U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934
         For the period ended September 30, 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 number 33-90672

                             THE ADSONLY GROUP, INC.
                 (Name of small business issuer in its charter)

          California                                        93-1026060
  (State or other jurisdiction of
   incorporation or organization)                     (IRS Employer ID No.)

                          2269 Chestnut St., Suite 637
                         San Francisco, California 94123
                    (Address of principal executive offices)

Registrant's telephone number including area code  (415) 457-7586

Indicate by check mark whether the registrant (1) has filed reports  required to
be filed by  Section  13 or 15(d) of the  Securities  Exchange  Act  during  the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days. Yes X No


Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common equity, as of the latest practicable date:

             As of January 31, 1996 - 2,056,864 shares of common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None
<PAGE>
                         PART I - Financial Information

Item 1. Financial Statements


                          INDEX TO FINANCIAL STATEMENTS

                                                                            Page

Balance Sheets   ............................................................F-2

Statements of Operations  ...................................................F-3

Statements of Stockholders' Equity  .........................................F-4

Statements of Cash Flows   ..................................................F-5

Notes to Financial Statements  ..............................................F-6
























                                       F-1
<PAGE>
                             THE ADSONLY GROUP, INC.
                        (A Development Stage Enterprise)
                                 Balance Sheets
<TABLE>
<S>                                                                  <C>                            <C>
                                                                        December 31, 1995           September 30, 1996
                                                                     -----------------------        ------------------
                            ASSETS                                                                     (Unaudited)
CURRENT ASSETS
  Cash                                                             $                  47,698                    13,517
  Federal income tax receivable                                                           22                        22
                                                                     -----------------------        ------------------
    Total current assets                                                              47,720                    13,539
                                                                     -----------------------        ------------------
FIXED ASSETS
  Computer equipment                                                                   1,983                     1,983
 Less: accumulated depreciation                                                         (430)                     (727)
                                                                     -----------------------        ------------------
    Total fixed assets                                                                 1,553                     1,256
                                                                     -----------------------        ------------------
OTHER ASSETS
  Deferred income tax asset (note 3)                                                       0                         0
                                                                     -----------------------        ------------------
    Total other assets                                                                     0                         0
                                                                     -----------------------        ------------------
Total Assets                                                       $                  49,273                    14,795
                                                                     =======================        ==================

             LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
  Accounts payable                                                 $                   1,816                         0
  State franchise tax payable                                                            800                         0
  State sales tax payable                                                                511                         0
                                                                     -----------------------        ------------------
    Total current liabilities                                                          3,127                         0
                                                                     -----------------------        ------------------
LONG-TERM LIABILITIES
  Notes payable (note 1a)                                                              8,842                     8,842
                                                                     -----------------------        ------------------
    Total long-term liabilities                                                        8,842                     8,842
                                                                     -----------------------        ------------------
    Total Liabilities                                                                 11,969                     8,842
                                                                     -----------------------        ------------------
STOCKHOLDERS' EQUITY
  Common stock, no par value, authorized 5,000,000
    shares; 2,006,864 issued and outstanding. (note 5)                               279,005                   279,005
  Preferred stock, no par value, authorized 1,000,000
    shares; 0 shares issued and outstanding. (note 4)                                      0                         0
  Deficit accumulated during the development stage                                  (241,701)                 (273,052)
                                                                     -----------------------        ------------------
Total Stockholders' Equity                                                            37,304                     5,953
                                                                     -----------------------        ------------------
Total Liabilities and Stockholders' Equity                         $                  49,273                    14,795
                                                                     =======================        ==================
</TABLE>
     The accompanying notes are an integral part of the financial statements
                                       F-2
<PAGE>
                             THE ADSONLY GROUP, INC.
                        (A Development Stage Enterprise)
                            Statements of Operations
                                   (Unaudited)
<TABLE>
<S>                                                         <C>                 <C>                 <C>
                                                                                                        Period from
                                                                                                       April 6, 1990
                                                               9 Months ended September 30,           (Inception) to
                                                                 1995                 1996             Sept 30, 1996
                       REVENUE
Sales                                                   $                0                  0                   6,813
Interest                                                                 0                  0                     413
                                                            --------------      -------------       -----------------
  Total revenue                                                          0                  0                   7,226
                                                            --------------      -------------       -----------------
                     COST OF SALES
Cost of sales                                                            0                  0                   6,823
                                                            --------------      -------------       -----------------
   Gross profit/(loss)                                                   0                  0                     403

