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: March 31, 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.
      No                          Yes    X

               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.
      No                           Yes

                      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 May 12, 1997
Common Stock, $.01 par value                          8,504,589





<PAGE>






                          Part I. Financial Information
                                     Item 1.

                  HMG WORLDWIDE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

                                       March 31, 1997       December 31, 1996
                                         (unaudited)
                     ASSETS

Current assets:
  Cash and cash equivalents                  $ 6,626                 $ 6,950
  Accounts receivable - less
    allowance for doubtful
    accounts of $448 and $577                  6,911                   6,454
  Inventory                                    3,898                   4,214
  Prepaid expenses                               127                      95
  Other current assets                           229                     240
    Total current assets                      17,791                  17,953
                                              ------                  ------

Property and equipment - net                   3,329                   3,349
Excess of cost over fair
  market value of assets acquired,
  less accumulated amortization
  of $1,309 and $1,207                         6,850                   6,952
Other assets                                     412                     501
                                                 ---                     ---
                                             $28,382                 $28,755
                                             =======                 =======

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current maturities of
    long-term obligations                    $10,324                 $ 9,439
  Note payable                                   258                     338
  Accounts payable                             5,658                   5,803
  Accrued employee compensation
    and benefits                               1,260                   1,033
  Deferred revenue                             1,068                   1,835
  Accrued expenses                             1,000                   1,566
  Other current liabilities                      912                   1,175
                                                 ---                   -----
     Total current liabilities                20,480                  21,189

Pension obligation                             1,642                   1,684
Other long-term liabilities                      672                     691
                                                 ---                     ---
                                              22,794                  23,564
                                              ------                  ------
Stockholders' equity:
  Common stock, par value $.01;
    50,000,000 shares authorized;
    8,504,589 and 8,129,589 issued
    and outstanding                               85                      81
  Additional paid-in capital                  34,271                  33,903
  Accumulated deficit                        (28,768)                (28,793)
                                             -------                 -------
                                               5,588                   5,191
                                               -----                   -----
                                             $28,382                 $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 March 31,

                                                         1997            1996

Net revenues                                          $10,200         $10,684

Cost of revenues                                        7,464           8,844
                                                        -----           -----

  Gross profit                                          2,736           1,840

Selling, general and
  administrative expenses                               2,826           3,130

  Loss from operations                                    (90)         (1,290)

Interest income                                            73             102

Interest expense                                         (220)           (191)

Other income                                              267
                                                          ---

  Income (loss) before provision
    for income taxes                                       30          (1,379)

Provision for income taxes                                 (5)             (8)
                                                           --              --

  Net income (loss)                                   $    25        ($ 1,387)
                                                      =======        ========


Net income (loss) per common and
  common equivalent share                             $   -          ($  0.18)
                                                      ====           ========

Weighted average number of
  common and common equivalent
  shares outstanding                                8,383,755       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)



                                                Three Months Ended March 31,
                                                   1997              1996


Cash flows from operating activities:
  Cash received from customers                   $8,973           $11,206
  Interest received                                  73               102
  Cash paid to suppliers                         (8,341)           (9,573)
  Cash paid to employees                         (2,215)           (2,509)
  Income taxes paid                                  (4)
  Interest paid                                    (220)             (189)
                                                   ----              ----
    Net cash used in operating
     activities                                  (1,734)             (963)

Cash flows from investing activities:
  Proceeds from the sale of
    an investment                                   356
  Capital expenditures                             (103)             (308)
                                                   ----              ----
    Net cash provided by
      (used in) investing
      activities                                    253              (308)
                                                    ---              ----

Cash flows from financing activities:
  Net proceeds from the sale of common
    stock as part of a private placement            372
  Proceeds derived from a credit
    agreement, net                                  885             2,168
  Principal payments of
    outstanding debt obligations                    (97)             (253)
                                                    ---              ----
    Net cash provided by
    financing activities                          1,160             1,915
                                                  -----             -----

Effect of exchange rate changes                      (3)               (1)
                                                     --                --

Net increase (decrease) in cash and
  cash equivalents                                 (324)              643

Cash and cash equivalents
  at beginning of year                            6,950             8,139
                                                  -----             -----

Cash and cash equivalents
  at March 31                                    $6,626           $ 8,782
           ==                                    ======           =======








         See accompanying notes to consolidated financial statements.




