FORM 10-Q

                 SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C.  20549




(Mark one)

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1997

                                      or

[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER:  0-7513


                   ARTISTIC GREETINGS INCORPORATED
            (Exact name of registrant as specified in its charter)

               DELAWARE                                16-0909929
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                   Identification No.)

                                ONE KOMER CENTER
                            ELMIRA, NEW YORK  14902
                                (607) 733-5541
   (Address of principal executive offices, including Registrant's telephone
                                    number)


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.

[ X ] Yes  [   ] No


As of November 1, the Registrant had 5,853,164 shares of its common stock
issued and outstanding.
<PAGE>



                   ARTISTIC GREETINGS INCORPORATED

                              FORM 10-Q INDEX

               FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997



                                                               PAGE NO.

PART I. FINANCIAL INFORMATION

        Item 1. Financial Statements

                 Balance Sheets                                    3

                 Unaudited Statements of Operations                4

                 Unaudited Statements of Cash Flows                5

                 Notes to Condensed Financial Statements           6

        Item 2. Management's Discussion and Analysis of
                 Financial Condition and Results of Operations     8

PART II. OTHER INFORMATION

        Item 5. Other Information                                 12

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

               Signature                                          13

               Exhibit Index                                      14


                                       2

<PAGE>
                        PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                   ARTISTIC GREETINGS INCORPORATED
                              BALANCE SHEETS

<TABLE>
<CAPTION>
                                                        September    December
                                                          30, 1997   31, 1996
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)       (Unaudited)
                        
                        ASSETS
CURRENT ASSETS:
<S>                                                     <C>        <C>
  Cash and cash equivalents                                $  245     $   99
  Marketable securities:
     Trading, at market 
     (cost $1,190 in 1997 and $2,418 in 1996)               1,413      2,881
     Available for sale at market 
     (cost $405 in 1997 and $9 in 1996)                       450         19
  Trade receivables - net                                   1,958      1,252
  Inventories:
     Finished goods                                           874        652
     Work-in-process                                          308        561
     Raw materials and supplies                             1,801      1,057
  Prepaid advertising                                       5,519      3,064
  Prepaid expenses and other current assets                   599        500

       TOTAL CURRENT ASSETS                                13,167     10,085

Deferred advertising                                        3,386      2,113
Property, plant and equipment - net                        17,090     16,237
Net cash surrender value of life insurance                    475        433
Other assets                                                  143        130

       TOTAL ASSETS                                       $34,261    $28,998

                LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

  Current portion of long-term debt                        $  145     $  153
  Accounts payable, trade                                  12,472      9,847
  Accrued liabilities                                       1,519      2,386
  Customer advances                                           903        451
  Income tax payable                                          225        113

       TOTAL CURRENT LIABILITIES                           15,264     12,950

Long-term debt                                              5,022      1,034
Other liabilities                                             308        383

       TOTAL LIABILITIES                                   20,594     14,367

Common stock subject to put option - 500,000 shares             -      2,343

STOCKHOLDERS' EQUITY:

  Common stock, par value $.10:
       Authorized:  10,000,000 shares
       Issued: 6,038,520 shares in 1997;
             6,037,720 shares in 1996                         654        604
  Additional paid-in capital                               11,055     11,042
  Unrealized gains on marketable securities 
  held as available for sale, net of tax effect                38          1
  Retained earnings                                         2,842      1,526

                                                           14,589     13,173

  Less: Treasury stock at cost (695,356 and 
        215,356 shares in 1997 and
        1996, respectively)                                  (922)      (885)

       TOTAL STOCKHOLDERS' EQUITY                          13,667     12,288

       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $34,261   $ 28,998
</TABLE>

THE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THESE FINANCIAL STATEMENTS.