                       EXPENSES
Bank charges                                                            22                  0                     493
Concept development cost                                                 0                  0                 120,000
Contract labor                                                      12,504             15,682                  59,925
Depreciation                                                           297                297                     727
Dues and subscriptions                                                 400                  0                     507
Franchise offering document preparation                                  0                  0                   5,955
State franchise filing fee                                             487              1,260                   3,697
Internet site fee                                                        0              3,455                   3,455
Licenses and taxes                                                       0                  0                   6,234
Office expenses                                                      1,709              1,270                  10,433
Postage                                                                565              1,250                   3,425
Printing                                                                 2                  0                   2,188
Professional Services                                               14,366              6,345                  51,751
Travel and entertainment                                               250              1,792                   4,289
Miscellaneous                                                            0                  0                     376
                                                            --------------      -------------       -----------------
  Total expenses                                                    30,602             31,351                 273,455
                                                            --------------      -------------       -----------------
Net loss before tax benefit                                        (30,602)           (31,351)               (273,052)
                                                            --------------      -------------       -----------------
Income tax benefit (note 3)                                              0                  0                       0
                                                            --------------      -------------       -----------------
Net loss                                                $          (30,602)           (31,351)               (273,052)
                                                            ==============      =============       =================
Weighted average number of shares outstanding                    2,006,684          2,006,684               2,006,684
                                                            ==============      =============       =================
Net loss per share                                      $            (0.02)             (0.02)                  (0.14)
                                                            ==============      =============       =================
</TABLE>
    The accompanying notes are an integral part of the financial statements.
                                       F-3
<PAGE>
                             THE ADSONLY GROUP, INC.
                        (A Development Stage Enterprise)
                        Statement of Stockholder's Equity
<TABLE>
<S>                               <C>                <C>                 <C>              <C>                    <C>         
                                     Shares of                                                                         Total
                                      Common             Common             Preferred         Accumulated           Stockholders'
                                       Stock              Stock               Stock             Deficit                Equity

BALANCE, December 31, 1995            2,006,864    $       279,005                   0             (241,701)                37,304


Net loss                                      0                  0                   0              (31,351)               (31,351)
                                  -------------      -------------       -------------    ------------------     ------------------

BALANCE, September 30, 
  1996 (Unaudited)                    2,006,864    $       279,005                   0             (273,052)                 5,953
                                  =============      =============       =============    ==================     ==================
</TABLE>




























    The accompanying notes are an integral part of the financial statements.
                                       F-4
<PAGE>
                             THE ADSONLY GROUP, INC.
                        (A Development Stage Enterprise)
                            Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<S>                                                                        <C>                     <C>                <C>  
                                                                                                                       Period from
                                                                                                                      April 6, 1990
                                                                                   9 Months ended September 30,      (Inception) to
                                                                                   1995                    1996       Sept 30, 1996
                                                                           -------------------     ----------------   -------------
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
Net loss                                                            $                 (30,602)            (31,351)        (273,052)
Adjustments to reconcile net loss to net cash used for
  development activities:
    Stock issued for concept development costs                                              0                   0          120,000
    Depreciation                                                                          297                 297              727
Changes in operating assets and liabilities:
    Increase (decrease) in accounts payable                                              (697)             (3,127)               0
    (Increase) decrease in receivable                                                       0                   0              (22)
                                                                                --------------      --------------    -------------
Net cash used for development activities                                              (31,002)            (34,181)        (152,347)
                                                                                --------------      --------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets                                                                    0                   0           (1,983)
                                                                                --------------      --------------    -------------
Net cash provided by investing activities                                                   0                   0           (1,983)
                                                                                --------------      --------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued for cash                                                                0                   0           84,020
Cash contributed by existing stockholders                                              74,985                   0           74,985
Cash received for notes payable                                                             0                   0            8,842
                                                                                --------------      --------------    -------------
Net cash provided by financing activities                                              74,985                   0          167,847
                                                                                --------------      --------------    -------------

Increase (decrease) increase in cash                                                   43,983             (34,181)          13,517
                                                                                --------------      --------------    -------------
CASH, beginning of period                                                               8,617              47,698                0
                                                                                --------------      --------------    -------------
CASH, end of period                                                        $           52,600              13,517           13,517
                                                                                ==============      ==============    =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid in cash                                                      $                 0                   0               0
                                                                                ==============      ==============    =============
Stock issued for intangible asset                                          $                 0                   0         120,000
                                                                                ==============      ==============    =============
</TABLE>
    The accompanying notes are an integral part of the financial statements.
                                       F-5
<PAGE>
                             THE ADSONLY GROUP, INC.
                        (A Development Stage Enterprise)
                          Notes to Financial Statements
                                   (Unaudited)

(1) Summary of significant accounting policies
     The Company  The AdsOnly Group, Inc. is a California chartered  development
         stage corporation which conducts business from its  headquarters in San
         Francisco. It was incorporated on April 6, 1990.

