U.S. 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, 1997, or

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


                         Commission file number 0-25866
                         ------------------------------


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


           OREGON                                    93-1066325
-------------------------------------------------------------------------------
(State or other jurisdiction                      (I.R.S. Employer
of incorporation or organization)                 Identification Number)


 9300 NORTH DECATUR STREET, PORTLAND, OREGON                97203
-------------------------------------------------------------------------------
Address of principal executive offices)                   (Zip code)


                                 (503) 288-2008
              (Registrant's telephone number, including area code)


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

There were  3,464,745  shares of the  issuer's  common stock  outstanding  as of
January 30, 1998.

<PAGE>

                        PHOENIX GOLD INTERNATIONAL, INC.
                FORM 10-QSB FOR THE QUARTER ENDED DECEMBER 31, 1997


                                      INDEX

<TABLE>
<CAPTION>

Part I. FINANCIAL INFORMATION                                                                               Page
            <S>                                                                                              <C>

             Item 1.      Financial Statements

                          Balance Sheets at December 31, 1997 (unaudited)
                          and September 30, 1997 (audited)                                                     3

                          Statements of Operations for the Three Months Ended
                          December 31, 1997 and 1996 (unaudited)                                               4

                          Statements of Cash Flows for the Three Months Ended
                          December 31, 1997 and 1996 (unaudited)                                               5

                          Notes to Financial Statements                                                        6

             Item 2.      Management's Discussion and Analysis of Financial Condition                          9
                          and Results of Operations


Part II.     OTHER INFORMATION

             Item 6.      Exhibits and Reports on Form 8-K                                                     12


SIGNATURES                                                                                                     13

INDEX TO EXHIBITS                                                                                              14


</TABLE>
<PAGE>

Part I. FINANCIAL INFORMATION
Item 1.      Financial Statements


<TABLE>
<CAPTION>

                        PHOENIX GOLD INTERNATIONAL, INC.
                                 BALANCE SHEETS


                                                                             DECEMBER 31,          SEPTEMBER 30,
                                                                                1997                  1997
                                                                          ------------------    ------------------
                                                                             (UNAUDITED)            (AUDITED)
<S>                                                                      <C>                    <C>    
ASSETS

Current assets:
    Cash and cash equivalents                                              $        2,601         $       2,603
    Accounts receivable, net                                                    4,333,930             5,186,630
    Inventories                                                                 6,867,520             7,178,820
    Prepaid expenses                                                              390,060               247,523
    Deferred taxes                                                                350,000               380,000
                                                                          ------------------    ------------------
        Total current assets                                                   11,944,111            12,995,576

Property and equipment, net                                                     3,315,012             3,478,827
Goodwill, net                                                                     247,419               257,324
Deferred taxes                                                                    230,000               231,000
Other assets                                                                      487,542               492,422
                                                                          ------------------    ------------------

        Total assets                                                         $ 16,224,084          $ 17,455,149
                                                                          ==================    ==================


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                                         $  1,112,352          $  1,558,749
    Notes payable                                                               2,593,717             3,147,936
    Accrued payroll and benefits                                                  246,921               373,512
    Other accrued expenses                                                        203,741               241,337
    Current portion of long-term obligations                                      386,332               395,669
                                                                          ------------------    ------------------
        Total current liabilities                                               4,543,063             5,717,203

Long-term obligations                                                             408,043               494,927

Shareholders' equity:
    Preferred stock;
        Authorized - 5,000,000 shares; none outstanding                                 -                     -
    Common stock, no par value;
        Authorized - 20,000,000 shares
        Issued and outstanding - 3,464,745 and 3,458,985 shares                 7,548,822             7,521,865
    Retained earnings                                                           3,724,156             3,721,154
                                                                          ------------------    ------------------
        Total shareholders' equity                                             11,272,978            11,243,019
                                                                          ------------------    ------------------

        Total liabilities and shareholders' equity                           $ 16,224,084          $ 17,455,149
                                                                          ==================    ==================



