UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.   20549
                                    FORM 10-Q

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

        For the quarterly period ended: June 30, 1997
                                       or

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

        For the transition period from      to

Commission file number: 0-13121

                            HMG Worldwide Corporation
             (Exact name of registrant as specified in its charter)

           Delaware                                          13-3402432
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                             Identification No.)

 475 Tenth Avenue, New York, NY                                  10018
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code  (212)736-2300

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

                                  Yes    X          No

                   APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                      PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

                                  Yes               No

                   APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

            Class                             Outstanding at August 11,1997
Common Stock, $.01 par value                             8,664,150





<PAGE>
                           Part I. Financial Information
                                     Item 1.
                   HMG WORLDWIDE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)
                                      June 30, 1997       December 31, 1996
                                      -------------       -----------------
                                       (unaudited)
                          ASSETS

Current assets:

  Cash and cash equivalents                 $ 6,913                $ 6,950
  Accounts receivable - less
    allowance for doubtful

    accounts of $291 and $577                 9,431                  6,454
  Inventory                                   3,740                  4,214
  Prepaid expenses                              168                     95
  Other current assets                          234                    240
                                            -------                -------
    Total current assets                     20,486                 17,953

Property and equipment - net                  3,370                  3,349
Excess of cost over fair
  market value of assets acquired,
  less accumulated amortization
  of $1,411 and $1,207                        6,748                  6,952
Other assets                                    411                    501
                                            -------                -------
                                            $31,015                $28,755
                                            =======                =======

                          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current maturities of
    long-term obligations                   $12,053                $ 9,439
  Note payable                                   67                    338
  Accounts payable                            6,300                  5,803
  Accrued employee compensation
    and benefits                              1,235                  1,033
  Deferred revenue                            1,794                  1,835
  Accrued expenses                              739                  1,566
  Other current liabilities                     810                  1,175
                                            -------                -------
Total current liabilities                    22,998                 21,189

Pension obligation                            1,534                  1,684
Other long-term liabilities                     652                    691
                                            -------                -------
                                             25,184                 23,564
                                            -------                -------
Stockholders' equity:
  Common stock, par value $.01;
    50,000,000 shares authorized;
    8,664,150 and 8,129,589 issued
    and outstanding                              87                     81
  Additional paid-in capital                 34,409                 33,903
  Accumulated deficit                       (28,665)               (28,793)
                                            -------                -------
                                              5,831                  5,191
                                            -------                -------
                                            $31,015                $28,755
                                            =======                =======


           See accompanying notes to consolidated financial statements.

                                              2

<PAGE>

                   HMG WORLDWIDE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        (in thousands, except share data)
                                   (unaudited)

                              Three Months Ended             Six Months Ended
                                    June 30,                     June 30,
                              1997          1996              1997       1996
                             -----         -----              ----       ----
Net revenues               $12,650       $13,862           $22,850    $24,546

Cost of revenues             9,444        10,569            16,908     19,413
                           -------       -------           -------    -------

  Gross profit               3,206         3,293             5,942      5,133

Selling, general and
  administrative
  expenses                   2,904         3,265             5,730      6,395
                           -------       -------           -------    -------

Income (loss)
  from operations              302            28               212    (1,262)

Interest income                 74            77               147       179

Interest expense              (268)         (187)             (488)     (378)

Other income                                                   267

  Income (loss) before
    provision for
    income taxes               108           (82)              138    (1,461)

Provision for
  income taxes                  (5)           (3)              (10)      (11)
                           -------       -------           -------   -------
  Net income (loss)        $   103      ($    85)          $   128   ($1,472)
                           =======       =======           =======    ======
Net income (loss) per
  common and common
  equivalent share         $  0.01      ($  0.01)          $  0.01   ($ 0.19)
                           =======       =======           =======    ======
Weighted average number
  of common and common
  equivalent shares
  outstanding            8,531,183     7,567,517         8,457,469  7,567,517
                         =========     =========         =========  =========















                 See accompanying notes to consolidated financial statements.

