As filed with the Securities and Exchange Commission
                              on September 30, 1997
     Registration No. 333-_____



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


                                   FORM S - 8
                          REGISTRATION STATEMENT UNDER
                           THE SECURITIES ACT OF 1933
                            ARTRA GROUP INCORPORATED
             (Exact name of registrant as specified in its charter)

                PENNSYLVANIA                               25-1095978
       (State or other jurisdiction of                  (I.R.S. Employer
        incorporation or organization)                Identification Number)


                        500 CENTRAL, NORTHFIELD, IL 60093
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


                 ARTRA GROUP INCORPORATED 1996 STOCK OPTION PLAN
                   ARTRA GROUP INCORPORATED 1966 DISINTERESTED
                          DIRECTORS' STOCK OPTION PLAN
                            (Full title of the Plans)



                                 PETER R. HARVEY
                      PRESIDENT AND CHIEF OPERATING OFFICER
                          C/O ARTRA GROUP INCORPORATED
                       500 CENTRAL, NORTHFIELD, IL 60093
                     (NAME AND ADDRESS OF AGENT FOR SERVICE)

                                 (847) 441-6650
          (Telephone number, including area code, of agent for service)
                                                                             


                        CALCULATION OF REGISTRATION FEE

                                   Proposed      Proposed
Title of                           maximum       maximum
securities        Amount to be      offering     aggregate       Amount of
to be             to be             price        offering        registration
registered        registered        per share    price           fee
--------------------------------------------------------------------------------

Common Stock,      2,200,000*       $5.25(1)     $8,788,617(1)   $3,031.00
$.01 par value     shares


(1)     532,750  shares  are being  offered at $5.25 and the  balance  1,667,250
        shares,  are  estimated  solely  for  the  purpose  of  calculating  the
        registration  fee, and based upon the average of the high and low prices
        of the Common Stock on the New York Stock Exchange on September 26, 1997
        in  accordance  with Rules  457(a) and 457(h) of the  Securities  Act of
        1933.

*  2,000,000 shares are  being registered  for the Stock Option Plan and 200,000
are being registered for the Disinterested Directors' Plan.
<PAGE>

PART I.  INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

         The  information  required by Part I is included in  documents  sent or
given to participants in the Registrant's 1996 Stock Option Plan for ARTRA GROUP
Incorporated  Stock  Option  holders  and  the  ARTRA  GROUP  Incorporated  1996
Disinterested Directors' Stock Option Plan holders pursuant to Rule 428(b)(1) of
the Securities Act of 1933, as amended (the "Securities Act").

         The following reoffer prospectus filed as part of the this Registration
Statement  has been prepared in accordance  with the  requirements  of Part I of
Form S-3 and,  pursuant to General  Instruction  C of Form S-8,  may be used for
reofferings  and resales of Common Stock to be acquired by  "affiliates"  of the
Company (as defined in Rule 405 under the  Securities  Act) upon the exercise of
acquisition  by such  affiliates  of  Common  Stock  upon  exercise  of  options
heretofore or hereafter granted under the Company's Plans.

                               REOFFER PROSPECTUS

         This Prospectus is being used in connection with the offering from time
to time by employees and non-employee directors (the "Selling  Shareholders") of
Artra Group Incorporated, a Pennsylvania corporation (the "Company"), who may be
deemed  "affiliates"  of the Company as defined in Rule 405 under the Securities
Act of 1933, as amended (the  "Securities  Act"),  of shares of common stock, no
par value shares,  of the Company (the "Common  Stock") that have been or may be
acquired by them pursuant to the Company's Plans being registered herein.

         The shares of Common Stock may be sold from time to time to  purchasers
directly  by  any  of  the  Selling  Shareholders.  Alternatively,  the  Selling
Shareholders  may sell the  shares of Common  Stock in one or more  transactions
(which  may  involve  one or more  block  transactions)  on the New  York  Stock
Exchange in separately  negotiated  transactions,  or in a  combination  of such
transactions.  Each sale may be made either at market  prices  prevailing at the
time of such sale or at negotiated  prices.  Some or all of the shares of Common
Stock may be sold through  brokers acting on behalf of the Selling  Shareholders
or to dealers for resale by such  dealers,  and in  connection  with such sales,
such  brokers or dealers may receive  compensation  in the form of  discounts or
commissions from the Selling  Shareholders  and/or the purchasers of such shares
for whom they may act as broker or agent (which discounts or commissions are not
anticipated to exceed those  customary in the types of  transactions  involved).
However,  any  securities  covered  by this  Prospectus  that  qualify  for sale
pursuant to Rule 144 under the  Securities Act may be sold under Rule 144 rather
than  pursuant to this  Prospectus.  All  expenses of  registration  incurred in
connection with this offering are being borne by the Company,  but all brokerage
commissions and other expenses incurred by individual Selling  Shareholders will
be borne by each such Selling  Shareholder.  The Company will not be entitled to
any of the proceeds from such sales,  although the Company will, with respect to
the Plans,  receive the exercise  price in cash upon the exercise of the options
pursuant to which the shares of Common  Stock are  acquired by the  participants
thereto.

         As  of  this  time,   the  Company  does  not  satisfy  the  registrant
requirements  for use of Form S-3,  and  consequently,  the Common  Stock  being
registered  hereby  and the  amount of shares of Common  Stock  that that may be
reoffered or resold by means of the reoffer prospectus,  by each person, and any
other person with whom he or she is acting in concert for the purpose of selling
control  Common  Stock of the  Company,  may not exceed,  during any three month
period, the amount specified in Rule 144(e) (230.144(e)).



                                       1
<PAGE>


                              AVAILABLE INFORMATION

         The Company  filed on May 30,  1997 with the  Securities  and  Exchange
Commission (the "Commission"),  in Washington, D.C., a Registration Statement on
Form S-1, No. 333-16965,  together with all amendments and exhibits thereto (the
"Registration  Statement")  under the Securities  Act. This  prospectus does not
contain all of the information set forth in the Registration Statement,  certain
parts of which are omitted in accordance  with the Rules and  Regulations of the
Commission.  Statements  made  in  the  Prospectus  as to  the  contents  of any
contract,  agreement or other document referred to are not necessarily complete;
with  respect to each such  contract,  agreement or other  document  filed as an
exhibit to the  Registration  Statement,  reference is made to the exhibit for a
more complete description of the matter involved,  and each such statement shall
be  deemed  qualified  in its  entirety  by  such  reference.  The  Registration
Statement, including exhibits and schedules filed therewith, may be inspected at
the Commission's  Public Reference Section,  450 Fifth Street,  N.W., Room 1024,
Washington, D.C. 20549, and at the regional offices of the Commission located at
7 World Trade Center,  13th Floor,  New York, New York 10048 and Suite 1400, 500
West Madison Street,  Chicago,  Illinois  60661.  Copies of such material may be
obtained  upon  written  request  from  the  Public  Reference  Section  of  the
Commission at the address set forth above upon payment of prescribed  fees.  The
Commission  also  maintains a Web site at  "http://www.sec.gov"  which  contains
reports,  financial statements and other information  regarding registrants that
file electronically with the Commission.

         The Company is subject to the  Securities  Exchange  Act of 1934 and in
accordance therewith files reports,  proxy statements and other information with
the  Commission.  Such reports,  proxy  statements and other  information may be
inspected at the Public Reference  Section of the Commission or the Commission's
regional  offices at the  addresses  set forth  above or  accessed  through  the
Commission's  Web site  identified  above,  and copies of such  material  may be
obtained  upon  written  request  from  the  Public  Reference  Section  of  the
Commission upon payment of prescribed fees.

         The  Common  Stock of the  Company  is  listed  on the New  York  Stock
Exchange and such reports,  proxy material other  information are also available
for  inspection  at the New Stock  Exchange,  20 Broad St,  New York,  New York,
10005.

Documents Incorporated by Reference

         See Part 2 Item 3, page 23  hereafter  for  Documents  Incorporated  by
Reference.


                         Bagcraft Corporation of America

Products, Markets, Customers and Distribution

         Bagcraft, Artra Group Incorporated Operating Subsidiary, established in
1947, is a leading  manufacturer and supplier of flexible  packaging products to
the fast food, bakery,  microwave popcorn and supermarket industries and is also
a significant  supplier to the theater industry.  Several of Bagcraft's products
are widely  recognized and have become standard items within various segments of
the food  industry.  Bagcraft is a full-service  supplier  complete with its own
laboratory and  engineering  departments.  Bagcraft's  sales and technical staff
work in conjunction with Bagcraft's customers to determine the proper components
of the package.  Bagcraft's art department creates packaging designs, subject to
customer approval,  or duplicates  customer-supplied  designs.  Thereafter,  the
packaging is produced in accordance with customer specifications using a variety
of  papers,  film,  foil and  lamination.  Bagcraft  has  developed  a number of
proprietary  innovations  in the  manufacture  of its packaging  products.  Such
innovations include the Dubl-WaxTM bag, which introduced specialty waxed bags to
the retail bakery industry. Bagcraft is also credited with being instrumental in
developing and producing the first microwave popcorn bags.




                                       2
<PAGE>



         Bagcraft  currently  produces over three billion bags and three billion
sheets and  wrappers  annually for the  packaging  of more than 1,000  different
products.

         Sales orders are processed,  and manufacturing  and delivery  schedules
are determined  primarily at Bagcraft's  headquarters  and principle  production
facility in Chicago. In September,  1994, Bagcraft completed the construction of
a new 265,000 sq. ft.  production  facility in Baxter Springs,  Kansas.  The new
Kansas facility,  which has added production capacity in Bagcraft's growing food
service  products  business,  has  replaced  Bagcraft's  production  facility in
Joplin,  Missouri  (which was conveyed to a contractor  involved in constructing
the Baxter Springs facility in partial consideration of such contractor's fees),
its facility in Carteret,  New Jersey  (which was sold in 1994) and its facility
in Forest Park, Georgia (which was converted into a distribution facility).

         Bagcraft's  products are sold  throughout  the United States by a sales
force  of  approximately  15  full-time   salespersons  who  sell  to  wholesale
distributors and a number of independent brokers who sell Bagcraft product lines
to large food processors and food chains.  Bagcraft presently sells its products
to more than 2,000  customers.  Although  some of these are the largest and most
recognizable  companies in the food industry,  no single customer  accounted for
more than 10% of Bagcraft's consolidated net sales in 1996.

         Sales to customers  are made  pursuant to orders  placed in advance for
periods of up to one year.  In certain  instances  Bagcraft  and a customer  can
enter into an  agreement  to  maintain a  specified  minimum  inventory  for the
customer.  The contracts  entered into by Bagcraft  with its  customers  vary in
length  depending on the customer's  needs and  Bagcraft's  capacity to meet the
customer's requirements.  Generally, Bagcraft's contracts provide advance notice
of from 30 days to one year to  terminate a contract.  The  contracts  typically
provide  for  delivery  of goods  at an  agreed-upon  fixed  price,  subject  to
adjustment upon timely notice in advance.  Bagcraft usually grants its customers
rights of return,  subject to penalty,  except in the case of goods  produced to
specification.  In addition,  Bagcraft  typically  requires payment for goods 30
days after  shipment,  but gives its  customers a 1% discount if payment is made
within 10 days after shipment.

         During 1996,  Bagcraft's products were sold by four marketing divisions
as described  below.  However,  in 1997,  Bagcraft  structured its marketing its
marketing  department  into  seven  segments:  Concessions,  Distributors,  Food
Service,  Microwave  Popcorn,  Supermarket  Deli/Bakery,  Retail  Packaging  and
International.

Paper Division

         Bagcraft  believes it is the industry  leader in specialty  paper bags,
which represented  approximately 31% of Bagcraft's 1996 sales.  Bakeries account
for  approximately  63%  of  the  paper  division's  sales  which  also  include
supermarkets  and various retail food chains.  A number of the paper  division's
products, including Dubl-WaxTM,  Dubl-PanelTM,  Dubl-ClearTM and Sealing-StripTM
represent  significant  manufacturing  innovations  which  have  contributed  to
Bagcraft's position as the industry leader.  Major customers include Walgreen's,
Albertson's,  Dunkin' Donuts and Boston Market and Publix. Bagcraft believes the
outlook for the future indicates stability and growth.

         Bagcraft's Paper Division stocks  approximately  150 generic  products,
which enables  Bagcraft to lead the industry in providing the widest  variety of
immediately  available  unprinted  and  stock  printed  bags and  sheets  in the
industry.  Stock  products are bought and  inventoried by  distributors  who, in
turn, sell them in varying  quantities to end-users for a multitude of purposes.
The  stock  line  is  sold  mainly  through   Bagcraft  field   salespeople  and
telemarketing from Bagcraft's Chicago home office.





                                       3

<PAGE>



Food Service Division

         The Food  Service  Division,  which  represented  approximately  46% of
Bagcraft's 1996 sales, is a leader among its  competitors.  Bagcraft's  products
sold to the food  service  industry  include  foil and paper bags and sheets for
sandwiches,  french  fries,  chicken  and  other  prepared  corporation.   Major
customers in this industry include Wendy's,  Burger King, Taco Bell, Dairy Queen
and McDonald's.

         The  development of the Honeycomb  sheet helped propel  Bagcraft to its
industry leading position. The Honeycomb sheet incorporates a moisture absorbing
layer which  prevents buns from becoming soggy and tends to keep food warm for a
longer  period of time.  When used to replace  rigid  packaging,  it  represents
significant source reduction to the solid waste system.  Additionally,  Bagcraft
was the first manufacturer to print 6-color sheets.

Specialty Bag Division

         The Specialty Bag Division represented  approximately 17% of Bagcraft's
1996 sales.  Many of the  division's  products  represent  unique  additions  to
Bagcraft's standard products.  The Cue-Pon BagTM has a "tear out" coupon affixed
near the window on the bag which offers the shopper the immediate benefit of the
coupon upon  purchase.  The Cue-Pon Pocket BagTM has a pouch on the front of the
bag  which  can be filled  with  novelty  items by the  retailer.  The  division
features products for the packaging of bakery goods, such as cookies and donuts,
coffee,  pre-popped  popcorn and specialized  promotional  items.  This division
provides bags with transparent windows, metal tin tie attachments and convenient
self-opening bottoms.  Customers for the division include Bake-Line Products and
Interstate Brands.

         This  division also produces  theater  popcorn bags,  which provide the
theater  chains with a more  economical  package  that is easy to dispose of and
substantially reduces the amount of space needed to inventory the product. These
double wall bags provide many of the properties of rigid containers such as tubs
and cartons with the environmental and storage  advantages of bags.  Bagcraft is
the leading  supplier of popcorn bags to theater  chains such as General  Cinema
Corporation, Carmike and Mann Theaters.

         As  discussed  in  Note  14 to  the  condensed  consolidated  financial
statements  for the  quarter  ended June 26,  1997,  effective  January 2, 1997,
Bagcraft purchased the business assets, subject to buyer's assumption of certain
liabilities,  of AB Specialty Holding Company,  Inc. ("AB").  The acquisition of
AB, is expected to enhance Bagcraft's specialty bag business.

Microwave Popcorn Division

         The Microwave Popcorn Division,  which represented  approximately 6% of
Bagcraft's  1996 sales,  represents  an example of  Bagcraft's  high  technology
advancements.  Bagcraft supplies microwave popcorn packaging to several industry
leaders,   including   Hunt-Wesson  (Orville   Redenbacher)  and  U.S.A.  Family
Corporation.

         Bagcraft was  instrumental  in the  development of the first  microwave
popcorn bag and played an important role in developing  "susceptor"  accelerator
technology which it has incorporated into its products. The susceptor technology
involves  placing a metallized  material into the popcorn bag which  accelerates
the heat  transfer  and results in a higher  percentage  of the popcorn  kernels
being popped.

         In recent  years,  Bagcraft has  experienced  a decline in its domestic
microwave  popcorn business due to the acquisition of one of its major customers
by a company with its own packaging ability.  Accordingly, at December 31, 1995,
Bagcraft  incurred  a  charge  to  operations  of  approximately  $1,500,000  to
write-down the carrying  value of idle machinery and equipment  dedicated to the
production of microwave popcorn products.





                                       4
<PAGE>

Competitive Conditions

         Bagcraft  believes that it is the  manufacturer of the most diversified
line of flexible packaging products in the United States.  However,  there are a
number of domestic and foreign companies which compete directly with Bagcraft in
each of its major  product  lines,  certain of which have a larger  market share
with respect to specific product lines.  Bagcraft's competitors range from small
companies to divisions of large corporations  which have  substantially  greater
financial  resources than those available to Bagcraft.  Bagcraft competes on the
basis of quality, service and the price of its products.

Trademarks, Patents and Research Activities

         Bagcraft  believes that only a modest level of continuing  research and
development and strict quality and process control will be necessary to maintain
and  improve  its  position  in the  flexible  packaging  industry.  All product
modifications and manufacturing  innovations reflect input from its personnel in
general management,  sales, marketing design, R&D and engineering.  Bagcraft has
filed for and holds  patents and  registers  trademarks  and  tradenames  in all
instances where such actions are considered valuable to its business.

Raw Materials

         Bagcraft  purchases the paper, foil, films and chemicals it uses from a
number of different unaffiliated suppliers. Since Bagcraft purchases each of the
raw materials it requires from more than one supplier,  it is not dependent upon
a single supplier for any specific materials or supplies.

Environmental Matters

         In January,  1985 the United  States  Environmental  Protection  Agency
("EPA")  notified the Company's  Bagcraft  subsidiary  that it was a potentially
responsible party ("PRP") under the Comprehensive  Environmental  Responsibility
Compensation  and  Liability  Act  ("CERCLA")  for alleged  release of hazardous
substances at the Cross Brothers site near Kankakee, Illinois. Although Bagcraft
has denied  liability for the site,  it has entered into a settlement  agreement
with the EPA, along with the other third party defendants, to resolve all claims
associated  with the site except for state  claims.  In May,  1994 Bagcraft paid
$850,000 to formally  extinguish the EPA claim. In September 1989,  Bagcraft was
served with a complaint filed by the State of Illinois against seventeen parties
for alleged  involvement  with the Cross Brothers  site.  The complaint  alleged
Bagcraft was responsible  for the costs of cleanup  incurred and to be incurred.
Although  Bagcraft  has denied  liability  for the site,  it has entered  into a
settlement agreement with the State, along with the other potential  responsible
parties,  to resolve all claims  associated with the site. In July 1997 Bagcraft
paid approximately $150,000 to formally extinguish the State's claim.

         Bagcraft  has  been  notified  by  the  EPA  that  it is a  potentially
responsible  party for the disposal of hazardous  substances at the Ninth Avenue
site in Gary,  Indiana.  This site is listed  on the EPA's  National  Priorities
list.  A group of defendant  PRPs,  known as the Ninth  Avenue  Remedial  Group,
settled with the USEPA and agreed to remediate the site. This Group subsequently
sued numerous third party  defendants,  including  Bagcraft,  alleged also to be
responsible  parties at the site.  The  plaintiffs  have  produced  only limited
testamentary  evidence,  and no documentary  evidence,  linking Bagcraft to this
site,  and the Company has neither  discovered any records which  indicate,  nor
located  any  current  or  former  employees  who have  advised,  that  Bagcraft
deposited hazardous  substances at the site. Based on the foregoing,  management
of the Company does not believe  that it is probable  that the Company will have
any liability for the costs of the clean-up of this site. The Company intends to
vigorously defend itself in this case.

         Bagcraft reported a release  associated with solvent tanks located in a
vault at its Chicago  facility.  After seeking approval from the IEPA,  Bagcraft
installed and is currently operating a soil vapor gas extraction system designed
to achieve  remedial  objectives which the IEPA has determined to be appropriate
to the site.

         Bagcraft's  Chicago  facility has also been the subject of  allegations
that it violated  laws and  regulations  associated  with the Clean Air Act. The
facility has numerous  sources of air  emissions of volatile  organic  materials
("VOMs") associated with its printing operations and is required to maintain and
comply  with  permits  and  emissions  regulations  with regard to each of these
emission sources.

                                        5
<PAGE>


         In  November  of 1995,  the EPA  issued a Notice of  Violation  ("NOV")
against  Bagcraft's  Chicago facility alleging numerous  violations of the Clean
Air Act and related regulations. The NOV alleges that the facility installed and
operated  emission  sources  without  permits,  that it  failed to  operate  air
pollution  control  equipment  at  required  efficiencies  and that  there  were
releases  of VOMs  above  permitted  limits.  In April  1997,  the EPA  filed an
administrative complaint and has proposed a $250,000 civil penalty. Bagcraft has
filed a response to the complaint and is attempting to negotiate a settlement.

