UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the quarterly period ended December 31, 1996

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the transition period from                  to
                                        ----------------    ------------------

                           Commission File No. 0-25866
                           ---------------------------

                        PHOENIX GOLD INTERNATIONAL, INC.
        (Exact name of small business issuer as specified in its charter)


               Oregon                                      93-1066325
--------------------------------------------------------------------------------
      (State or other jurisdiction of           (I.R.S. employer identification
       incorporation or organization)                        number)

        9300 North Decatur Street
               Portland, Oregon                              97203
--------------------------------------------------------------------------------
     (Address of principal executive offices)             (Zip code)


                                 (503) 288-2008
                           ---------------------------
                           (Issuer's telephone number)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter  period that the registrant was required to file such reports),
and (2) has been subject to such filing  requirements  for the past 90 days. YES
[X] NO [ ]

As of January 31, 1997,  there were issued and outstanding  3,454,605  shares of
the Company's Common Stock.

Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]


<PAGE>

                        PHOENIX GOLD INTERNATIONAL, INC.
               Form 10-QSB for the Quarter Ended December 31, 1996


                                      INDEX
                                      -----

                                                                          Page
                                                                          ----
Part I.  FINANCIAL INFORMATION


Item 1.  Financial Statements

         Balance Sheets at September 30, 1996 (audited)
         and December 31, 1996 (unaudited)                                  3

         Unaudited Statements of Operations for the
         Three Months Ended December 31, 1996
         and 1995                                                           4

         Unaudited Statements of Cash Flows for the
         Three Months Ended December 31, 1996
         and 1995                                                           5

         Notes to Financial Statements                                      6

Item 2.  Management's Discussion and Analysis or Plan of Operation          8


Part II. OTHER INFORMATION

Items 1 through 6                                                          11

Signatures                                                                 12

Index to Exhibits                                                          13



<PAGE>


PART I.  FINANCIAL INFORMATION
Item 1.   Financial Statements



                        PHOENIX GOLD INTERNATIONAL, INC.
                                 BALANCE SHEETS

                                            December 31,         September 30,
                                                1996                  1996
                                            ------------         -------------
                                             Unaudited              Audited

ASSETS
Current assets:
    Cash and cash equivalents               $     2,599           $     2,599
    Accounts receivable, net                  4,465,355             5,119,360
    Inventories                               9,429,797             8,971,560
    Prepaid expenses                            393,705               285,777
    Deferred taxes                              717,428               525,428
                                            -----------           -----------
          Total current assets               15,008,884            14,904,724
Property and equipment, net                   3,807,220             3,938,790
Goodwill, net                                   287,041               296,946
Long term deferred tax asset                    230,333               230,333
Other assets                                    491,235               461,734
                                            -----------           -----------

Total assets                                $19,824,713           $19,832,527
                                            ===========           ===========

LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable                        $ 3,909,189           $ 3,529,450
    Notes payable                             4,331,938             4,278,983
    Accrued expenses                            836,502               932,767
    Current portion of long-term obligations    133,000               130,334

                                            -----------           -----------
          Total current liabilities           9,210,629             8,871,534

Long-term obligations, net of
  current portion                               137,589               171,995

Shareholders' equity:
    Preferred stock;
       Authorized - 5,000,000 shares;
         none outstanding                             -                     -
    Common stock, no par value;
       Authorized - 20,000,000 shares
       Outstanding - 3,454,605 shares         7,477,939             7,477,939
    Retained earnings                         2,998,556             3,311,059
                                            -----------           -----------
          Total shareholders' equity         10,476,495            10,788,998
                                            -----------           -----------

Total liabilities and shareholders' equity  $19,824,713           $19,832,527
                                            ===========           ===========


                        See Notes to Financial Statements


<PAGE>




                        PHOENIX GOLD INTERNATIONAL, INC.
                            STATEMENTS OF OPERATIONS
                                   (unaudited)