                                              3

<PAGE>

                      HMG WORLDWIDE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)
                                                  Six Months Ended June 30,
                                                  1997                 1996
                                                  ----                 ----


Cash flows from operating activities:

  Cash received from customers                 $19,828               $26,019
  Interest received                                147                   179
  Cash paid to suppliers                       (16,756)              (21,135)
  Cash paid to employees                        (5,514)               (5,000)
  Income taxes paid                                 (4)                  (13)
  Interest paid                                   (488)                 (372)
                                               -------               -------
    Net cash used in operating
     activities                                 (2,787)                 (322)
                                               -------               -------
Cash flows from investing activities:
  Proceeds from the sale of
    an investment                                  356
  Capital expenditures                            (279)                 (785)
                                               -------               -------
    Net cash provided by
      (used in) investing
      activities                                    77                  (785)
                                               -------               -------
Cash flows from financing activities:
  Net proceeds from the sale of common
    stock as part of a private placement           352
  Proceeds derived from a credit
    agreement, net                               2,614                    16
  Principal payments of
    outstanding debt obligations                  (288)                 (253)
                                               -------               -------
    Net cash provided by (used in)
      financing activities                       2,678                  (237)
                                               -------               -------

Effect of exchange rate changes                     (5)                   (2)
                                               -------               -------
Net decrease in cash and
  cash equivalents                                 (37)               (1,346)

Cash and cash equivalents
  at beginning of year                           6,950                 8,139
                                               -------               -------
Cash and cash equivalents
  at June 30                                   $ 6,913               $ 6,793
                                               =======               =======





         See accompanying notes to consolidated financial statements.

                                              4

<PAGE>

                      HMG WORLDWIDE CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
                                 (in thousands)
                                   (unaudited)
                                                   Six Months Ended June 30,
                                                    1997              1996
                                                    ----              ----
Reconciliation of net income (loss)
  to net cash used in
  operating activities:

Net income (loss)                                 $  128           ($1,472)

Adjustments to reconcile net
  income (loss) to net cash used in
  operating activities:

  Depreciation and amortization                      460               433
  Loss on foreign currency translation                                   2
  Other income                                      (267)

Decrease (increase) in assets:
  Accounts receivable                             (2,977)              987
  Inventory                                          474               773
  Prepaid expenses                                   (73)              198
  Other assets                                         7              (232)

Increase (decrease) in liabilities:
  Accounts payable                                   497               924
  Deferred revenue                                   (41)              451
  Accrued expenses                                  (845)           (2,292)
  Pension obligation                                (150)              (94)
                                                  ------            ------

Net cash used in operating
  activities                                     ($2,787)          ($  322)
                                                  ======            ======














               See accompanying notes to consolidated financial statements.

                                              5

<PAGE>

                   HMG WORLDWIDE CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)
Note 1 - Consolidated Financial Statements

     HMG  Worldwide   Corporation   ("the  Company")   conducts  its  operations
principally  through four wholly-owned  subsidiaries  being,  respectively,  HMG
Worldwide In- Store Marketing, Inc. ("HMG"), Intermark Corp. ("Intermark"),  HMG
Intermark  Worldwide  Manufacturing,  Inc. ("HMG  Intermark") and Display Depot,
Inc.  ("DDI"),  with  facilities in New York,  Pennsylvania  and  Illinois.

     The  Consolidated  Balance Sheet as of June 30, 1997, and the  Consolidated
Statements of  Operations  and Cash Flows for the six months ended June 30, 1997
and 1996,  have been prepared by the Company  without  audit.  In the opinion of
management,  all adjustments  (which include only normal recurring  adjustments)
necessary to present  fairly the financial  position,  results of operations and
cash flows at June 30, 1997 and for all periods presented have been made.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted.  These consolidated  financial statements should
be read in  conjunction  with the  consolidated  financial  statements and notes
thereto   included  in  the  Company's   December  31,  1996  annual  report  to
shareholders.  The results of operations  for the period ended June 30, 1997 are
not necessarily indicative of the operating results for the full year.