         Bagcraft has been notified that it may have responsibility with respect
to a clean-up  site on Basket Creek Road,  Georgia.  Bagcraft  presently  has no
indication of its liability, if any or whether it is a responsible party.

Employees

         The Company  currently employs  approximately 900 persons.  The Company
considers its relationships with its employees to be good.


Properties

         Bagcraft  believes that all of their  facilities are adequate for their
present and reasonably  anticipated  future business.  At September 15, 1997 and
December 28, 1996, the principal  physical  properties of Bagcraft  consisted of
the following:
<TABLE>
<CAPTION>

Location                      General Description                                    Ownership
--------                      -------------------                                    ---------
<S>                           <C>                                                    <C>
Chicago, IL                   Administrative and manufacturing facility of           Owned    
                              approximately 148,000 sq. ft.                           

Chicago, IL (1)               Warehouse and office facility of                       Leased
                              approximately 63,000 sq. ft, expiring in 2006          

Baxter Springs, KS (4)        Manufacturing, warehouse and office facility of        Owned
                              approximately 265,000 sq. ft.                          

Hialeah, FL (2) (3)           Manufacturing, warehouse and office facility           Leased                       
                              of  approximately  25,000 sq. ft.,                     expiring in 1998

Medley, FL (2) (3)            Warehouse facility of approximately 20,000 sq.ft.      Leased
                                                                                     expiring in 1999

Forest Park, GA (4)           Warehouse and office facility of approximately          Owned 
                              5,000 sq. ft

<FN>

(1)      This lease provides  for a  ten-year  option to renew  at  the  current
         market rate.
(2)      This  lease  was  assumed  in  conjunction   with  Bagcraft's   January
         acquisition of AB Specialty Holding Company.
(3)      This lease provides for a two-year renewal option.
(4)      In September,  1994,  Bagcraft completed  construction of a new 265,000
         sq. ft. production  facility in Baxter Springs,  Kansas.  This facility
         replaced  Bagcraft's   production   facilities  in  Joplin,   Missouri,
         Carteret,  New Jersey and Forest Park,  Georgia.  Bagcraft conveyed the
         former Joplin,  Missouri facility to one of the contractors involved in
         the  construction  of the Baxter  Springs,  Kansas  facility as partial
         consideration for the work performed by this contractor.  Bagcraft sold
         the Carteret,  New Jersey  facility in 1994.  The Forest Park,  Georgia
         facility was retained as a  distribution  center until it was closed in
         June 1996.
</FN>
</TABLE>

Legal Proceedings

         See  the  description  above  entitled  "Environmental  Matters"  for a
discussion of the Bagcraft pending legal proceedings.


                                       6
<PAGE>

                                  RISK FACTORS

THE SHARES OF COMMON STOCK OFFERED BY THIS  PROSPECTUS  INVOLVE A HIGH DEGREE OF
RISK.  PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER,  AMONG OTHER THINGS, THE
FOLLOWING RISK FACTORS INHERENT IN AND AFFECTING THE BUSINESS OF THE COMPANY AND
THIS OFFERING,  TOGETHER WITH THE OTHER  INFORMATION IN THIS PROSPECTUS,  BEFORE
MAKING AN INVESTMENT DECISION.

         Continuing Losses

         The Company ("Artra") has experienced losses from continuing operations
in recent years, including losses from continuing operations in each year during
the period 1990 - 1995.  Losses from  continuing  operations of $16,943,000  and
$13,529,000 were experienced in 1995 and 1994,  respectively.  See "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations"
(contained in Form 10-K for the year ended  December 26, 1996,  incorporated  by
reference).

         Indebtedness

         As of  September  19,  1997,  the  Company had  outstanding  short-term
indebtedness of approximately  $18,000,000.  Bagcraft,  the Company's  operating
subsidiary,  is also  obligated  to pay  substantial  amounts in the near future
under the terms of its debt  obligations.  At September  19, 1997,  Bagcraft had
total borrowings of $52,372,000  consisting of $42,401,000 (before reduction for
unamortized  discount of $3,309,000)  outstanding under its Credit Agreement and
loans from the City of Baxter Springs, Kansas totaling $9,971,000.

         In December 1996,  Bagcraft's  Credit  Agreement was amended to provide
for a $20,000,000 term loan payable in varying  quarterly  installments  through
maturity  on  September  30,  2002 and a  revolving  credit  loan,  subject to a
borrowing base, with maximum  borrowings of $18,000,000.  Term loan installments
totaling  $2,000,000 are payable during the next twelve months.  As of September
19, 1997, the oustanding balance on the term loan was $18,500,000. At September,
1997, the revolving  credit loan had  outstanding  borrowings of $11,401,000 due
September 30, 2002.  Initial  borrowings  under  Bagcraft's  Credit Agreement in
December 1993 refinanced borrowings under a previous bank loan agreement.

         Effective May 15, 1997, the Credit Agreement was amended to provide for
a $5,000,000  term loan (Term Loan B) with  interest at the lender's  index rate
plus .75%. Term Loan B is payable on May 8, 1998, unless accelerated under terms
of the Credit  Agreement.  The  proceeds  of Term Loan B were  advanced to Artra
under terms of an intercompany note payable to Bagcraft on May 8, 1998.  Because
the Artra  /Bagcraft note results from an intercompany  transaction,  it has not
been  included in Artra 's short-term  indebtedness.  Artra used the proceeds of
this loan to repay certain Artra debt obligations as discussed below.

         Effective  July 17, 1997,  the Credit  Agreement was amended to provide
for a $7,500,000  term loan (Term Loan C) with  interest at the  lender's  index
rate plus 1%. Term Loan C is payable on July 15, 2000, unless  accelerated under
terms of the Credit  Agreement.  The  proceeds  of Term Loan C were  advanced to
Artra under terms of an intercompany  note payable to Bagcraft on July 15, 2000.
Because the Artra  /Bagcraft note results from an intercompany  transaction,  it
has not been  included  in  Artra 's  short-term  indebtedness.  Artra  used the
proceeds of this loan to repay  certain Artra debt  obligations  and for working
capital.

         Bagcraft has $3,137,000 payable during the next twelve months, on loans
from the City of Baxter Springs, Kansas, the aggregate principal amount of which
was $9,971,000 as of August 20, 1997.  Proceeds from the Baxter Springs,  Kansas
loans  financed  the  construction  of  Bagcraft's  265,000  sq. ft.  production
facility.





                                       7


<PAGE>



         In June 1997, Artra completed  private  placements of $4,950,000 of 12%
secured  promissory notes due in December 1997. As additional  consideration the
noteholders  received  warrants to purchase an aggregate of 227,500 Artra common
shares at a price of $5.00 per share.  The  warrants  expire in June  1999.  The
warrantholders  have the right to put these  warrants  back to Artra at any time
during a six month period  commencing  in December  1997,  at prices of $2.00 to
$2.40 per share.  The cost of this obligation  ($514,000 if all warrants are put
back to the Company) is being accrued in the Company's financial statements as a
charge to interest expense over the period June 1997 (the  commencement  date of
the private  placement)  through December 1997 (the maturity date of the notes).
The proceeds from the private  placement were used principally to pay down other
debt obligations. The secured promissory notes are collateralized principally as
follows:

         Promissory  notes with an aggregate  principal amount of $2,000,000 are
         collateralized  by a 25%  interest in the common  stock of Artra 's BCA
         subsidiary (the parent of Bagcraft).

         The  Company  and the  lender  are  currently  negotiating  the form of
         collateral  for certain  promissory  notes with an aggregate  principal
         amount of $2,950,000,  which is anticipated to be substantially  all of
         the   Company's   otherwise   unencumbered   COMFORCE   common   shares
         (approximately 1,000,000 shares).


                  In July 1997, Artra completed private placements of $7,475,000
of 12% secured promissory notes due in January 1998. As additional consideration
the  noteholders  received  warrants to purchase an aggregate  of 199,311  Artra
common shares at a price of $4.50 per share.  The warrants  expire in July 1998.
The  warrantholders  have the right to put these  warrants  back to Artra at any
time  during  a six  month  period  commencing  on the  earlier  of the date the
principal  amount of the notes are paid or the maturity date of the notes,  at a
price of $3.00 per share. The cost of this obligation  ($598,000 if all warrants
are put  back  to the  Company)  will  be  accrued  in the  Company's  financial
statements  as a charge to interest  expense over the period July 1997 (the date
of the private  placement)  through January (the scheduled  maturity date of the
notes).  In the event of a  default,  as  defined  in the note  agreements,  the
secured promissory notes will bear interest at 37%. The secured promissory notes
are collateralized principally as follows:

         A  $4,000,000  note is  collateralized  by 575,000  shares of  COMFORCE
         common stock owned by the Company's Fill-Mor subsidiary and a secondary
         interest in the common stock of Artra 's BCA subsidiary  (the parent of
         Bagcraft).

         Promissory  notes with an aggregate  principal amount of $3,475,000 are
         collateralized by 652.285 shares of Artra redeemable preferred stock (a
         17.4% interest),  1,784.02 shares of BCA Series A redeemable  preferred
         stock (a 48.5%  interest) and 6,488.8 shares of BCA Series B redeemable
         preferred stock (a 79.8% interest).

         The proceeds  from the July 1997  private  placement  were  advanced to
Peter R. Harvey and Mr. Harvey provided  additional  collateral for his advances
as  discussed  in  Note 13 to the  Company's  condensed  consolidated  financial
statements  contained  in Form  10-Q  for  the  quarter  ended  June  26,  1997,
incorporated by reference.

         In August,  1996,  Artra borrowed  $500,000 from Howard Conant,  then a
private  investor,  evidenced  by an  short-term  note,  due  December 23, 1996,
bearing  interest  at 10%.  The loan was  collateralized  by  125,000  shares of
COMFORCE common stock owned by the Company's Fill-Mor subsidiary.  As additional
compensation  for the loan, Mr. Conant received a warrant,  expiring in 2001, to
purchase 25,000 Artra common shares at a price of $5.00 per share.  The proceeds
of the loan were used for working  capital.  At the Company's  annual meeting of
shareholders,  held August 29,  1996,  Mr.  Conant was elected to the  Company's
board of directors.  In December,  1996,  the loan was extended  until April 23,
1997 and Mr. Conant received, as additional  compensation,  a warrant , expiring
in 2001, to purchase 25,000 Artra common shares at a price of $5.875 per share.



                                       8

<PAGE>


         In January, 1997, Artra borrowed an additional $300,000 from Mr. Conant
evidenced by a short-term  note, due December 23, 1997,  bearing interest at 8%.
The loan was  collateralized by 100,000 shares of COMFORCE common stock owned by
the Company's Fill-Mor subsidiary.  As additional compensation for the loan, Mr.
Conant  received a warrant,  expiring in 2002,  to purchase  25,000 Artra common
shares at a price of $5.75 per share.

         In March 1997, Artra borrowed an additional  $1,000,000 from Mr. Conant
evidenced by a short-term  note, due May 26, 1997,  bearing interest at 12%. The
loan was  collateralized by 585,000 shares of COMFORCE common stock owned by the
Company's Fill-Mor subsidiary.  As additional compensation,  Mr. Conant received
an option to  purchase  25,000  shares of  COMFORCE  common  stock  owned by the
Company's  Fill-Mor  subsidiary at a price of $4.00 per share, with the right to
put the option  back to Artra on or before May 30, 1997 for a total put price of
$50,000.  In May 1997,  Mr.  Conant  exercised  his rights and put the  COMFORCE
option back to Artra for $50,000.  The proceeds from this loan were used in part
to repay an Artra /Fill-Mor $2,500,000 bank term loan.

         In April 1997, Artra borrowed $5,000,000 from Mr. Conant evidenced by a
note, due April 20, 1998,  bearing interest at 10%. As additional  compensation,
the lender received a warrant to purchase 333,333 Artra common shares at a price
of $5.00 per share. The  warrantholder has the right to put this warrant back to
Artra at any time  during the period  April 21,  1998 to April 20,  2000,  for a
total purchase price of $1,000,000.  The cost of this obligation will be accrued
in the Company's  financial  statements as a charge to interest expense over the
period  April 21, 1997 (the date of the loan)  through  April 21, 1998 (the date
the warrantholder has the right to put the warrant back to Artra ). The proceeds
from  this  loan  were used to repay  Mr.  Conant's  outstanding  borrowings  of
$1,800,000 and to pay down other Artra debt obligations.

         In June 1997, Artra borrowed an additional  $1,000,000 from Mr. Conant,
due December 10, 1997, bearing interest at 12%. As additional compensation,  the
lender  received a warrant to purchase  40,000 Artra common shares at a price of
$5.00 per share.  The  warrantholder  has the right to put this  warrant back to
Artra at any time during the period  December 10, 1997 to June 10,  1998,  for a
total purchase price of $80,000.  The cost of this obligation will be accrued in
the  Company's  financial  statements  as a charge to interest  expense over the
period June 10, 1997 (the date of the loan) through  December 10, 1997 (the date
the warrantholder has the right to put the warrant back to Artra ). The proceeds
from this loan were used to pay down other Artra debt obligations. In July 1997,
borrowings from Mr. Conant were reduced to $3,000,000 with proceeds  advanced to
Artra from a Bagcraft term loan as discussed above. As of August 20, 1997, Artra
had total outstanding borrowings of $3,000,000 from Mr. Conant collateralized by
a 75%  interest in the common  stock of Artra 's BCA  subsidiary  (the parent of
Bagcraft).

         At December  26, 1996 (the end of Artra 's most  recent  fiscal  year),
Artra was the obligor under two demand notes origininally  issued to CIPKA S.A.,
an unrelated Swiss company, in the amount of approximately $2,300,000, including
accrued  interest.  The notes were issued in October,  1990 with  interest at 15
percent.  In January 1997,  Artra received  notice that its obligations to CIPKA
were sold,  effective  October 26,  1996,  to  PRESTWOOD  LIMITED,  an unrelated
company  registered in Tortola,  BVI. In July 1997,  Artra paid all  outstanding
interest on these demand notes and reduced the outstanding  borrowings under the
demand notes to approximately  $1,500,000.  Artra is currently  negotiating with
the noteholder to extend or refinance this obligation.

         Artra also has outstanding  short-term  borrowings from other unrelated
parties aggregating approximately $1,100,000.  The remaining amounts come due at
various  times in 1997 and 1998.  The notes were issued at various  times during
1997 and the  interest  rates vary  between 10 and 12 percent.  The  proceeds of
these loans were used principally for working capital.





                                      9
<PAGE>




         Artra has suffered recurring losses from operations in recent years. As
a result  of these  factors,  Artra  has  experienced  difficulty  in  obtaining
adequate  financing to replace certain current credit  arrangements,  certain of
which are in default, to fund its debt service and liquidity  requirements.  Due
to its limited ability to receive operating funds from its operating subsidiary,
Artra  historically has met its operating  expenditures  with funds generated by
such alternative  sources as private placements of Artra common stock and notes,
sales of Artra common stock with put options, loans from  officers/directors and
private  investors,  as well as  through  sales of  assets  (including  COMFORCE
shares)  and/or  other  equity  infusions.  Artra plans to continue to seek such
alternative sources of funds to meet its future operating expenditures. However,
there can be no assurance  that it will be successful in doing so in the future.
If Artra is unable to negotiate  extensions  with its creditors and complete the
above mentioned  transactions,  Artra could suffer severe adverse  consequences,
and as a  result,  Artra  may be  forced  to  liquidate  its  assets or file for
protection under the Bankruptcy Code. See "Management's  Discussion and Analysis
of Financial  Condition and Results of  Operations -- Status of Debt  Agreements
and Operating Plan"  (contained in Form 10-Q for the quarter ended June 26, 1997
incorporated by reference).

         Potential Volatility in Market Price of COMFORCE Common Stock

         Artra,  along  with  its  wholly  owned  Fill-Mor  subsidiary,  owns  a
significant  minority  interest in COMFORCE,  consisting of 1,728,000  shares or
approximately  13% of the  outstanding  common stock of COMFORCE as of September
19, 1997, with an aggregate value as of that date of  approximately  $12,852,000
(value at December 26, 1996 was  $22,564,000).  The value of COMFORCE  stock has
fluctuated  substantially  in recent periods.  The high per share for the twelve
month period ending August 31, 1997 was $19.125 and the per share low during the
same period was $4.00.  There can be no assurance that the value of the COMFORCE
shares will not decline substantially in the future, which would have a material
adverse effect on the value of Artra .

         The  COMFORCE  shares  constitute  unregistered  securities  under  the
Securities Act of 1933 (the "Act"). As a result of Artra's former involvement in
the operations  and management of COMFORCE,  Artra was considered an "affiliate"
of COMFORCE  under the Act, and because of this, the number of shares that Artra
could sell without  registration under the Act within any three-month period was
limited. For the reasons set forth below, the Company believes that an exemption
from registration  under Rule 144(k)  promulgated under the Act is now available
to it, and therefore the limitations  under Rule 144 on the number of restricted
shares that Artra could sell within any three-month period without  registration
are no longer applicable to it.

         Rule 144(k) of the Act permits the sale without  registration under the
Act of  restricted  shares of an  issuer  that have been held in excess of three
years (two years as of April 29, 1997) by persons who have not been "affiliates"
of the issuer for the preceding three months.  Since December 28, 1995,  Artra ,
Fill-Mor and their respective officers, directors, affiliates and employees have
held no  managerial  or executive  positions  with  COMFORCE nor have any of the
above  served in the capacity of  directors,  nor have any of them had the right
under any  agreement or otherwise to serve in such capacity  since  December 28,
1995.  Likewise,  neither  Artra ,  Fill-Mor  nor any of the above had the right
under any  agreement or otherwise to serve in such capacity  since  December 28,
1995.  Finally,  since  that time,  neither  Artra ,  Fill-Mor  nor any of their
respective officers,  directors,  affiliates and employees have had any material
involvement in, nor have they been able to exercise any control over,  COMFORCE,
either  individually  or together  with any other  person or entity.  Because of
this,  the Company  believes  that Artra and  Fill-Mor are not  "affiliates"  of
COMFORCE  and,  since  they have  held  their  shares in excess of three  years,
qualify for the exemption under Rule 144(k) set forth above.

         There can be no assurance that the  Securities and Exchange  Commission
would concur with the Company's position.  Notwithstanding  this, Artra does not
believe that its ability to sell  COMFORCE  shares,  or eventually to realize on
the value of its COMFORCE  shares,  will be affected in a material  adverse way,
although it may not be able to sell its  COMFORCE  shares as quickly as it could
if it were to use Rule  144(k),  and in any  event,  an  attempt to sell a large





                                       10
<PAGE>



number of its COMFORCE  shares over a limited period could be expected to result
in a reduction in the value of such shares.  Effective  December 19, 1996, Artra
and  COMFORCE  entered into a Settlement  Agreement  pursuant to which  COMFORCE
agreed to include in a proposed  underwritten  public offering 380,000 shares of
COMFORCE common stock held by Artra and its Fill-Mor subsidiary and Artra agreed
to a Lock-up  agreement which limits its ability to sell its remaining  COMFORCE
common  shares for a period of 360 days after the  effective  date of Comforce's
proposed  underwritten  public offering.  COMFORCE did not retain an underwriter
for the proposed underwritten public offering and, accordingly,  effective April
30, 1997 Artra was released from the  provisions of the Lock-up  Agreement.  The
sale  of  1,295,000  COMFORCE  common  shares  held by  Artra  and  Fill-Mor  is
restricted  because  the shares are  collateral  for  various  short-term  loans
(449,703 shares held by Artra and Fill-Mor remain unencumbered at May 28, 1997).
See "Management's  Discussion and Analysis of Financial Condition and Results of
Operations -- Investment  in COMFORCE  Corporation"  (contained in Form 10-Q for
the quarter ended June 26, 1997, incorporated by reference).

         The sale of 700,000  COMFORCE  common shares held by Artra and Fill-Mor
is restricted  because the shares are collateral  for various debt  obligations.
Additionally,  the Company and a lender are  currently  negotiating  the form of
collateral  for certain  promissory  notes issued in June 1997 with an aggregate
principal   amount  of   $2,950,000.   The   collateral  is  anticipated  to  be
substantially  all of it the Company's  otherwise  unencumbered  COMFORCE common
shares  (approximately  1,000,000  shares).  See  "Management's  Discussion  and
Analysis of Financial  Condition  and Results of  Operations  --  Investment  in
COMFORCE  Corporation"  (contained  in Form 10-Q for the quarter  ended June 26,
1997, incorporated by reference).