                ARTISTIC GREETINGS INCORPORATED
                UNAUDITED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                          QUARTER ENDED                  NINE-MONTHS ENDED
                                                          September 30,                    September 30,
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)        1997             1996           1997             1996
<S>                                              <C>              <C>              <C>              <C>
Net sales                                           $24,272          $23,643          $70,703          $72,901
Cost of sales                                        10,700            9,750           30,095           29,732
Gross profit                                         13,572           13,893           40,608           43,169
Selling, advertising, general and administrative     12,519           12,835           38,240           40,236
expenses
INCOME FROM OPERATIONS                                1,053            1,058            2,368            2,933
Other income (expense)
    Interest and dividend income                         19               11               70               26
    Net unrealized (losses) gains on trading            (95)              48               24              100
securities
    Net realized (losses) gains on marketable           253               (3)             314               80
securities
    Loss on disposal of fixed assets                   (451)               -             (451)               -
    Interest expense                                    (70)            (194)            (204)            (662)
    Bonus & Profit Sharing Expense                     (138)               -             (441)               -
    Other                                                 8             (323)              62             (778)
INCOME BEFORE TAXES                                     579              597            1,742            1,699
Provision for income taxes                                8                -              426                -
NET INCOME                                             $571             $597           $1,316           $1,699
Net income per common and common equivalent share    $ 0.10           $ 0.09           $ 0.21           $ 0.27
Weighted average number of common shares            5,852,870        6,329,551        6,189,735        6,325,174
   outstanding
</TABLE>

THE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS ARE AN INTEGRAL 
PART OF THESE FINANCIAL STATEMENTS.

                                                 3

<PAGE>
                   ARTISTIC GREETINGS INCORPORATED
                    UNAUDITED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                NINE-MONTHS ENDED
                                                        September 30,           September 30,
                                                        1997                    1996
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                     <C>                  <C>
Net income                                                   $ 1,316            $ 1,699
Adjustments to reconcile net income 
to net cash provided by operating activities:
  Depreciation and amortization                                1,495              1,814
  Loss on disposal of fixed assets                               451                  -
  Allowance for Doubtful account                                 (75)                 -
  Net unrealized (gains) on trading securities                    24               (100)
  Net realized losses (gains) on marketable securities          (106)               (80)
  Purchase of trading securities                                  23             (1,901)
  Proceeds from sale of trading securities                     1,036              1,243
  Amortization of interest credit from New York State Urban
     Development Corporation grant                               (75)               (75)
  Accretion of common stock subject to put option                157                234
  Increase in cash surrender value of life insurance             (42)               (41)
  Decrease (increase) in assets:
     Trade receivables                                          (631)                57
     Income taxes receivable                                       -                900
     Inventories                                                (713)             2,825
     Prepaid advertising, prepaid expenses and other          (2,567)             2,597
     Deferred advertising                                     (1,273)              (265)
  Increase (decrease) in liabilities:
     Accounts payable, trade                                   2,625             (3,610)
     Accrued liabilities                                        (867)               986
     Customer advances                                           452                457
     Income taxes payable                                        112                  -

NET CASH PROVIDED BY OPERATING ACTIVITIES                      1,296              6,740

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property, plant and equipment                     (2,799                  -
Sale of marketable securities                                    150              2,694
Purchase of marketable securities                                 (7)                 -

       NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES    (2,656)             2,694

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayment of amounts received under lines of credit          (12,240)           (20,804)
Proceeds received under lines of credit                       16,290             16,245
Purchase of Treasury Stock                                       (37)                 -
Proceeds from issuance of common stock                            63                 42
Payment of put option                                         (2,500)                 -
Repayment of long-term debt                                      (70)            (4,551)

       NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES     1,506             (9,068)

Net increase in cash and cash equivalents                        146                366
Cash and cash equivalents at beginning of period                  99                529
Cash and cash equivalents at end of period                     $ 245              $ 895

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid (received) during the period for:
  Interest                                                     $ 124             $  517
  Income taxes, net of refunds received                          320               (818)

</TABLE>
THE ACCOMPANYING NOTES TO CONDENSED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THESE FINANCIAL STATEMENTS.

                                                 4

<PAGE>

                    ARTISTIC GREETINGS INCORPORATED
                   NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  (Unaudited)

NOTE 1.   STATEMENT OF MANAGEMENT

    The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission.  Certain information and footnote
disclosures normally included in financial statements, prepared in accordance
with generally accepted accounting principles, have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading.  The
Company incorporated reclassifications of 1995 information to conform to the
current presentations of its financial statements included herein.  It is
suggested that these condensed financial statements be read in conjunction with
the financial statements and the notes thereto included in the Company's 1996
report on Form 10-K.