         The  financial   statements  have  been  prepared  in  conformity  with
         generally accepted  accounting  principles.  In preparing the financial
         statements,  management is required to make  estimates and  assumptions
         that affect the reported  amounts of assets and  liabilities  as of the
         dates  of the  statements  of  financial  condition  and  revenues  and
         expenses  for  the  years  then  ended.  Actual  results  could  differ
         significantly  from  those  estimates.   Material  estimates  that  are
         particularly  susceptible to significant change in the near-term relate
         to the book-tax  difference of accounting for the development  expenses
         (see note 3 ).  The  financial  statements  for  the  nine months ended
         September  30,  1995  and  1996  include  all  adjustments which in the
         opinion  of  management  are  necessary  for  fair  presentation.   The
         following  summarize  the  more  significant  accounting  and reporting
         policies and practices of the Company:

     a)  Fixed assets  Fixed asset are recorded at cost.Depreciation is computed
         by the  straight-line  method over the  estimated  useful  lives of the
         assets, generally five or seven years. Expenditures for maintenance and
         repairs are charged to  operations as incurred.  Depreciation  was $297
         for each of the nine month periods ended September 30, 1995 and 1996.

     b)  Notes  payable  The  Company  issued  notes  payable  to two  principal
         stockholders in exchange for cash. These notes carry no stated interest
         rate or maturity date.

     c)  Net loss per share  Net loss per share is computed by dividing  the net
         loss by the number of shares outstanding during the period.

     d)  Concept development   At inception  the  Company exchanged common stock
         for $120,000 of concept development costs previously  expended  by  two
         individuals previously  unrelated  to the  founders of the Company. The
         Company chose to immediately expense these costs.

(2) Franchise  offering  document  expenses   The  franchise  offering  document
         expenses  pertain   exclusively  to  the  development  of  the  Uniform
         Franchise Offering Circular,  (UFOC),  which represents the bulk of the
         Company's  near-term  future  marketing  efforts and  revenues.  SFAS 2
         requires  that all  generated  development  costs be charged to expense
         when  incurred.  Accordingly,  the  Company has  expenses  the costs to
         develop its UFOC.

(3) Franchise revenues  The Company has not as yet  received  any  franchise fee
         revenues, but it expects to record such revenue in accordance with SFAS
         45.

(4) Income taxes   The Company recorded the franchise offering document costs as
         expenses in the period when incurred for financial statement  purposes,
         per note 2 above. The Company recorded the concept development costs as
         expense immediately as well, per note 1b above. However, for income tax
         purposes, these costs were recorded as an intangible asset to be amort-
         ized over future years.  The primary purpose for this treatment for tax
         purposes  is  to  retain  the  tax  benefit  of  the development costs.
         California tax law did not then recognize operating loss carry-forwards
         as the Federal tax code does. Therefore, by capitalizing and amortizing
         these costs the tax benefit of these expenses is retained for state tax
         purposes rather than  being lost forever, as immediate  expensing would
         have caused.  This  treatment will require a longer time before the tax
         benefit of  the  costs is  realized,  but will increase the tax benefit
         realized over time. California tax law was changed for tax years begin-
         ning after January 1, 1994. It now recognizes net operating loss carry-
         forwards on the same basis as the federal tax code.
                                       F-6
<PAGE>
                             THE ADSONLY GROUP, INC.
                        (A Development Stage Enterprise)
                          Notes to Financial Statements

(4) Income taxes, continued  The amounts recorded as deferred  income tax assets
         at  September 30,  1995  and 1996,  $64,200 and $109,200, respectively,
         represent the amount of tax benefit of loss carry-forwards. The Company
         has  established a $109,200  valuation allowance against this asset, as
         the Company has no history of profitable  operations.  At September 30,
         1996, the Company has a net operating loss carry-forward for income tax
         purposes  of  approximately  $273,052, expiring as follows: $126,490 in
         2005, $6,891 in 2006, $2,921 in 2007, $45,483 in 2008, $23,513 in 2009,
         $36,403 in 2010 and $31,351 in 2011.