Note 2 - Inventory

 Inventories at June 30, 1997 and December 31, 1996 consisted of the following:

                                                 June 30,         December 31,
                                                   1997               1996
                                                      (in thousands)
    Finished goods                              $  745              $1,312
    Work in process                                874                 653
    Raw materials                                2,121               2,249
                                                ------              ------
                                                $3,740              $4,214
                                                ======              ======


Note 3 - Income Taxes

     At December 31, 1996, the Company had net operating loss  carryforwards  of
approximately  $27.5 million which expire during the years 2001 through 2011. As
of June 30, 1997, a valuation allowance of approximately $11.7 million, which is
equal to the  entire  amount  of the  deferred  tax asset  arising  from the net
operating  loss  carryforwards  and  other  temporary   differences,   has  been
established until realizability is certain.

    Components of income tax expense for the six months ended June 30,1997 and
1996 are as follows:

                                                 Six Months Ended June 30,
                                                   1997             1996
                                                      (in thousands)
    State and local
      income taxes                                  $10              $11
                                                    ===              ===








                                              6

<PAGE>

                   HMG WORLDWIDE CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
                                    (unaudited)

Note 4 - Stockholder's Equity

     In December 1996, the Company  initiated a private  placement ("HMG Private
Placement")  whereby  the  Company  offered  for sale up to 2 million  shares of
common  stock at $1.00  per  share.  Pursuant  to the  terms of the HMG  Private
Placement, as of December 31, 1996 the Company sold 377,500 shares of its common
stock at $1.00 per share from which it derived  net  proceeds  of  approximately
$377,000. For the six months ended June 30, 1997, the company sold an additional
375,000  shares of common  stock  and  derived  net  proceeds  of  approximately
$352,000. All stock issued pursuant to the terms of the HMG Private Placement is
restricted stock which has not been registered under the Securities Act of 1933,
as  amended  ("the  Securities  Act"),  and may not be resold by the  respective
purchasers  thereof  absent   registration  under  the  Securities  Act  or  the
availability of an applicable exemption from such registration statement.

    During the three  months  ended June 30, 1997,  the Company  contributed  an
aggregate  of 159,561  shares of common stock to the HMG  Worldwide  Corporation
Capital Accumulation Plan maintained for the benefit of the Company's employees.
The fair market value of the common  stock was $1.00 per share.  The shares were
contributed  without  registration  in reliance upon the  exemption  provided by
Section 4(2) of the Securities Act.

                                              7

<PAGE>

                   HMG WORLDWIDE CORPORATION AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Three Months Ended June 30, 1997 as Compared to the
  Three Months Ended June 30, 1996

    Net revenues  were $12.7 million for the three months ended June 30, 1997 as
compared to $13.9 million for the three months ended June 30, 1996. The decrease
in net  revenues  from period to period was due  principally  to a reduction  in
capital and marketing  expenditures of one significant  client of  approximately
$3.2  million,  offset by, the  increase in  marketing  expenditures  of another
significant  client of  approximately  $1.8  million.  The increase in marketing
expenditures of one significant  client was principally the result of a national
rollout of a new merchandising program. The decrease in net revenues realized by
the Company from one significant client was principally the result of a national
rollout that occurred in 1996.

    Gross  profit for the three  months  ended June 30, 1997 was $3.2 million as
compared to $3.3 million for the three months ended June 30, 1996.  The decrease
in gross  profit of $87,000  was  principally  a result of the  decrease  in net
sales,  offset by an increase in gross  margin.  For the three months ended June
30, 1997 and 1996, the Company's gross margin was 25.3% and 23.8%, respectively.
The gross margin increase was due principally to a favorable  production revenue
mix  resulting  in a 4.5%  increase,  offset  by the  underabsorption  of  fixed
overhead  expenses  as a  percentage  of net  revenues  of 3.0%.  The  favorable
production  revenue mix was  principally the result of an increase in the number
of programs manufactured and assembled at the Company's Pennsylvania  facilities
and the increased operational efficiencies on the specific programs shipped.

