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                       SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549-1004

                        ________________________________


                                    FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 1996

                                       or

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

                       Commission File Number 000 - 19462


                                 ARTISOFT, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                        86-0446453
-------------------------------             ------------------------------------
(State or other jurisdiction of             (IRS employer identification number)
        incorporation)

                           2202 North Forbes Boulevard
                              Tucson, Arizona 85745
                                 (520) 670-7100
               ---------------------------------------------------
               (Address, including zip code, and telephone number,
                      including area code, of registrant's
                          principal executive offices)

      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 the
filing requirements for at least the past 90 days.

                               Yes  x         No
                                  -----         -----

       Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date (November 12, 1996).

                 Common stock, $.01 par value: 14,535,682 shares


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<PAGE>
                         Artisoft Inc. and Subsidiaries
                                      INDEX


                                                                           Page
                                                                           ----
PART I.    FINANCIAL INFORMATION

       Item 1.  Financial Statements

                  Consolidated Balance Sheets-
                     September 30, 1996 and June 30, 1996                    3

                  Consolidated Statements of Operations-
                     Three Months Ended
                     September 30, 1996 and 1995                             4

                  Consolidated Statements of Cash Flows-
                     Three Months Ended September 30, 1996
                     and 1995                                                5

                  Notes to Consolidated Financial Statements                6-7

       Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations             8-11


PART II.   OTHER INFORMATION

       Item 1.  Legal Proceedings                                            12

       Item 2. Changes in Securities                                         12

       Item 3. Defaults Upon Senior Securities                               12

       Item 4. Submission of Matters to a Vote by Security Holders           12

       Item 5. Other Information                                             12

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



SIGNATURES                                                                   13


EXHIBITS

       11       Computation of Net Income (Loss) Per Share                   14

       27       Financial Data Schedule                        

                                       2
<PAGE>
                         Artisoft, Inc. and Subsidiaries
                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share amounts)
<TABLE>
<CAPTION>

                                                                     September 30,  June 30,
ASSETS                                                                   1996         1996
                                                                     -------------  --------
                                                                      (unaudited)
<S>                                                                    <C>         <C>     
Current assets:
     Cash and cash equivalents                                         $ 15,852    $ 15,325
     Receivables:
          Trade accounts, net                                            13,364      16,768
          Income taxes                                                      706       1,635
          Notes and other                                                   875       1,405
     Inventories                                                          3,432       2,998
     Prepaid expenses                                                     1,410         906
     Deferred income taxes                                                6,297       4,426
                                                                       --------    --------
         Total current assets                                            41,936      43,463
                                                                       --------    --------


Property and equipment                                                   14,215      13,690
     Less accumulated depreciation and amortization                      (6,672)     (6,166)
                                                                       --------    --------
Net property and equipment                                                7,543       7,524
                                                                       --------    --------

Deferred income taxes                                                     3,141       3,141
Other assets                                                              3,452       3,584
                                                                       --------    --------
                                                                       $ 56,072    $ 57,712
                                                                       ========    ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                  $  4,175    $  3,333
     Accrued liabilities                                                  3,659       2,640
     Income taxes payable                                                   450         577
     Current portion of capital lease obligations                            79          85
                                                                       --------    --------
         Total current liabilities                                        8,363       6,635
                                                                       --------    --------

Capital lease obligations, net of current portion                            76          96

Commitments and Contingencies                                                 -           -