         Inability to Honor Put Options

         Artra has entered into various  agreements  under which it has sold its
common  shares  along with put options that require  Artra to  repurchase  these
shares at the option of the holder, usually one year after the date of each such
agreement.  At September 19, 1997,  options were outstanding that, if exercised,
would  require  Artra to  repurchase  72,984  shares of its Common  Stock for an
aggregate of approximately $3,300,000. Artra does not have adequate resources to
make such redemptions. However, the holders have the option to sell their shares
in the market,  subject to the  limitations of Rule 144 of the  Securities  Act,
which  could  adversely  impact the market  price of the  Common  Stock.  At its
discretion  and subject to its  financial  ability,  Artra could  reimburse  the
option  holders for any shortfall  resulting from such sale. At the present time
none of the option holders have demanded payment,  and all of the option holders
have  indicated to the Company a willingness to work with the Company to satisfy
the  obligations,  in some manner other than a demand for payment  under the put
option.  See "Risk  Factors -  Dilution  and  Depression  of Market  Price  from
Issuance of Additional Common Stock" and "- Limited Trading  Activity." See also
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations - Liquidity  and Capital  Resources  (contained  in Form 10-Q for the
quarter ended June 26, 1997, incorporated by reference)."

                                 
         Need for Additional Funds; Unfavorable Credit Terms

         The  Company  continues  to be engaged in efforts to obtain  equity and
debt financing.  Even if the Company's  Bagcraft  subsidiary  generates positive
cash flow (and there can be no  assurances  that it will),  it is  restricted in
paying  dividends  or making  distributions  to the Company  under  certain loan
agreements (except for limited overhead  allocations payable to Artra in certain
circumstances and payments under tax sharing arrangements where applicable) . As
a  result,  Artra  does not have a means of  generating  cash  flow on a regular
basis.  Consequently,  Artra is reliant on its  ability to place debt and equity
securities  privately and to sell  COMFORCE  shares to raise cash needed to meet
its working capital requirements.




                                       11
<PAGE>

         The costs and conditions  associated with raising  required capital may
not be on  favorable  terms,  and the Company  may not be able to sell  COMFORCE
shares at  favorable  prices.  In recent  years,  short-term  borrowings  by the
Company from private investors have generally been available, but at a high cost
to the Company. Stated base interest rates on its notes have been as high as 20%
(with  substantially  higher default  rates),  and certain of the borrowers have
demanded  warrants as additional  consideration for agreeing to extend credit to
the  Company.  Warrants  to  purchase  approximately  2,708,676  shares  of  the
Company's  common  stock (at  exercise  prices at the market  price when issued,
which has ranged from $3.50 to $8.00 per share) have  previously  been issued to
private lenders in connection with these transactions.  The continuation of such
practices  could  result  in  further  dilution  of the  existing  shareholders'
interests in the Company. See "Management's Discussion and Analysis of Financial
Condition  and Results of  Operations  Status of Debt  Agreements  and Operating
Plan" (contained in Form 10-Q for the quarter ended June 26, 1997,  incorporated
by reference).

         Risks Relating to Peter R. Harvey

         The  Company's  ability to  continue to  refinance  its  operations  is
dependent on the ability of the  Company's  officers and  directors,  especially
Peter R. Harvey,  to raise capital.  In the event Mr. Harvey were not affiliated
with the Company for any reason,  this could adversely affect the ability of the
Company to survive.

         As of September 19 1997,  Artra has outstanding  total amounts due from
Peter R. Harvey,  including accrued interest, of $17,025,000.  The advances bear
interest at the prime rate plus 2%, which was 10.5% at September 19, 1997.  This
receivable has been classified as a reduction of shareholder's  equity. See Note
13 to the Company's condensed  consolidated financial statements for the quarter
ended June 26, 1997 for a further  discussion  of the  receivable  from Peter R.
Harvey.

         Peter R. Harvey has not received  other than nominal  compensation  for
his services as an officer or director of Artra or any of its subsidiaries since
October of 1990 and Mr. Harvey has agreed not to accept any compensation for his
services as an officer or director of Artra or any of its subsidiaries until his
obligations to Artra , described above, are fully satisfied. Additionally, since
December 31, 1986, Peter R. Harvey has guaranteed  approximately  $40,000,000 of
Artra obligations to private and  institutional  lenders (John Harvey also was a
co-guarantor of a $26,700,000  loan included in that total with Peter R. Harvey)
and has  also  hypothecated  personal  assets  as  security  for  certain  Artra
obligations.

         In prior  years,  as partial  collateral  for amounts due from Peter R.
Harvey,  the Company has received the pledge of 1,523 shares of Artra redeemable
Series A preferred stock (with a liquidation  value of $1,523,000,  plus accrued
dividends) which are owned by Mr. Harvey. In addition,  Mr. Harvey has pledged a
25%  interest in  Industrial  Communication  Company (a private  company) . Such
interest is valued by Mr. Harvey at $800,000 to $1,000,000.  During 1995,  Peter
R. Harvey entered into a pledge  agreement with Artra whereby Mr. Harvey pledged
additional  collateral  consisting  of 42,067  shares of Artra  common stock and
707,281 shares of PureTec Corporation, a publicly traded corporation ("PureTec")
 . As of August  20,  1997,  the  closing  market  price of PureTec on the NASDAQ
National  Market was $1.75 per share.  As collateral  for a July 1997 advance of
$7,475,000,  Mr.  Harvey  provided  Artra  with  additional  collateral  for his
advances  consisting of 652.285 shares of Artra  redeemable  preferred  stock (a
17.4% interest),  1,784.02 shares of BCA Series A redeemable  preferred stock (a
48.5% interest) and 6,488.8 shares of BCA Series B redeemable preferred stock (a
79.8%  interest).  As of September 19, 1997,  this  additional  collateral had a
carrying value in Artra 's condensed consolidated balance sheet of approximately
$11,000,000. The fair market value of this additional collateral is not known.

         In  addition,   in   connection   with  a  discharge  of  certain  bank
indebtedness  discussed below, Artra received rights under a mortgage of certain
real estate owned by Mr.  Harvey.  The real estate had an appraised  value of $2
million as of December 13, 1993. The mortgage  collateralized  $2,150,000 of the
amount  owed by Mr.  Harvey.  Bank of  America  Illinois  had a senior  security
interest in the amount of $850,000. See "Transactions with Management And Others
-- Settlement  of the Bank of America  Illinois  Debt." In March 1997,  the bank
sold its interest in Mr.  Harvey's note and the related  collateral to a private
investor.  Artra  retained  its  $2,150,000  security  interest the real estate,
subordinated to the noteholder's $850,000 security interest in this real estate.


                                       12
<PAGE>


         Explanatory Paragraph in Report of Independent Accountants

         The  Company's  independent  accountants,   Coopers  &  Lybrand  L.L.P.
("Coopers & Lybrand"),  has issued an explanatory  paragraph with respect to the
Company,  that expresses  substantial  doubt as to the ability of the Company to
continue as a going concern due to recurring  losses from  operations  and a net
capital  deficiency  at December 26,  1996.  Coopers & Lybrand has stated in its
report  that,  as a  result  of  these  factors,  the  Company  has  experienced
difficulty  in  obtaining  adequate  financing  to replace  the  current  credit
agreements,   to  fund  its  debt  service  and  liquidity   requirements.   The
Consolidated  Financial  Statements  do not include any  adjustments  that might
result  from this  uncertainty.  If the  Company  ceases to  operate  as a going
concern,  an  investor  would be likely  to lose his  entire  investment  in the
Company's Common Stock. See Note 1 to "Consolidated Financial Statements."

         Dilution and  Depression  of Market Price from  Issuance of  Additional
Common Stock

         As of September 19, 1997,  there were 7,932,912 shares of the Company's
common stock  outstanding.  The  Company's  Board of Directors  has the power to
issue any and all authorized but unissued shares without  shareholder  approval.
At the  annual  meeting  held on August 29,  1996,  the  Company's  shareholders
approved an amendment to the Company's Articles of Incorporation to increase the
number of authorized  common shares from 7,500,000 to  20,000,000.  In addition,
the Company anticipates that holders of options and warrants will exercise their
options and warrants in order to sell the underlying shares  registered  hereby.
Such an  exercise  could  result in a  dilution  of the  interests  of  existing
shareholders.  Purchasers of the Shares  offered hereby should be aware that the
issuance of  additional  shares may result in a reduction in the market price of
the Company's Common Stock then  outstanding.  See "Description of the Company's
Securities." See also "Risk Factors - Limited Trading Activity."

         Possible  Delisting of Securities  from the New York Stock Exchange and
the Pacific Stock Exchange

         The  Company's  Common  Stock is  currently  listed on the New York and
Pacific Stock  Exchanges.  The Company has been unable to maintain the standards
for continued listing on these exchanges,  and the Company's securities could be
subject to delisting  from these  exchanges  at any time.  Trading of the Common
Stock might  thereafter  be  conducted  in the  over-the-counter  markets on the
electronic  bulletin board  established  for securities that do not meet the New
York and Pacific  Stock  exchange  listing  requirements  or in what is commonly
referred to as the "pink sheets." If delisting were to occur,  an investor could
find it more difficult to dispose of, or to obtain accurate quotations regarding
the price of the  Company's  Common  Stock,  and the market  price of the Common
Stock could decline significantly,

         Composition of the Board

         The  Company's  Articles  of  Incorporation  require  that at least six
persons  serve on the Board of  Directors.  Vacancies  existed on the  Company's
Board  between 1989 and August 29, 1996.  All  corporate  actions  taken between
October 12, 1993 and August 29, 1996 are potentially voidable since such actions
were taken in reliance on the consent or  affirmative  vote of less than four of
the Company's  directors  which would  constitute a majority of the required six
person Board.

         Conflicts of Interest

         In the past, the Company has been a party to numerous transactions with
officers  and  directors of the Company or with  entities in which  officers and
directors of the Company own  substantial  equity  interests.  While the Company
does not presently  contemplate  effectuating any additional  transactions  with
officers and directors of the Company or with management-owned  entities,  there
can be no assurance that it will not do so in the future. See "Transactions with
Management   and  Others."  In   addition,   as   described   under   "Principal
Shareholders,"  various  officers  and  directors  hold  warrants  or options to
purchase  shares of the  Company's  Common Stock,  including at exercise  prices
lower than the market price of the Company's Common Stock as of the date hereof.




                                       13
<PAGE>

         Limited Trading Activity

During the six months ended August 31, 1997,  the daily average number of shares
of Common Stock traded on the New York Stock Exchange was  approximately  30,000
shares.  If such  trading  levels  continue,  it may be  difficult  for  Selling
Shareholders  to effect sales of their shares on the New York and Pacific  Stock
Exchanges,  and the  placement of a  substantially  larger number of sell orders
could  materially and adversely impact the market price of the Common Stock. See
also "Risk  Factors - Dilution and  Depression  of Market Price from Issuance of
Additional Common Stock."

         Competitive Conditions in the Packaging Products Industry

         The packaging  products industry is highly  competitive.  The Company's
Bagcraft  subsidiary  competes as a printer and converter within the competitive
flexible  packaging  business.  Management  believes the  principal  competitive
factors in the Company's markets are product quality and  functionality,  price,
service and reputation.  Bagcraft  encounters  competition  from both integrated
producers and  independents  in each of its marketing  divisions.  Some of these
competitors  are larger  and have  access to greater  financial  resources  than
Bagcraft. Bagcraft's costs have increased substantially in recent years, largely
due to increases in the cost of paper. Although Bagcraft generally seeks to pass
its increased costs on to its customers,  this is frequently not possible due to
the  competitive  nature of the  paper  products  industry.  See  "Business  and
Properties - Packaging Products Segment."

         Litigation

         At June 26, 1997, the end of its most recent fiscal quarter,  Artra has
accrued $1,900,000 for business litigation and environmental liabilities.  Based
on investigation and settlement  discussions,  the Company believes this to be a
sufficient  amount  for any  potential  costs  or  liabilities  for the  matters
described below.  However, no assurance can be given that the reserved amount is
sufficient  to satisfy  all  potential  business  litigation  and  environmental
liabilities.  As described under  "Business and Properties - Legal  Proceedings"
herein,  Artra or its predecessors or their subsidiaries have been identified by
the U.S.  Environmental  Protection  Agency ("EPA") as  potentially  responsible
parties  for  environmental  clean-up  costs  (or  sued by a  named  potentially
responsible  party seeking  indemnification  or contribution for clean-up costs)
for waste sent to several sites included on the EPA's National  Priorities List,
which  are  commonly  known as  "Superfund"  sites.  In  addition,  Artra or its
predecessors  and  their   subsidiaries  are  alleged  to  have  sent  hazardous
substances  to certain other sites which,  although not  designated as Superfund
sites, are sites at which environmental  clean-up or remediation may be required
to be undertaken. Artra and its predecessors, directly and through subsidiaries,
have, since 1960, operated in excess of 30 manufacturing facilities.  Certain of
these facilities used and/or generated  hazardous  materials and disposed of the
hazardous  substances,  directly or through third party waste  disposal firms at
various  off-site waste disposal  locations,  in most cases before laws had been
enacted governing the safe disposal of hazardous substances.

         Artra  has  not   conducted   a   comprehensive   audit  of   potential
environmental liability at the facilities formerly owned or operated by Artra or
its  predecessors  and their  subsidiaries  since it is no  longer  the owner or
operator  of most of the  properties  at which it or its  predecessors  or their
affiliates  conducted  manufacturing  operations.  As  a  result,  Artra  cannot
accurately  quantify  potential  environmental  liability  associated  with past
ownership or operation  of these  facilities.  Artra did not keep records of the
companies  with which it  contracted  for the  disposal  of wastes  before  such
record-keeping became mandated by law.

         In addition,  even if Artra is not found to be responsible for clean-up
costs at any particular  site, the costs of defending  itself in any proceedings
or inquiries instituted by the EPA, any state environmental  agencies or private
parties could itself be significant. As described under "Risk Factors - Need for
Additional Funds" herein, Artra has limited funds available to it, including for
its legal  defense.  In  certain  cases,  Artra may be unable to raise the funds
needed to mount an adequate (or any) defense against the claims raised,  even if
it has  legal  grounds  to do so.  In one case  described  under  "Business  and
Properties - Legal Proceedings"  herein,  Artra did not prosecute an appeal of a
decision  adverse to Artra in which its  insurer  was held not  responsible  for
defending or indemnifying  Artra in connection with two  environmental  clean-up
cases in California.  In addition, in another case, Artra entered into a consent
decree with the EPA to pay  certain  clean-up  costs,  but was unable to pay the
costs it had agreed to bear. See "Business and Properties -- Legal Proceedings."



                                       14
<PAGE>


         No Cash Dividends

         The  Company  has not paid any cash  dividends  on its Common  Stock in
recent  years  and  does  not  anticipate  paying  any  such  dividends  in  the
foreseeable  future.  In addition,  the  Bagcraft  operating  subsidiary  of the
Company  is  prohibited  from  or  restricted  in  paying  dividends  or  making
distributions  to the Company under various loan agreements  (except for limited
overhead  allocations payable to Artra in certain  circumstances and tax sharing
agreements  where  applicable).  Accordingly,  even if  Artra  were  able to pay
dividends to its  shareholders,  the  restrictions or limitations on Bagcraft in
upstreaming  payments  would make payment of dividends  by Artra  unlikely.  See
"Description of the Company's Securities."

         Negative  Effect on  Shareholders  from Possible  Issuance of Preferred
Stock

         The Company is authorized to issue up to 2,000,000  shares of preferred
stock,  par value $1,000 per share.  The preferred stock may be issued in one or
more series, the terms of which may be determined at the time of issuance by the
Board of Directors,  without  further  action by  shareholders,  and may include
voting rights  (including the right to vote as a series on particular  matters),
preferences as to dividends and  liquidation,  conversion and redemption  rights
and sinking fund provisions. In 1990 the Company issued 3,750 shares of Series A
Preferred  Stock.  No other  preferred  stock is currently  outstanding  and the
Company  has no present  plans for the  issuance  thereof.  The  issuance of any
preferred  stock could  affect the rights of the holders of Common Stock and, in
certain circumstances, reduce the value of the Common Stock. See "Description of
the Company's Securities."

                             PRINCIPAL SHAREHOLDERS

         As of September 19, 1997,  there were 7,931,912  shares of Common Stock
issued and outstanding. The following table sets forth the number and percentage
of Common  Stock known by  management  of Artra to be  beneficially  owned as of
September 19, 1997 by (i) all  stockholders  known by management of Artra to own
5% or more of Artra's  Common  Stock,  (ii) all  directors of Artra , (iii) each
executive  officer included in the Summary  Compensation  Table in the 1996 Form
10-K and (iv) all directors, executive officers and other key employees of Artra
as a group (9 persons).  Unless stated otherwise, each person so named exercises
sole voting and investment power as to the shares of Common Stock so indicated.

         As of September 19, 1997,  3,750 shares of Series A Preferred  Stock of
Artra , par value $1,000 per share,  had been issued,  of which 3,583.62  shares
were  outstanding.  Each share of this Series A  Preferred  Stock  entitles  the
holder  to one  vote  on an  equal  basis  with  each  share  of  Common  Stock.
Accordingly,  for  purposes of showing  ownership  of Common  Stock in the table
below, the Series A Preferred Stock is treated as Common Stock.

                                                   Number
                                                 of Shares
                                                Beneficially
Name of Beneficial Owner                           Owned          Percent
-----------------------------------------        ----------       ------- 
Research Center of Kabbalah(l)                     647,250          7.9%
Peter R. Harvey(2)       Common                    440,243          5.6%
                         Preferred                   2,175         60.7%
John Harvey(3)                                     423,796          5.2%
Gerard M. Kenny(4)                                 240,048          3.0%
Maynard K. Louis(5)                                121,000          1.5%
Howard R. Conant(6)                                578,333          6.9%
Edward A. Celano                                     18,18             *
Robert L. Johnson                                    2,873             *
John G. Hamm(7)                                    143,498          1.8%
Robert S. Gruber(8)                                141,104          1.8%
James D. Doering(9)                                124,311          1.5%

All directors and executive officers
as a group (12 persons)                         2,460,082          26.1%

*        Less than 1% of the outstanding shares.

         Ozite  Corporation,  an affiliate of Artra by reason of Peter R. Harvey
and John Harvey  being  directors  of the parent  corporation,  PureTec,  is the
record holder of 2,227 shares (59.4%) of the Artra Series A Preferred.




                                       15
<PAGE>

(1)      The  address of  Research  Center of  Kabbalah  ("RCK") is 83-84  115th
         Street, Richmond Hill, New York 11418. The shares beneficially owned by
         RCK consist of 361,000  shares of Common Stock owned  directly,  21,250
         shares of Common Stock issuable  under a warrant which expires  October
         29,  1998 at an  exercise  price of $6.00 per share,  65,000  shares of
         Common Stock issuable  issuable under a warrant which expires  December
         31, 1998 at an  exercise  price of $7.00 per share,  100,000  shares of
         Common Stock issuable  under a warrant which expires  February 14, 2002
         at an exercise  price of $5.625 per share and 100,000  shares of Common
         Stock  issuable  under a warrant  which  expires  April 13,  2002 at an
         exercise price of $5.00 per share.

(2)      Mr.  Peter  R.  Harvey's   business  address  is  500  Central  Avenue,
         Northfield, Illinois 60093. The shares beneficially owned by Mr. Harvey
         consist of 375,790  shares held  directly by him (of which  373,615 are
         Common Stock and 2,175 are shares of Series A Preferred Stock),  23,001
         shares held as trustee for the benefit of his nieces,  800 shares owned
         by his wife and  children,  634 shares held in his 401(k)  plan,  7,193
         shares  held  in  his  individual  retirement  account,  20,000  shares
         issuable  under  an  option  which  expires  September  19,  2001 at an
         exercise  price of $3.65 per share and 15,000 shares  issuable under an
         option which expires  January 8, 2003 at an exercise price of $3.75 per
         share.

(3)      Mr. John Harvey's  business address is 500 Central Avenue,  Northfield,
         Illinois 60093.  The shares of Common Stock  beneficially  owned by Mr.
         Harvey  consist of 123,100  shares held  directly by him,  1,705 shares
         held in his 401(k) plan, 5,746 shares held in his individual retirement
         account,  100,000 shares held by Mr. Harvey's daughters,  75,000 shares
         issuable under an option which expires December 19, 2000 at an exercise
         price of $3.65 per share,  1,000 shares  issuable under an option which
         expires  September  19, 2001 at an  exercise  price of $3.65 per share,
         4,000 shares  issuable under an option which expires January 8, 2003 at
         an exercise price of $3.75 per share,  141,000 shares issuable under an
         option which expires  October 4, 2006 at an exercise price of $5.25 per
         share  and an  aggregate  of  72,245  shares  issuable  under  warrants
         expiring at various dates in 2000 and 2001 received in 1995 and 1996 as
         additional  compensation for 1995 and 1996 short-term loans at exercise
         prices of $3.75 per share to $6.25 per share.

