U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   Form 10-QSB

         (MarkOne)

          [X]  QUARTERLY  REPORT PURSUANT  SECTION 13 OR 15(d) OF THE SECURITIES
               EXCHANGE ACT OF 1934

               For the quarterly period ended December 31, 1996.

          [ ]  TRANSITION   REPORT  PURSUANT  SECTION  13  OR  15(d)  OF  THE
               SECURITIES EXCHANGE ACT OF 1934

               For the transition period from _____________  to ______________

                    Commission file number: 333182

                        The Ashton Technology Group, Inc.

                             Delaware                         22-6650372
                     (State of incorporation)                (IRS Employer
                                                          Identification No.)

                          1900 Market Street, Suite 701
                             Philadelphia, PA 19103
                    (Address of principal executive offices)

                                 (215) 751-1900
                (Issuer's telephone number, including area code)
              (Former name, former address and former fiscal year,
                         if changed since last report)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act 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 __

                      APPLICABLE ONLY TO CORPORATE ISSUERS

                The number of shares outstanding of common stock,
                      as of December 31, 1996: 7,562,500.




<PAGE>

                        THE ASHTON TECHNOLOGY GROUP, INC.

                               INDEX - FORM 10-QSB

                                December 31, 1996




PART I - FINANCIAL INFORMATION.................................................


ITEM 1. FINANCIAL STATEMENTS...................................................

       Consolidated Balance Sheets.............................................
       As of December 31, 1996 and March 31, 1996

       Consolidated Statements of Operations...................................
       For the Three and Nine Months Ended December 31, 1996 and 1995

       Consolidated Statements of Cash Flows...................................
       For the Nine Months Ended December 31, 1996 and 1995


NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS...........................

ITEM 2.  MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION
         AND RESULTS OF OPERATIONS.............................................


PART II - OTHER INFORMATION....................................................

Item 5.    Other Information...................................................

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


SIGNATURES.....................................................................



<PAGE>

                         PART I - FINANCIAL INFORMATION




ITEM 1.  FINANCIAL STATEMENTS


<PAGE>





               The Ashton Technology Group, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                   As of December 31, 1996 and March 31, 1996

<TABLE>
<CAPTION>
                          ASSETS                              December 31, 1996         March 31, 1996
                                                              -----------------         --------------
                                                                 (UNAUDITED)               (AUDITED)
<S>                                                               <C>                     <C>
Current Assets:
   Cash and cash equivalents                                       $  1,416,032           $      31,021
   Contracts receivable, net of allowance for doubtful accounts       1,197,681                      --
   Notes receivable from stockholders                                    91,448                      --
   Prepayments and other current assets                                 171,580                      --
                                                                 ---------------         ---------------
     Total Current Assets                                             2,876,741                  31,021

Property and equipment, net                                             963,455                  21,359
Deferred offering costs                                                   1,960                 614,856
Investment in unconsolidated investee                                   100,000                 708,844
Goodwill, net                                                           582,691                      --
Other assets                                                             70,016                  27,590
                                                                 ===============         ===============
                Total Assets                                       $  4,594,863             $ 1,403,670
                                                                 ===============         ===============
</TABLE>



                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

<TABLE>

<S>                                                                <C>                    <C>
Current Liabilities:
   Accounts payable and accrued expenses                            $  1,236,476           $  1,067,429
   Billings in excess of costs                                           205,861                     --
   Notes payable to stockholders                                              --              1,244,771
     Total current liabilities                                         1,442,337              2,312,200
Long-term debt                                                                --               650,000
     Total liabilities                                                 1,442,337              2,962,200
Minority Interest                                                        412,610                     --
Commitments and contingencies
Stockholders' Equity (Deficiency):
     Preferred stock - $.01 par value                                         --                     --
     Common stock - $.01 par value                                        75,625                 52,900
     Warrants outstanding, exercise price of $5.85                       618,125                     --
     Additional paid-in capital                                        9,898,192              1,341,109
     Treasury stock                                                           --              (300,000)
     Accumulated deficit                                             (7,852,026)            (2,652,539)
     Total stockholders' equity (deficiency)                           2,739,916            (1,558,530)
                Total Liabilities and
                Stockholders' Equity (Deficiency)                   $  4,594,863           $  1,403,670
                                                                    ============           ============            
 

              The accompanying notes are an integral part of these
                       consolidated financial statements.
</TABLE>

<PAGE>


               The Ashton Technology Group, Inc. and Subsidiaries
                      Consolidated Statements of Operations
         For the Three and Nine Months Ended December 31, 1996 and 1995
                                   (Unaudited)
<TABLE>
<CAPTION>