Shareholders' equity:
     Common stock, $.01 par value. Authorized 50,000,000 shares;
          issued 27,815,182 shares at September 30,
          1996 and 27,807,890 at June 30, 1996                              278         278
     Additional paid-in capital                                          96,112      96,075
     Retained earnings                                                   20,923      24,308
     Less treasury stock, at cost, 13,287,500 shares                    (69,680)    (69,680)
                                                                       --------    --------
         Total shareholders' equity                                      47,633      50,981
                                                                       --------    --------
                                                                       $ 56,072    $ 57,712
                                                                       ========    ========
</TABLE>
           See accompanying notes to consolidated financial statements
                                       3
<PAGE>
                         Artisoft, Inc. and Subsidiaries
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                 Three Months Ended September 30, 1996 and 1995
                    (in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                         September 30,
                                                                      ------------------
                                                                       1996        1995
                                                                       ----        ----
                                                                          (unaudited)
<S>                                                                  <C>         <C>     
Net sales                                                            $ 11,120    $ 14,980
Cost of sales                                                           3,930       5,548
                                                                     --------    --------
         Gross profit                                                   7,190       9,432
                                                                     --------    --------

Operating expenses:
     Sales and Marketing                                                7,005       6,412
     Product development                                                2,390       1,253
     General and administrative                                         1,438       1,357
     Restructuring cost                                                 1,805           -
                                                                     --------    --------
         Total operating expenses                                      12,638       9,022
                                                                     --------    --------

         Income (loss) from operations                                 (5,448)        410

Other income, net                                                         192         339
                                                                     --------    --------

         Income (loss) before income taxes                             (5,256)        749

Income taxes (benefit)                                                 (1,871)        285
                                                                     --------    --------

         Net income (loss)                                           $ (3,385)   $    464
                                                                     ========    ========

Net income (loss) per common and
     equivalent share                                                $   (.23)   $    .03
                                                                     ========    ========

Shares used in per share calculation                                   14,524      14,853
                                                                     ========    ========
</TABLE>
           See accompanying notes to consolidated financial statements
                                       4
<PAGE>
                         Artisoft, Inc. and Subsidiaries
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                               Three Months Ended
                                                                                                  September 30,
                                                                                               -------------------
                                                                                                 1996        1995
                                                                                               --------    -------
                                                                                                    (unaudited)
<S>                                                                                            <C>         <C>     
Cash flows from operating activities:
     Net income (loss)                                                                         $ (3,385)   $    464
     Adjustments to reconcile net income (loss) to net
        cash provided by operating activities:
            Depreciation and amortization                                                           718         615
            (Gain) loss  from disposition of property and equipment                                  (1)         34
            Deferred income taxes                                                                (1,871)        285
            Change in accounts receivable and inventory allowances                               (1,718)      (1000)
            Tax benefit of disqualifying dispositions                                                14          70
            Changes in assets and liabilities,
              Trade accounts receivable                                                           4,482         498
              Income taxes receivable                                                               929           -
              Notes and other receivables                                                           530         (50)
              Inventories                                                                           206         (52)
              Prepaid expenses                                                                     (504)       (202)
              Other assets                                                                          (67)         23
              Accounts payable and accrued liabilities                                            1,861         149
              Income taxes payable                                                                 (127)          -
                                                                                               --------    --------

                 Net cash provided by operating activities                                        1,067         834
                                                                                               --------    --------

Cash flows from investing activities:
     Purchases of investments                                                                         -      (3,300)
     Sales of investments                                                                             -       7,577
     Proceeds from sales of property and equipment                                                   13           -
     Purchases of property and equipment                                                           (550)       (971)
                                                                                               --------    --------

                 Net cash provided by (used in) investing activities                               (537)      3,306
                                                                                               --------    --------

Cash flows from financing activities:
     Proceeds from exercise of stock options                                                         23         596
     Principal payments on capital lease obligations                                                (26)          -
                                                                                               --------    --------

                 Net cash provided by (used in) financing activities                                 (3)        596
                                                                                               --------    --------


Net increase in cash and cash equivalents                                                           527       4,736
Cash and cash equivalents at beginning of period                                                 15,325      16,551
                                                                                               --------    --------
Cash and cash equivalents at end of period                                                     $ 15,852    $ 21,287
                                                                                               ========    ========
</TABLE>
           See accompanying notes to consolidated financial statements
                                        5
<PAGE>
                         Artisoft, Inc. and Subsidiaries
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(1)      Basis of Presentation

         The consolidated financial statements include the accounts of Artisoft,
Inc. and its five wholly-owned subsidiaries: Triton Technologies, Inc., Artisoft
Europe B.V.,  Artisoft "FSC". Ltd. (which has elected to be treated as a foreign
sales corporation),  NodeRunner,  Inc., and Artisoft Japan, K.K. All significant
intercompany balances and transactions have been eliminated in consolidation.