(4)      The shares  beneficially  owned by Mr. Kenny consist of 2,000 shares of
         Artra's  common stock issuable upon the exercise of an option at $10.00
         per  share  expiring  November  28,  1996,  75,652  shares  held by (or
         issuable to) Kenny Construction Company,  14,411 shares held by Clinton
         Industries,  and 75,001 shares issuable under a warrant held by Clinton
         Industries  which  expires  November  10, 1997 at an exercise  price of
         $5.00 per share. Kenny  Construction  Company holds put options to sell
         to Artra (I)  23,004  shares of Common  Stock for a put price of $83.45
         per share plus an amount equal to 15% per annum for each day from March
         1,  1991 to the date of  payment  by Artra , which put  option  expires
         December  31,  1997,  and (ii) 49,980  shares of Common Stock for a put
         price of $21.19 per  share,  subject  to an annual  increase  of $2.25,
         which  put  option  is  exercisable  on the  later of the date  Artra's
         obligations  to Bank of America  are repaid or the  $2,500,000  note of
         Artra payable to Kenny Construction  Company (as described in paragraph
         5 under "Transactions with Management and Others." If the stock subject
         to the put is sold at a price  less  than the put  price,  the  Company
         would  remain  liable to the  holder of the put for the amount by which
         the put price of the shares  exceeds the selling  price.  Mr.  Kenny is
         Executive Vice  President,  Director and beneficial  owner of 16.66% of
         the issued and outstanding stock of Kenny Construction  Company.  He is
         also the  General  Partner  and a 14.28%  beneficial  owner of  Clinton
         Industries,  a  limited  partnership.  See  paragraphs  4 and  5  under
         "Transactions with Management and Others."

(5)      Mr. Louis is the holder of warrants to purchase 121,000 shares of Artra
         common  stock at  prices of $4.50 to $8.00  per  share  which  warrants
         expire on various dates commencing in 1997 and ending June 13, 2001.

(6)      Mr.  Conant holds 140,000 Artra common  shares  directly,  Mrs.  Conant
         holds  5,000  Artra  common  shares and Mr.  Conant  holds  warrants to
         acquire  433,000  shares  of Artra  common  stock at prices of $5.00 to
         $5.75 per share  which  warrants  expire on  various  dates in 2001 and
         2002.



                                       16
<PAGE>


(7)      The shares of Common Stock beneficially owned by Mr. Hamm consist of 50
         shares  held  directly  by him,  93  shares  held  by him and his  wife
         jointly,  2,905 shares held in his 401(k) plan,  25,000 shares issuable
         under an option which expires December 19, 2000 at an exercise price of
         $3.65 per share,  1,000 shares  issuable  under an option which expires
         September  19,  2001 at an  exercise  price of $3.65 per share,  13,200
         shares  issuable  under an option which  expires  January 8, 2003 at an
         exercise price of $3.75 per share, and 101,250 shares issuable under an
         option which expires October 4, 2006, at an exercise price of $5.25 per
         share.

(8)      The shares of Common Stock  beneficially owned by Mr. Gruber consist of
         20,190  shares  held  directly  by him,  943 shares held in his 401(k),
         plan,  1,221 shares held in his individual  retirement  account,  8,000
         shares  issuable under an option which expires  December 19, 2000 at an
         exercise  price of $3.65 per  share,  1,000  shares  issuable  under an
         option which expires  September 19, 2001 at an exercise  price of $3.65
         per share, 12,000 shares issuable under an option which expires January
         8, 2003 at an  exercise  price of $3.75 per  share  and  97,750  shares
         issuable under an option which expires  October 4, 2006, at an exercise
         price of $5.25 per share.

(9)      The shares of Common Stock beneficially owned by Mr. Doering consist of
         10,500 shares held by him in joint tenancy with his wife,  1,693 shares
         held in his 401(k) plan, 1,118 shares held in his individual retirement
         account,  22,500 shares issuable under an option which expires December
         19,  2000 at an  exercise  price  of $3.65  per  share,  31,000  shares
         issuable  under an option which expires  January 8, 2003 at an exercise
         price of $3.75 per share and  57,500  shares  issuable  under an option
         which expires October 4, 2006, at an exercise price of $5.25 per share.


                              SELLING SHAREHOLDERS

         The following table sets forth certain information regarding the shares
of Common Stock  issuable  upon the exercise of Options held by any affiliate of
the Company (as defined in Rule in 405 under the  Securities  Act) granted under
the  Company's  Plans  ("Selling  Shareholders").  In cases  where  the  Selling
Shareholder  serves or has served  within the past  three  years as an  officer,
director  or  employee  of the  Company  or any of its  subsidiaries  or has had
another material  relationship with the Company, this relationship is noted. All
of the shares  offered hereby and shares issued or issuable upon the exercise of
Options  granted  under the  Company's  Plans,  including  Options which are not
presently exercisable. Non-employee directors are entitled to receive Options to
purchase  10,000  shares of Common  Stock upon  election as a director and 2,500
shares of Common  Stock  annually  thereafter,  and the  Company's  Stock Option
Committee  or  Board  of  Directors  may  award   additional   options  to  such
non-employee directors and other directors,  officers, employees and agents from
time to time. This  prospectus may be supplemented  from time to time to include
additional  shares of Common Stock  issuable  upon the exercise of Options which
may hereafter be granted to affiliates of the Company.


         The  Selling   Shareholders   and  any  dealer   participating  in  the
distribution  of any  shares of Common  Stock or any  broker  executing  selling
orders on behalf of the Selling  Shareholders may be deemed to be "underwriters"
within the meaning of the Securities  Act, in which event any profit on the sale
of any or all of the  shares  of  Common  Stock  by them  and any  discounts  or
commissions  received  by any  such  brokers  or  dealers  may be  deemed  to be
underwriting  discounts and  commissions  under the Securities  Act. All options
granted to the  disinterested  directors  were  granted  August  29,  1996 at an
exercise  price of $5.25 per share.  The  directors  granted  such  options are:
Edward A.  Celano,  Howard R.  Conant,  Robert L.  Johnson,  Gerard M. Kenny and
Maynard K. Louis.





                                       17
<PAGE>

         The officers and employees  receiving  options at an exercise  price of
$5.25 in all  instances  during 1996  pursuant to the Stock  Option Plan and the
number of shares are as follows:

         Name of Grantee                    Number of Shares
         ---------------                    ----------------

         John P. Conroy                           34,750

         James D. Doering                         57,500

         Robert S. Gruber                         97,750

         John G. Hamm                            101,250

         John Harvey                             141,000

         Lawrence D. Levin                        38,500

         Richard Mandra                           27,750

         Edwin G. Rymek                           34,250



         All options expire on October 4, 2006. No options granted and as listed
above have been  exercised.  All of the above persons  except for Mr. Mandra are
officers of the Company, and in addition, John Harvey is a director, chairman of
the board and the chief executive officer.

         The  Common  Stock is traded on the New York Stock  Exchange  under the
symbol "ATA".  On September  26, 1997,  the closing price of the Common Stock as
reported on the New York Stock Exchange was $3.625 per share.

         THESE   SECURITIES  HAVE  NOT  BEEN  APPROVED  OR  DISAPPROVED  BY  THE
SECURITIES  AND  EXCHANGE  COMMISSION,  NOR HAS THE  COMMISSION  PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

PART II.  INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Certain Documents by Reference

         The  following  documents,  which are  filed  with the  Securities  and
Exchange  Commission (the  "Commission"),  are incorporated in this Registration
Statement by reference:

         (1) The  Registrant's  latest annual report for the year ended December
         26, 1996 filed  pursuant to Sections  13(a) or 15(d) of the  Securities
         Exchange Act of 1934, as amended (the "Exchange  Act"), the latest year
         for which audited financial statements have been filed.

         (2) All other reports filed  pursuant to Sections 13(a) or 15(d) of the
         Exchange  Act since the end of the  fiscal  year  covered by the annual
         report including, but not limited to the Registrant's Quarterly Reports
         on Form 10-Q for the quarters ended March 27, 1997 and June 26, 1997.

         (3) The description of the common stock of the Registrant, no par value
         shares (the "Common Stock"), contained in the Registrant's Registration
         Statement  on Form 8-A filed  under the  Exchange  Act,  including  any
         amendment or report filed for the purpose of updating such description.

         All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the effective date
of the  Registration  Statement  and  prior to the  filing  of a  post-effective
amendment  which  indicates  that all shares of Common Stock offered hereby have
been sold or which deregisters all shares of Common Stock then remaining unsold,
shall be deemed to be  incorporated  by  reference  herein and to be part hereof
from the date of the filing of such documents.



                                       18
<PAGE>

Item 4.  Description of Securities

     Not applicable.

Item 5. Interests of Named Experts and Counsel

         Kwiatt,  Silverman  & Ruben,  Ltd.  have  rendered  its  legal  opinion
attached  hereto as exhibit  5.1.  The equity  stockholders  of the firm who own
common  stock and voting  preferred  stock of the  Registrant  and the number of
shares owned by them are as follows:

                                  Common Stock      Preferred Stock
                                  ------------      ---------------
        Kenneth L. Kwiatt            21,587             44.25
        Michael Silverman            18,687
        Philip E. Ruben              20,687             44.25

         Additionally, the firm holds 12,000 shares of the common stock
and the Kwiatt, Silverman & Ruben, Ltd. 401(k) Profit Sharing Plan is the holder
of 15,000 shares of the common stock.



         Item 6.   Indemnification of Directors and Officers

         Subchapter D, Section 1741 et seq. of the Business  Corporation  Law of
Pennsylvania  ("BCL")  provides  authority  for the  Registrant to indemnify its
officers  and  directors  and the  by-laws  provide  indemnity  to an officer or
director  and the  Registrant  may  indemnify  any other  employee or agent,  in
connection   with  any  completed   action,   pending  or  threatened   suit  or
administrative  proceeding  against such person by reason of such person serving
as a director,  officer,  employee or agent of the Registrant or, at the request
of  the  Registrant,   in  such  capacity  for  another  entity.   However,   no
indemnification  will  be  made  if  the  act  giving  rise  to  the  claim  for
indemnification is determined by a court to have constituted  willful misconduct
or recklessness. In addition, the by-laws provide that the above indemnification
provisions  are not  exclusive of any other rights to  indemnification  any such
person may have under any  contract  or vote of  shareholders  or  disinterested
shareholders or as determined by a court. The by-laws  expressly provide that it
is the  Registrant's  policy to permit  indemnification  to the  fullest  extent
permitted  by law. The by laws further  provide the  indemnification  provisions
will be deemed to be amended  upon any  amendment of the BCL,  which  expands or
enlarges the powers of corporations to indemnify.

         See Article IV of the By-Laws,  Exhibit 3.2(1) for a complete statement
of the indemnification authorized by the Registrant.

         The BCL provides  that a  corporation  will have the power to indemnify
any  representative  of a corporation,  or of any other entity at the request of
the  corporation,  if  such  person  acted  in good  faith  and in a  manner  he
reasonably  believed  to be in,  or not  opposed  to the best  interests  of the
corporation  and,  with respect to any criminal  proceeding,  had no  reasonable
cause to believe his conduct was unlawful.

         The BCL further  provides that  indemnification  is mandatory where the
representative  is  "successful  on the  merits or  otherwise"  in defense of an
action or  proceeding,  and in  addition,  the BCL  provides  that the method of
indemnification provided by the act is not exclusive of rights under any by law,
vote of shareholders or disinterested shareholders or otherwise,  unless the act
giving rise to the claim for  indemnification  is  determined by a court to have
constituted willful misconduct or recklessness.

         Insofar as indemnification for liabilities arising under the Securities
Act  may  be  permitted  to  directors,  officers  or  persons  controlling  the
Registrant  pursuant  to the  foregoing  provisions,  the  Registrant  has  been
informed that in the opinion of the Commission such  indemnification  is against
public policy as expressed in the Securities Act and is therefore unenforceable.

         The Company has purchased a general  liability  insurance  policy which
covers certain  liabilities of directors and officers of the Company arising out
of claims based on acts or omissions in their capacity as directors or officers.

Item 7. Exemption from Registration Claimed
Not applicable.

                                       19
<PAGE>



Item 8. Exhibits

Exhibit
Number      Description
------      -----------

3.1         Amended and Restated Certificate of Incorporation of the Registrant

3.2 (*)     By-Laws of the Registrant

4.1         Artra Group Incorporated 1996 Stock Option Plan

4.1         Artra Group Incorporated 1996 Disinterested
            Directors' Stock Option Plan

5.1         Opinion of Kwiatt, Silverman & Ruben, Ltd.

23.1        Consent of Kwiatt, Silverman & Ruben, Ltd. (included in Exhibit 5.1)

23.2        Consent of Coopers & Lybrand L.L.P.

24.1        Power  of  Attorney   (included  on  the  signature  page   of  this
            Registration Statement)

    (*)  Incorporated  herein by  reference  from the  Registrant's Registration
         Statement on Form S-1 (File No. 333-16965)

Item 9. Undertakings

         (a)      The Registrant hereby undertakes:

                  (1)    To file,  during any  period in  which  offers or sales
                         are being made,  a  post-effective  amendment  to  this
                         Registration Statement:*

                           (i)      To   include  any  prospectus  required  by 
                                    Section 10(a)(3) of the Securities Act;

                           (ii)     To  reflect in the  prospectus  any facts or
                                    events  arising after the effective  date of
                                    the  Registration  Statement  (or  the  most
                                    recent  post-effective   amendment  thereof)
                                    which,  individually  or in  the  aggregate,
                                    represent  a   fundamental   change  in  the
                                    information  set  forth in the  Registration
                                    Statement; and

                           (iii)    To include  any  material  information  with
                                    respect  to the  plan  of  distribution  not
                                    previously  disclosed  in this  Registration
                                    Statement  or any  material  change  to such
                                    information in this Registration  Statement;
                                    provided,  however,  that paragraphs (i) and
                                    (ii)  do  not  apply  if  the   Registration
                                    Statement is on Form S-3 or Form S-8 or Form
                                    F-3,  and  the  information  required  to be
                                    included in a  post-effective  amendment  by
                                    those  paragraphs  is  contained in periodic
                                    reports filed by the Registrant  pursuant to
                                    Section   13  or   Section   15(d)   of  the
                                    Securities  Exchange  Act of 1934  that  are
                                    incorporated    by    reference    in   this
                                    Registration Statement.

                  (2)    That,  for the  purpose of  determining  any  liability
                         under the  Securities  Act,  each  such  post-effective
                         amendment  shall  be  deemed  to be a new  Registration
                         Statement  relating to the securities  offered therein,
                         and the offering of such  securities at that time shall
                         be deemed to be the initial bona fide offering thereof.

                  (3)    To   remove   from   registration   by   means   of   a
                         post-effective  amendment any of the  securities  being
                         registered  which remain unsold at the  termination  of
                         the offering.



                                       20
<PAGE>

         (b) The Registrant  hereby undertakes that, for purposes of determining
         any  liability  under the  Securities  Act of 1933,  each filing of the
         Registrant's  annual report  pursuant to Section 13(a) or Section 15(d)
         of the Exchange Act of 1934 (and, where  applicable,  each filing of an
         employee  benefit plan's annual report pursuant to Section 15(d) of the
         Exchange  Act  of  1934)  that  is  incorporated  by  reference  in the
         Registration  Statement  shall  be  deemed  to  be a  new  Registration
         Statement relating to the securities offered therein,  and the offering
         of such  securities  at that time shall be deemed to be in the  initial
         bona fide offering thereof.

         (c)  Insofar  as  indemnification  for  liabilities  arising  under the
         Securities  Act of 1933 may be  permitted  to  directors,  officers and
         controlling  persons  of  the  Registrant  pursuant  to  the  foregoing
         provisions,  or otherwise,  the Registrant has been advised that in the
         opinion of the Commission such indemnification is against public policy
         as expressed in the Securities Act and is, therefore, unenforceable. In
         the event that a claim for  indemnification  against  such  liabilities
         (other than the payment by the Registrant of expenses  incurred or paid
         by a director,  officer or controlling  person of the Registrant in the
         successful  defense of any action,  suit or  proceeding) is asserted by
         such  director,  officer or controlling  person in connection  with the
         securities being registered, the Registrant will, unless in the opinion
         of its counsel the matter has been  settled by  controlling  precedent,
         submit to a court of appropriate jurisdiction the question whether such
         indemnification  by it is against  public  policy as  expressed  in the
         Securities Act and will be governed by the final  adjudication  of such
         issue.

     *  Incorporated  herein by  reference  from the  Registrant's  Registration
     Statement  on Form S-1 (File No.  333-16965) .  Information  required to be
     included in a post-effective  amendment by those paragraphs is contained in
     periodic reports filed by the Registrant  pursuant to Section 13 or Section
     15(d) of the  Exchange  Act  that  are  incorporated  by  reference  in the
     Registration Statement.











                                       21


<PAGE>
                                   SIGNATURES

         Pursuant to the  requirements  of the  Securities  Act, the  registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in the City of Northfield, State of Illinois, on September 30, 1997.

ARTRA GROUP Incorporated

By:  /s/ Peter R. Harvey
------------------------------ 
     Peter R. Harvey
     President and Chief
     Operating Officer

POWER OF ATTORNEY

         We, the undersigned  officers and directors of Artra Group Incorporated
hereby severally constitute Peter R. Harvey,  James Doering,  Lawrence D. Levin,
and  Kenneth  L.  Kwiatt  Esq.,  and each of them  singly,  our true and  lawful
attorneys with full power to them,  and each of them singly,  to sign for us and
in our names in the capacities  indicated below,  the Registration  Statement on
Form  S-8  filed  herewith  and  any  and  all  subsequent  amendments  to  said
Registration  Statement,  and  generally  to do all such things in our names and
behalf in our  capacities  as  officers  and  directors  to enable  Artra  Group
Incorporated  to comply with all  requirements  of the  Securities  and Exchange
Commission, hereby ratifying and confirming our signatures as they may be signed
by said attorneys,  or any of them, to said  Registration  Statement and any and
all amendments thereto.

Pursuant to the requirements of the Securities Act, this Registration  Statement
has been signed below by the following persons in the capacities and on the date
indicated.

Signature                       Title                          Date
---------                       -----                          ----

/s/Peter R. Harvey              Director                       September 30,1997
---------------------------       
Peter R. Harvey

/s/ John G. Hamm                Executive Vice President       September 30,1997
---------------------------
John G. Hamm

/s/ James D. Doering            Vice President and             September 30,1997
---------------------------     Treasurer, Chief Financial
James D. Doering                Officer

/s/ Lawrence D. Levin           Controller                     September 30,1997
---------------------------
Lawrence D. Levin

/s/Edward A. Celano             Director                       September 30,1997
---------------------------
Edward A. Celano

/s/Howard R. Conant             Director                       September 30,1997
---------------------------
Howard R. Conant  

/s/John Harvey                  Chairman and Chief             September 30,1997
---------------------------     Executive Officer
John Harvey                     (Principal Executive officer);
                                Director

/s/Robert L. Johnson            Director                       September 30,1997
---------------------------
Robert L. Johnson

/s/Gerard M. Kenny              Director                       September 30,1997
---------------------------
Gerard M. Kenny

/s/Maynard K. Louis             Director                       September 30,1997
---------------------------
Maynard K. Louis



                                       22
<PAGE>

Exhibit
Number         Description

3.1            Amended  and   Restated   Certificate  of  Incorporation  of  the
               Registrant

3.2 (*)        By-Laws of the Registrant

4.1            Artra Group Incorporated 1996 Stock Option Plan

4.1            Artra Group Incorporated 1966 Disinterested
               Directors' Stock Option Plan

5.1            Opinion of Kwiatt, Silverman & Ruben, Ltd.
  
23.1           Consent of Kwiatt, Silverman & Ruben, Ltd.
               (included in Exhibit 5.1)

23.2           Consent of Coopers & Lybrand.

24.1           Power  of  Attorney   (included  on  the  signature  page of this
               Registration Statement)

-------------------------
(*)  Incorporated  herein  by  reference  from  the   Registrant's  Registration
     Statement  on Form S-1  (File  No. 333-16965).