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

<S>                                               <C>                   <C>            <C>                  <C>         
Revenues                                          $  1,501,244          $      --      $ 4,663,332          $         --
                                                  ------------          ---------      -----------          ------------
Costs and expenses:

   Cost of revenues                                  1,183,388                 --         3,592,156                    --

   Development costs                                   668,518          1,355,893         2,643,462             1,355,893

   Selling, general and administrative expenses        815,816            143,541         2,692,935               300,153
                                                    -----------         ---------       -----------           -----------
         Total costs and expenses                    2,667,722          1,499,434         8,928,553             1,656,046
                                                    -----------         ---------       -----------           -----------

Loss from operations                                (1,166,478)        (1,499,434)       (4,265,221)           (1,656,046)

Other costs and revenues:

    Cost of corporate restructuring                  (702,678)                 --         (702,678)                    --

    Interest income (expense), net                      15,105           (41,092)           113,865              (51,448)

    Equity in earnings of unconsolidated
    subsidiary                                              --             31,616                --                31,616

    Minority interest in earnings of subsidiary       (37,085)                 --         (118,153)                    --
                                                   -----------        -----------       -----------           -----------
Loss before provision for income taxes             (1,891,136)        (1,508,910)       (4,972,187)           (1,675,878)

Provision for income taxes                             155,800                 --           227,300                    --
                                                   -----------        -----------       -----------        --------------
Net loss                                                     $                  $                          $  (1,675,878)
                                                                                                           ==============
                                                   (2,046,936)        (1,508,910)      $(5,199,487)
                                                   ==========         ==========       =========== 

Net loss per common share                          $                  $     (.29)      $                   $         (.32)
                                                                      ===========                          ===============
                                                         (.27)                                (.73)         
                                                   ===========                          ===========
Weighted average number of common shares
outstanding                                          7,562,500          5,290,000         7,150,416             5,290,000
                                                   ===========         ==========       ============            =========


                 The accompanying notes are an integral part of
                    these consolidated financial statements.
</TABLE>



<PAGE>


                       The Ashton Technology Group, Inc. and Subsidiaries
                             Consolidated Statements of Cash Flows
                      For the Nine Months Ended December 31, 1996 and 1995
                                          (Unaudited)

<TABLE>
<CAPTION>
                                                                       Nine Months Ended
                                                                            December 31,
                                                                 --------------------------
                                                                 1996                  1995
                                                                 ----                  ----

CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                          <C>                  <C>           
Net loss                                                     $  (5,199,487)       $  (1,675,878)

Adjustments to reconcile net loss to net cash (used in)
provided by operating activities, net of acquired
business in 1996:
         Depreciation and amortization                              253,827               27,910

         Development costs                                               --            1,355,893

         Equity in earnings of unconsolidated investee                   --             (31,616)

Changes in operating asset and liabilities

   Increase in contracts receivable, net                          (229,469)                    --

   Increase in prepayments and other                              (236,094)             (17,152)

   (Decrease) Increase in accounts payable and accrued            (250,440)               48,741
   expenses
   Increase in billings in excess of costs                          194,043                   --
                                                            ----------------      ---------------
         Net cash (used in) provided by operating               (5,467,620)            (292,102)
         activities
                                                            ----------------      ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of fixed assets                                     (1,012,917)             (19,388)

   Cash paid for acquisition of CSI(R), net of 
   cash acquired                                                   (512,012)            (679,024)
   Increase in minority interest                                    118,153                   --
                                                            ----------------      ---------------
         Net cash used in investing activities                  (1,406,776)            (698,412)
                                                            ----------------      ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Issuance costs for private placement                             (1,960)             (67,340)

   Issuance costs for initial public offering                     (282,001)            (164,500)

   Proceeds from initial public offering                         10,394,709                   --

   Proceeds from notes payable                                      250,000            1,340,346

   Collection of receivable in connection with
   issuance of common stock                                              --               24,332

   Payment of notes payable                                     (2,101,341)                   --
                                                                                  ---------------
                                                            ----------------
         Net cash provided by financing activities                8,259,407            1,132,838
                                                            ----------------      ---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                         1,385,011              142,324
Cash and cash equivalents, beginning of period                       31,021                    --
                                                            ----------------      ---------------
Cash and cash equivalents, end of period                    $     1,416,032        $     142,324
                                                            ================      ===============

                 The accompanying notes are an integral part of
                    these consolidated financial statements.
</TABLE>


<PAGE>



THE  ASHTON  TECHNOLOGY   GROUP,  INC.  AND  SUBSIDIARIES   NOTES  TO  UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS

1.   DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION1. DESCRIPTION OF BUSINESS
     AND BASIS OF PRESENTATION

     The accompanying  consolidated  financial statements for the three and nine
months ended  December  31, 1996  include the accounts of The Ashton  Technology
Group,  Inc.  ("Ashton") and its subsidiaries,  Universal  Trading  Technologies
Corporation   ("UTTC")  and  Computer  Science   Innovations,   Inc.  ("CSI(R)")
(collectively,  the "Company").  The financial statements for the three and nine
months ended December 31, 1995 represent the accounts of Ashton.  On October 25,
1995, Ashton acquired 80% of the common stock of UTTC and on May 2, 1996, Ashton
purchased  additional  shares of CSI(R) which  enabled the Company to own 80% of
both classes of CSI's(R)  common stock.  These business  combinations  have been
accounted  for as a  purchase.  Prior  to  September  30,  1995,  Ashton  had an
investment in CSI(R) that was accounted for using the equity method.

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared  by the  Company  in  accordance  with  generally  accepted  accounting
principles  for  interim  financial   statements  and  in  accordance  with  the
instructions  for  Form  10-QSB.  Accordingly,  they do not  contain  all of the
information and footnotes required by generally accepted  accounting  principles
for  complete  financial   statements.   In  the  opinion  of  management,   the
accompanying  unaudited  consolidated financial statements have been prepared on
the same basis as the audited statements and include all adjustments, consisting
only of normal recurring  adjustments,  which are necessary for a fair statement
of the results of the interim  periods  presented.  These  financial  statements
should be read in  conjunction  with the  footnotes  contained in the  Company's
10-KSB for the fiscal year ended March 31, 1996.

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

2.   INITIAL PUBLIC OFFERING OF STOCK

     On May 2, 1996,  Ashton's  previously filed Registration  Statement on Form
SB-2 became effective and the Company  completed an initial public offering (the
"Offering")  of 2,150,000  shares of common stock at an offering  price of $4.50
per share and 2,150,000  warrants at $.25 per warrant.  The common stock and the
warrants are separately  tradable.  The Company granted to the  underwriters the
right to  exercise  over-allotment  options  of 322,500  shares of common  stock
and/or 322,500  warrants at the public  offering rate,  within 45 days of May 2,
1996. On May 7, 1996, the underwriters  exercised the over-allotment options and
offered an additional 322,500 shares of common stock and 322,500 warrants to the
public  at $4.50  per share  and $.25 per  warrant.  As a result of the  initial
public offering, the Company received net proceeds of approximately  $10,395,000
($9,498,000  after out of pocket  expenses  associated  with the  offering)  and
increased its total shares of common stock and warrants outstanding by 2,472,500
each. The net proceeds from the Offering were used to repay all notes payable to
stockholders,  long-term debt and related accrued interest in existence  through
the date of the Offering and provide working capital. The net proceeds were also
used to purchase the  additional  shares of CSI(R) stock and provide the Company
with additional working capital.

     Concurrent with the initial public offering, the Company registered 760,000
additional  warrants  to purchase  common  stock.  The  warrants  were  issuable
automatically  upon the  completion  of the offering in exchange for the already
existing outstanding common stock shares.


<PAGE>


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

        THIRD  QUARTER  OF FISCAL  1997  COMPARED  TO THIRD  QUARTER OF FISCAL
        1996.THIRD  QUARTER OF FISCAL 1997 COMPARED TO THIRD QUARTER OF FISCAL
        1996.

     The  results of  operations  for the third  quarter of fiscal  1997 are not
comparable  to the third  quarter of fiscal 1996  because all of the accounts in
fiscal 1996 were the accounts of Ashton only,  whereas fiscal 1997 accounts also
include Ashton's subsidiaries, Universal Trading Technologies Corporation (UTTC)
and Computer  Science  Innovations  (CSI(R))  (See Footnote 1.  "Description  of
Business and Basis of Presentation".)

     The Company had revenues of $1,501,244  for the quarter ended  December 31,
1996 and revenues of $4,663,332 for the nine months ended December 31, 1996. All
of the Company's revenues, and the related "cost of revenues", were generated by
the Company's CSI(R)subsidiary.

     During the three months ended December 31, 1996, the Company incurred a net
loss of $2,046,936  and for the nine months ended December 31, 1996, the Company
incurred  a net loss of  $5,199,487.  The  losses  for the  three  months  ended
December 31, 1996,  include the cost of corporate  restructuring  related to the
resignation of Raymond T. Tate as Chairman,  President and C.E.O of Ashton;  the
subsequent  closing of Ashton's  corporate  offices in Columbia,  Maryland;  the
transfer of all corporate functions to Philadelphia;  and the termination of the
eight person staff in Maryland. (None of these positions will be replaced except
the financial control function.)