    In the opinion of management, the information contained herein reflects all
adjustments that are of a normal recurring nature and necessary to provide a
fair statement of the results of operations for the periods presented in the
statements of operations included herein.

NOTE 2. FORM 10-K

    Reference is made to the following footnotes included in the Company's 1996
report on Form
10-K:

    1.  Summary of Significant Accounting Policies
    2.  Marketable Securities
    3.  Inventories
    4.  Property, Plant and Equipment
    5.  Accrued Liabilities
    6.  Income Taxes
    7.  Leases
    8.  Debt
    9.  Defined Contribution Savings Plan
    10. Stock Options
    11. Stockholders' Equity
    12. Related Party Transactions
    13. Commitments and Contingencies
    14. Supplemental Disclosure of Non-cash Investing and Financing Activity
    15. New Accounting Standards

                                                 5

<PAGE>

                    ARTISTIC GREETINGS INCORPORATED
                                  (UNAUDITED)

(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)


NOTE 3. NET INCOME PER SHARE

    Net  income  or  loss per common and common equivalent share is computed on
the basis of the weighted  average  of  common  and  common  equivalent  shares
outstanding   during  the  period.   The  weighted  average  number  of  shares
outstanding was  5,852,870  for  the  quarter  ended  September  30,  1997  and
6,329,551 for the quarter ended September 30, 1996.

    The  weighted  average  number  of shares outstanding was 6,189,735 for the
nine-month period ended September 30,  1997  and  6,325,174  for the nine-month
period ended September 30, 1996.

    The Company accounts for net income per common and common  equivalent share
in accordance with the provisions of Accounting Principles Board Opinion No. 15
(APB No. 15).  In March 1997, Statement of Financial Accounting  Standards  No.
128  (SFAS  No.  128),  "Earnings Per Share" was issued.  SFAS No. 128 replaces
primary Earnings Per Share  (EPS)  with  basic  EPS.   Basic EPS is computed by
dividing reported earnings available to common stockholders by weighted average
shares  outstanding.   No  dilution for common share equivalents  is  included.
Fully diluted EPS, now called  diluted  EPS, is still required.  The Company is
required to adopt SFAS No. 128 retroactively  for periods ending after December
15, 1997.  On a pro forma basis, basic EPS and  diluted  EPS  for the three and
nine-months  ended  September 30, 1997 were $0.11 and $0.10, respectively,  the
same as reported EPS.

NOTE 4. LONG-TERM DEBT

     Long-term debt rose to $5.2 million since the end of the fiscal year 1996.
The Company funded from  its revolving credit line (the "Revolver") with Marine
Midland Bank ("Marine"), a  contractually  specified  $2.0  million advertising
payment to Valassis Communications, Inc. ("Valassis"), the Company's  exclusive
provider of Free Standing Insert advertising media.  A $2.5 million payment  to
Valcheck   was  also  funded  from  the  Revolver.   Additionally,  the Company
utilized  an  additional  $0.4  million  from  the Revolver to fund its working
capital.   See  "Item  2  -  Liquidity  and Capital Resources"  for  a  further
description of the Company's cash flow.   Finally,  the City of Elmira mortgage
increased in principal amount by $0.3 million as a result  of  the inclusion of
interest which had been accruing since 1991.

                                       6

<PAGE>

                    ARTISTIC GREETINGS INCORPORATED
                                  (UNAUDITED)

(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)


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

    The  following  discussion  contains  forward-looking  statements.   For  a
discussion  of  important  factors  that could cause actual results  to  differ
materially from such forward-looking  statements,  please  carefully review the
discussion   of   the   following  Risk  Factors:   "Recent  Losses;  Potential
Fluctuations  in  Operating  Results";  "Dependence  on  Effective  Information
Systems"; "Dependence on Key Personnel"; "Potential Volatility of Stock Price";
and  "Control  by Present  Stockholders,"  included  under  the  heading  "Risk
Factors" in Exhibit  99  to  this  Report,  which  Exhibit  is  incorporated by
reference herein, as well as the other information contained in this Report and
in the Company's periodic reports and other documents filed with the SEC.