                                       23
[{"type": "S-8", "sequence": "1", "description": "REGISTRATION STATEMENT", "secsgml_size_bytes": 98368}]
{"company-data": {"conformed-name": "ARTRA GROUP INC", "cik": "0000200243", "assigned-sic": "2670", "irs-number": "251095978", "state-of-incorporation": "PA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-36695", "film-number": "97688108"}, "business-address": {"street1": "500 CENTRAL AVE", "city": "NORTHFIELD", "state": "IL", "zip": "60093", "phone": "7084416650"}, "mail-address": {"street1": "500 CENTRAL AVE", "city": "NORTHFIELD", "state": "IL", "zip": "60093"}, "former-company": [{"former-conformed-name": "TELEPRO INDUSTRIES INC", "date-changed": "19820225"}, {"former-conformed-name": "ELT INC", "date-changed": "19760503"}, {"former-conformed-name": "DUTCH BOY INC", "date-changed": "19750630"}]}
As filed with the Securities and Exchange Commission
                              on September 30, 1997
     Registration No. 333-_____

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   FORM S - 8
                          REGISTRATION STATEMENT UNDER
                           THE SECURITIES ACT OF 1933
                            ARTRA GROUP INCORPORATED
             (Exact name of registrant as specified in its charter)

                PENNSYLVANIA                               25-1095978
       (State or other jurisdiction of                  (I.R.S. Employer
        incorporation or organization)                Identification Number)

                        500 CENTRAL, NORTHFIELD, IL 60093
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                 ARTRA GROUP INCORPORATED 1996 STOCK OPTION PLAN
                   ARTRA GROUP INCORPORATED 1966 DISINTERESTED
                          DIRECTORS' STOCK OPTION PLAN
                            (Full title of the Plans)

                                 PETER R. HARVEY
                      PRESIDENT AND CHIEF OPERATING OFFICER
                          C/O ARTRA GROUP INCORPORATED
                       500 CENTRAL, NORTHFIELD, IL 60093
                     (NAME AND ADDRESS OF AGENT FOR SERVICE)

                                 (847) 441-6650
          (Telephone number, including area code, of agent for service)
                                                                             

                        CALCULATION OF REGISTRATION FEE

                                   Proposed      Proposed
Title of                           maximum       maximum
securities        Amount to be      offering     aggregate       Amount of
to be             to be             price        offering        registration
registered        registered        per share    price           fee
--------------------------------------------------------------------------------

Common Stock,      2,200,000*       $5.25(1)     $8,788,617(1)   $3,031.00
$.01 par value     shares

(1)     532,750  shares  are being  offered at $5.25 and the  balance  1,667,250
        shares,  are  estimated  solely  for  the  purpose  of  calculating  the
        registration  fee, and based upon the average of the high and low prices
        of the Common Stock on the New York Stock Exchange on September 26, 1997
        in  accordance  with Rules  457(a) and 457(h) of the  Securities  Act of
        1933.

*  2,000,000 shares are  being registered  for the Stock Option Plan and 200,000
are being registered for the Disinterested Directors' Plan.
PART I.  INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

         The  information  required by Part I is included in  documents  sent or
given to participants in the Registrant's 1996 Stock Option Plan for ARTRA GROUP
Incorporated  Stock  Option  holders  and  the  ARTRA  GROUP  Incorporated  1996
Disinterested Directors' Stock Option Plan holders pursuant to Rule 428(b)(1) of
the Securities Act of 1933, as amended (the "Securities Act").

         The following reoffer prospectus filed as part of the this Registration
Statement  has been prepared in accordance  with the  requirements  of Part I of
Form S-3 and,  pursuant to General  Instruction  C of Form S-8,  may be used for
reofferings  and resales of Common Stock to be acquired by  "affiliates"  of the
Company (as defined in Rule 405 under the  Securities  Act) upon the exercise of
acquisition  by such  affiliates  of  Common  Stock  upon  exercise  of  options
heretofore or hereafter granted under the Company's Plans.

                               REOFFER PROSPECTUS

         This Prospectus is being used in connection with the offering from time
to time by employees and non-employee directors (the "Selling  Shareholders") of
Artra Group Incorporated, a Pennsylvania corporation (the "Company"), who may be
deemed  "affiliates"  of the Company as defined in Rule 405 under the Securities
Act of 1933, as amended (the  "Securities  Act"),  of shares of common stock, no
par value shares,  of the Company (the "Common  Stock") that have been or may be
acquired by them pursuant to the Company's Plans being registered herein.

         The shares of Common Stock may be sold from time to time to  purchasers
directly  by  any  of  the  Selling  Shareholders.  Alternatively,  the  Selling
Shareholders  may sell the  shares of Common  Stock in one or more  transactions
(which  may  involve  one or more  block  transactions)  on the New  York  Stock
Exchange in separately  negotiated  transactions,  or in a  combination  of such
transactions.  Each sale may be made either at market  prices  prevailing at the
time of such sale or at negotiated  prices.  Some or all of the shares of Common
Stock may be sold through  brokers acting on behalf of the Selling  Shareholders
or to dealers for resale by such  dealers,  and in  connection  with such sales,
such  brokers or dealers may receive  compensation  in the form of  discounts or
commissions from the Selling  Shareholders  and/or the purchasers of such shares
for whom they may act as broker or agent (which discounts or commissions are not
anticipated to exceed those  customary in the types of  transactions  involved).
However,  any  securities  covered  by this  Prospectus  that  qualify  for sale
pursuant to Rule 144 under the  Securities Act may be sold under Rule 144 rather
than  pursuant to this  Prospectus.  All  expenses of  registration  incurred in
connection with this offering are being borne by the Company,  but all brokerage
commissions and other expenses incurred by individual Selling  Shareholders will
be borne by each such Selling  Shareholder.  The Company will not be entitled to
any of the proceeds from such sales,  although the Company will, with respect to
the Plans,  receive the exercise  price in cash upon the exercise of the options
pursuant to which the shares of Common  Stock are  acquired by the  participants
thereto.

         As  of  this  time,   the  Company  does  not  satisfy  the  registrant
requirements  for use of Form S-3,  and  consequently,  the Common  Stock  being
registered  hereby  and the  amount of shares of Common  Stock  that that may be
reoffered or resold by means of the reoffer prospectus,  by each person, and any
other person with whom he or she is acting in concert for the purpose of selling
control  Common  Stock of the  Company,  may not exceed,  during any three month
period, the amount specified in Rule 144(e) (230.144(e)).

                                       1
AVAILABLE INFORMATION

         The Company  filed on May 30,  1997 with the  Securities  and  Exchange
Commission (the "Commission"),  in Washington, D.C., a Registration Statement on
Form S-1, No. 333-16965,  together with all amendments and exhibits thereto (the
"Registration  Statement")  under the Securities  Act. This  prospectus does not
contain all of the information set forth in the Registration Statement,  certain
parts of which are omitted in accordance  with the Rules and  Regulations of the
Commission.  Statements  made  in  the  Prospectus  as to  the  contents  of any
contract,  agreement or other document referred to are not necessarily complete;
with  respect to each such  contract,  agreement or other  document  filed as an
exhibit to the  Registration  Statement,  reference is made to the exhibit for a
more complete description of the matter involved,  and each such statement shall
be  deemed  qualified  in its  entirety  by  such  reference.  The  Registration
Statement, including exhibits and schedules filed therewith, may be inspected at
the Commission's  Public Reference Section,  450 Fifth Street,  N.W., Room 1024,
Washington, D.C. 20549, and at the regional offices of the Commission located at
7 World Trade Center,  13th Floor,  New York, New York 10048 and Suite 1400, 500
West Madison Street,  Chicago,  Illinois  60661.  Copies of such material may be
obtained  upon  written  request  from  the  Public  Reference  Section  of  the
Commission at the address set forth above upon payment of prescribed  fees.  The
Commission  also  maintains a Web site at  "http://www.sec.gov"  which  contains
reports,  financial statements and other information  regarding registrants that
file electronically with the Commission.

         The Company is subject to the  Securities  Exchange  Act of 1934 and in
accordance therewith files reports,  proxy statements and other information with
the  Commission.  Such reports,  proxy  statements and other  information may be
inspected at the Public Reference  Section of the Commission or the Commission's
regional  offices at the  addresses  set forth  above or  accessed  through  the
Commission's  Web site  identified  above,  and copies of such  material  may be
obtained  upon  written  request  from  the  Public  Reference  Section  of  the
Commission upon payment of prescribed fees.

         The  Common  Stock of the  Company  is  listed  on the New  York  Stock
Exchange and such reports,  proxy material other  information are also available
for  inspection  at the New Stock  Exchange,  20 Broad St,  New York,  New York,
10005.

Documents Incorporated by Reference

         See Part 2 Item 3, page 23  hereafter  for  Documents  Incorporated  by
Reference.

                         Bagcraft Corporation of America

Products, Markets, Customers and Distribution

         Bagcraft, Artra Group Incorporated Operating Subsidiary, established in
1947, is a leading  manufacturer and supplier of flexible  packaging products to
the fast food, bakery,  microwave popcorn and supermarket industries and is also
a significant  supplier to the theater industry.  Several of Bagcraft's products
are widely  recognized and have become standard items within various segments of
the food  industry.  Bagcraft is a full-service  supplier  complete with its own
laboratory and  engineering  departments.  Bagcraft's  sales and technical staff
work in conjunction with Bagcraft's customers to determine the proper components
of the package.  Bagcraft's art department creates packaging designs, subject to
customer approval,  or duplicates  customer-supplied  designs.  Thereafter,  the
packaging is produced in accordance with customer specifications using a variety
of  papers,  film,  foil and  lamination.  Bagcraft  has  developed  a number of
proprietary  innovations  in the  manufacture  of its packaging  products.  Such
innovations include the Dubl-WaxTM bag, which introduced specialty waxed bags to
the retail bakery industry. Bagcraft is also credited with being instrumental in
developing and producing the first microwave popcorn bags.

                                       2
Bagcraft  currently  produces over three billion bags and three billion
sheets and  wrappers  annually for the  packaging  of more than 1,000  different
products.

         Sales orders are processed,  and manufacturing  and delivery  schedules
are determined  primarily at Bagcraft's  headquarters  and principle  production
facility in Chicago. In September,  1994, Bagcraft completed the construction of
a new 265,000 sq. ft.  production  facility in Baxter Springs,  Kansas.  The new
Kansas facility,  which has added production capacity in Bagcraft's growing food
service  products  business,  has  replaced  Bagcraft's  production  facility in
Joplin,  Missouri  (which was conveyed to a contractor  involved in constructing
the Baxter Springs facility in partial consideration of such contractor's fees),
its facility in Carteret,  New Jersey  (which was sold in 1994) and its facility
in Forest Park, Georgia (which was converted into a distribution facility).

         Bagcraft's  products are sold  throughout  the United States by a sales
force  of  approximately  15  full-time   salespersons  who  sell  to  wholesale
distributors and a number of independent brokers who sell Bagcraft product lines
to large food processors and food chains.  Bagcraft presently sells its products
to more than 2,000  customers.  Although  some of these are the largest and most
recognizable  companies in the food industry,  no single customer  accounted for
more than 10% of Bagcraft's consolidated net sales in 1996.

         Sales to customers  are made  pursuant to orders  placed in advance for
periods of up to one year.  In certain  instances  Bagcraft  and a customer  can
enter into an  agreement  to  maintain a  specified  minimum  inventory  for the
customer.  The contracts  entered into by Bagcraft  with its  customers  vary in
length  depending on the customer's  needs and  Bagcraft's  capacity to meet the
customer's requirements.  Generally, Bagcraft's contracts provide advance notice
of from 30 days to one year to  terminate a contract.  The  contracts  typically
provide  for  delivery  of goods  at an  agreed-upon  fixed  price,  subject  to
adjustment upon timely notice in advance.  Bagcraft usually grants its customers
rights of return,  subject to penalty,  except in the case of goods  produced to
specification.  In addition,  Bagcraft  typically  requires payment for goods 30
days after  shipment,  but gives its  customers a 1% discount if payment is made
within 10 days after shipment.

         During 1996,  Bagcraft's products were sold by four marketing divisions
as described  below.  However,  in 1997,  Bagcraft  structured its marketing its
marketing  department  into  seven  segments:  Concessions,  Distributors,  Food
Service,  Microwave  Popcorn,  Supermarket  Deli/Bakery,  Retail  Packaging  and
International.

Paper Division

         Bagcraft  believes it is the industry  leader in specialty  paper bags,
which represented  approximately 31% of Bagcraft's 1996 sales.  Bakeries account
for  approximately  63%  of  the  paper  division's  sales  which  also  include
supermarkets  and various retail food chains.  A number of the paper  division's
products, including Dubl-WaxTM,  Dubl-PanelTM,  Dubl-ClearTM and Sealing-StripTM
represent  significant  manufacturing  innovations  which  have  contributed  to
Bagcraft's position as the industry leader.  Major customers include Walgreen's,
Albertson's,  Dunkin' Donuts and Boston Market and Publix. Bagcraft believes the
outlook for the future indicates stability and growth.

         Bagcraft's Paper Division stocks  approximately  150 generic  products,
which enables  Bagcraft to lead the industry in providing the widest  variety of
immediately  available  unprinted  and  stock  printed  bags and  sheets  in the
industry.  Stock  products are bought and  inventoried by  distributors  who, in
turn, sell them in varying  quantities to end-users for a multitude of purposes.
The  stock  line  is  sold  mainly  through   Bagcraft  field   salespeople  and
telemarketing from Bagcraft's Chicago home office.

                                       3
Food Service Division

         The Food  Service  Division,  which  represented  approximately  46% of
Bagcraft's 1996 sales, is a leader among its  competitors.  Bagcraft's  products
sold to the food  service  industry  include  foil and paper bags and sheets for
sandwiches,  french  fries,  chicken  and  other  prepared  corporation.   Major
customers in this industry include Wendy's,  Burger King, Taco Bell, Dairy Queen
and McDonald's.

         The  development of the Honeycomb  sheet helped propel  Bagcraft to its
industry leading position. The Honeycomb sheet incorporates a moisture absorbing
layer which  prevents buns from becoming soggy and tends to keep food warm for a
longer  period of time.  When used to replace  rigid  packaging,  it  represents
significant source reduction to the solid waste system.  Additionally,  Bagcraft
was the first manufacturer to print 6-color sheets.

Specialty Bag Division

         The Specialty Bag Division represented  approximately 17% of Bagcraft's
1996 sales.  Many of the  division's  products  represent  unique  additions  to
Bagcraft's standard products.  The Cue-Pon BagTM has a "tear out" coupon affixed
near the window on the bag which offers the shopper the immediate benefit of the
coupon upon  purchase.  The Cue-Pon Pocket BagTM has a pouch on the front of the
bag  which  can be filled  with  novelty  items by the  retailer.  The  division
features products for the packaging of bakery goods, such as cookies and donuts,
coffee,  pre-popped  popcorn and specialized  promotional  items.  This division
provides bags with transparent windows, metal tin tie attachments and convenient
self-opening bottoms.  Customers for the division include Bake-Line Products and
Interstate Brands.

         This  division also produces  theater  popcorn bags,  which provide the
theater  chains with a more  economical  package  that is easy to dispose of and
substantially reduces the amount of space needed to inventory the product. These
double wall bags provide many of the properties of rigid containers such as tubs
and cartons with the environmental and storage  advantages of bags.  Bagcraft is
the leading  supplier of popcorn bags to theater  chains such as General  Cinema
Corporation, Carmike and Mann Theaters.

         As  discussed  in  Note  14 to  the  condensed  consolidated  financial
statements  for the  quarter  ended June 26,  1997,  effective  January 2, 1997,
Bagcraft purchased the business assets, subject to buyer's assumption of certain
liabilities,  of AB Specialty Holding Company,  Inc. ("AB").  The acquisition of
AB, is expected to enhance Bagcraft's specialty bag business.

Microwave Popcorn Division

         The Microwave Popcorn Division,  which represented  approximately 6% of
Bagcraft's  1996 sales,  represents  an example of  Bagcraft's  high  technology
advancements.  Bagcraft supplies microwave popcorn packaging to several industry
leaders,   including   Hunt-Wesson  (Orville   Redenbacher)  and  U.S.A.  Family
Corporation.

         Bagcraft was  instrumental  in the  development of the first  microwave
popcorn bag and played an important role in developing  "susceptor"  accelerator
technology which it has incorporated into its products. The susceptor technology
involves  placing a metallized  material into the popcorn bag which  accelerates
the heat  transfer  and results in a higher  percentage  of the popcorn  kernels
being popped.

         In recent  years,  Bagcraft has  experienced  a decline in its domestic
microwave  popcorn business due to the acquisition of one of its major customers
by a company with its own packaging ability.  Accordingly, at December 31, 1995,
Bagcraft  incurred  a  charge  to  operations  of  approximately  $1,500,000  to
write-down the carrying  value of idle machinery and equipment  dedicated to the
production of microwave popcorn products.

                                       4
Competitive Conditions

         Bagcraft  believes that it is the  manufacturer of the most diversified
line of flexible packaging products in the United States.  However,  there are a
number of domestic and foreign companies which compete directly with Bagcraft in
each of its major  product  lines,  certain of which have a larger  market share
with respect to specific product lines.  Bagcraft's competitors range from small
companies to divisions of large corporations  which have  substantially  greater
financial  resources than those available to Bagcraft.  Bagcraft competes on the
basis of quality, service and the price of its products.

Trademarks, Patents and Research Activities

         Bagcraft  believes that only a modest level of continuing  research and
development and strict quality and process control will be necessary to maintain
and  improve  its  position  in the  flexible  packaging  industry.  All product
modifications and manufacturing  innovations reflect input from its personnel in
general management,  sales, marketing design, R&D and engineering.  Bagcraft has
filed for and holds  patents and  registers  trademarks  and  tradenames  in all
instances where such actions are considered valuable to its business.

Raw Materials

         Bagcraft  purchases the paper, foil, films and chemicals it uses from a
number of different unaffiliated suppliers. Since Bagcraft purchases each of the
raw materials it requires from more than one supplier,  it is not dependent upon
a single supplier for any specific materials or supplies.

Environmental Matters

         In January,  1985 the United  States  Environmental  Protection  Agency
("EPA")  notified the Company's  Bagcraft  subsidiary  that it was a potentially
responsible party ("PRP") under the Comprehensive  Environmental  Responsibility
Compensation  and  Liability  Act  ("CERCLA")  for alleged  release of hazardous
substances at the Cross Brothers site near Kankakee, Illinois. Although Bagcraft
has denied  liability for the site,  it has entered into a settlement  agreement
with the EPA, along with the other third party defendants, to resolve all claims
associated  with the site except for state  claims.  In May,  1994 Bagcraft paid
$850,000 to formally  extinguish the EPA claim. In September 1989,  Bagcraft was
served with a complaint filed by the State of Illinois against seventeen parties
for alleged  involvement  with the Cross Brothers  site.  The complaint  alleged
Bagcraft was responsible  for the costs of cleanup  incurred and to be incurred.
Although  Bagcraft  has denied  liability  for the site,  it has entered  into a
settlement agreement with the State, along with the other potential  responsible
parties,  to resolve all claims  associated with the site. In July 1997 Bagcraft
paid approximately $150,000 to formally extinguish the State's claim.

         Bagcraft  has  been  notified  by  the  EPA  that  it is a  potentially
responsible  party for the disposal of hazardous  substances at the Ninth Avenue
site in Gary,  Indiana.  This site is listed  on the EPA's  National  Priorities
list.  A group of defendant  PRPs,  known as the Ninth  Avenue  Remedial  Group,
settled with the USEPA and agreed to remediate the site. This Group subsequently
sued numerous third party  defendants,  including  Bagcraft,  alleged also to be
responsible  parties at the site.  The  plaintiffs  have  produced  only limited
testamentary  evidence,  and no documentary  evidence,  linking Bagcraft to this
site,  and the Company has neither  discovered any records which  indicate,  nor
located  any  current  or  former  employees  who have  advised,  that  Bagcraft
deposited hazardous  substances at the site. Based on the foregoing,  management
of the Company does not believe  that it is probable  that the Company will have
any liability for the costs of the clean-up of this site. The Company intends to
vigorously defend itself in this case.

         Bagcraft reported a release  associated with solvent tanks located in a
vault at its Chicago  facility.  After seeking approval from the IEPA,  Bagcraft
installed and is currently operating a soil vapor gas extraction system designed
to achieve  remedial  objectives which the IEPA has determined to be appropriate
to the site.

         Bagcraft's  Chicago  facility has also been the subject of  allegations
that it violated  laws and  regulations  associated  with the Clean Air Act. The
facility has numerous  sources of air  emissions of volatile  organic  materials
("VOMs") associated with its printing operations and is required to maintain and
comply  with  permits  and  emissions  regulations  with regard to each of these
emission sources.