     Cost of Corporate Restructuring

     On  September  6, 1996,  Robert A.  Eprile  filed an amended  Schedule  13D
relating to his  ownership of common stock of Ashton.  On September  13, 1996, a
group filed a Schedule 13D, which was amended on September 17, 1996.  This group
was comprised of Robert A. Eprile,  Fredric W.  Rittereiser,  John A. Blohm, The
Dover Group,  Inc. and affiliates of the Dover Group  (collectively,  the "Group
Members").  The Group Members were  concerned  that the management of Ashton was
not  taking   appropriate   measures  to  protect  the   interests  of  Ashton's
stockholders  and to  enhance  the  value of the  stockholders'  investments  in
Ashton.  Through legal counsel,  the Group Members  commenced  discussions  with
Ashton's legal counsel and counsel for Raymond T. Tate. These discussions led to
a  resolution  of the Group  Members'  differences  with  Raymond T. Tate and to
Tate's  resignation as Chairman,  President,  and CEO of Ashton (see "Settlement
Agreement" below.)

     The Company has recorded a charge of $702,678 for  corporate  restructuring
costs.  This charge  includes legal fees,  severance pay,  relocation  costs and
termination payments.

     Development Costs

     During the three months  ended  December  31,  1996,  the Company  incurred
$668,518 of development costs on a consolidated  basis. Ashton incurred costs of
$316,507 for the ATED encryption device. UTTC incurred costs of $352,011 for the
development  of the  UTSTM  system  which  will  be an  electronic  pricing  and
transaction  facility for trading  exchange  listed and NASDAQ NMS securities in
conjunction with the Philadelphia Stock Exchange.

     Capital Equipment

     During the three months ended December 31, 1996, the Company spent $124,285
for the acquisition of equipment,  primarily  computer hardware and software for
the UTSTM system.

     Selling, General and Administrative Expenses

     During the three months  ended  December  31,  1996,  the Company  incurred
$815,816  of Selling,  General  and  Administrative  (SG&A)  expenses.  On a per
subsidiary basis,  Ashton incurred  $314,681 of SG&A expense,  UTTC $397,522 and
CSI $103,613. The largest component of Ashton and UTTC's SG&A expenses was labor
costs which amounted to $88,997 for Ashton and $184,374 for UTTC.

     Liquidity

     At  December  31,  1996,  the  Company  had cash and  cash  equivalents  of
$1,416,032.  Management  believes that the Company has  sufficient  resources to
complete  its  initial  development  program  for ATEDs and the UTS  system.  To
provide financing for the development of new transactional  products,  marketing
and working capital UTTC commenced a private placement on December 26, 1996. See
"Subsequent  Events." There can be no assurance that the UTTC private  placement
will not be amended or terminated,  or that any securities will be sold pursuant
thereto. In addition to the UTTC private placement, the Company is continuing to
explore other financing alternatives,  including borrowings and further debt and
equity  offerings,  which  management  believes are  currently  available to the
Company.  However,  there can be no  assurance  that the Company will be able to
raise  additional  financing on favorable  terms,  if at all, or that it will be
able to do so on a timely  basis.  There can be no assurance  that the Company's
actual cash  requirements  will not exceed its anticipated cash  requirements or
that additional cash requirements or additional financing will not be required.

     Settlement Agreement

     On October 22, 1996,  The Ashton  Technology  Group,  Inc. (the  "Company")
entered into a settlement agreement (the "Settlement  Agreement") with the Group
Members,  Raymond T. Tate and Helen J. Tate as trustee for the Tate Trusts.  The
Settlement  Agreement resolved the differences among the parties thereto related
to the  management  and  direction  of the Company.  Pursuant to the  Settlement
Agreement,  on October 22, 1996, Mr. Tate resigned from his position as director
of the Company and its subsidiaries and all officer positions held by him in the
Company and its subsidiaries.  Pursuant to the Settlement Agreement,  on October
22,  1996,  the Board of  Directors  of the Company  elected  Fred S.  Weingard,
Executive Vice President for  Technology  and Advanced  Computer  Systems of the
Company's  subsidiary Universal Trading  Technologies  Corporation,  to fill the
vacancy on the Company's  Board of Directors  created by the  resignation of Mr.
Tate.