         The accompanying  unaudited consolidated financial statements have been
prepared  by the  Company  in  accordance  with  generally  accepted  accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management,  the accompanying financial statements
include all adjustments (of a normal recurring nature) which are necessary for a
fair  presentation of the financial  results for the interim periods  presented.
Certain  information  and footnote  disclosures  normally  included in financial
statements   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,  it is  suggested  that these
financial  statements be read in  conjunction  with the  consolidated  financial
statements and the notes thereto included in the Company's 1996 Annual Report to
Shareholders  and report on Form 10-K.  The results of operations  for the three
months ended September 30, 1996 are not necessarily indicative of the results to
be expected for the full year.

(2)      Restructuring Cost


         During the quarter ended  September 30, 1996,  primarily in response to
lower than expected sales of LANtastic  network  operating system (NOS) products
during the quarter and the  attendant  uncertainty  as to future sales levels of
NOS products,  the Company  elected to take two  principal  actions;  first,  to
realign the resources of the Company to accelerate the develpment,  delivery and
potential  customer  adoption  of  new  computer  telephony  and  communications
products and, second, to significantly reduce the Company's operating break-even
point through a reduction in operating  expenses.  As a result of these actions,
the Company recorded a pre-tax restructuring charge of $1,805,000 in the quarter
ended September 30, 1996 to cover  severance  costs  associated with a 50 person
headcount reduction and other related costs.

(3)      Inventories

         Inventories consist of the following (in thousands):

                                                         September 30,  June 30,
                                                             1996         1996
                                                         -------------  --------

            Raw materials                                  $ 2,157     $  2,167
            Work-in-process                                    653          584
            Finished goods                                   1,547        1,812
                                                           -------     --------
                                                             4,357        4,563
            Less allowance for inventory obsolescence         (925)      (1,565)
                                                           -------     --------

                                                           $  3,432    $  2,998
                                                           ========    ========
                                       6
<PAGE>
(4)      Property and Equipment

         Property and  Equipment consists of the following (in thousands):

                                       September 30,   June 30,
                                           1996          1996  
                                           ----          ----  
                                                               
         Land                            $   807       $   807  
         Buildings and Improvements        1,992         1,991 
         Furniture and Fixtures            1,059         1,058 
         Computers and other equipment    10,231         9,741 
         Leasehold improvements              126            93 
                                         -------       ------- 
                                          14,215        13,690 
         Accumulated depreciation and
         amortization                      6,672         6,166 
                                         -------       ------- 
                                         $ 7,543       $ 7,524 
                                         =======       ======= 
                                                       



(6)      Other Assets

         Other assets consist of the following (in thousands):

                                                      September 30,    June 30,
                                                          1996           1996
                                                          ----           ----

         Trademarks and patents, net of
                  accumulated amortization              $     269      $   285
         Purchased technology, net of
                  accumulated amortization                  2,990        3,172
         Recoverable deposits and other                       193          127
                                                        ---------      -------
                                                        $   3,452      $ 3,584
                                                        =========      =======

                                       7
<PAGE>
                         Artisoft, Inc. and Subsidiaries

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations


                  Net  Sales.  The  Company's  net sales for the  quarter  ended
September  30,  1996 were $11.1  million,  a  decrease  of 26% from sales of $15
million  for the  corresponding  quarter  of the  previous  fiscal  year,  and a
decrease of 33% from the previous quarter's sales of $16.5 million. The decrease
in net sales as  compared  to the  corresponding  quarter  in fiscal  1996,  was
primarily  due to reduced  sales of the Company's  LANtastic  network  operating
system (NOS) products  partially  offset by sales  attributable to the Company's
acquisition of three software  companies during the second and third quarters of
fiscal 1996.