(5) Stockholders' equity  The Company has authorized 5,000,000 shares of no  par
         value common stock and 1,000,000 shares of no par preferred stock.   In
         April 1990 the Company issued 1,550,000 shares of common stock in exch-
         ange  for  $3,900  in  cash and $120,000 of previously expended concept
         development  costs.  In May 1993,  the Company issued 273,530 shares of
         common stock in exchange  for $29,970 in cash.  In November  1993,  the
         Company  issued  150,000 shares of common stock in exchange for $150 in
         cash.  In February  1994,  the Company  issued  33,334 shares of common
         stock in  exchange  for  $50,000 in cash.  In May 1995,  and June 1995,
         existing  stockholders  contributed  $50,000 and $24,985 in cash to the
         Company.

(6) Common  stock  public  offering   The  board  of  directors  authorized  the
         Company to sell up to 850,000 shares of the Company's common stock in a
         "self-underwritten"   public   offering   pursuant  to  a  Registration
         Statement on Form SB-2 under the Securities Act of 1933.  This offering
         is being made with a 50,000 share  minimum,  and is  effective  for one
         year from the effective date of the registration, June 26, 1996.

(7) Subsequent events  In December 1996, the Company  completed  the sale of the
         minimum shares under its registration, and therefore  broke its escrow.
         The Company is proceeding with the continued sale of its shares.
















                                       F-7
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.

         The AdsOnly Group is a start-up company offering advertising  franchise
opportunities  for  sale  on a  national  basis.  The  Company  has  been  in an
organizational  and development  stage since 1990,  during which time management
has incorporated the Company, filed for and completed franchise registration and
concentrated  its  efforts  with the legal and  logistical  issues  involved  in
preparing to sell franchise offerings of a service-based enterprise.

         AOG is currently  operating  on a part-time  basis until such time that
funding  can be raised to allow the  officers  to devote  full-time  efforts  in
advancing  this  enterprise.   At  this  time,  management  is  working  without
compensation.  AOG will not commence full-time  operations until such time as at
least the minimum  number of shares are sold and the  proceeds of this  offering
become  available.  The Company  currently has eight part-time  employees and no
full-time  employees,  however,  once  the  Offering  is  completed  all  of the
part-time employees will become full-time employees. The Company also expects to
hire an additional three to twelve employees for its administrative staff in the
first year.

         The Company has set aside  $75,740 under the minimum Use of Proceeds of
the  Offering  for the  payment of  salaries to  employees.  Although  this is a
significant amount of the minimum proceeds,  the Company feels that this will be
sufficient  to cover the salary  expense of its  employees for the first year of
operation  while not  negatively  impacting  the  liquidity of the Company.  AOG
currently  has  sufficient  employees  to operate  the  company for the first 12
months,  however,  if  amounts  greater  than the  minimum  proceeds  are raised
proportionally  up to  the  maximum  amount  to be set  aside  for  salaries  of
$941,740,  the Company will hire  additional  employees to expand its operations
and  expansion,  however not to the degree that the amount of employees are more
than can be supported  for one year under the amount of proceeds  raised and set
aside for salaries  from the  Offering.  Any addition of employees and increased
operations  would also be expected to accordingly  allow the AOG to increase its
revenues and thus gain an even greater liquidity.

         Should  only the  minimum  sale of shares  offered  be sold  management
believes that it would meet the Company's minimum cash  requirements  until such
time as AOG's operations begin generating  revenues.  Management believes it may
not be necessary to seek additional funding during the twelve-month period after
receipt of at least the  minimum  amount of  proceeds  which will be made become
available to AOG as the Company  expects to be generating  revenues prior to the
end of the 12th month of operation after funding.

         AOG intends to secure additional  operating and training  facilities to
its main office in San Francisco.  AOG intents to secure operating facilities in
the San Francisco area. Management anticipates that this base of operations will
demonstrate  a real world  example of "the virtual  office"  rather than a large
physical  plant  associated  with past  agencies.  Should  adequate  funding  be
available,  AOG plans to employee  additional  key personnel to proceed with the
Company's franchise sales effort and commence with the design and development of
the communication  network/computer  system, necessary to organize the sales and
marketing effort, as well as future franchise communications.