        Selling,  general and administrative  expense for the three months ended
June 30, 1997 was $2.9  million as compared to $3.3  million for the  comparable
period in 1996.  The decrease of $361,000 from period to period was  principally
due to (i) a reduction in personnel costs of $52,000 and (ii) decreased spending
in other general expenses.

        For the three months ended June 30, 1997, the Company generated interest
income of $74,000 as  compared to $77,000  for the three  months  ended June 30,
1996. This decrease was principally attributable to a reduction in cash and cash
equivalents  invested in interest-bearing  marketable  securities and commercial
paper from period to period.

        Interest  expense was  $268,000 for the three months ended June 30, 1997
as compared to $187,000 for the three  months ended June 30, 1996.  The increase
in interest expense was principally due to the increased average borrowings from
period to period.

        As a result of the foregoing  factors,  the Company generated net income
of  $103,000,  or $0.01 per share for the three  months  ended June 30,  1997 as
compared  to a net loss of  $85,000,  or $0.01 per share,  for the three  months
ended June 30, 1996.

                                              8

<PAGE>

                   HMG WORLDWIDE CORPORATION AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Six Months Ended June 30, 1997 as Compared to the
  Six Months Ended June 30, 1996

        Net revenues  were $22.9  million for the six months ended June 30, 1997
as  compared  to $24.5  million  for the six  months  ended June 30,  1996.  The
decrease  in net  revenues  from  period  to  period  was due  principally  to a
reduction in capital and marketing  expenditures of two  significant  clients of
approximately  $1.6  million  and $3.5  million,  offset  by,  the  increase  in
marketing  expenditures  of  another  significant  client of $2.7  million.  The
increase in marketing expenditures of one significant client was principally the
result of a national rollout of a new merchandising program. The decrease in net
revenues realized by the Company from one significant client was principally the
result of the client's  reduction in its capital and marketing  expenditures for
budgetary and other reasons. Reduced shipments to this client may continue if it
continues  such budgetary  reductions  and deferrals.  There can be no assurance
that net revenues and shipments to this client will resume at historical levels.
The decrease in net revenues from another significant client was principally the
result of a national rollout that occurred in 1996.

        Gross  profit for the six months ended June 30, 1997 was $5.9 million as
compared to $5.1 million for the six months ended June 30, 1996. The increase in
gross  profit of  $809,000  was  principally  a result of the  increase in gross
margin.  For the six months ended June 30, 1997 and 1996,  the  Company's  gross
margin was 26.0% and 20.9%,  respectively.  The gross  margin  increase  was due
principally to a favorable  production revenue mix resulting in a 7.2% increase,
offset by the  underabsorption of fixed overhead expenses as a percentage of net
revenues of 2.1%.  The  favorable  production  revenue mix was  principally  the
result of an increase in the number of programs  manufactured  and  assembled at
the Company's Pennsylvania facilities and the increased operational efficiencies
on the specific programs shipped.

        Selling,  general and  administrative  expense for the six months  ended
June 30, 1997 was $5.7  million as compared to $6.4  million for the  comparable
period in 1996.  The decrease of $665,000 from period to period was  principally
due to (i) a reduction in personnel  costs of  $176,000,  (ii) the  discontinued
European  operations  of $99,000 and (iii)  decreased  spending in other general
expenses.

     For the six months  ended June 30,  1997,  the Company  generated  interest
income of $147,000 as  compared  to $179,000  for the six months  ended June 30,
1996. This decrease was principally attributable to a reduction in cash and cash
equivalents  invested in interest-bearing  marketable  securities and commercial
paper from period to period.

     Interest  expense was  $488,000  for the six months  ended June 30, 1997 as
compared to $378,000  for the six months  ended June 30,  1996.  The increase in
interest  expense was principally due to the increased  average  borrowings from
period to period.

        In 1994, the Company received shares of common stock of a client in lieu
of payment for services rendered to such client. In March 1997, the Company sold
the shares of common  stock and derived net  proceeds  from the sale of $356,000
and generated a net gain of $267,000 which was recorded as other income.