         The  sequential  decrease in net sales from the quarter  ended June 30,
1996 is attributed to the  following  factors:  a reduction in U.S. and European
distribution  channel  inventories;  seasonal market softness experienced in the
U.S. as well as Europe and; a slower than expected sales ramp for LANtastic 7.0.
The reduction in channel  inventories  resulted from the continued impact of the
transition  of the LANtastic NOS product line to LANtastic 7.0 (released in June
1996) and the  anticipated  stocking of the U.S.  distribution  channel with new
products in the quarter ending  December 31, 1996. This action should also allow
more flexibilty in managing incentive and other programs with distributors.

         The Company distributes its products in both the U.S. and international
markets.  U.S. sales  decreased 25% to $7.9 million (71% of net sales),  for the
first  quarter  ended  September 30, 1996 from $10.5 million (70% of net sales),
for the same  quarter a year ago.

         Gross Profits.  The Company's  gross profits were $7.2 million and $9.4
million for the quarters ended  September 30, 1996 and 1995,  respectively  (65%
and 63% of net sales, respectively). The net increase in gross profit margin for
the first  quarter of fiscal 1997 as compared  to the  corresponding  quarter in
fiscal 1996 was  primarily  the result of higher  average  gross  margins in the
Company's  product lines offset  significantly by the impact on gross margins of
the  quarter  over  quarter  decrease in net sales of $3.9  million.  The higher
average  gross profit  margins in the  Company's  existing  product lines is the
result of higher  margin  software  products  acquired  in  connection  with the
purchase of three software companies during fiscal 1996 and software  components
comprising an increasing percentage of LANtastic NOS products sales. The quarter
over  quarter  decrease  in net sales  reduced  gross  profit  margins  as fixed
components  of  cost  of  goods  sold,   principally   production  overhead  and
amortization of purchased  technology and localization  costs,  were absorbed by
lower sales.  Gross margins may fluctuate from quarter to quarter due to changes
in net sales,  product mix,  pricing  actions and changes in sales and inventory
allowances.

         The sequential decrease in gross profit margin from 70% for the quarter
ended June 30,  1996 to 65% for the  quarter  ended  September  30,  1996 is the
result of the sequential decrease in net sales of $5.3 million. The gross profit
margin mix in the Company's product lines was consistent between the quarters.

         Sales and Marketing. Sales and marketing expenses were $7.0 million and
$6.4 million for the quarters ended  September 30, 1996 and 1995,  respectively,
(63% and 43% of net sales, respectively).  The increase in aggregate dollars for
sales and marketing expenses for the first quarter of fiscal 1997 as compared to
the corresponding quarter in fiscal 1996, is due primarily to activities related
to the  introduction  of LANtastic 7.0 to the Company's  existing  extensive VAR
network.  The increase in sales and  marketing  expenses as a percentage  of net
sales for the first quarter of fiscal 1997 over the
                                       8
<PAGE>
corresponding  period in fiscal 1996, is principally  due to the decrease in net
sales.

         Product Development. Product development expenses were $2.4 million and
$1.3 million for the quarters ended  September 30, 1996 and 1995,  respectively,
representing  21% and 8% of net  sales,  respectively.  The  change  in  product
development  expenses as a  percentage  of net sales is due  principally  to the
decrease in net sales.  The increase in aggregate  dollars for the first quarter
of fiscal  1997 as  compared  to the  corresponding  quarter  in fiscal  1996 is
principally attributable to the addition of product development personnel in the
Computer Telephony and Communications product group, both in connection with the
acquisitions  of the three  software  companies  in fiscal  1996 and  subsequent
thereto to accelerate development efforts in this segment.