         AOG intends to contract with a leading  public  relations firm to begin
the process of  promoting  its  franchise  business and  operations.  Initially,
management  intends to orchestrate an extensive  awareness  campaign to generate
interest and leads,  on a  market-by-market  basis,  just prior to  conducting a
sales  blitz  in that  area.  As  part of its  marketing  and  public  relations
strategy, management plans to solicit press coverage, personal interviews, trade
articles and industry  related  forums that will further  promote the Company in
its operations.  Management intends to target publications,  trade journals, and
other communication  vehicles geared to the advertising  industry in conjunction
with its planned self-promotional advertising campaign.

         In keeping with a technologically-based,  information-sharing  concept,
management feels that the implementation of computer systems and the training of
new franchisees in their use will be an important part of a successful  approach
to the  establishment  of any  communication  based  service  industry  such  as
advertising.  Therefore,  as soon as capitalization allows, one of the Company's
first  organizational  plans will be to implement the use of a LAN/WAN  computer
system to connect AOG's home office with its franchisees. The system AOG intends
to  install  will be a custom  designed  database/network  utilizing  the  Apple
Computer  platform.   Management   believes  this  system  will  allow  for  the
collection,  archiving,  and exchange of advertising ideas and products produced
and digitally stored within AOG's system database. It is this system which plans
to make available for its franchisees that is intended to offer
                                        9
<PAGE>
the communication,  knowledge,  and support that are often only available from a
large national advertising agency. This network, referred to by AOG as the "CET"
(Creative Exchange  Technology)  system,  will also allow the Company to monitor
individual  franchise  sales and  operational  activities as well as reaction to
needs and demands in real-time, as needed. In addition, management believes this
ability to share ideas and information will be a distinct competitive  advantage
and marketing  tool to be used for AOG's  franchisees  seeking  market-by-market
data, creative and other operational support.

         The  interactive  capabilities  of the CET  system  will also allow for
digital creative exchanges, while allowing The AdsOnly Group and franchisees to:
communicate  at will with text and graphics,  retrieve text and graphics from an
advertisement database,  allow remote brain-storming  sessions,  conduct on-line
research, as well as access existing mainstream on-line services.

         Management  intends,  due to  practical  reasons  and  the  size of its
potential national market, to concentrate its initial franchising efforts in the
California  area markets.  These first few franchises will then be able to serve
both as examples to new franchisees,  as well as franchisee training centers and
beta test sites for franchised system development.

         Management  intends to complete  production  of AdsOnly  marketing  and
sales tools,  which will include a franchise  sales brochure with an interactive
computer  disk  and the  AdsOnly  Video(TM),  targeted  trade,  direct  mail and
specialized  business-to-business  advertising campaigns. The AdsOnly Video will
be  produced by AOG on a quarterly  basis for use as a  communication  and sales
tool.  Parts of the video will be used to update  franchisees of current events,
trends campaign, and issues concerning the AdsOnly franchise and the advertising
industry.  The AdsOnly  Video will be regularly  updated for show as demo reels,
highlighting the best work for that quarter with case study examples. An initial
"working  model" of this video will be produced  for the purpose of  introducing
prospective  franchisees to the AOG concept and to be supplied as a leave behind
sales tool.

         Simultaneously,  AOG intends to complete the  production of the AdsOnly
Franchise Business and Marketing Manual, which is currently in draft form. Items
outlined will include detailed  education of the franchisee and their employees;
pre-opening activities; agency advertising and promotion;  professional systems;
administrative  systems;  and  professional  support.  Additionally,  management
intends to re-create all existing franchise advertising and direct mail programs
in customizable electronics format for use within the CET system.

         Management is currently  developing specific training tools designed to
teach new franchisees the operational  systems of the AdsOnly franchise package,
including the nut-and-bolts of opening,  promoting and maintaining their AdsOnly
office,  and running it  profitably.  This  training  will be  conducted in both
classroom  sessions  prior to opening a franchise as well as through  self-paced
computer  based training that will also instruct the operators on how to use the
CET  system.  This  coursework  and  corresponding  instruction  tools  will  be
copyright  protected to protect investor interests in AOG. Management intends to
hold  bi-annual  training  seminars  held in  conjunction  with  national  sales
conferences  that  AdsOnly   franchises  will  be  obligated  to  attend  or  be
represented  at. Future  continuing  education for  franchisees is planned to be
implemented using on line programs developed by the Company.