     As a result of the foregoing  factors,  the Company generated net income of
$128,000, or $0.01 per share, for the six months ended June 30, 1997 as compared
to a net loss of $1.5 million, or $0.19 per share, for the six months ended June
30, 1996.

 Stockholders' Equity

     Stockholders'  equity increased  approximately  $640,000 to $5.8 million at
June 30,  1997  from  $5.2  million  at  December  31,  1996.  The  increase  in
stockholder's equity was principally due to (i)net proceeds derived from the HMG
Private Placement of $352,000, (ii) the contribution of 159,561 shares of common
stock, valued at $1.00 per share, to the HMG Worldwide Capital Accumulation Plan
and (iii) net income of $128,000.

                                              9

<PAGE>

                   HMG WORLDWIDE CORPORATION AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
             OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -continued

Income Taxes

        At December  31, 1996,  the Company has  available  approximately  $27.5
million in net operating loss  carryforwards  which expire during the years 2001
through 2011.

     The  Company's  income tax provision for the six months ended June 30, 1997
was $10,000 as compared to $11,000 for the six months ended June 30,  1996.  The
income  tax  provision  for the six  months  ended  June  30,  1997 and 1996 was
comprised principally of state and local taxes.

Inflation

        The  effect  of  inflation  on the  Company's  operations  has not  been
significant to date.

Backlog

     At June 30, 1997, the Company's  aggregate backlog was approximately  $13.3
million as compared to $15.6  million and $17.0 million at December 31, 1996 and
June 30, 1996,  respectively.  Of such aggregate backlog at June 30, 1997, 21.4%
was attributable to two clients.  The Company anticipates that substantially all
such backlog at June 30, 1997 will be filled during the next twelve  months.  In
addition to the $13.3 million  backlog at June 30, 1997,  the  Company's  supply
contract  with the Foster  Grant Group L.P.  ("Foster  Grant")  requires  Foster
Grant, subject to certain limitations,  to purchase at least 70% of its in-store
merchandising  displays  from the  Company  with  average  annual  purchases  to
aggregate no less than $2.5  million.  The  aggregate  value of the Foster Grant
supply  contract  at June 30,  1997 was  $27.4  million,  of which  the  Company
anticipates that $2.5 million will be shipped within the next twelve months. Due
to quarter to quarter fluctuations in the Company's backlog levels, attributable
to the timing,  nature and size of its  merchandising  system  programs  for its
clients,  such  backlog  levels are not  necessarily  an indicator of future net
revenue levels.

Liquidity and Capital Resources

     Cash and cash equivalents at June 30, 1997 and December 31, 1996 aggregated
$6.9 million and $6.9 million,  respectively. The Company's decrease in cash and
cash  equivalents of  approximately  $37,000 for the three months ended June 30,
1997 was due principally to the net effect of (i) net cash used in operations of
$2.8 million (ii) capital  expenditures  of $279,000 and (iii) reduction of debt
obligations  of $288,000,  offset by (iv)  proceeds  from  borrowings  under the
Company's  revolving  line of credit with its bank lender of $2.6  million,  (v)
proceeds  from the  sale of an  investment  of  $356,000  and (vi) net  proceeds
derived from the HMG Private Placement of $352,000.  The Company's negative cash
flows  from  operations  for the  three  months  ended  June 30,  1997  resulted
principally from (i) an increase in assets of $2.6 million and (ii)a decrease in
general liabilities of $539,000.

        The  Company  has  secured  a  $12.0  million  Credit  Agreement  with a
financial  institution in the form of a revolving credit and term loan facility.
The Credit  Agreement  provides for a secured  revolving  credit  facility which
advances  up to the sum of (i) 85% of  eligible  accounts  receivable,  (ii) the
lesser of 60% of eligible  finished  goods  inventory  or $750,000 and (iii) the
Company's cash, cash equivalents and marketable securities. The Credit Agreement
is secured by a lien on and a security  interest  in the  Company's  cash,  cash
equivalents,   marketable  securities,   accounts  receivable,   inventory,  and
equipment  and all other  tangible  and  intangible  assets  and a pledge of the
common stock of each of the Company's wholly-owned subsidiaries.