                                      4

<PAGE>




                  HMG WORLDWIDE CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
                                 (in thousands)
                                   (unaudited)



                                                 Three Months Ended March 31,
                                                      1997              1996


Reconciliation of net income (loss)
  to net cash used in
  operating activities:

Net income (loss)                                       25           ($1,387)

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

  Depreciation and amortization                        225               213
  Loss on foreign currency translation                                     7
  Other income                                        (267)

Decrease (increase) in assets:
  Accounts receivable                                 (457)              859
  Inventory                                            316             1,182
  Prepaid expenses                                     (32)               47
  Other assets                                          11              (188)

Increase (decrease) in liabilities:
  Accounts payable                                    (145)              157
  Deferred revenue                                    (767)             (342)
  Accrued expenses                                    (601)           (1,454)
  Pension obligation                                   (42)              (57)
                                                       ---               ---

Net cash used in operating
  activities                                       ($1,734)          ($  963)
                                                   =======           =======














            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 Creative Displays,
Inc. ("CDI"), with facilities in New York, Pennsylvania and Illinois.
     The  Consolidated  Balance Sheet as of March 31, 1997, and the Consolidated
Statements  of  Operations  and Cash Flows for the three  months ended March 31,
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 March 31, 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 March 31, 1997 are
not necessarily  indicative of the operating results for the full year. Note 2 -
Inventory

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

                                        March 31,      December 31,
                                          1997             1996
                                             (in thousands)
   Finished goods                       $  887           $1,312
   Work in process                         645              653
   Raw materials                         2,366            2,249
                                         -----            -----
                                        $3,898           $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 March 31, 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 three months ended March 31, 1997
and 1996 are as follows:

                                           Three Months Ended March 31,
                                                1997           1996
                                                   (in thousands)
   State and local
     income taxes                                $ 5            $ 8
                                                 ===            ===







                                        6

<PAGE>




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



Note 4 - Private Placement

     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 three  months  ended  March 31,  1997,  the  company  sold an
additional  375,000  shares of  common  stock  pursuant  to the terms of the HMG
Private Placement and derived net proceeds of approximately  $372,000. 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.















































                                      7

<PAGE>


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

Three Months Ended March 31, 1997 as Compared to the
  Three Months Ended March 31, 1996

     Net revenues  were $10.2  million for the three months ended March 31, 1997
as compared to $10.7  million for the three  months  ended March 31,  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 $1.3 million, offset by, the increase in marketing expenditures of
another significant client of approximately  $957,000. 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.  Gross
profit for the three months ended March 31, 1997 was $2.7 million as compared to
$1.8 million for the three  months  ended March 31, 1996.  The increase in gross
profit of $896,000 was principally a result of the increase in gross margin. For
the three months ended March 31, 1997 and 1996,  the Company's  gross margin was
26.8% and 17.2%, respectively.  The gross margin increase was due principally to
a favorable production revenue mix resulting in a 10.6% increase,  offset by the
underabsorption  of fixed  overhead  expenses as a percentage of net revenues of
1.0%.  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 March 31, 1997 was $2.8 million as compared to $3.1 million
for the  comparable  period in 1996.  The  decrease of  $304,000  from period to
period was  principally  due to (i) a reduction in personnel  costs of $124,000,
(ii) the  discontinued  European  operations  of  $90,000  and  (iii)  decreased
spending in other general  expenses.  For the three months ended March 31, 1997,
the Company generated interest income of $73,000 as compared to $102,000 for the
three months ended March 31, 1996. This decrease was 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 $220,000 for
the three  months  ended March 31,  1997 as  compared to $191,000  for the three
months ended March 31, 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 $25,000,  for the three
months ended March 31, 1997 as compared to a net loss of $1.4 million,  or $0.18
per share,  for the three  months  ended March 31,  1996.  Stockholders'  Equity
Stockholders' equity increased  approximately  $397,000 to $5.6 million at March
31, 1997 from $5.2 million at December 31, 1996.  The increase in  stockholder's
equity  was  principally  due to net  proceeds  derived  from  the  HMG  Private
Placement of $372,000 and net income of $25,000. 8