Results of Operations:

NET SALES

    In the third quarter of 1997, the Company's sales increased 2.7% to $24,272
from  $23,643 in the comparable period of 1996.  This increase is  primarily  a
result  of  the  increase  in  check  sales  described  below.   Sales  in  the
personalized products category decreased 8.0% to $7,725 in the third quarter of
1997  from  $8,395  in  the  comparable  period  of  the  prior year due to the
continued  reduction  in  the purchase by the Company of less  responsive  mass
media advertising circulation.   Catalog  sales  increased by 7.1% to $4,091 in
the third quarter of 1997 from $3,819 in 1996 due  to  an  increase  by  4%  of
catalog circulation, additional product offerings and higher page counts in the
PERSONAL  TOUCH<reg-trade-mark>  catalog.   Check  sales  increased by 10.6% to
$11,417 in the third quarter of 1997, from $10,320 the prior  year.  The higher
check  sales  was  primarily  attributable  to an increase in first-time  check
orders from increased circulation and better  response  rates  in  the Company'
free standing insert media.

    For  the  nine months ended September 30, 1997, sales of $70,703 were  3.0%
lower than the $72,901 revenues reported for the comparable 1996 period.  Check
sales grew 4.7%  to  $34,014  in  the  nine  months of 1997 from $32,500 in the
comparable prior period.  Personalized product  sales decreased 8.4% to $25,254
in the first nine months of 1997 from $27,581 in the first nine months of 1996.
This decrease resulted from the reduction in the  purchase  of  less responsive
mass  media  circulation.  Catalog shipments were 2.0% lower at $8,996  through
September 30,  1997,  as compared to $9,175 in 1996, which reflects the effects
of a reduction in mailings  in  the  first  quarter  of  1997  as the result of
eliminating less profitable names from the Company's solicitation efforts.

COST OF SALES

    The  major  components  of cost of goods sold are materials, which  consist
primarily of paper and gift items; direct labor; and manufacturing overhead.

    The cost of materials in  the  third  quarter  of  1997  increased 28.5% to
$6,522 from $5,075 in the comparable period of 1996, which is  a  6.2% increase
as  a  percentage  of  sales between periods.  The increase as a percentage  of
sales represents a higher  component  of  material  cost  allocated  for  check
production  with  the  Company's outsourcing partner, as compared to mostly in-
house manufacturing in the  prior  comparable  period.  In the third quarter of
1996,  the  Company  engaged in an outsourcing arrangement  with  The  John  H.
Harland Company ("Harland")  for  the  manufacturing  of all its check-printing
requirements  (the "Outsourcing Agreement").  The increase  in  check  material
cost in connection  with the Outsourcing Agreement was offset by less scrap and
exchanges in personalized  products  and  catalog  manufacturing,  as well as a
reduction  in  manufacturing  overhead  and direct labor expense.  The cost  of
materials for the first nine months of 1997  increased  18.4%  to  $18,405 from
$15,538  in  the  1996 comparable period, which reflects a 4.7% increase  as  a
percentage of sales  from  year to year.  The increase as a percentage of sales
is due to the reasons outlined above for the third quarter.

    Direct labor decreased 24.7%  to  $1,326  in the third quarter of 1997 from
$1,762 in the third quarter of 1996, which represents  a  decrease of 2.0% as a
component of sales between periods.  Direct labor for the first  nine months of
1997 decreased 28.6% to $3,857 from $5,405 in the 1996 comparable period.  This
represents  a decrease of 2.1% as a component of sales between periods.   Year-
to-year reductions  in direct labor are directly associated with the diminished
labor required by the Company as a result of the Outsourcing Agreement, as well
as an internal reduction of direct labor due to increased efficiencies and less
exchanges within personalized products and catalog manufacturing.