                                                     Three Months Ended
                                                        December 31,
                                            -----------------------------------
                                                 1996                 1995
                                            --------------       --------------

Net sales                                    $ 5,572,276          $ 5,127,789
Cost of sales                                  4,595,147            3,633,569
                                             -----------          -----------

     Gross profit                                977,129            1,494,220

Operating expenses:
  Selling                                        767,414              540,875
  General and administrative                     601,656              534,528
   In-process research & development
                                                       -            1,120,500
                                             -----------          -----------

     Total operating expenses                  1,369,070            2,195,903
                                             -----------          -----------

Loss from operations                            (391,941)            (701,683)
                                             -----------          -----------

Other income (expense):
  Interest expense                              (113,842)             (10,361)
  Other, net                                       1,280               19,495
                                             -----------          -----------

     Total other income (expense)               (112,562)               9,134
                                             -----------          -----------

Loss before taxes                               (504,503)            (692,549)
Income tax benefit                               192,000              266,375
                                             -----------          -----------

Net loss                                     $  (312,503)         $  (426,174)
                                             ===========          ===========

Net loss per share                           $     (0.09)         $     (0.12)
                                             ===========          ===========
     
Shares used in per share calculation           3,454,605            3,445,000
                                             ===========          ===========



                        See Notes to Financial Statements


<PAGE>



                        PHOENIX GOLD INTERNATIONAL, INC.
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                     Three Months Ended
                                                        December 31,
                                            -----------------------------------
                                                 1996                 1995
                                            --------------       --------------

Cash flows from operating activities:
  Net loss                                   $  (312,503)         $  (426,174)
  Adjustments to reconcile net loss to net
    cash provided by (used in)
    operating activities:
      Depreciation and amortization              244,463              182,506
      Deferred taxes                            (192,000)            (266,373)
      In-process research and development
        expenses                                       -            1,120,500
      Changes in operating assets and liabilities:
          Accounts receivable                    654,005               57,728
          Inventories                           (458,237)             (18,142)
          Prepaid expenses                      (107,928)            (242,272)
          Accounts payable                       379,739               47,054
          Accrued expenses                       (96,265)            (138,682)
                                            ------------          -----------

Net cash provided by operating activities        111,274              316,145
                                            ------------          -----------

Cash flows from investing activities:
  Capital expenditures, net                      (87,668)            (287,516)
  Acquisition of Carver Professional
    Sound division                                     -           (1,792,616)
  Other                                          (44,821)             (75,932)
                                            ------------          -----------

Net cash used in investing activities           (132,489)          (2,156,064)
                                            ------------          -----------

Cash flows from financing activities:
  Repayment of long-term obligations             (31,740)             (27,463)
  Notes payable, net                              52,955                    -
                                            ------------          -----------

Net cash provided by (used in) financing
  activities                                      21,215              (27,463)
                                            ------------          -----------

Decrease in cash                                       -           (1,867,382)

Cash and cash equivalents, beginning of period     2,599            2,101,563
                                            ------------          -----------

Cash and cash equivalents, end of period    $      2,599          $   234,181
                                            ============          ===========

Supplemental disclosures:
  Cash paid during the period for interest  $     86,808          $    10,361
  Cash paid during the period for income
    taxes                                   $     73,951          $    48,000

  Acquisition of equipment via accounts
    payable                                            -          $    67,410
  Note payable incurred for acquisition of
    Carver Professional Sound Division                 -          $   350,000
     

                        See Notes to Financial Statements

<PAGE>



                        PHOENIX GOLD INTERNATIONAL, INC.
                          Notes to Financial Statements
                                   (Unaudited)

(1)  Unaudited financial statements

Certain  information  and  note  disclosures   normally  included  in  financial
statements prepared in accordance with generally accepted accounting  principles
have been omitted from these  unaudited  financial  statements.  These unaudited
financial statements should be read in conjunction with the financial statements
and notes  included in the  Company's  Annual Report on Form 10-KSB for the year
ended September 30, 1996 filed with the Securities and Exchange Commission.  The
results of operations for the three-month period ended December 31, 1996 are not
necessarily  indicative  of the  operating  results  for the full  year.  In the
opinion of  management,  all  adjustments  have been made to present  fairly the
Company's  financial  position  at  December  31,  1996 and the  results  of its
operations  and its cash flows for the  three-month  periods ended  December 31,
1996 and 1995.