<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 three months ended March 31,
1997 was $5,000 as compared to $8,000 for the three months ended March 31, 1996.
The income tax  provision for the three months ended March 31, 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 March 31, 1997,  the  Company's  aggregate  backlog was  approximately  $15.2
million as compared to $15.6  million and $20.0 million at December 31, 1996 and
March 31, 1996, respectively. Of such aggregate backlog at March 31, 1997, 40.7%
was attributable to three clients.  The Company  anticipates that  substantially
all such backlog at March 31, 1997 will be filled during the next twelve months.
In addition to the $15.2 million backlog at March 31, 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 March 31,  1997 was  $28.2  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
March 31, 1997 and December 31, 1996  aggregated  $6.6 million and $6.9 million,
respectively.   The  Company's   decrease  in  cash  and  cash   equivalents  of
approximately  $324,000  for the  three  months  ended  March  31,  1997 was due
principally  to the net  effects  of (i) net  cash  used in  operations  of $1.7
million  (ii) capital  expenditures  of $103,000  and (iii)  reductions  of debt
obligations  of  $97,000,  offset  by  (iv)proceeds  from  borrowings  under the
Company's revolving line of credit with its bank lender of $885,000, (v)proceeds
from the sale of an  investment  of $356,000 and (vi) net proceeds  derived from
the HMG Private  Placement of $372,000.  The Company's  negative cash flows from
operations for the three months ended March 31, 1997 resulted  principally  from
(i) a decrease in general  liabilities  of $1.6  million  and (ii)a  decrease in
assets of $162,000.  The Company has secured a $11.0  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.
                                      9

<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 March 31, 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 March 31,  1997,  the  balance
outstanding on the term loan component of the Credit Agreement was $317,000. The
Company's  working  capital  at March  31,1997  was a deficit  of $2.7  million,
inclusive  of  borrowings  of $10.3  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  first  quarter  of 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 fifteen 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 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,  significant cost savings will
be realized.  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. In January
1997,  the Company  agreed to engage an investment  banker to act as a placement
agent on a "best efforts" basis in a proposed  private  offering  ("1997 Private
Offering").  In May 1997,  the  decision  was made not to proceed  with the 1997
Private Offering and for the Company to continue to investigate other sources of
financing,  including  the  continuation  and/or  expansion  of the HMG  Private
Placement. Management believes that each of the above cost reduction components,
expanded  client  base,  future cash flows from  operations  and the HMG Private
Placement developed and/or implemented by the Company provide an important basis
for future profitability and liquidity,  however, there can be no assurance that
such belief  will prove to be correct,  that  additional  financing  will not be
required,  or  that  any  such  financing  will  be  available  on  commercially
reasonable terms or otherwise. 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.
                                      10

<PAGE>






Part II.  Other Information


Item 2.  Changes in Securities

     During the three months ended March 31, 1997, the Company sold an aggregate
of 375,000 shares of common stock to Benjamin Shabtai, Great Court Analysis LLC,
John Calvert-Jones and Stephen Spira in the HMG Private Placement.  The purchase
price per share was $1.00. The shares were sold without registration in reliance
upon the exemption provided by Section 4(2) of the Securities Act.
























































                                      11

<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.



                                                      HMG Worldwide Corporation
                                                      (Registrant)





                                                    -------------------------
Date: May 14, 1997                                  /S/ Robert V. Cuddihy, Jr
                                                    Robert V. Cuddihy, Jr.
                                                    Chief Operating Officer and
                                                    Chief Financial Officer








































                                      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 thereunto duly authorized.


                                                    HMG Worldwide Corporation
                                                    (Registrant)




Date: May 14, 1997
                                                    Robert V. Cuddihy, Jr.
                                                    Chief Operating Officer and
                                                    Chief Financial Officer














                                       13