                        SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>


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

<TABLE>
<CAPTION>

                                                                                   THREE MONTHS ENDED
                                                                           ---------------------------------------
                                                                                       DECEMBER 31, 
                                                                           ---------------------------------------
                                                                                 1997                 1996
                                                                           ------------------   ------------------
<S>                                                                        <C>                  <C>   
Net sales                                                                   $    6,058,001       $    5,572,276

Cost of sales                                                                    4,643,204            4,595,147
                                                                           ------------------   ------------------

    Gross profit                                                                 1,414,797              977,129


Operating expenses:
    Selling                                                                        755,053              767,414
    General and administrative                                                     566,278              601,656
                                                                           ------------------   ------------------
        Total operating expenses                                                 1,321,331            1,369,070
                                                                           ------------------   ------------------

Income (loss) from operations                                                       93,466             (391,941)

Other income (expense):
    Interest expense                                                               (97,439)            (113,842)
    Other income, net                                                                7,975                1,280
                                                                           ------------------   ------------------

        Total other income (expense)                                               (89,464)            (112,562)
                                                                           ------------------   ------------------

Earnings (loss) before income taxes                                                  4,002             (504,503)

Income tax benefit (expense)                                                        (1,000)             192,000
                                                                           ------------------   ------------------

Net earnings (loss)                                                         $        3,002           $ (312,503)
                                                                           ==================   ==================

Net earnings (loss) per share - basic and diluted                           $         0.00           $     (.09)
                                                                           ==================   ==================



                        SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>


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

<TABLE>
<CAPTION>

                                                                                    THREE MONTHS ENDED
                                                                             -----------------------------------
                                                                                         DECEMBER 31,
                                                                             -----------------------------------
                                                                                   1997               1996
                                                                             ----------------   ----------------
<S>                                                                          <C>                <C>
Cash flows from operating activities:
    Net earnings (loss)                                                       $     3,002        $  (312,503)
    Adjustments  to  reconcile net earnings(loss)
    to net cash provided by operating activities:
        Depreciation and amortization                                             252,424            244,463
        Deferred taxes                                                             31,000           (192,000)
        Changes in operating assets and liabilities:
            Accounts receivable                                                   852,700            654,005
            Inventories                                                           311,300           (458,237)
            Prepaid expenses                                                     (142,537)          (107,928)
            Other assets                                                           (3,106)           (44,821)
            Accounts payable                                                     (446,397)           379,739
            Accrued expenses                                                     (164,187)           (96,265)
                                                                             ---------------    ---------------
    Net cash provided by operating activities                                     694,199             66,453

Cash flows from investing activities:
    Capital expenditures, net                                                     (70,718)           (87,668)
                                                                             ----------------   ----------------

    Net cash used in investing activities                                         (70,718)           (87,668)

Cash flows from financing activities:
    Notes payable, net                                                           (554,219)            52,955
    Repayment of long-term obligations                                            (96,221)           (31,740)
    Proceeds from exercise of stock options                                        26,957                  -
                                                                             ----------------   ----------------
    Net cash provided by (used in) financing activities                          (623,483)            21,215
                                                                             ----------------   ----------------

Increase (decrease) in cash and cash equivalents                                       (2)                 -

Cash and cash equivalents, beginning of period                                      2,603              2,599
                                                                             ----------------   ----------------

Cash and cash equivalents, end of period                                      $     2,601        $     2,599
                                                                             ================   ================

Supplemental disclosures:
    Cash paid for interest                                                    $   102,429        $     86,808
    Cash paid for income taxes                                                          -              73,951




                        SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>

                        PHOENIX GOLD INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 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, 1997 filed with the Securities and Exchange Commission.  The
results of operations for the three-month period ended December 31, 1997 are not
necessarily  indicative  of the  operating  results  for the full  year.  In the
opinion of management,  all  adjustments,  consisting  only of normal  recurring
accruals,  have been made to present fairly the Company's  financial position at
December 31, 1997 and the results of its  operations  and its cash flows for the
three-month periods ended December 31, 1997 and 1996.


NOTE 2 - REPORTING PERIODS

      The Company's fiscal year is the 52-week or 53-week period ending the last
Sunday in  September.  Fiscal  1998 and fiscal  1997 are  52-week  years and all
quarters are 13-week  periods.  For  presentation  convenience,  the Company has
indicated in these financial  statements that its fiscal year ended on September
30 and that the three months presented ended on December 31.