         General and  Administrative.  General and administrative  expenses were
$1.4 million for both the quarters  ended  September 30, 1996 and 1995.  General
and administrative  expenses  represented 13% of net sales for the first quarter
of fiscal  year 1997 and 9% of net sales for the first  quarter  of fiscal  year
1996. General and  administrative  expenses as a percentage of net sales for the
first quarter of fiscal 1997 as compared to the  corresponding  period in fiscal
1996, increased solely as a result of the decrease in net sales.

         Restructuring  Cost.  During the  quarter  ended  September  30,  1996,
primarily  in  response  to  lower  than  expected  sales of  LANtastic  network
operating system (NOS) products during the quarter and the attendant uncertainty
as to future  sales  levels of NOS  products,  the  Company  elected to take two
principal actions;  first, to realign the resources of the Company to accelerate
the development,  delivery and customer  adoption of new computer  telephony and
communications  products  and,  second,  to  significantly  reduce the Company's
operating break-even point through a reduction in operating expenses. The effect
of  the  realignment  was  to  increase  the  Company's  investment  in  product
development,  marketing  and channel  development  in the high  growth  computer
telephony  and  communications  segments of the business and thereby  bring more
focus  to the  delivery  of  products  in  these  areas,  as well as to  support
continuing  differentiation  for  LANtastic in the future.  As a result of these
actions,  the Company recorded a pre-tax  restructuring  charge of $1,805,000 in
the quarter ended September 30, 1996 to cover severance costs  associated with a
50 person headcount reduction and other related costs.

         Other  Income,  Net.  For the quarter  ended  September  30, 1996 other
income,  net,  decreased to $192,000  from $339,000 in the same period in fiscal
1996.  This decrease  resulted  principally  from a reduction in the  investment
income earned from  investments.  Investment  and cash balances  decreased  from
$38.3  million at September  30, 1995 to $15.9 million at September 30, 1996 due
to the acquisition of three software companies in fiscal year 1996.

Liquidity and Capital Resources

         The Company had cash and cash equivalents of $15.9 million at September
30, 1996 compared to $15.3  million at June 30, 1996 and working  capital of $34
million at September 30, 1996 and $37 million at June 30, 1996.  The increase in
cash and cash  equivalents  was principally a result of the receipt of a federal
tax refund, partially offset by severance payments associated with the Company's
organizational  realignment  effected  at the  end of the  quarter.  Days  sales
outstanding in trade accounts  receivable at September 30, 1996 increased to 108
days from 97 days at June 30, 1996 due  principally  to the quarter over quarter
decrease in net sales.  The Company believes that its allowances for returns and
doubtful accounts are adequate. 

         The Company funds its working capital  requirements  primarily  through
cash flows from  operations  and  existing  cash  balances.  While  the  Company
anticipates  that existing cash balances and cash flows from  operations will be
adequate to meet the Companys  current and  expected  cash  requirements  for at
least the next year,  additional  investments  by the  Company  to  acquire  new
technologies  and products may necessitate that the Company seek additional debt
or equity capital.
                                        9
<PAGE>
Risk Factors

         The PC industry is highly  competitive and is  characterized by rapidly
changing  technology and evolving  industry  standards.  The Company's  products
compete with  products  available  from numerous  companies,  many of which have
substantially  greater  financial,   technological,   production  and  marketing
resources than those of the Company. Competition in the PC industry is likely to
intensify as current  competitors  expand their product lines, more features are
included in operating systems (e.g., Windows 95), and as new companies enter the
markets or segments in which the Company  currently  competes.  The  industry is
also characterized by a high degree of consolidation which favors companies with
greater resources than those of the Company.  There can be no assurance that the
Company's  products  will be able to compete  successfully  with other  products
offered presently or in the future by other vendors.