(2)  Reporting periods

The  Company's  fiscal  year is the  52-week or 53-week  period  ending the last
Sunday in September. Fiscal 1996 was a 53-week year and fiscal 1997 is a 52-week
year. For presentation convenience, the Company has indicated in these financial
statements  that its fiscal  year ends on  September  30.  The first  quarter of
fiscal  1996 was a 14-week  period  and the same  quarter  in fiscal  1997 was a
13-week period. The remaining quarters in fiscal years 1996 and 1997 are 13-week
quarters.

(3)  Inventories

Inventories are stated at the lower of average cost or market and consist of the
following:

                                        December 31,          September 30,
                                           1996                    1996
                                        ------------          -------------

         Raw materials                   $ 4,725,360           $ 4,288,206
         Work-in-process                     178,939             1,101,414
         Finished goods                    4,361,761             3,411,342
         Supplies                            163,737               170,598
                                         -----------           -----------
            Total inventories, net       $ 9,429,797           $ 8,971,560
                                         ===========           ===========

<PAGE>


(4)  Property and equipment

Property and equipment consist of the following:


                                        December 31,          September 30,
                                           1996                    1996
                                        ------------          -------------

     Machinery, equipment and vehicles   $ 4,179,601           $ 4,144,651
     Leasehold improvements                1,425,816             1,425,816
     Construction in progress                246,403               193,685
                                         -----------           -----------
                                           5,851,820             5,764,152
     Less accumulated depreciation
       and amortization                   (2,044,600)           (1,825,362)
                                         -----------           -----------
         Total property and
           equipment, net                $ 3,807,220           $ 3,938,790

(5)  Acquisition of Carver Professional sound division

Effective  November  20,  1995,  Phoenix  Gold   International,   Inc.  acquired
substantially  all of  the  assets  of  the  professional  sound  division  (the
"Division")  of Carver  Corporation  ("Carver").  The assets  acquired  included
finished  goods and  intellectual  property,  including  the license of the name
"Carver  Professional"  for five years.  The  purchase  price for the assets was
$2.14  million,  of which the  Company  paid $1.79  million in cash and issued a
$350,000  note payable due on November 20, 1996,  which has since been  extended
and is being paid at the rate of $50,000 per month plus  interest at the rate of
6% per annum.  The Company  accounted  for the  acquisition  under the  purchase
method of accounting and recorded in-process  research and development  expenses
of $1.12  million,  inventories of $780,000,  other  intangibles of $110,000 and
goodwill of $132,000.  Other  intangibles  and goodwill are amortized  using the
straight-line  method over a period of five years.  The Company has included the
results of operations for the Division in its financial statements from the date
of acquisition.


<PAGE>


PART I.   FINANCIAL INFORMATION
Item 2:   Management's Discussion and Analysis or Plan of Operation

                        PHOENIX GOLD INTERNATIONAL, INC.
                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

Results of Operations
---------------------

Net sales  increased  $444,000,  or 8.7%,  to $5.57 million for the three months
ended  December 31, 1996,  compared to $5.13  million for the three months ended
December 31, 1995.  Sales of electronics  products in the quarter ended December
31,  1996  increased  13.8%  from  the  quarter  ended  December  31,  1995  due
principally to increased  sales of professional  sound  amplifiers and car audio
signal  processors.  Sales of speakers increased 143.9% and sales of accessories
decreased  17.5% in the first quarter of fiscal 1997 compared to the  comparable
quarter in fiscal 1996.