NOTE 3 - PROSPECTIVE ACCOUNTING CHANGES

     In June 1997,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement  of  Financial   Accounting   Standards  (SFAS)  No.  130,   REPORTING
COMPREHENSIVE  INCOME.  SFAS No. 130 establishes  requirements for disclosure of
comprehensive  income and becomes  effective  for the year ending  September 30,
1999.  Reclassification of earlier financial statements for comparative purposes
is required.

      In June 1997, the FASB issued SFAS No. 131,  DISCLOSURES ABOUT SEGMENTS OF
AN ENTERPRISE AND RELATED  INFORMATION.  SFAS No. 131 establishes  standards for
disclosure about operating segments in annual financial  statements and selected
information in interim  financial  reports.  It also  establishes  standards for
related  disclosures  about  products and services,  geographic  areas and major
customers.  This  statement  supersedes  SFAS No. 14,  FINANCIAL  REPORTING  FOR
SEGMENTS OF A BUSINESS  ENTERPRISE.  SFAS No. 131 will be effective for the year
ending September 30, 1999 and requires that comparative information from earlier
years be restated to conform to the requirements of this standard.

<PAGE>


NOTE 4 - INVENTORIES

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

<TABLE>
<CAPTION>
                                                            DECEMBER 31,            SEPTEMBER 30,
                                                                1997                     1997
                                                        ---------------------    ---------------------
<S>                                                     <C>                      <C>    
       Raw materials                                      $     2,678,801          $     2,818,409
       Work-in-process                                             12,161                   11,867
       Finished goods                                           4,056,339                4,204,428
       Supplies                                                   120,219                  144,116
                                                        =====================    =====================
           Total inventories                              $     6,867,520          $     7,178,820
                                                        =====================    =====================
</TABLE>



NOTE 5 - PROPERTY AND EQUIPMENT

      Property and equipment consist of the following:

<TABLE>
<CAPTION>

                                                            DECEMBER 31,            SEPTEMBER 30,
                                                                1997                     1997
                                                        ---------------------    ---------------------
<S>                                                      <C>                      <C>    
       Machinery, equipment, and vehicles                 $    4,407,419           $     4,434,003
       Leasehold improvements                                  1,590,012                 1,590,012
       Construction in progress                                  244,379                   155,052
                                                        ---------------------    ---------------------
                                                               6,241,810                 6,179,067
       Less accumulated depreciation
         and amortization                                     (2,926,798)               (2,700,240)
                                                        =====================    =====================
           Total property and equipment, net              $    3,315,012           $     3,478,827
                                                        =====================    =====================
</TABLE>



NOTE 6 - NOTE PAYABLE

      During December 1997, the Company renewed the $5.5 million  revolving bank
operating line of credit through  December  1998.  Borrowings  under the renewed
line of credit are limited to eligible  accounts  receivable and inventories and
are subject to certain additional limits. Interest on borrowings is equal to the
bank's prime  lending rate plus an additional  percentage  based on debt service
coverage.  Beginning  January  1, 1998,  the  additional  percentage  was 1.00%.
Borrowings  under the line of credit are secured  only by  accounts  receivable,
inventories and certain  equipment.  The line of credit contains covenants which
require a minimum  level of  tangible  net worth and  minimum  ratios of current
assets to current liabilities and debt service coverage.

<PAGE>


NOTE 7 - EARNINGS (LOSS) PER SHARE

     Effective  beginning  in fiscal  1998,  the Company  adopted  SFAS No. 128,
EARNINGS PER SHARE.  SFAS No. 128  established  new  standards for computing and
presenting  earnings per share. The earnings (loss) per share  calculation is as
follows:

<TABLE>
<CAPTION>

                                                                           THREE MONTHS ENDED
                                                                            DECEMBER 31, 1997
                                                         -------------------------------------------------------
                                                                NET               AVERAGE              PER
                                                              EARNINGS            SHARES              SHARE
                                                         ------------------  ------------------   --------------
<S>                                                      <C>                    <C>               <C>   
      Basic earnings per share                            $        3,002         3 ,464,555        $      0.00
      Effect of dilutive options and warrants                          -             20,741                  -
                                                         ------------------  ------------------   --------------