         The  Company is exposed to the risk of product  returns  and  rotations
from its distributors and volume  purchasers,  which are recorded by the Company
as a reduction in sales. Although the Company attempts to monitor and manage the
volume of its sales to distributors and volume  purchasers,  overstocking by its
distributors and volume purchasers or changes in inventory policies or practices
by distributors and volume  purchasers may require the Company to accept returns
above historical  levels. In addition,  the risk of product returns may increase
if the  demand  for new  products  introduced  by the  Company is lower than the
Company  anticipates at the time of introduction.  Although the Company believes
that it  provides  an  adequate  allowance  for sales  returns,  there can be no
assurance that actual sales returns will not exceed the Company's allowance. Any
product  returns in excess of  recorded  allowances  could  result in a material
adverse  effect on net sales and operating  results.  As the Company  introduces
more new  products,  the  predictably  and  timing of sales to end users and the
management  of returns to the  Company of unsold  products by  distributors  and
volume purchasers becomes more complex and could result in material fluctuations
in quarterly sales and operating results.

         The Company is also exposed to its  distributors  for price  protection
for  list  price  reductions  by  the  Company  on its  products  held  in  such
distributors'  inventories.  The Company  provides its  distributors  with price
protection in the event that the Company reduces the list price of its products.
Distributors  and volume  purchasers  are  usually  offered  some credit for the
impact of a list price  reduction  on the expected  revenue  from the  Company's
products in the  distributors'  inventories at the time of the price  reduction.
Although the Company  believes  that it has provided an adequate  allowance  for
price protection, there can be no assurance that the impact of actual list price
reductions  by the Company will not exceed the  Company's  allowance.  Any price
protection in excess of recorded  allowances  could result in a material adverse
effect on sales and operating  results.  As the Company introduces new products,
the  predictability  and timing of sales to end-users and returns to the Company
of unsold products by distributors  and volume  purchasers  becomes more complex
and could  result in material  fluctuations  in  quarterly  sales and  operating
results.

         Substantially  all of the  Company's  revenue  in each  fiscal  quarter
results from orders  booked in that  quarter.  A  significant  percentage of the
Company's   bookings  and  sales  to  major   customers  on  a  quarterly  basis
historically  has  occurred  during  the  last  month  of the  quarter  and  are
concentrated in the latter half of that month.  Orders placed by major customers
are typically based upon customers' forecasted sales levels for Company products
and inventory levels of Company products desired to be maintained by those major
customers  at the time of the  orders.  Moreover,  orders may also be based upon
financial  practices  by major  customers  designed  to  increase  the return on
investment or yield on the sales of the Company's products to VARs or end-users.
Major  distribution  customers receive market development funds from the Company
for  purchasing   Company  products  and  from  time-to-time  may  also  receive
negotiated cash rebates or extended terms, in accordance with industry practice,
depending upon competitive conditions.  Changes in purchasing patterns by one or
more of the Company's  major customers  related to customer
                                       10
<PAGE>
forecasts of future sales of Company products,  customer policies  pertaining to
desired inventory levels of Company products, negotiations of market development
funds and rebates,  or otherwise,  or in the Company's  ability to anticipate in
advance the mix of customer orders, or to ship large quantities of products near
the end of a fiscal quarter,  could result in material fluctuations in quarterly
operating  results.  Expedited  outsourcing of production and component parts to
meet unanticipated demand could also adversely affect gross margins.

         The Company  believes  that there is a trend  among major  distribution
customers  and volume  purchasers to reduce their  inventory  levels of computer
products, including the Company's products. This trend could have a significant,
adverse effect on the Company's  operating  results during the period or periods
that customers initiate such inventory  reductions or at such times as customers
elect to further reduce channel inventories.