    Manufacturing overhead  decreased  2.1%  to  $2,852 in the third quarter of
1997 from $2,913 in the comparable period of 1996, representing a 0.6% decrease
as a component of sales between periods. Employee  benefits  were  lower in the
third quarter of 1997 due to lower employment levels attributable primarily  to
the  Outsourcing Agreement.  Finally, depreciation expense decreased due to the
sale of  check-printing  equipment  in  the third quarter of 1996 in connection
with  the Outsourcing Agreement.  Manufacturing  overhead  decreased  10.9%  to
$7,833 in the first nine months of 1997 from $8,789 in the comparable period of
1996.   This  represents a decrease of 1.0% as a component of sales during that
period.   The same  reasons  as  outlined  above  for  quarterly  manufacturing
overhead changes apply to the nine-month changes from 1996 to 1997.

SELLING, ADVERTISING, GENERAL AND ADMINISTRATIVE (SG&A)

    The three  largest components of SG&A expenses are advertising, postage and
labor.

    Advertising  expense  of $8,152 in the third quarter of 1997 decreased 6.9%
from $8,752 in the comparable  period  of  1996, which represents a decrease of
3.4% as a component of sales between periods.   Advertising  expense  decreased
8.6% to $25,545 in the first nine months of 1997 from $27,936 in the comparable
period  of  1996,  which  represents a decrease of 2.2% as a component of sales
between the periods.  Advertising  expense  changes  through September 30, 1997
represent the continuation of the Company's strategy to  forego less profitable
advertising circulation while better leveraging the dollars  spent  to  produce
higher sales.

    Postage  and  shipping expense in the third quarter of 1997 increased 12.9%
to $2,380 from $2,108  in the comparable period of 1996, which represents a .9%
increase as a component  of  sales.  The increase in postage is attributable to
an increase in the cost of check  postage,  shipping and handling with Harland,
offset by a decrease in this category for personalized  products  due  to lower
exchanges and returns.  Postage and shipping expense for the first nine  months
of  1997 increased 1.7% to $6,637 from $6,526 in the comparable period of 1996,
which  represents an increase of .2% as a component of sales.  The same reasons
as above  for  quarterly  postage  and shipping changes apply to the nine-month
changes from 1996 to 1997.

    Administrative expense increased  in  the  third quarter of 1997 by 0.6% to
$1,987 from $1,975 in the comparable period of 1996,  representing  an increase
of .6% as a component of sales.  Administrative expense increased in  the first
nine  months of 1997 by 4.9% to $6,058 from $5,774 in the comparable period  of
1996, representing  an  increase  of  1.5%  as  a  component  of  sales.  These
increases  are  primarily due to increased depreciation from the implementation
of a new management  information  computer  system,  higher  professional  fees
associated  with  the Company's discussions regarding the potential sale of the
Company as further  described in Item 5 of this Report (the "Discussions"), and
non-recurring personnel-related expenses.

OTHER

    The Company recognized  other expense of $474 in the third quarter of 1997,
compared to an expense of $461  in  the  comparable  period  of 1996.  Interest
expense  decreased  to  $70  in  the  third  quarter of 1997 from $194  in  the
comparable  period  of  1996.   The decrease in interest  expense  was  due  to
reductions in long-term borrowing  associated with debt repayment in connection
with  the  Outsourcing  Agreement.  Please  also  see  "Liquidity  and  Capital
Resources" for a further  description  of  the  Company's  debt  and  cash flow
position.   Net  unrealized losses on trading securities were $95 in the  third
quarter of 1997 compared  to  a  gain  of $48 in the comparable period of 1996.
The Company recognized other expense of  $626 in the first nine months of 1997,
compared to an expense of $1,234 in the comparable  period  of  1996.  Year-to-
year  changes  through  September  30 are due to the same reasons as  discussed
above.  Additionally, the Company recognized  a  loss  on the disposal of fixed
assets of $451.

TAX PROVISION

    A tax provision of $8 was recorded in the third quarter of 1997 as compared
to no tax provision recorded in the third quarter of 1996.  A tax provision was
recorded in the third quarter of 1997, reflecting an effective tax rate of 36%,
offset by income tax refunds for previous years of $201.   The benefit of a net
operating loss carry forward was utilized in the third quarter of 1996, but due
to  1997  expected  profitability, a tax provision was required.   A  $426  tax
provision was recorded  in  the first nine months of 1997 as compared to no tax
provision in the comparable nine  months  of  1996.   The  reason  stated above
applies to the year-to-year comparison.