         AOG intends to form relationships between its management and their past
associations in the advertising  industry by  establishing  strategic  alliances
that  can be used to  benefit  the  organization  as a  whole.  These  strategic
alliance candidates include:  The American  Association of Advertising  Agencies
("AAAA"),  The National Ad Council,  Direct Marketing Association ("DMA"), Media
Buying Services, and the National Association of Franchises.

         As a  result  of these  alliances,  AOG  hopes to be able to  negotiate
blanket  discounts,  wholesale  buying  arrangements and group rates that can be
passed on throughout the AdsOnly network.  Management believes that this ability
to leverage the Company's  mass  marketing  approach will enable AOG to create a
stronger  competitive  advantage for the entire AOG  organization  allowing each
franchisee  to offer prices and service that  individual  agencies  would not be
able. While larger agencies are able to offer services in similar ways to larger
budget  clients,  AOG's ability to offer boutique  style  creative  support with
competitive  prices could  position  AdsOnly  franchisees to compete for clients
against agencies of all sizes.
                                       10
<PAGE>
         Management  anticipates that by the end of the first year of operation,
AOG will have  completed  all  franchise  development,  systems and  operational
issues both at the corporate level and at the franchise level. AOG projects this
length of time to completely "field test" the AOG franchise  concept,  allow for
the  sale  and  training  of the  first  franchises,  and  modifications  to the
operating systems for the organization.

         While systems and communication  tools are the tangible aspects of what
the AdsOnly franchise consists of, the Company feels that there is a significant
"intangible"  benefit to the business AOG offers. For small local agencies,  and
for that matter,  people that would like to leave a large shop to "go it alone",
there is the isolation  factor present in any single start-up  business that can
impede an individual's  ability to compete.  Management  believes that AdsOnly's
ability to create and support a growing network of franchise agencies around the
country that will create an organizational network to supply the type of support
that can be extremely beneficial in the early stages of a business.  The ability
of franchisees to network,  share ideas,  research industries and draw on inside
knowledge from within the AdsOnly  organization and its database will be able to
allow the  individual  franchisees  to have a much  greater  advantage as far as
competitiveness and support.

Franchising

         In  July  of  1993,   AOG  began  the   preparation  of  its  franchise
registration  documents  including a Uniform Franchise  Offering Circular (UFOC)
for submission to the Federal Trade Commission which has now been completed. The
Company  has also began  preparing  and  submitting  the  required  registration
materials to be allowed to sell franchises in approximately  thirty states which
the  Company  has  targeted to begin its  marketing.  The Company  expects to be
registered  with all the states that it has initially  targeted  within  several
months after the completion of the offering.

         AOG intends to sell franchises for an initial non-refundable  franchise
fee of $19,500, for which AOG intends to provide a franchisee with assistance in
establishing  the  franchise  location,  assistance  pursuant to  operating  the
franchise,  legal and  accounting  work, and training  expenses.  AOG intends to
train each franchise owner in AOG's advertising business operating systems.

         Franchisees  will be required to pay AOG a monthly royalty fee equal to
five percent (5) of the monthly sales.  Franchisees will also pay AOG a national
advertising  fee equal to one and a half percent (1 1/2) of monthly gross sales.
These fees will be used to purchase regional  advertising to benefit franchisees
as well as AOG.

         Franchisees  will be  responsible  for  obtaining  all zoning  permits,
licensing  and  variances  which may be required to open and operate a franchise
location. AOG will require all of its franchisees to sign strict confidentiality
and non-  disclosure  agreements  pursuant  to the trade  secrets  disclosed  to
franchisees in order for them to operate franchise locations.


                           PART II - Other Information

Item 1. Legal Proceedings.
The Company is not a party to any pending legal proceedings.

Item 2. Changes in Securities
None to report.

Item 3. Defaults Upon Senior Securities
None to report.

Item 4. Submission of Matters to a Vote of Security Holders.
The  Company did not submit any matters to a vote of security holders during the
last quarter.
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Item 5. Other Information
None to report.

Item 6. Exhibits and Reports on Form 8-K and 8-K/A.
During the last quarter the Company did not file any reports on Form 8-K.

                                   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.

Date: January 27, 1996

                                              THE ADSONLY GROUP, INC.
                                             a California Corporation



                                             By:  /s/ Michael Hinshaw
                                                  Michael Hinshaw
                                                  CEO and Chairman of the Board



                                             By:  /s/ Henry L. Corona
                                                  Henry L. Corona
                                                  Chief Financial Officer















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