                                        5
In  November  of 1995,  the EPA  issued a Notice of  Violation  ("NOV")
against  Bagcraft's  Chicago facility alleging numerous  violations of the Clean
Air Act and related regulations. The NOV alleges that the facility installed and
operated  emission  sources  without  permits,  that it  failed to  operate  air
pollution  control  equipment  at  required  efficiencies  and that  there  were
releases  of VOMs  above  permitted  limits.  In April  1997,  the EPA  filed an
administrative complaint and has proposed a $250,000 civil penalty. Bagcraft has
filed a response to the complaint and is attempting to negotiate a settlement.

         Bagcraft has been notified that it may have responsibility with respect
to a clean-up  site on Basket Creek Road,  Georgia.  Bagcraft  presently  has no
indication of its liability, if any or whether it is a responsible party.

Employees

         The Company  currently employs  approximately 900 persons.  The Company
considers its relationships with its employees to be good.

Properties

         Bagcraft  believes that all of their  facilities are adequate for their
present and reasonably  anticipated  future business.  At September 15, 1997 and
December 28, 1996, the principal  physical  properties of Bagcraft  consisted of
the following:
Location                      General Description                                    Ownership
--------                      -------------------                                    ---------
Chicago, IL                   Administrative and manufacturing facility of           Owned    
                              approximately 148,000 sq. ft.                           

Chicago, IL (1)               Warehouse and office facility of                       Leased
                              approximately 63,000 sq. ft, expiring in 2006          

Baxter Springs, KS (4)        Manufacturing, warehouse and office facility of        Owned
                              approximately 265,000 sq. ft.                          

Hialeah, FL (2) (3)           Manufacturing, warehouse and office facility           Leased                       
                              of  approximately  25,000 sq. ft.,                     expiring in 1998

Medley, FL (2) (3)            Warehouse facility of approximately 20,000 sq.ft.      Leased
                                                                                     expiring in 1999

Forest Park, GA (4)           Warehouse and office facility of approximately          Owned 
                              5,000 sq. ft
(1)      This lease provides  for a  ten-year  option to renew  at  the  current
         market rate.
(2)      This  lease  was  assumed  in  conjunction   with  Bagcraft's   January
         acquisition of AB Specialty Holding Company.
(3)      This lease provides for a two-year renewal option.
(4)      In September,  1994,  Bagcraft completed  construction of a new 265,000
         sq. ft. production  facility in Baxter Springs,  Kansas.  This facility
         replaced  Bagcraft's   production   facilities  in  Joplin,   Missouri,
         Carteret,  New Jersey and Forest Park,  Georgia.  Bagcraft conveyed the
         former Joplin,  Missouri facility to one of the contractors involved in
         the  construction  of the Baxter  Springs,  Kansas  facility as partial
         consideration for the work performed by this contractor.  Bagcraft sold
         the Carteret,  New Jersey  facility in 1994.  The Forest Park,  Georgia
         facility was retained as a  distribution  center until it was closed in
         June 1996.
Legal Proceedings

         See  the  description  above  entitled  "Environmental  Matters"  for a
discussion of the Bagcraft pending legal proceedings.

                                       6
RISK FACTORS

THE SHARES OF COMMON STOCK OFFERED BY THIS  PROSPECTUS  INVOLVE A HIGH DEGREE OF
RISK.  PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER,  AMONG OTHER THINGS, THE
FOLLOWING RISK FACTORS INHERENT IN AND AFFECTING THE BUSINESS OF THE COMPANY AND
THIS OFFERING,  TOGETHER WITH THE OTHER  INFORMATION IN THIS PROSPECTUS,  BEFORE
MAKING AN INVESTMENT DECISION.

         Continuing Losses

         The Company ("Artra") has experienced losses from continuing operations
in recent years, including losses from continuing operations in each year during
the period 1990 - 1995.  Losses from  continuing  operations of $16,943,000  and
$13,529,000 were experienced in 1995 and 1994,  respectively.  See "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations"
(contained in Form 10-K for the year ended  December 26, 1996,  incorporated  by
reference).

         Indebtedness

         As of  September  19,  1997,  the  Company had  outstanding  short-term
indebtedness of approximately  $18,000,000.  Bagcraft,  the Company's  operating
subsidiary,  is also  obligated  to pay  substantial  amounts in the near future
under the terms of its debt  obligations.  At September  19, 1997,  Bagcraft had
total borrowings of $52,372,000  consisting of $42,401,000 (before reduction for
unamortized  discount of $3,309,000)  outstanding under its Credit Agreement and
loans from the City of Baxter Springs, Kansas totaling $9,971,000.

         In December 1996,  Bagcraft's  Credit  Agreement was amended to provide
for a $20,000,000 term loan payable in varying  quarterly  installments  through
maturity  on  September  30,  2002 and a  revolving  credit  loan,  subject to a
borrowing base, with maximum  borrowings of $18,000,000.  Term loan installments
totaling  $2,000,000 are payable during the next twelve months.  As of September
19, 1997, the oustanding balance on the term loan was $18,500,000. At September,
1997, the revolving  credit loan had  outstanding  borrowings of $11,401,000 due
September 30, 2002.  Initial  borrowings  under  Bagcraft's  Credit Agreement in
December 1993 refinanced borrowings under a previous bank loan agreement.

         Effective May 15, 1997, the Credit Agreement was amended to provide for
a $5,000,000  term loan (Term Loan B) with  interest at the lender's  index rate
plus .75%. Term Loan B is payable on May 8, 1998, unless accelerated under terms
of the Credit  Agreement.  The  proceeds  of Term Loan B were  advanced to Artra
under terms of an intercompany note payable to Bagcraft on May 8, 1998.  Because
the Artra  /Bagcraft note results from an intercompany  transaction,  it has not
been  included in Artra 's short-term  indebtedness.  Artra used the proceeds of
this loan to repay certain Artra debt obligations as discussed below.

         Effective  July 17, 1997,  the Credit  Agreement was amended to provide
for a $7,500,000  term loan (Term Loan C) with  interest at the  lender's  index
rate plus 1%. Term Loan C is payable on July 15, 2000, unless  accelerated under
terms of the Credit  Agreement.  The  proceeds  of Term Loan C were  advanced to
Artra under terms of an intercompany  note payable to Bagcraft on July 15, 2000.
Because the Artra  /Bagcraft note results from an intercompany  transaction,  it
has not been  included  in  Artra 's  short-term  indebtedness.  Artra  used the
proceeds of this loan to repay  certain Artra debt  obligations  and for working
capital.

         Bagcraft has $3,137,000 payable during the next twelve months, on loans
from the City of Baxter Springs, Kansas, the aggregate principal amount of which
was $9,971,000 as of August 20, 1997.  Proceeds from the Baxter Springs,  Kansas
loans  financed  the  construction  of  Bagcraft's  265,000  sq. ft.  production
facility.

                                       7
In June 1997, Artra completed  private  placements of $4,950,000 of 12%
secured  promissory notes due in December 1997. As additional  consideration the
noteholders  received  warrants to purchase an aggregate of 227,500 Artra common
shares at a price of $5.00 per share.  The  warrants  expire in June  1999.  The
warrantholders  have the right to put these  warrants  back to Artra at any time
during a six month period  commencing  in December  1997,  at prices of $2.00 to
$2.40 per share.  The cost of this obligation  ($514,000 if all warrants are put
back to the Company) is being accrued in the Company's financial statements as a
charge to interest expense over the period June 1997 (the  commencement  date of
the private  placement)  through December 1997 (the maturity date of the notes).
The proceeds from the private  placement were used principally to pay down other
debt obligations. The secured promissory notes are collateralized principally as
follows:

         Promissory  notes with an aggregate  principal amount of $2,000,000 are
         collateralized  by a 25%  interest in the common  stock of Artra 's BCA
         subsidiary (the parent of Bagcraft).

         The  Company  and the  lender  are  currently  negotiating  the form of
         collateral  for certain  promissory  notes with an aggregate  principal
         amount of $2,950,000,  which is anticipated to be substantially  all of
         the   Company's   otherwise   unencumbered   COMFORCE   common   shares
         (approximately 1,000,000 shares).

                  In July 1997, Artra completed private placements of $7,475,000
of 12% secured promissory notes due in January 1998. As additional consideration
the  noteholders  received  warrants to purchase an aggregate  of 199,311  Artra
common shares at a price of $4.50 per share.  The warrants  expire in July 1998.
The  warrantholders  have the right to put these  warrants  back to Artra at any
time  during  a six  month  period  commencing  on the  earlier  of the date the
principal  amount of the notes are paid or the maturity date of the notes,  at a
price of $3.00 per share. The cost of this obligation  ($598,000 if all warrants
are put  back  to the  Company)  will  be  accrued  in the  Company's  financial
statements  as a charge to interest  expense over the period July 1997 (the date
of the private  placement)  through January (the scheduled  maturity date of the
notes).  In the event of a  default,  as  defined  in the note  agreements,  the
secured promissory notes will bear interest at 37%. The secured promissory notes
are collateralized principally as follows:

         A  $4,000,000  note is  collateralized  by 575,000  shares of  COMFORCE
         common stock owned by the Company's Fill-Mor subsidiary and a secondary
         interest in the common stock of Artra 's BCA subsidiary  (the parent of
         Bagcraft).

         Promissory  notes with an aggregate  principal amount of $3,475,000 are
         collateralized by 652.285 shares of Artra redeemable preferred stock (a
         17.4% interest),  1,784.02 shares of BCA Series A redeemable  preferred
         stock (a 48.5%  interest) and 6,488.8 shares of BCA Series B redeemable
         preferred stock (a 79.8% interest).

         The proceeds  from the July 1997  private  placement  were  advanced to
Peter R. Harvey and Mr. Harvey provided  additional  collateral for his advances
as  discussed  in  Note 13 to the  Company's  condensed  consolidated  financial
statements  contained  in Form  10-Q  for  the  quarter  ended  June  26,  1997,
incorporated by reference.

         In August,  1996,  Artra borrowed  $500,000 from Howard Conant,  then a
private  investor,  evidenced  by an  short-term  note,  due  December 23, 1996,
bearing  interest  at 10%.  The loan was  collateralized  by  125,000  shares of
COMFORCE common stock owned by the Company's Fill-Mor subsidiary.  As additional
compensation  for the loan, Mr. Conant received a warrant,  expiring in 2001, to
purchase 25,000 Artra common shares at a price of $5.00 per share.  The proceeds
of the loan were used for working  capital.  At the Company's  annual meeting of
shareholders,  held August 29,  1996,  Mr.  Conant was elected to the  Company's
board of directors.  In December,  1996,  the loan was extended  until April 23,
1997 and Mr. Conant received, as additional  compensation,  a warrant , expiring
in 2001, to purchase 25,000 Artra common shares at a price of $5.875 per share.

                                       8
In January, 1997, Artra borrowed an additional $300,000 from Mr. Conant
evidenced by a short-term  note, due December 23, 1997,  bearing interest at 8%.
The loan was  collateralized by 100,000 shares of COMFORCE common stock owned by
the Company's Fill-Mor subsidiary.  As additional compensation for the loan, Mr.
Conant  received a warrant,  expiring in 2002,  to purchase  25,000 Artra common
shares at a price of $5.75 per share.

         In March 1997, Artra borrowed an additional  $1,000,000 from Mr. Conant
evidenced by a short-term  note, due May 26, 1997,  bearing interest at 12%. The
loan was  collateralized by 585,000 shares of COMFORCE common stock owned by the
Company's Fill-Mor subsidiary.  As additional compensation,  Mr. Conant received
an option to  purchase  25,000  shares of  COMFORCE  common  stock  owned by the
Company's  Fill-Mor  subsidiary at a price of $4.00 per share, with the right to
put the option  back to Artra on or before May 30, 1997 for a total put price of
$50,000.  In May 1997,  Mr.  Conant  exercised  his rights and put the  COMFORCE
option back to Artra for $50,000.  The proceeds from this loan were used in part
to repay an Artra /Fill-Mor $2,500,000 bank term loan.

         In April 1997, Artra borrowed $5,000,000 from Mr. Conant evidenced by a
note, due April 20, 1998,  bearing interest at 10%. As additional  compensation,
the lender received a warrant to purchase 333,333 Artra common shares at a price
of $5.00 per share. The  warrantholder has the right to put this warrant back to
Artra at any time  during the period  April 21,  1998 to April 20,  2000,  for a
total purchase price of $1,000,000.  The cost of this obligation will be accrued
in the Company's  financial  statements as a charge to interest expense over the
period  April 21, 1997 (the date of the loan)  through  April 21, 1998 (the date
the warrantholder has the right to put the warrant back to Artra ). The proceeds
from  this  loan  were used to repay  Mr.  Conant's  outstanding  borrowings  of
$1,800,000 and to pay down other Artra debt obligations.

         In June 1997, Artra borrowed an additional  $1,000,000 from Mr. Conant,
due December 10, 1997, bearing interest at 12%. As additional compensation,  the
lender  received a warrant to purchase  40,000 Artra common shares at a price of
$5.00 per share.  The  warrantholder  has the right to put this  warrant back to
Artra at any time during the period  December 10, 1997 to June 10,  1998,  for a
total purchase price of $80,000.  The cost of this obligation will be accrued in
the  Company's  financial  statements  as a charge to interest  expense over the
period June 10, 1997 (the date of the loan) through  December 10, 1997 (the date
the warrantholder has the right to put the warrant back to Artra ). The proceeds
from this loan were used to pay down other Artra debt obligations. In July 1997,
borrowings from Mr. Conant were reduced to $3,000,000 with proceeds  advanced to
Artra from a Bagcraft term loan as discussed above. As of August 20, 1997, Artra
had total outstanding borrowings of $3,000,000 from Mr. Conant collateralized by
a 75%  interest in the common  stock of Artra 's BCA  subsidiary  (the parent of
Bagcraft).

         At December  26, 1996 (the end of Artra 's most  recent  fiscal  year),
Artra was the obligor under two demand notes origininally  issued to CIPKA S.A.,
an unrelated Swiss company, in the amount of approximately $2,300,000, including
accrued  interest.  The notes were issued in October,  1990 with  interest at 15
percent.  In January 1997,  Artra received  notice that its obligations to CIPKA
were sold,  effective  October 26,  1996,  to  PRESTWOOD  LIMITED,  an unrelated
company  registered in Tortola,  BVI. In July 1997,  Artra paid all  outstanding
interest on these demand notes and reduced the outstanding  borrowings under the
demand notes to approximately  $1,500,000.  Artra is currently  negotiating with
the noteholder to extend or refinance this obligation.

         Artra also has outstanding  short-term  borrowings from other unrelated
parties aggregating approximately $1,100,000.  The remaining amounts come due at
various  times in 1997 and 1998.  The notes were issued at various  times during
1997 and the  interest  rates vary  between 10 and 12 percent.  The  proceeds of
these loans were used principally for working capital.

                                      9
Artra has suffered recurring losses from operations in recent years. As
a result  of these  factors,  Artra  has  experienced  difficulty  in  obtaining
adequate  financing to replace certain current credit  arrangements,  certain of
which are in default, to fund its debt service and liquidity  requirements.  Due
to its limited ability to receive operating funds from its operating subsidiary,
Artra  historically has met its operating  expenditures  with funds generated by
such alternative  sources as private placements of Artra common stock and notes,
sales of Artra common stock with put options, loans from  officers/directors and
private  investors,  as well as  through  sales of  assets  (including  COMFORCE
shares)  and/or  other  equity  infusions.  Artra plans to continue to seek such
alternative sources of funds to meet its future operating expenditures. However,
there can be no assurance  that it will be successful in doing so in the future.
If Artra is unable to negotiate  extensions  with its creditors and complete the
above mentioned  transactions,  Artra could suffer severe adverse  consequences,
and as a  result,  Artra  may be  forced  to  liquidate  its  assets or file for
protection under the Bankruptcy Code. See "Management's  Discussion and Analysis
of Financial  Condition and Results of  Operations -- Status of Debt  Agreements
and Operating Plan"  (contained in Form 10-Q for the quarter ended June 26, 1997
incorporated by reference).

         Potential Volatility in Market Price of COMFORCE Common Stock

         Artra,  along  with  its  wholly  owned  Fill-Mor  subsidiary,  owns  a
significant  minority  interest in COMFORCE,  consisting of 1,728,000  shares or
approximately  13% of the  outstanding  common stock of COMFORCE as of September
19, 1997, with an aggregate value as of that date of  approximately  $12,852,000
(value at December 26, 1996 was  $22,564,000).  The value of COMFORCE  stock has
fluctuated  substantially  in recent periods.  The high per share for the twelve
month period ending August 31, 1997 was $19.125 and the per share low during the
same period was $4.00.  There can be no assurance that the value of the COMFORCE
shares will not decline substantially in the future, which would have a material
adverse effect on the value of Artra .

         The  COMFORCE  shares  constitute  unregistered  securities  under  the
Securities Act of 1933 (the "Act"). As a result of Artra's former involvement in
the operations  and management of COMFORCE,  Artra was considered an "affiliate"
of COMFORCE  under the Act, and because of this, the number of shares that Artra
could sell without  registration under the Act within any three-month period was
limited. For the reasons set forth below, the Company believes that an exemption
from registration  under Rule 144(k)  promulgated under the Act is now available
to it, and therefore the limitations  under Rule 144 on the number of restricted
shares that Artra could sell within any three-month period without  registration
are no longer applicable to it.

         Rule 144(k) of the Act permits the sale without  registration under the
Act of  restricted  shares of an  issuer  that have been held in excess of three
years (two years as of April 29, 1997) by persons who have not been "affiliates"
of the issuer for the preceding three months.  Since December 28, 1995,  Artra ,
Fill-Mor and their respective officers, directors, affiliates and employees have
held no  managerial  or executive  positions  with  COMFORCE nor have any of the
above  served in the capacity of  directors,  nor have any of them had the right
under any  agreement or otherwise to serve in such capacity  since  December 28,
1995.  Likewise,  neither  Artra ,  Fill-Mor  nor any of the above had the right
under any  agreement or otherwise to serve in such capacity  since  December 28,
1995.  Finally,  since  that time,  neither  Artra ,  Fill-Mor  nor any of their
respective officers,  directors,  affiliates and employees have had any material
involvement in, nor have they been able to exercise any control over,  COMFORCE,
either  individually  or together  with any other  person or entity.  Because of
this,  the Company  believes  that Artra and  Fill-Mor are not  "affiliates"  of
COMFORCE  and,  since  they have  held  their  shares in excess of three  years,
qualify for the exemption under Rule 144(k) set forth above.

         There can be no assurance that the  Securities and Exchange  Commission
would concur with the Company's position.  Notwithstanding  this, Artra does not
believe that its ability to sell  COMFORCE  shares,  or eventually to realize on
the value of its COMFORCE  shares,  will be affected in a material  adverse way,
although it may not be able to sell its  COMFORCE  shares as quickly as it could
if it were to use Rule  144(k),  and in any  event,  an  attempt to sell a large

                                       10
number of its COMFORCE  shares over a limited period could be expected to result
in a reduction in the value of such shares.  Effective  December 19, 1996, Artra
and  COMFORCE  entered into a Settlement  Agreement  pursuant to which  COMFORCE
agreed to include in a proposed  underwritten  public offering 380,000 shares of
COMFORCE common stock held by Artra and its Fill-Mor subsidiary and Artra agreed
to a Lock-up  agreement which limits its ability to sell its remaining  COMFORCE
common  shares for a period of 360 days after the  effective  date of Comforce's
proposed  underwritten  public offering.  COMFORCE did not retain an underwriter
for the proposed underwritten public offering and, accordingly,  effective April
30, 1997 Artra was released from the  provisions of the Lock-up  Agreement.  The
sale  of  1,295,000  COMFORCE  common  shares  held by  Artra  and  Fill-Mor  is
restricted  because  the shares are  collateral  for  various  short-term  loans
(449,703 shares held by Artra and Fill-Mor remain unencumbered at May 28, 1997).
See "Management's  Discussion and Analysis of Financial Condition and Results of
Operations -- Investment  in COMFORCE  Corporation"  (contained in Form 10-Q for
the quarter ended June 26, 1997, incorporated by reference).

         The sale of 700,000  COMFORCE  common shares held by Artra and Fill-Mor
is restricted  because the shares are collateral  for various debt  obligations.
Additionally,  the Company and a lender are  currently  negotiating  the form of
collateral  for certain  promissory  notes issued in June 1997 with an aggregate
principal   amount  of   $2,950,000.   The   collateral  is  anticipated  to  be
substantially  all of it the Company's  otherwise  unencumbered  COMFORCE common
shares  (approximately  1,000,000  shares).  See  "Management's  Discussion  and
Analysis of Financial  Condition  and Results of  Operations  --  Investment  in
COMFORCE  Corporation"  (contained  in Form 10-Q for the quarter  ended June 26,
1997, incorporated by reference).