NET INCOME

    For  the  reasons  discussed  above, the Company's net income in the  third
quarter of 1997 decreased to $571 or  $.10  per share, from the prior period of
$597 or $.09 per share.  The Company's net income  in  the first nine months of
1997 decreased to $1,316 or $.21 per share, from a net income of $1,699 or $.27
per share, reflecting primarily that the Company paid no taxes in 1996.

LIQUIDITY & CAPITAL RESOURCES

    Cash  and  cash  equivalents, combined with marketable  securities  totaled
$2,108  at  September  30,  1997  and  $2,999  at  December  31,  1996.   Total
liabilities increased by  $6,227  to $20,594 at September 30, 1997 from $14,367
at December 31, 1996, as a result of the Outsourcing Agreement, under which the
Company has no inventory for its check  business  but  records accounts payable
for the cost of the subcontracted check production.  Long-term  debt  increased
to  $5,022  at  September  30,  1997  from  $1,034 at December 31, 1996 for the
reasons described in Note 5 to the Condensed  Financial Statements.  Income tax
payable increased to $225 at September 30, 1997 from $113 at December 31, 1996.
Accounts payable increased by 5.3% to $12,472 at September 30, 1997 from $9,847
at December 31, 1996, as inventories grew to service  expected higher volume in
the second half of the year.

                                       7

Working capital at September 30, 1997 was a negative $2.1 million.  The Company
is  operating  with a working capital deficit as a result  of  the  Outsourcing
Agreement, under  which the Company has no inventory for its check business but
records accounts payable  for  the  costs  of Harland's check production.  Cash
flows from operating activities in the third  quarter  of 1997 were positive by
$0.6 million as expected because of the Company's traditionally higher sales in
the third quarter.

    The  Company  has  historically  met its cash requirements  primarily  from
operating activities. An aggregate of  $4.5  million  in  payments were made in
June of 1997, all of which were funded from the Revolver.   These  payments, in
combination  with  negative  cash  flow of $1.0 million for the second quarter,
elevated  the balance under the Revolver  to  $4.1  million  with  availability
thereunder  capped  by  a borrowing base of $5.6 million.  As of July 18, 1997,
the  Company liquidated $1.5  million  of  its  investments  to  pay  down  the
Revolver.   As of November 1, 1997, the outstanding balance on the Revolver was
$5.4 million,  with  availability  capped  by a borrowing base of $6.4 million.
Operating activities are expected to fully fund the Company's cash requirements
in the fourth quarter.

    Management believes that the operating activities  of the Company, together
with  the  line  of  credit  available  under its Revolver, will  substantially
support its cash requirements for the next  twelve  months  and that sufficient
capital  resources  are available to the Company to provide adequate  liquidity
overall.  Management  is of the opinion that inflation will not have a material
effect on the operations  of  the  Company.  The Company is in compliance under
all financial and operating covenants of the Revolver.


                                       8

<PAGE>

                          PART II - OTHER INFORMATION

ITEM 5. OTHER INFORMATION.

    On October 22, 1997, the Company issued a press release stating that:  "The
Company announced on September 30, 1997, that it was engaged in discussions
regarding a possible sale of the Company and those discussions are continuing
with no resolution to report at this time."


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

    a)     Exhibits.  See Exhibit Index.

    b)     Reports on Form 8-K.  None.
                                        9

<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.


                                 ARTISTIC GREETINGS INCORPORATED



Dated: November 14, 1997     By: /S/THOMAS C. WYCKOFF
                                 Thomas C. Wyckoff
                                 Chief Operating Officer & Executive Vice
                                        President
                                 (Acting Principal Financial and Accounting
                                        Officer)

                                      10

<PAGE>
                                EXHIBIT INDEX

EXHIBIT 
NUMBER                        DESCRIPTION                   PAGES
                
11              Statement re: computation of per    See Note 3 to the Financial
                share earnings                      Statements contained in 
                                                        this report
                
27              Financial Data Schedule             Filed only with EDGAR 
                                                    filing, per Regulation S-K, 
                                                    Rule 601(c)(1)(v)

99              Risk Factors                        Filed Herewith