         Microsoft,  a significant  competitor of the Company, today offers, and
is expected in the future to offer, Windows- and NT-based products which include
features  competitive  with certain  features  found in products  offered by the
Company.  Because of the  dominance  and market  visibility  of Microsoft in the
personal computer software market, the presence of the Microsoft products in the
market may affect the sales of the Company's  products and,  depending  upon the
degree of such effect,  could have a significant adverse effect on the Company's
operating  results.  In addition,  as a result of its  dominant  position in the
market for personal computer operating systems,  the Microsoft  operating system
products are frequently  installed at no additional charge on the hard drives of
new  personal  computers  and  thereby  placed  directly  into the  hands of the
end-user customer.  Such distribution  provides a favorable market advantage for
the  features of its  products,  to the  potential  detriment  of the  Company's
product sales.

         During the third  fiscal  quarter of 1996,  the Company  announced  its
INSYNC brand of remote communications products, which includes CoSession Remote,
a remote  control  software  product,  and Modem Share, a telephone line sharing
software  product.  These  products were  introduced to the Company's  worldwide
sales  channels late in the third  quarter.  These  products have not previously
been broadly distributed through these channels.  Currently, several competitors
offer similar  products  through  similar sales  channels.  Although the Company
believes  these new products to be  functionally  comparable  and  competitively
priced relative to competitors products, there can be no assurance of the future
success of these products.

         During  the first  fiscal  quarter  of 1997,  the  Company  experienced
significantly  lower than expected  sales of its  LANtastic NOS products.  While
management  believes that seasonal market softness in the U.S.  marketplace,  as
well as Europe,  and a slower than  expected  transition  from  LANtastic 6.0 to
LANtastic  7.0 were the  principal  reasons for the  shortfall,  there can be no
assurance that LANtastic sales will improve or that LANtastic  sell-through will
not trend downward from current levels.

         Due to  the  foregoing,  and  other  factors  affecting  the  Company's
operating results,  past financial  performance should not be considered to be a
reliable  indicator  of  future  performance,   and  investors  should  not  use
historical trends to anticipate results or trends in future periods.

"Safe Harbor"  Statement under the Private  Securities  Litigation Reform Act of
1995

         This Form 10-Q may  contain  forward-looking  statements  that  involve
risks  and  uncertainties,   including,  but  not  limited  to,  the  impact  of
competitive  products and pricing,  product demand and market  acceptance risks,
the  presence  of  competitors  with  greater   financial   resources,   product
development and  commercialization  risks, costs associated with the integration
and  administration of acquired  operations,  capacity and supply constraints or
difficulties,  the results of financing  efforts and other risks  detailed  from
time to time in the Company's Securities and Exchange Commission filings.
                                       11
<PAGE>
                         Artisoft, Inc. and Subsidiaries
                           PART II. OTHER INFORMATION


Item 1.     LEGAL PROCEEDINGS


             The Company is subject to lawsuits and other claims  arising in the
ordinary  course of its  operations.  In the  opinion  of  management,  based on
consultation  with legal  counsel,  the effects of such  matters will not have a
materially adverse effect on the Company's financial position.

Item 2.     CHANGES IN SECURITIES
                 None

Item 3.     DEFAULTS UPON SENIOR SECURITIES
                 None

Item 4.     SUBMISSION OF MATTERS TO A VOTE BY SECURITY HOLDERS
                 None

Item 5.     OTHER INFORMATION
                 None

Item 6.     EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits
              No. 11 - Computation of Net Income Per Share

              No. 27 - Financial  Data Schedule for Form 10-Q  dated November 6,
                       1996

(c)   Reports on Form 8-K

              There were no reports  filed on Form 8-K during  the three  months
              ended September 30, 1996.

                                       12
<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 hereunto duly authorized.

                                    ARTISOFT, INC.







Date:  November 12, 1996            By /s/ William C. Keiper
                                      ---------------------------------------
                                      William C. Keiper
                                      Chairman and Chief Executive Officer






                                    By /s/ Gary R. Acord
                                      ---------------------------------------
                                      Gary R. Acord
                                      Vice President and Chief Financial Officer
                                        (Principal Financial Officer)

                                       13