     On October 22, 1996,  after closing the  transactions  contemplated  by the
Settlement Agreement,  the  newly-constituted  Board of Directors of the Company
convened a meeting and (i) elected Robert A. Eprile as Chairman of the Board and
Treasurer of the Company;  (ii)  appointed Mr.  Rittereiser  President and Chief
Executive Officer of the Company and Chairman of the Board of UTTC.

     On October 23, 1996,  Vice Admiral (U.S.  Navy retired) Albert J. Baciocco,
Jr. resigned from his positions as a director of the Company and its subsidiary,
Computer Science  Innovations,  Inc. On October 25, 1996, Dr. Ruth M. Davis also
resigned her position as a director of the Company.  The Board of Directors  has
not filled the vacancies created by such resignations.

     The Settlement  Agreement and other agreements thereto were all attached as
Exhibits to the Form 8-K of the Company filed on October 28, 1996.

     Subsequent Events

     UTTC has  commenced  a private  placement  offering  to raise a minimum  of
$3,000,000  and a maximum of  $4,500,000  from the sale of  non-convertible  and
convertible  notes  to  accredited  investors.   It  is  anticipated  that  upon
successful completion of an offering the net proceeds will be used as follows:

 -----------------------------      -----------            -----------
                                       Minimum               Maximum
 -----------------------------      -----------            -----------
 New Product Development            $1,900,000              $2,400,000
 Marketing                             250,000                 500,000
 Working Capital                       340,000                 910,000
 Total                              $2,490,000              $3,810,000
 -----------------------------      -----------            -----------

     There can be no  assurance  that the UTTC  offering  will not be amended or
terminated, or that any securities will be sold pursuant thereto.

     On January 30, 1997, Ashton, along with UTTC, Mr. Rittereiser and The Dover
Group, Inc.  ("Dover") (of which Mr. Rittereiser is the Chairman) entered into a
Settlement  Agreement  with David N.  Rosensaft  ("Rosensaft")  (a co-founder of
UTTC) under which the consulting  agreement  between Ashton,  UTTC and Rosensaft
dated  January  19, 1996 was deemed to be void ab initio and each of the parties
released and  discharged  each of the other parties from any and all  agreements
and  claims  which  any of them  have  against  any of the  other  parties.  The
Settlement Agreement granted Rosensaft  registration rights under the Securities
Act of  1933,  as  amended  (the  "Securities  Act")  under  certain  terms  and
conditions  for the 333,333  shares of UTTC common  stock that he owns.  Also on
January 30, 1997, Ashton, Dover,  Rittereiser and Rosensaft entered into a Stock
Purchase Agreement under which Dover, Rittereiser or his or its designee, agreed
to purchase  the 750,000  shares of Ashton  common  stock owned by  Rosensaft on
April 10,  1997 for a total  purchase  price of  $2,000,000  and Ashton  granted
Dover,  Rittereiser  or his or  its  designee,  registration  rights  under  the
Securities Act under certain  conditions for the 750,000 shares.  The Settlement
Agreement and the Stock Purchase  Agreement are filed as Exhibits 10.1 and 10.2,
respectively to this 10-QSB.


<PAGE>



                           PART II - OTHER INFORMATION

(Items 1 through 4 have been omitted since the items are either  inapplicable or
the answer is  negative)



Item 5.  Other Information

         See "Subsequent Events" in Item 2 above.

Item 6.  Exhibits and Reports on Form 8-K

         (A)      Exhibits

         Exhibit 10.1 -   Settlement Agreement dated January 30, 1997 among the 
                          Company, UTTC, Fredric W. Rittereiser; The Dover 
                          Group, Inc. and David A. Rosensaft.

         Exhibit 10.2 -   Stock Purchase Agreement dated January 30, 1997 among 
                          the Company, Fredric W. Rittereiser; The Dover Group, 
                          Inc. and David A. Rosensaft.

         Exhibit 11 -      Earnings per share computation.

         Exhibit 27 -      Financial Data Schedule

         (B) Reports on Form 8-K

             October 28, 1996 - Report on Change in Control of the Company


<PAGE>


                                   SIGNATURES


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


          The Ashton Technology Group, Inc.
          --------------------------------
                      (Registrant)






Date:  February 14, 1997                By:  /s/ Frederic W. Rittereiser
                                             ---------------------------
                                             Chief Executive Officer


<PAGE>


                                  EXHIBIT INDEX



Exhibit 10.1 
-------------
Settlement Agreement


Exhibit 10.2
------------                                                                    
Stock Purchase Agreement

Exhibit 11
----------                                                                      
Earnings per share computation

Exhibit 27
----------                                                  
Financial Data Schedule