         Inability to Honor Put Options

         Artra has entered into various  agreements  under which it has sold its
common  shares  along with put options that require  Artra to  repurchase  these
shares at the option of the holder, usually one year after the date of each such
agreement.  At September 19, 1997,  options were outstanding that, if exercised,
would  require  Artra to  repurchase  72,984  shares of its Common  Stock for an
aggregate of approximately $3,300,000. Artra does not have adequate resources to
make such redemptions. However, the holders have the option to sell their shares
in the market,  subject to the  limitations of Rule 144 of the  Securities  Act,
which  could  adversely  impact the market  price of the  Common  Stock.  At its
discretion  and subject to its  financial  ability,  Artra could  reimburse  the
option  holders for any shortfall  resulting from such sale. At the present time
none of the option holders have demanded payment,  and all of the option holders
have  indicated to the Company a willingness to work with the Company to satisfy
the  obligations,  in some manner other than a demand for payment  under the put
option.  See "Risk  Factors -  Dilution  and  Depression  of Market  Price  from
Issuance of Additional Common Stock" and "- Limited Trading  Activity." See also
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations - Liquidity  and Capital  Resources  (contained  in Form 10-Q for the
quarter ended June 26, 1997, incorporated by reference)."

                                 
         Need for Additional Funds; Unfavorable Credit Terms

         The  Company  continues  to be engaged in efforts to obtain  equity and
debt financing.  Even if the Company's  Bagcraft  subsidiary  generates positive
cash flow (and there can be no  assurances  that it will),  it is  restricted in
paying  dividends  or making  distributions  to the Company  under  certain loan
agreements (except for limited overhead  allocations payable to Artra in certain
circumstances and payments under tax sharing arrangements where applicable) . As
a  result,  Artra  does not have a means of  generating  cash  flow on a regular
basis.  Consequently,  Artra is reliant on its  ability to place debt and equity
securities  privately and to sell  COMFORCE  shares to raise cash needed to meet
its working capital requirements.

                                       11
The costs and conditions  associated with raising  required capital may
not be on  favorable  terms,  and the Company  may not be able to sell  COMFORCE
shares at  favorable  prices.  In recent  years,  short-term  borrowings  by the
Company from private investors have generally been available, but at a high cost
to the Company. Stated base interest rates on its notes have been as high as 20%
(with  substantially  higher default  rates),  and certain of the borrowers have
demanded  warrants as additional  consideration for agreeing to extend credit to
the  Company.  Warrants  to  purchase  approximately  2,708,676  shares  of  the
Company's  common  stock (at  exercise  prices at the market  price when issued,
which has ranged from $3.50 to $8.00 per share) have  previously  been issued to
private lenders in connection with these transactions.  The continuation of such
practices  could  result  in  further  dilution  of the  existing  shareholders'
interests in the Company. See "Management's Discussion and Analysis of Financial
Condition  and Results of  Operations  Status of Debt  Agreements  and Operating
Plan" (contained in Form 10-Q for the quarter ended June 26, 1997,  incorporated
by reference).

         Risks Relating to Peter R. Harvey

         The  Company's  ability to  continue to  refinance  its  operations  is
dependent on the ability of the  Company's  officers and  directors,  especially
Peter R. Harvey,  to raise capital.  In the event Mr. Harvey were not affiliated
with the Company for any reason,  this could adversely affect the ability of the
Company to survive.

         As of September 19 1997,  Artra has outstanding  total amounts due from
Peter R. Harvey,  including accrued interest, of $17,025,000.  The advances bear
interest at the prime rate plus 2%, which was 10.5% at September 19, 1997.  This
receivable has been classified as a reduction of shareholder's  equity. See Note
13 to the Company's condensed  consolidated financial statements for the quarter
ended June 26, 1997 for a further  discussion  of the  receivable  from Peter R.
Harvey.

         Peter R. Harvey has not received  other than nominal  compensation  for
his services as an officer or director of Artra or any of its subsidiaries since
October of 1990 and Mr. Harvey has agreed not to accept any compensation for his
services as an officer or director of Artra or any of its subsidiaries until his
obligations to Artra , described above, are fully satisfied. Additionally, since
December 31, 1986, Peter R. Harvey has guaranteed  approximately  $40,000,000 of
Artra obligations to private and  institutional  lenders (John Harvey also was a
co-guarantor of a $26,700,000  loan included in that total with Peter R. Harvey)
and has  also  hypothecated  personal  assets  as  security  for  certain  Artra
obligations.

         In prior  years,  as partial  collateral  for amounts due from Peter R.
Harvey,  the Company has received the pledge of 1,523 shares of Artra redeemable
Series A preferred stock (with a liquidation  value of $1,523,000,  plus accrued
dividends) which are owned by Mr. Harvey. In addition,  Mr. Harvey has pledged a
25%  interest in  Industrial  Communication  Company (a private  company) . Such
interest is valued by Mr. Harvey at $800,000 to $1,000,000.  During 1995,  Peter
R. Harvey entered into a pledge  agreement with Artra whereby Mr. Harvey pledged
additional  collateral  consisting  of 42,067  shares of Artra  common stock and
707,281 shares of PureTec Corporation, a publicly traded corporation ("PureTec")
 . As of August  20,  1997,  the  closing  market  price of PureTec on the NASDAQ
National  Market was $1.75 per share.  As collateral  for a July 1997 advance of
$7,475,000,  Mr.  Harvey  provided  Artra  with  additional  collateral  for his
advances  consisting of 652.285 shares of Artra  redeemable  preferred  stock (a
17.4% interest),  1,784.02 shares of BCA Series A redeemable  preferred stock (a
48.5% interest) and 6,488.8 shares of BCA Series B redeemable preferred stock (a
79.8%  interest).  As of September 19, 1997,  this  additional  collateral had a
carrying value in Artra 's condensed consolidated balance sheet of approximately
$11,000,000. The fair market value of this additional collateral is not known.

         In  addition,   in   connection   with  a  discharge  of  certain  bank
indebtedness  discussed below, Artra received rights under a mortgage of certain
real estate owned by Mr.  Harvey.  The real estate had an appraised  value of $2
million as of December 13, 1993. The mortgage  collateralized  $2,150,000 of the
amount  owed by Mr.  Harvey.  Bank of  America  Illinois  had a senior  security
interest in the amount of $850,000. See "Transactions with Management And Others
-- Settlement  of the Bank of America  Illinois  Debt." In March 1997,  the bank
sold its interest in Mr.  Harvey's note and the related  collateral to a private
investor.  Artra  retained  its  $2,150,000  security  interest the real estate,
subordinated to the noteholder's $850,000 security interest in this real estate.

                                       12
Explanatory Paragraph in Report of Independent Accountants

         The  Company's  independent  accountants,   Coopers  &  Lybrand  L.L.P.
("Coopers & Lybrand"),  has issued an explanatory  paragraph with respect to the
Company,  that expresses  substantial  doubt as to the ability of the Company to
continue as a going concern due to recurring  losses from  operations  and a net
capital  deficiency  at December 26,  1996.  Coopers & Lybrand has stated in its
report  that,  as a  result  of  these  factors,  the  Company  has  experienced
difficulty  in  obtaining  adequate  financing  to replace  the  current  credit
agreements,   to  fund  its  debt  service  and  liquidity   requirements.   The
Consolidated  Financial  Statements  do not include any  adjustments  that might
result  from this  uncertainty.  If the  Company  ceases to  operate  as a going
concern,  an  investor  would be likely  to lose his  entire  investment  in the
Company's Common Stock. See Note 1 to "Consolidated Financial Statements."

         Dilution and  Depression  of Market Price from  Issuance of  Additional
Common Stock

         As of September 19, 1997,  there were 7,932,912 shares of the Company's
common stock  outstanding.  The  Company's  Board of Directors  has the power to
issue any and all authorized but unissued shares without  shareholder  approval.
At the  annual  meeting  held on August 29,  1996,  the  Company's  shareholders
approved an amendment to the Company's Articles of Incorporation to increase the
number of authorized  common shares from 7,500,000 to  20,000,000.  In addition,
the Company anticipates that holders of options and warrants will exercise their
options and warrants in order to sell the underlying shares  registered  hereby.
Such an  exercise  could  result in a  dilution  of the  interests  of  existing
shareholders.  Purchasers of the Shares  offered hereby should be aware that the
issuance of  additional  shares may result in a reduction in the market price of
the Company's Common Stock then  outstanding.  See "Description of the Company's
Securities." See also "Risk Factors - Limited Trading Activity."

         Possible  Delisting of Securities  from the New York Stock Exchange and
the Pacific Stock Exchange

         The  Company's  Common  Stock is  currently  listed on the New York and
Pacific Stock  Exchanges.  The Company has been unable to maintain the standards
for continued listing on these exchanges,  and the Company's securities could be
subject to delisting  from these  exchanges  at any time.  Trading of the Common
Stock might  thereafter  be  conducted  in the  over-the-counter  markets on the
electronic  bulletin board  established  for securities that do not meet the New
York and Pacific  Stock  exchange  listing  requirements  or in what is commonly
referred to as the "pink sheets." If delisting were to occur,  an investor could
find it more difficult to dispose of, or to obtain accurate quotations regarding
the price of the  Company's  Common  Stock,  and the market  price of the Common
Stock could decline significantly,

         Composition of the Board

         The  Company's  Articles  of  Incorporation  require  that at least six
persons  serve on the Board of  Directors.  Vacancies  existed on the  Company's
Board  between 1989 and August 29, 1996.  All  corporate  actions  taken between
October 12, 1993 and August 29, 1996 are potentially voidable since such actions
were taken in reliance on the consent or  affirmative  vote of less than four of
the Company's  directors  which would  constitute a majority of the required six
person Board.

         Conflicts of Interest

         In the past, the Company has been a party to numerous transactions with
officers  and  directors of the Company or with  entities in which  officers and
directors of the Company own  substantial  equity  interests.  While the Company
does not presently  contemplate  effectuating any additional  transactions  with
officers and directors of the Company or with management-owned  entities,  there
can be no assurance that it will not do so in the future. See "Transactions with
Management   and  Others."  In   addition,   as   described   under   "Principal
Shareholders,"  various  officers  and  directors  hold  warrants  or options to
purchase  shares of the  Company's  Common Stock,  including at exercise  prices
lower than the market price of the Company's Common Stock as of the date hereof.

                                       13
Limited Trading Activity

During the six months ended August 31, 1997,  the daily average number of shares
of Common Stock traded on the New York Stock Exchange was  approximately  30,000
shares.  If such  trading  levels  continue,  it may be  difficult  for  Selling
Shareholders  to effect sales of their shares on the New York and Pacific  Stock
Exchanges,  and the  placement of a  substantially  larger number of sell orders
could  materially and adversely impact the market price of the Common Stock. See
also "Risk  Factors - Dilution and  Depression  of Market Price from Issuance of
Additional Common Stock."

         Competitive Conditions in the Packaging Products Industry

         The packaging  products industry is highly  competitive.  The Company's
Bagcraft  subsidiary  competes as a printer and converter within the competitive
flexible  packaging  business.  Management  believes the  principal  competitive
factors in the Company's markets are product quality and  functionality,  price,
service and reputation.  Bagcraft  encounters  competition  from both integrated
producers and  independents  in each of its marketing  divisions.  Some of these
competitors  are larger  and have  access to greater  financial  resources  than
Bagcraft. Bagcraft's costs have increased substantially in recent years, largely
due to increases in the cost of paper. Although Bagcraft generally seeks to pass
its increased costs on to its customers,  this is frequently not possible due to
the  competitive  nature of the  paper  products  industry.  See  "Business  and
Properties - Packaging Products Segment."

         Litigation

         At June 26, 1997, the end of its most recent fiscal quarter,  Artra has
accrued $1,900,000 for business litigation and environmental liabilities.  Based
on investigation and settlement  discussions,  the Company believes this to be a
sufficient  amount  for any  potential  costs  or  liabilities  for the  matters
described below.  However, no assurance can be given that the reserved amount is
sufficient  to satisfy  all  potential  business  litigation  and  environmental
liabilities.  As described under  "Business and Properties - Legal  Proceedings"
herein,  Artra or its predecessors or their subsidiaries have been identified by
the U.S.  Environmental  Protection  Agency ("EPA") as  potentially  responsible
parties  for  environmental  clean-up  costs  (or  sued by a  named  potentially
responsible  party seeking  indemnification  or contribution for clean-up costs)
for waste sent to several sites included on the EPA's National  Priorities List,
which  are  commonly  known as  "Superfund"  sites.  In  addition,  Artra or its
predecessors  and  their   subsidiaries  are  alleged  to  have  sent  hazardous
substances  to certain other sites which,  although not  designated as Superfund
sites, are sites at which environmental  clean-up or remediation may be required
to be undertaken. Artra and its predecessors, directly and through subsidiaries,
have, since 1960, operated in excess of 30 manufacturing facilities.  Certain of
these facilities used and/or generated  hazardous  materials and disposed of the
hazardous  substances,  directly or through third party waste  disposal firms at
various  off-site waste disposal  locations,  in most cases before laws had been
enacted governing the safe disposal of hazardous substances.

         Artra  has  not   conducted   a   comprehensive   audit  of   potential
environmental liability at the facilities formerly owned or operated by Artra or
its  predecessors  and their  subsidiaries  since it is no  longer  the owner or
operator  of most of the  properties  at which it or its  predecessors  or their
affiliates  conducted  manufacturing  operations.  As  a  result,  Artra  cannot
accurately  quantify  potential  environmental  liability  associated  with past
ownership or operation  of these  facilities.  Artra did not keep records of the
companies  with which it  contracted  for the  disposal  of wastes  before  such
record-keeping became mandated by law.

         In addition,  even if Artra is not found to be responsible for clean-up
costs at any particular  site, the costs of defending  itself in any proceedings
or inquiries instituted by the EPA, any state environmental  agencies or private
parties could itself be significant. As described under "Risk Factors - Need for
Additional Funds" herein, Artra has limited funds available to it, including for
its legal  defense.  In  certain  cases,  Artra may be unable to raise the funds
needed to mount an adequate (or any) defense against the claims raised,  even if
it has  legal  grounds  to do so.  In one case  described  under  "Business  and
Properties - Legal Proceedings"  herein,  Artra did not prosecute an appeal of a
decision  adverse to Artra in which its  insurer  was held not  responsible  for
defending or indemnifying  Artra in connection with two  environmental  clean-up
cases in California.  In addition, in another case, Artra entered into a consent
decree with the EPA to pay  certain  clean-up  costs,  but was unable to pay the
costs it had agreed to bear. See "Business and Properties -- Legal Proceedings."

                                       14
No Cash Dividends

         The  Company  has not paid any cash  dividends  on its Common  Stock in
recent  years  and  does  not  anticipate  paying  any  such  dividends  in  the
foreseeable  future.  In addition,  the  Bagcraft  operating  subsidiary  of the
Company  is  prohibited  from  or  restricted  in  paying  dividends  or  making
distributions  to the Company under various loan agreements  (except for limited
overhead  allocations payable to Artra in certain  circumstances and tax sharing
agreements  where  applicable).  Accordingly,  even if  Artra  were  able to pay
dividends to its  shareholders,  the  restrictions or limitations on Bagcraft in
upstreaming  payments  would make payment of dividends  by Artra  unlikely.  See
"Description of the Company's Securities."

         Negative  Effect on  Shareholders  from Possible  Issuance of Preferred
Stock

         The Company is authorized to issue up to 2,000,000  shares of preferred
stock,  par value $1,000 per share.  The preferred stock may be issued in one or
more series, the terms of which may be determined at the time of issuance by the
Board of Directors,  without  further  action by  shareholders,  and may include
voting rights  (including the right to vote as a series on particular  matters),
preferences as to dividends and  liquidation,  conversion and redemption  rights
and sinking fund provisions. In 1990 the Company issued 3,750 shares of Series A
Preferred  Stock.  No other  preferred  stock is currently  outstanding  and the
Company  has no present  plans for the  issuance  thereof.  The  issuance of any
preferred  stock could  affect the rights of the holders of Common Stock and, in
certain circumstances, reduce the value of the Common Stock. See "Description of
the Company's Securities."

                             PRINCIPAL SHAREHOLDERS

         As of September 19, 1997,  there were 7,931,912  shares of Common Stock
issued and outstanding. The following table sets forth the number and percentage
of Common  Stock known by  management  of Artra to be  beneficially  owned as of
September 19, 1997 by (i) all  stockholders  known by management of Artra to own
5% or more of Artra's  Common  Stock,  (ii) all  directors of Artra , (iii) each
executive  officer included in the Summary  Compensation  Table in the 1996 Form
10-K and (iv) all directors, executive officers and other key employees of Artra
as a group (9 persons).  Unless stated otherwise, each person so named exercises
sole voting and investment power as to the shares of Common Stock so indicated.

         As of September 19, 1997,  3,750 shares of Series A Preferred  Stock of
Artra , par value $1,000 per share,  had been issued,  of which 3,583.62  shares
were  outstanding.  Each share of this Series A  Preferred  Stock  entitles  the
holder  to one  vote  on an  equal  basis  with  each  share  of  Common  Stock.
Accordingly,  for  purposes of showing  ownership  of Common  Stock in the table
below, the Series A Preferred Stock is treated as Common Stock.

                                                   Number
                                                 of Shares
                                                Beneficially
Name of Beneficial Owner                           Owned          Percent
-----------------------------------------        ----------       ------- 
Research Center of Kabbalah(l)                     647,250          7.9%
Peter R. Harvey(2)       Common                    440,243          5.6%
                         Preferred                   2,175         60.7%
John Harvey(3)                                     423,796          5.2%
Gerard M. Kenny(4)                                 240,048          3.0%
Maynard K. Louis(5)                                121,000          1.5%
Howard R. Conant(6)                                578,333          6.9%
Edward A. Celano                                     18,18             *
Robert L. Johnson                                    2,873             *
John G. Hamm(7)                                    143,498          1.8%
Robert S. Gruber(8)                                141,104          1.8%
James D. Doering(9)                                124,311          1.5%

All directors and executive officers
as a group (12 persons)                         2,460,082          26.1%

*        Less than 1% of the outstanding shares.

         Ozite  Corporation,  an affiliate of Artra by reason of Peter R. Harvey
and John Harvey  being  directors  of the parent  corporation,  PureTec,  is the
record holder of 2,227 shares (59.4%) of the Artra Series A Preferred.

                                       15
(1)      The  address of  Research  Center of  Kabbalah  ("RCK") is 83-84  115th
         Street, Richmond Hill, New York 11418. The shares beneficially owned by
         RCK consist of 361,000  shares of Common Stock owned  directly,  21,250
         shares of Common Stock issuable  under a warrant which expires  October
         29,  1998 at an  exercise  price of $6.00 per share,  65,000  shares of
         Common Stock issuable  issuable under a warrant which expires  December
         31, 1998 at an  exercise  price of $7.00 per share,  100,000  shares of
         Common Stock issuable  under a warrant which expires  February 14, 2002
         at an exercise  price of $5.625 per share and 100,000  shares of Common
         Stock  issuable  under a warrant  which  expires  April 13,  2002 at an
         exercise price of $5.00 per share.

(2)      Mr.  Peter  R.  Harvey's   business  address  is  500  Central  Avenue,
         Northfield, Illinois 60093. The shares beneficially owned by Mr. Harvey
         consist of 375,790  shares held  directly by him (of which  373,615 are
         Common Stock and 2,175 are shares of Series A Preferred Stock),  23,001
         shares held as trustee for the benefit of his nieces,  800 shares owned
         by his wife and  children,  634 shares held in his 401(k)  plan,  7,193
         shares  held  in  his  individual  retirement  account,  20,000  shares
         issuable  under  an  option  which  expires  September  19,  2001 at an
         exercise  price of $3.65 per share and 15,000 shares  issuable under an
         option which expires  January 8, 2003 at an exercise price of $3.75 per
         share.