                                              10

<PAGE>

                   HMG WORLDWIDE CORPORATION AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
           OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

        Borrowings under the Credit Agreement bear interest at the institution's
prime  rate plus 1% per  annum.  The  Company  is  required  to pay a  quarterly
commitment  fee at the rate of one half of 1% per  annum  of the  average  daily
unused amount of funds available.  Additionally,  the Credit Agreement  contains
certain customary  affirmative and negative  covenants which require the Company
to maintain certain financial ratios, and, among other things restrict,  (i) the
declaration   or  payment  of   dividends,(ii)   the  incurrence  of  additional
indebtedness  and (iii) the sale of certain  assets.  As of June 30,  1997,  the
Company was in compliance with all financial  covenants of the Credit Agreement,
as amended.

        Pursuant to the terms of the Credit Agreement, the lender can advance up
to $1.6  million  in the form of a term  loan  collateralized  by the  Company's
current  and future  real  estate and  equipment.  The term loan  portion of the
Credit  Agreement is  amortized on a sixty month basis with a final  payment due
upon  the  termination  of  the  Credit  Agreement  and  bears  interest  at the
institution's  prime  rate plus 1% per  annum.  At June 30,  1997,  the  balance
outstanding on the term loan component of the Credit Agreement was approximately
$300,000.

        The  Company's  working  capital at June  30,1997  was a deficit of $2.5
million,  inclusive of borrowings  of $12.1  million  pursuant to the three year
Credit  Agreement.  The  working  capital  deficit  was due  principally  to (i)
negative  cash flows from  operations  during 1996 and the six months ended June
30, 1997 and (ii)  increased  borrowing  under the Company's  credit  facilities
whereby such proceeds were used in part to finance capital  expenditures of $1.7
million,  inclusive  of  $1.1  million  in  one-time  facility  renovations  and
equipment upgrades at the Company's Pennsylvania  production facility during the
past  eighteen  months.  Due  to  the  working  capital  deficit,   the  Company
experiences  temporary liquidity problems from time to time due to the timing of
cash flows while the Company is in production  and building  inventory.  However
management  believes that  significant cost savings will be realized through the
implementation  of its  1996  strategic  plan  whereby  the  Company  moved  and
consolidated its manufacturing facilities in Reading, Pennsylvania, restructured
the Company's  New York and Chicago  offices,  upgraded the Company's  injection
molding  division  and  closed  its  European  office.  Furthermore,  management
believes that its current cash and cash  equivalents,  its backlog,  anticipated
future cash flows from operations,  availability  under its Credit Agreement and
the  proceeds  derived  from the HMG Private  Placement  will be  sufficient  to
support its debt service  requirements and its other capital and operating needs
for the next fiscal year.

     The  above  statements  and  certain  other  statements  contained  in this
quarterly report on Form 10-Q are based on current expectations. Such statements
are forward looking statements that involve a number of risks and uncertainties.
Factors  that could  cause  actual  results  to differ  materially  include  the
following (i) general economic  conditions at retail,  (ii)  competitive  market
influences,  (iii)  client  budgetary  restrictions  (iv)  delays in shipment of
scheduled  programs to clients (v) delay in or inability to expand the Company's
client  base  and/or  (vi) the loss of or  reduction  in  spending  of  existing
clients.

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Part II.  Other Information

Item 2.  Changes in Securities

    During the three  months  ended June 30, 1997,  the Company  contributed  an
aggregate  of 159,561  shares of common stock to the HMG  Worldwide  Corporation
Capital Accumulation Plan maintained for the benefit of the Company's employees.
The fair market value of the common  stock was $1.00 per share.  The shares were
contributed  without  registration  in reliance upon the  exemption  provided by
Section 4(2) of the Securities Act.

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                                    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.

                                            HMG Worldwide Corporation
                                            (Registrant)

Date: August 11, 1997                       /S/  Robert  V.   Cuddihy, Jr.
      ---------------                       ------------------------------
                                                 Robert V. Cuddihy, Jr.
                                                 Chief Operating Officer and
                                                 Chief Financial Officer















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