International  sales decreased 12.0% to $2.06 million for the three months ended
December  31,  1996,  from $2.34  million in the  comparable  1995  period.  The
decrease  resulted  primarily  from sales made to a European  distributor in the
first quarter of the prior year in anticipation of European  regulatory  changes
effective as of December  31, 1995 that were not  repeated in the quarter  ended
December 31, 1996.  International sales represented 37.0% and 45.6% of net sales
for the three months ended December 31, 1996 and 1995, respectively.

Gross  profit  decreased  to 17.5% from 29.1% of net sales for the three  months
ended  December  31, 1996 and 1995,  respectively,  primarily  due to changes in
product mix and lower than  expected  sales volume  which  caused  manufacturing
overhead to increase as a percentage of sales.

Operating  expenses  consist of selling,  general and  administrative  expenses.
Operating expenses for the first quarter of fiscal 1996 also included a one-time
pretax charge of $1.12 million for in-process research and development  acquired
from Carver  Corporation.  See Note 5 of Notes to  Financial  Statements.  Total
operating expenses decreased $827,000,  or 37.7%, to $1.37 million for the three
months ended  December 31, 1996  compared to $2.20  million for the three months
ended December 31, 1995. Operating expenses were 24.6% and 42.8% of net sales in
the respective three-month periods.

Selling expenses increased $227,000,  or 41.9%, to $767,000 for the three months
ended  December 31, 1996  compared to $541,000 for the  comparable  1995 period.
Selling expenses were 13.8% and 10.5% of net sales in the respective three-month
periods. The increased selling expenses in dollar amount were principally due to
increased  marketing and sales  salaries and increased  sales  incentive  costs,
offset in part by lower promotional and advertising expenses.

<PAGE>


General and administrative expenses increased $67,000, or 12.6%, to $602,000 for
the three months ended December 31, 1996 compared to $535,000 for the comparable
fiscal 1996 period. General and administrative  expenses were 10.8% and 10.4% of
net sales in the respective three-month periods.

Other income (expense) decreased by $122,000 from other income of $9,000 for the
quarter  ended  December  31, 1995 to $113,000 of other  expense for the quarter
ended  December 31, 1996.  The change was due to increased  interest  expense on
increased borrowings.

Net  loss  was  $313,000,  or $.09  per  share  (based  on 3.45  million  shares
outstanding),  for the three months ended  December 31, 1996,  compared to a net
loss of $426,000, or $0.12 per share (based on 3.45 million shares outstanding),
for the three months ended  December 31, 1995. The net loss for the three months
ended December 31, 1995 resulted  primarily from the one-time charge  associated
with the Carver acquisition discussed above.

Liquidity and Capital Resources
-------------------------------

The Company's  primary needs for funds are for working  capital and, to a lesser
extent,  capital  expenditures.  The Company financed its operations  during the
three  months  ended  December  31,  1996 from  cash  generated  from  operating
activities. Net cash provided by operating activities was $111,000 for the three
months  ended  December  31,  1996.  Accounts  receivable   decreased  $654,000,
inventories increased by $458,000 and accounts payable increased $380,000 during
the first  quarter of fiscal 1997,  leading to a decrease in working  capital of
$235,000 during the three-month period.

Prepaid expenses  increased  $108,000 during the three months ended December 31,
1996,  primarily due to trade show and insurance costs incurred in the beginning
of the  Company's  fiscal year that will be amortized  over the remainder of the
fiscal year.  Deferred  taxes  increased  $192,000  during the first  quarter of
fiscal  1997 for the tax  benefit  associated  with  the net loss for the  three
months ended December 31, 1996.

Inventories  increased $458,000, or 5.1%, during the three months ended December
31,  1996.  Increases  in  finished  goods and raw  materials  inventories  were
partially offset by a decrease in work-in-process inventory.

The Company  made  capital  expenditures  of $88,000 for the three  months ended
December 31, 1996.  Management  anticipates  that capital  expenditures  for the
remainder  of  fiscal  1997  will be  approximately  $400,000,  all of which are
discretionary.  These anticipated expenditures will be financed from proceeds of
short-term debt and cash provided from operations.