(3)      Mr. John Harvey's  business address is 500 Central Avenue,  Northfield,
         Illinois 60093.  The shares of Common Stock  beneficially  owned by Mr.
         Harvey  consist of 123,100  shares held  directly by him,  1,705 shares
         held in his 401(k) plan, 5,746 shares held in his individual retirement
         account,  100,000 shares held by Mr. Harvey's daughters,  75,000 shares
         issuable under an option which expires December 19, 2000 at an exercise
         price of $3.65 per share,  1,000 shares  issuable under an option which
         expires  September  19, 2001 at an  exercise  price of $3.65 per share,
         4,000 shares  issuable under an option which expires January 8, 2003 at
         an exercise price of $3.75 per share,  141,000 shares issuable under an
         option which expires  October 4, 2006 at an exercise price of $5.25 per
         share  and an  aggregate  of  72,245  shares  issuable  under  warrants
         expiring at various dates in 2000 and 2001 received in 1995 and 1996 as
         additional  compensation for 1995 and 1996 short-term loans at exercise
         prices of $3.75 per share to $6.25 per share.

(4)      The shares  beneficially  owned by Mr. Kenny consist of 2,000 shares of
         Artra's  common stock issuable upon the exercise of an option at $10.00
         per  share  expiring  November  28,  1996,  75,652  shares  held by (or
         issuable to) Kenny Construction Company,  14,411 shares held by Clinton
         Industries,  and 75,001 shares issuable under a warrant held by Clinton
         Industries  which  expires  November  10, 1997 at an exercise  price of
         $5.00 per share. Kenny  Construction  Company holds put options to sell
         to Artra (I)  23,004  shares of Common  Stock for a put price of $83.45
         per share plus an amount equal to 15% per annum for each day from March
         1,  1991 to the date of  payment  by Artra , which put  option  expires
         December  31,  1997,  and (ii) 49,980  shares of Common Stock for a put
         price of $21.19 per  share,  subject  to an annual  increase  of $2.25,
         which  put  option  is  exercisable  on the  later of the date  Artra's
         obligations  to Bank of America  are repaid or the  $2,500,000  note of
         Artra payable to Kenny Construction  Company (as described in paragraph
         5 under "Transactions with Management and Others." If the stock subject
         to the put is sold at a price  less  than the put  price,  the  Company
         would  remain  liable to the  holder of the put for the amount by which
         the put price of the shares  exceeds the selling  price.  Mr.  Kenny is
         Executive Vice  President,  Director and beneficial  owner of 16.66% of
         the issued and outstanding stock of Kenny Construction  Company.  He is
         also the  General  Partner  and a 14.28%  beneficial  owner of  Clinton
         Industries,  a  limited  partnership.  See  paragraphs  4 and  5  under
         "Transactions with Management and Others."

(5)      Mr. Louis is the holder of warrants to purchase 121,000 shares of Artra
         common  stock at  prices of $4.50 to $8.00  per  share  which  warrants
         expire on various dates commencing in 1997 and ending June 13, 2001.

(6)      Mr.  Conant holds 140,000 Artra common  shares  directly,  Mrs.  Conant
         holds  5,000  Artra  common  shares and Mr.  Conant  holds  warrants to
         acquire  433,000  shares  of Artra  common  stock at prices of $5.00 to
         $5.75 per share  which  warrants  expire on  various  dates in 2001 and
         2002.

                                       16
(7)      The shares of Common Stock beneficially owned by Mr. Hamm consist of 50
         shares  held  directly  by him,  93  shares  held  by him and his  wife
         jointly,  2,905 shares held in his 401(k) plan,  25,000 shares issuable
         under an option which expires December 19, 2000 at an exercise price of
         $3.65 per share,  1,000 shares  issuable  under an option which expires
         September  19,  2001 at an  exercise  price of $3.65 per share,  13,200
         shares  issuable  under an option which  expires  January 8, 2003 at an
         exercise price of $3.75 per share, and 101,250 shares issuable under an
         option which expires October 4, 2006, at an exercise price of $5.25 per
         share.

(8)      The shares of Common Stock  beneficially owned by Mr. Gruber consist of
         20,190  shares  held  directly  by him,  943 shares held in his 401(k),
         plan,  1,221 shares held in his individual  retirement  account,  8,000
         shares  issuable under an option which expires  December 19, 2000 at an
         exercise  price of $3.65 per  share,  1,000  shares  issuable  under an
         option which expires  September 19, 2001 at an exercise  price of $3.65
         per share, 12,000 shares issuable under an option which expires January
         8, 2003 at an  exercise  price of $3.75 per  share  and  97,750  shares
         issuable under an option which expires  October 4, 2006, at an exercise
         price of $5.25 per share.

(9)      The shares of Common Stock beneficially owned by Mr. Doering consist of
         10,500 shares held by him in joint tenancy with his wife,  1,693 shares
         held in his 401(k) plan, 1,118 shares held in his individual retirement
         account,  22,500 shares issuable under an option which expires December
         19,  2000 at an  exercise  price  of $3.65  per  share,  31,000  shares
         issuable  under an option which expires  January 8, 2003 at an exercise
         price of $3.75 per share and  57,500  shares  issuable  under an option
         which expires October 4, 2006, at an exercise price of $5.25 per share.

                              SELLING SHAREHOLDERS

         The following table sets forth certain information regarding the shares
of Common Stock  issuable  upon the exercise of Options held by any affiliate of
the Company (as defined in Rule in 405 under the  Securities  Act) granted under
the  Company's  Plans  ("Selling  Shareholders").  In cases  where  the  Selling
Shareholder  serves or has served  within the past  three  years as an  officer,
director  or  employee  of the  Company  or any of its  subsidiaries  or has had
another material  relationship with the Company, this relationship is noted. All
of the shares  offered hereby and shares issued or issuable upon the exercise of
Options  granted  under the  Company's  Plans,  including  Options which are not
presently exercisable. Non-employee directors are entitled to receive Options to
purchase  10,000  shares of Common  Stock upon  election as a director and 2,500
shares of Common  Stock  annually  thereafter,  and the  Company's  Stock Option
Committee  or  Board  of  Directors  may  award   additional   options  to  such
non-employee directors and other directors,  officers, employees and agents from
time to time. This  prospectus may be supplemented  from time to time to include
additional  shares of Common Stock  issuable  upon the exercise of Options which
may hereafter be granted to affiliates of the Company.

         The  Selling   Shareholders   and  any  dealer   participating  in  the
distribution  of any  shares of Common  Stock or any  broker  executing  selling
orders on behalf of the Selling  Shareholders may be deemed to be "underwriters"
within the meaning of the Securities  Act, in which event any profit on the sale
of any or all of the  shares  of  Common  Stock  by them  and any  discounts  or
commissions  received  by any  such  brokers  or  dealers  may be  deemed  to be
underwriting  discounts and  commissions  under the Securities  Act. All options
granted to the  disinterested  directors  were  granted  August  29,  1996 at an
exercise  price of $5.25 per share.  The  directors  granted  such  options are:
Edward A.  Celano,  Howard R.  Conant,  Robert L.  Johnson,  Gerard M. Kenny and
Maynard K. Louis.

                                       17
The officers and employees  receiving  options at an exercise  price of
$5.25 in all  instances  during 1996  pursuant to the Stock  Option Plan and the
number of shares are as follows:

         Name of Grantee                    Number of Shares
         ---------------                    ----------------

         John P. Conroy                           34,750

         James D. Doering                         57,500

         Robert S. Gruber                         97,750

         John G. Hamm                            101,250

         John Harvey                             141,000

         Lawrence D. Levin                        38,500

         Richard Mandra                           27,750

         Edwin G. Rymek                           34,250

         All options expire on October 4, 2006. No options granted and as listed
above have been  exercised.  All of the above persons  except for Mr. Mandra are
officers of the Company, and in addition, John Harvey is a director, chairman of
the board and the chief executive officer.

         The  Common  Stock is traded on the New York Stock  Exchange  under the
symbol "ATA".  On September  26, 1997,  the closing price of the Common Stock as
reported on the New York Stock Exchange was $3.625 per share.

         THESE   SECURITIES  HAVE  NOT  BEEN  APPROVED  OR  DISAPPROVED  BY  THE
SECURITIES  AND  EXCHANGE  COMMISSION,  NOR HAS THE  COMMISSION  PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

PART II.  INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Certain Documents by Reference

         The  following  documents,  which are  filed  with the  Securities  and
Exchange  Commission (the  "Commission"),  are incorporated in this Registration
Statement by reference:

         (1) The  Registrant's  latest annual report for the year ended December
         26, 1996 filed  pursuant to Sections  13(a) or 15(d) of the  Securities
         Exchange Act of 1934, as amended (the "Exchange  Act"), the latest year
         for which audited financial statements have been filed.

         (2) All other reports filed  pursuant to Sections 13(a) or 15(d) of the
         Exchange  Act since the end of the  fiscal  year  covered by the annual
         report including, but not limited to the Registrant's Quarterly Reports
         on Form 10-Q for the quarters ended March 27, 1997 and June 26, 1997.

         (3) The description of the common stock of the Registrant, no par value
         shares (the "Common Stock"), contained in the Registrant's Registration
         Statement  on Form 8-A filed  under the  Exchange  Act,  including  any
         amendment or report filed for the purpose of updating such description.

         All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the effective date
of the  Registration  Statement  and  prior to the  filing  of a  post-effective
amendment  which  indicates  that all shares of Common Stock offered hereby have
been sold or which deregisters all shares of Common Stock then remaining unsold,
shall be deemed to be  incorporated  by  reference  herein and to be part hereof
from the date of the filing of such documents.

                                       18
Item 4.  Description of Securities

     Not applicable.

Item 5. Interests of Named Experts and Counsel

         Kwiatt,  Silverman  & Ruben,  Ltd.  have  rendered  its  legal  opinion
attached  hereto as exhibit  5.1.  The equity  stockholders  of the firm who own
common  stock and voting  preferred  stock of the  Registrant  and the number of
shares owned by them are as follows:

                                  Common Stock      Preferred Stock
                                  ------------      ---------------
        Kenneth L. Kwiatt            21,587             44.25
        Michael Silverman            18,687
        Philip E. Ruben              20,687             44.25

         Additionally, the firm holds 12,000 shares of the common stock
and the Kwiatt, Silverman & Ruben, Ltd. 401(k) Profit Sharing Plan is the holder
of 15,000 shares of the common stock.

         Item 6.   Indemnification of Directors and Officers

         Subchapter D, Section 1741 et seq. of the Business  Corporation  Law of
Pennsylvania  ("BCL")  provides  authority  for the  Registrant to indemnify its
officers  and  directors  and the  by-laws  provide  indemnity  to an officer or
director  and the  Registrant  may  indemnify  any other  employee or agent,  in
connection   with  any  completed   action,   pending  or  threatened   suit  or
administrative  proceeding  against such person by reason of such person serving
as a director,  officer,  employee or agent of the Registrant or, at the request
of  the  Registrant,   in  such  capacity  for  another  entity.   However,   no
indemnification  will  be  made  if  the  act  giving  rise  to  the  claim  for
indemnification is determined by a court to have constituted  willful misconduct
or recklessness. In addition, the by-laws provide that the above indemnification
provisions  are not  exclusive of any other rights to  indemnification  any such
person may have under any  contract  or vote of  shareholders  or  disinterested
shareholders or as determined by a court. The by-laws  expressly provide that it
is the  Registrant's  policy to permit  indemnification  to the  fullest  extent
permitted  by law. The by laws further  provide the  indemnification  provisions
will be deemed to be amended  upon any  amendment of the BCL,  which  expands or
enlarges the powers of corporations to indemnify.

         See Article IV of the By-Laws,  Exhibit 3.2(1) for a complete statement
of the indemnification authorized by the Registrant.

         The BCL provides  that a  corporation  will have the power to indemnify
any  representative  of a corporation,  or of any other entity at the request of
the  corporation,  if  such  person  acted  in good  faith  and in a  manner  he
reasonably  believed  to be in,  or not  opposed  to the best  interests  of the
corporation  and,  with respect to any criminal  proceeding,  had no  reasonable
cause to believe his conduct was unlawful.

         The BCL further  provides that  indemnification  is mandatory where the
representative  is  "successful  on the  merits or  otherwise"  in defense of an
action or  proceeding,  and in  addition,  the BCL  provides  that the method of
indemnification provided by the act is not exclusive of rights under any by law,
vote of shareholders or disinterested shareholders or otherwise,  unless the act
giving rise to the claim for  indemnification  is  determined by a court to have
constituted willful misconduct or recklessness.

         Insofar as indemnification for liabilities arising under the Securities
Act  may  be  permitted  to  directors,  officers  or  persons  controlling  the
Registrant  pursuant  to the  foregoing  provisions,  the  Registrant  has  been
informed that in the opinion of the Commission such  indemnification  is against
public policy as expressed in the Securities Act and is therefore unenforceable.

         The Company has purchased a general  liability  insurance  policy which
covers certain  liabilities of directors and officers of the Company arising out
of claims based on acts or omissions in their capacity as directors or officers.

Item 7. Exemption from Registration Claimed
Not applicable.

                                       19
Item 8. Exhibits

Exhibit
Number      Description
------      -----------

3.1         Amended and Restated Certificate of Incorporation of the Registrant

3.2 (*)     By-Laws of the Registrant

4.1         Artra Group Incorporated 1996 Stock Option Plan

4.1         Artra Group Incorporated 1996 Disinterested
            Directors' Stock Option Plan

5.1         Opinion of Kwiatt, Silverman & Ruben, Ltd.

23.1        Consent of Kwiatt, Silverman & Ruben, Ltd. (included in Exhibit 5.1)

23.2        Consent of Coopers & Lybrand L.L.P.

24.1        Power  of  Attorney   (included  on  the  signature  page   of  this
            Registration Statement)

    (*)  Incorporated  herein by  reference  from the  Registrant's Registration
         Statement on Form S-1 (File No. 333-16965)

Item 9. Undertakings

         (a)      The Registrant hereby undertakes:

                  (1)    To file,  during any  period in  which  offers or sales
                         are being made,  a  post-effective  amendment  to  this
                         Registration Statement:*

                           (i)      To   include  any  prospectus  required  by 
                                    Section 10(a)(3) of the Securities Act;

                           (ii)     To  reflect in the  prospectus  any facts or
                                    events  arising after the effective  date of
                                    the  Registration  Statement  (or  the  most
                                    recent  post-effective   amendment  thereof)
                                    which,  individually  or in  the  aggregate,
                                    represent  a   fundamental   change  in  the
                                    information  set  forth in the  Registration
                                    Statement; and

                           (iii)    To include  any  material  information  with
                                    respect  to the  plan  of  distribution  not
                                    previously  disclosed  in this  Registration
                                    Statement  or any  material  change  to such
                                    information in this Registration  Statement;
                                    provided,  however,  that paragraphs (i) and
                                    (ii)  do  not  apply  if  the   Registration
                                    Statement is on Form S-3 or Form S-8 or Form
                                    F-3,  and  the  information  required  to be
                                    included in a  post-effective  amendment  by
                                    those  paragraphs  is  contained in periodic
                                    reports filed by the Registrant  pursuant to
                                    Section   13  or   Section   15(d)   of  the
                                    Securities  Exchange  Act of 1934  that  are
                                    incorporated    by    reference    in   this
                                    Registration Statement.

                  (2)    That,  for the  purpose of  determining  any  liability
                         under the  Securities  Act,  each  such  post-effective
                         amendment  shall  be  deemed  to be a new  Registration
                         Statement  relating to the securities  offered therein,
                         and the offering of such  securities at that time shall
                         be deemed to be the initial bona fide offering thereof.

                  (3)    To   remove   from   registration   by   means   of   a
                         post-effective  amendment any of the  securities  being
                         registered  which remain unsold at the  termination  of
                         the offering.

                                       20
(b) The Registrant  hereby undertakes that, for purposes of determining
         any  liability  under the  Securities  Act of 1933,  each filing of the
         Registrant's  annual report  pursuant to Section 13(a) or Section 15(d)
         of the Exchange Act of 1934 (and, where  applicable,  each filing of an
         employee  benefit plan's annual report pursuant to Section 15(d) of the
         Exchange  Act  of  1934)  that  is  incorporated  by  reference  in the
         Registration  Statement  shall  be  deemed  to  be a  new  Registration
         Statement relating to the securities offered therein,  and the offering
         of such  securities  at that time shall be deemed to be in the  initial
         bona fide offering thereof.

         (c)  Insofar  as  indemnification  for  liabilities  arising  under the
         Securities  Act of 1933 may be  permitted  to  directors,  officers and
         controlling  persons  of  the  Registrant  pursuant  to  the  foregoing
         provisions,  or otherwise,  the Registrant has been advised that in the
         opinion of the Commission such indemnification is against public policy
         as expressed in the Securities Act and is, therefore, unenforceable. In
         the event that a claim for  indemnification  against  such  liabilities
         (other than the payment by the Registrant of expenses  incurred or paid
         by a director,  officer or controlling  person of the Registrant in the
         successful  defense of any action,  suit or  proceeding) is asserted by
         such  director,  officer or controlling  person in connection  with the
         securities being registered, the Registrant will, unless in the opinion
         of its counsel the matter has been  settled by  controlling  precedent,
         submit to a court of appropriate jurisdiction the question whether such
         indemnification  by it is against  public  policy as  expressed  in the
         Securities Act and will be governed by the final  adjudication  of such
         issue.

     *  Incorporated  herein by  reference  from the  Registrant's  Registration
     Statement  on Form S-1 (File No.  333-16965) .  Information  required to be
     included in a post-effective  amendment by those paragraphs is contained in
     periodic reports filed by the Registrant  pursuant to Section 13 or Section
     15(d) of the  Exchange  Act  that  are  incorporated  by  reference  in the
     Registration Statement.

                                       21
SIGNATURES

         Pursuant to the  requirements  of the  Securities  Act, the  registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in the City of Northfield, State of Illinois, on September 30, 1997.

ARTRA GROUP Incorporated

By:  /s/ Peter R. Harvey
------------------------------ 
     Peter R. Harvey
     President and Chief
     Operating Officer

POWER OF ATTORNEY

         We, the undersigned  officers and directors of Artra Group Incorporated
hereby severally constitute Peter R. Harvey,  James Doering,  Lawrence D. Levin,
and  Kenneth  L.  Kwiatt  Esq.,  and each of them  singly,  our true and  lawful
attorneys with full power to them,  and each of them singly,  to sign for us and
in our names in the capacities  indicated below,  the Registration  Statement on
Form  S-8  filed  herewith  and  any  and  all  subsequent  amendments  to  said
Registration  Statement,  and  generally  to do all such things in our names and
behalf in our  capacities  as  officers  and  directors  to enable  Artra  Group
Incorporated  to comply with all  requirements  of the  Securities  and Exchange
Commission, hereby ratifying and confirming our signatures as they may be signed
by said attorneys,  or any of them, to said  Registration  Statement and any and
all amendments thereto.

Pursuant to the requirements of the Securities Act, this Registration  Statement
has been signed below by the following persons in the capacities and on the date
indicated.

Signature                       Title                          Date
---------                       -----                          ----

/s/Peter R. Harvey              Director                       September 30,1997
---------------------------       
Peter R. Harvey

/s/ John G. Hamm                Executive Vice President       September 30,1997
---------------------------
John G. Hamm

/s/ James D. Doering            Vice President and             September 30,1997
---------------------------     Treasurer, Chief Financial
James D. Doering                Officer

/s/ Lawrence D. Levin           Controller                     September 30,1997
---------------------------
Lawrence D. Levin

/s/Edward A. Celano             Director                       September 30,1997
---------------------------
Edward A. Celano

/s/Howard R. Conant             Director                       September 30,1997
---------------------------
Howard R. Conant  

/s/John Harvey                  Chairman and Chief             September 30,1997
---------------------------     Executive Officer
John Harvey                     (Principal Executive officer);
                                Director

/s/Robert L. Johnson            Director                       September 30,1997
---------------------------
Robert L. Johnson

/s/Gerard M. Kenny              Director                       September 30,1997
---------------------------
Gerard M. Kenny

/s/Maynard K. Louis             Director                       September 30,1997
---------------------------
Maynard K. Louis

                                       22
Exhibit
Number         Description

3.1            Amended  and   Restated   Certificate  of  Incorporation  of  the
               Registrant

3.2 (*)        By-Laws of the Registrant

4.1            Artra Group Incorporated 1996 Stock Option Plan

4.1            Artra Group Incorporated 1966 Disinterested
               Directors' Stock Option Plan

5.1            Opinion of Kwiatt, Silverman & Ruben, Ltd.
  
23.1           Consent of Kwiatt, Silverman & Ruben, Ltd.
               (included in Exhibit 5.1)

23.2           Consent of Coopers & Lybrand.

24.1           Power  of  Attorney   (included  on  the  signature  page of this
               Registration Statement)

-------------------------
(*)  Incorporated  herein  by  reference  from  the   Registrant's  Registration
     Statement  on Form S-1  (File  No. 333-16965).

                                       23