner and the  Huberfeld/Bodner  partnership have appointed
Jeremy Barbera as their proxy to vote  1,000,000,  727,000 and 539,599 shares of
Common Stock, respectively, for a period until December 17, 1998.
<PAGE>



                                  SIGNATURES
 


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report on Form  10-KSB/A to be signed on its
behalf by the undersigned hereunto duly authorized.

                        MARKETING SERVICES GROUP, INC.


                        By: /s/           J. Jeremy Barbera        
                               ---------------------------------------------
                              Name  :     J. Jeremy Barbera
                              Title :     Chief Executive Officer


                        By: /s/           Cindy H. Hill        
                               ---------------------------------------------
                              Name  :     Cindy H. Hill
                              Title :     Chief Financial Officer




Date:  October 27, 1998