      Diluted earnings per share                          $        3,002          3,485,296        $      0.00
                                                         ==================  ==================   ==============


                                                                           THREE MONTHS ENDED
                                                                            DECEMBER 31, 1996
                                                         -------------------------------------------------------

                                                                NET               AVERAGE              PER
                                                                LOSS              SHARES              SHARE
                                                         ------------------  ------------------   --------------

      Basic loss per share                                $   (312,503)           3,454,605        $     (0.09)
      Effect of dilutive options and warrants
                                                                     -                    -                  -
                                                         ------------------  ------------------   --------------

      Diluted loss per share                              $   (312,503)           3,454,605        $     (0.09)
                                                         ==================  ==================   ==============


</TABLE>

<PAGE>

Part I.    FINANCIAL INFORMATION
ITEM 2:    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
           RESULTS OF OPERATIONS


RESULTS OF OPERATIONS
---------------------

      Net sales  increased  $486,000,  or 8.7%,  to $6.1  million  for the three
months ended  December  31, 1997,  compared to $5.6 million for the three months
ended  December 31, 1996.  Sales of  electronics  products in the quarter  ended
December  31, 1997  increased  18.2% from the quarter  ended  December 31, 1996.
Sales of car audio  electronics  increased 22.6% compared to the same quarter in
fiscal 1997 due to the continuing success of the initial  introduction of the QX
series and XS series car audio  amplifiers  that are  designed to address  lower
price points.  Sales of  professional  audio  electronics  decreased 3.5% due to
weaker  distribution  and dealer demand partially offset by increased OEM sales.
Sales of speakers  decreased 8.1% due to market  softness.  Sales of accessories
increased 3.6% in the first quarter of fiscal 1998 compared to the corresponding
quarter in fiscal 1997.

      International  sales  increased 15.1% to $2.4 million for the three months
ended December 31, 1997,  from $2.1 million in the comparable  1996 period.  The
increase  resulted  primarily  from  increased  sales of car audio  electronics.
International  sales  represented  39.2%  and  37.0% of net  sales for the three
months  ended  December  31, 1997 and 1996,  respectively.  For the three months
ended  December  31,  1997,  the effects on the  Company of the Asian  financial
crisis were not material.  However,  the Company  remains  cautious about future
sales in certain markets in Asia.

      Gross  profit  increased  to 23.4%  from  17.5% of net sales for the three
months ended December 31, 1997 and 1996, respectively,  primarily due to changes
in product mix and increased sales volume which caused manufacturing overhead to
decrease as a percentage of sales.

      Operating   expenses  consist  of  selling,   general  and  administrative
expenses. Total operating expenses decreased $48,000, or 3.5%, to $1,321,000 for
the three months ended  December 31, 1997 compared to  $1,369,000  for the three
months ended December 31, 1996.  Operating  expenses were 21.8% and 24.6% of net
sales in the respective three-month periods.

      Selling  expenses  decreased  $12,000,  or 1.6%, to $755,000 for the three
months ended  December 31, 1997  compared to $767,000  for the  comparable  1996
period.  Selling  expenses  were 12.5% and 13.8% of net sales in the  respective
three-month periods. The decreased selling expenses in dollar amount were due to
continuing cost control programs.

      General  and  administrative  expenses  decreased  $35,000,  or  5.9%,  to
$566,000 for the three months ended  December 31, 1997  compared to $602,000 for
the comparable fiscal 1997 period. General and administrative expenses were 9.3%
and 10.8% of net sales in the  respective  three-month  periods.  The  decreased
general and administrative  expenses in dollar amount were due to lower bad debt
expense and continuing cost control programs.
<PAGE>

      Interest  expense  decreased  by $16,000 to $97,000  for the three  months
ended December 31, 1997 compared to $114,000 for the three months ended December
31, 1996. The decrease was due to decreased borrowings.

