ASHTON TECHNOLOGY GROUP INC
8-K, 1998-12-10
COMPUTER PROGRAMMING SERVICES
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<PAGE>
 
                                   FORM 8-K


                                CURRENT REPORT


                      PURSUANT TO SECTION 13 OR 15(D) OF
                          THE SECURITIES ACT OF 1934


                       Date of Report: December 10, 1998


                       THE ASHTON TECHNOLOGY GROUP, INC.
            (Exact name of registrant as specified in its charter)



                                    1-11747
                           (Commission file number)

         Delaware                                 22-6650372
 (State or other jurisdiction                  (I.R.S. Employer
     of incorporation)                        Identification No.)



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


                                (215) 751-1900
             (Registrant's telephone number, including area code)



                                Not applicable
         (Former name or former address, if changed since last report)
<PAGE>
 
ITEM 5.  LEGAL PROCEEDINGS


   Alliant Techsystems, Inc. ("Alliant") with whom the Registrant had a contract
for the production of certain ATED Encryption Devices ("ATEDs"), had demanded
payment of approximately $292,000, under the contract between Alliant and the
Registrant, which the Registrant was contesting.  On October 22, 1997, the
Registrant filed a Complaint against Alliant in the Court of Common Pleas,
County of Philadelphia, Pennsylvania ("PA") for damages and failure of Alliant
to perform its obligations under its contract with the Registrant.  On December
15, 1997, Alliant filed its Answer and Counterclaims totaling $292,000.  Since
the filing of this original lawsuit on October 22, 1997, the Registrant
encountered warranty-related problems while testing the ATEDs.  Alliant had
failed to address the reported problems.  As a result, the Registrant filed a
second Complaint against Alliant for breach of warranty.  The second action was
commenced on July 20, 1998 and sought damages in excess of $50,000.

   On November 16, 1998, a non-jury civil trial commenced related to the
Registrant's first Complaint as well as Alliant's Counterclaim.  On November 23,
1998, verdicts were rendered in favor of the Registrant in the amount of
$316,000 (plus interest of approximately $28,000) that resolved the pending
Complaint by the Registrant against Alliant.  Additionally, a verdict for
Registrant was rendered which dismissed Alliant's Counterclaims against the
Registrant.



                                  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 hereunto duly authorized.


                                  /s/ Arthur J. Bacci
Date:  December 10, 1998        ____________________________________
                                Arthur J. Bacci
                                Chief Financial Officer


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