<PAGE>

Through  December  31,  1996,  the Company  had a $6.0  million  revolving  bank
operating  line of credit.  Borrowings  under the line of credit were limited to
eligible  accounts  receivable  and  inventory,  and  were  subject  to  certain
additional  limits.  Interest on the first $4.0 million of borrowings  under the
line of credit  equaled the bank's  prime  lending  rate (8.25% at December  31,
1996). Interest on borrowings in excess of $4.0 million under the line of credit
equaled the bank's prime lending rate plus 0.25%.  Borrowings  under the line of
credit were secured by  substantially  all of the assets of the  Company.  As of
December 31, 1996,  the Company was eligible to borrow $4.66  million  under the
line of  credit  and  borrowings  under  the line of credit as of that date were
$4.03 million.

Subsequent  to December  31,  1996,  the Company  negotiated  a new $5.5 million
revolving  bank  operating  line  of  credit  expiring  on  December  31,  1997.
Borrowings under the line of credit are limited to eligible accounts  receivable
and  inventory,  and are  subject  to certain  additional  limits.  Interest  on
borrowings is equal to the bank's prime lending rate (8.25% at February 4, 1997)
plus 2.0%.  Borrowings under the line of credit are secured by substantially all
of the  Company's  assets.  As of February 4, 1997,  the Company was eligible to
borrow $4.69 million under the line of credit and  borrowings  under the line of
credit as of that date were $3.73 million.

Forward-Looking Statements
--------------------------

This  Report  contains  "forward-looking  statements"  within the meaning of the
Private Securities Litigation Reform Act of 1995, including, without limitation,
statements as to expectations,  beliefs and future financial  performance,  that
are based on current  expectations and are subject to certain risks,  trends and
uncertainties  that could  cause  actual  results to vary from those  projected,
which  variances may have a material  adverse  effect on the Company.  Among the
factors that could cause actual results to differ  materially are the following:
business  conditions and growth in the car audio,  professional sound and custom
audio/video  and home  theater  markets  and the  general  economy;  competitive
factors such as rival products and price pressures;  the failure of new products
to compete  successfully  in  existing  or new  markets;  the failure to achieve
timely  improvement  in the  manufacturing  ramp with  respect to new  products;
changes in product mix; availability and price of components,  subassemblies and
products  supplied by third party vendors;  and cost and yield issues associated
with production at the Company's factory.

<PAGE>


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                 NONE

Item 2.  Changes in Securities                                             NONE

Item 3.  Defaults Upon Senior Securities                                   NONE

Item 4.  Submission of Matters to a Vote of Security Holders               NONE

Item 5.  Other Information                                                 NONE

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

                 10.1       Loan Agreement dated as of February 4, 1997  between
                            the  Company and  United  States  National  Bank  of
                            Oregon ("USNB")

                 10.2       Promissory Note  dated February  3, 1997 made by the
                            Company in favor of USNB

                 27         Financial Data Schedule

         (b)  Reports on Form 8-K

                 None.



<PAGE>

                                   SIGNATURES


In accordance with the requirements of the Securities  Exchange Act of 1934, the
registrant has caused this Report to be signed on its behalf by the  undersigned
thereunto duly authorized.

PHOENIX GOLD INTERNATIONAL, INC.



          /s/ Joseph K. O'Brien
          --------------------------------------------
          Joseph K. O'Brien
          Chief Financial Officer
          (Principal Financial and Accounting Officer)

          Dated:  February 11, 1997



<PAGE>


                                INDEX TO EXHIBITS

                                                                           Page
                                                                           ----

10.1  Loan Agreement dated as of February 4, 1997 between the
      Company and United States National Bank of Oregon ("USNB")

10.2  Promissory Note dated February 3, 1997 made by the Company
      in favor of USNB

27    Financial Data Schedule