      Net earnings were $3,000,  or $0.00 earnings per share (basic and diluted)
for the  three  months  ended  December  31,  1997,  compared  to a net  loss of
$313,000, or $0.09 loss per share (basic and diluted) for the three months ended
December 31, 1996.  The increase in net earnings in the first  quarter of fiscal
1998 compared to the  corresponding  quarter in fiscal 1997 was due to increased
sales,  improved gross margin and continuing cost control programs which reduced
operating expenses as a percentage of sales.


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 first quarter of fiscal 1998 from cash generated from operating  activities.
Net cash  provided by  operating  activities  was  $694,000 for the three months
ended December 31, 1997. When cash flow from  operations  exceeds current needs,
the Company pays down in part the balance owing on its operating  line of credit
rather than investing and  accumulating  excess cash,  resulting in low reported
cash balances.

      Accounts receivable decreased $853,000,  inventories decreased by $311,000
and accounts payable decreased $446,000 during the first quarter of fiscal 1998,
leading to a increase  in working  capital of  $123,000  during the  three-month
period.

      Prepaid expenses increased $143,000 during the three months ended December
31, 1997,  primarily due to trade show deposits and insurance  costs incurred in
the beginning of the Company's fiscal year.

      The Company  made  capital  expenditures  of $71,000 for the three  months
ended  December 31, 1997.  Management  anticipates  that  discretionary  capital
expenditures  for the remainder of fiscal 1998 will be  approximately  $400,000.
These anticipated expenditures will be financed from proceeds of short-term debt
and cash provided from operations.

      A $5.5  million  revolving  bank  operating  line of credit was  available
through  December 31, 1997.  Interest on the  borrowings was equal to the bank's
prime  lending rate (8.50% at December 31, 1997) plus an  additional  percentage
based on tangible net worth.  At December 31, 1997,  the  additional  percentage
above  prime was  1.50%.  Borrowings  under the line of credit  were  limited to
eligible  accounts  receivable  and  inventories  and were  subject  to  certain
additional  limits.  Borrowings  under  the  line  of  credit  were  secured  by
substantially  all of the assets of the  Company.  The line of credit  contained
covenants  which required a minimum level of tangible net worth, a maximum level
of inventories  and minimum ratios of current assets to current  liabilities and
debt service coverage. Additionally, the line of credit prohibited dividends. As
of December 31, 1997,  the Company was eligible to borrow $4.5 million under the
line of credit. Borrowings under the line of credit were $2.6 million as of that
date.

      During December 1997, the Company renewed the $5.5 million  revolving bank
operating line of credit through  December  1998.  Borrowings  under the renewed
line of credit are limited to eligible  accounts  receivable and inventories and
are subject to certain additional limits. Interest on borrowings is equal to the
bank's prime  lending rate plus an additional  percentage  based on debt service
coverage.  Beginning  January  1, 1998,  the  additional  percentage  was 1.00%.
Borrowings  under the line of credit are secured  only by  accounts  receivable,
inventories and certain  equipment.  The line of credit contains covenants which
require a minimum  level of  tangible  net worth and  minimum  ratios of current
assets to current liabilities and debt service coverage.
<PAGE>

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 6.    EXHIBITS AND REPORTS ON FORM 8-K


           (a) Exhibits

                      10.1       Loan Agreement dated December 19, 1997 between
                                 the Company and U.S. National Bank Association

                      10.2       Promissory Note dated December 17, 1997 made
                                 by the Company in favor of U.S. National Bank
                                 Association

                      27         Financial Data Schedule

           (b) Reports on Form 8-K

                      A current  report on Form 8-K, dated December 1, 1997, was
                      filed on December 3, 1997 to report a  director's
                      resignation.


<PAGE>


                                   SIGNATURES


      Pursuant to the  requirements 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.

                                         PHOENIX GOLD INTERNATIONAL, INC.


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

Dated:  February 10, 1998

<PAGE>



                                INDEX TO EXHIBITS



    Exhibit                                                               Page
    -------                                                               ----

      10.1      Loan Agreement dated December 19, 1997
                between the Company and U.S. National Bank
                Association                                                 15

      10.2      Promissory Note dated December 17, 1997
                made by the Company in favor of U.S.
                National Bank Association                                   21

      27        Financial Data Schedule                                     33