ARTRA GROUP INC
10-K/A, 1996-04-26
COSTUME JEWELRY & NOVELTIES
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-K/A

                                AMENDMENT NO. 1

[X]      Annual  Report  Pursuant to Section 13 or 15(d) of the  Securities  and
         Exchange Act of 1934 For the fiscal year ended December 28, 1995

                                       OR

[   ]    Transition Report Pursuant to Section 13 or 15(d) of the 
         Securities and Exchange Act of 1934
         For the transition period from _____________ to  ______________
                                         

                         Commission file number 1-3916

                            ARTRA GROUP INCORPORATED
             (Exact name of registrant as specified in its charter)

   Commonwealth of Pennsylvania                          25-1095978
  ------------------------------             --------------------------------
 (State or other jurisdiction of            (I.R.S. EmployerIdentification No.)
   incorporation or organization)

  500 Central Avenue, Northfield, IL                       60093
- ----------------------------------------                  -------
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code:    (847) 441-6650

Securities registered pursuant to Section 12(b) of the Act:

                                                     Name of Each Exchange
      Title of Each Class                             on Which Registered
- -------------------------------                    ------------------------    
Common stock, without par value                     New York Stock Exchange
                                                     Pacific Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None.

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  registrant's   knowledge,  in  the  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.  Yes X   No
                                       ---

State the aggregate  market value of the voting stock held by  nonaffiliates  of
the registrant at February 29, 1996: $34,356,000.

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

                    
           Class                              Outstanding at February 29, 1996
- -------------------------------               --------------------------------
Common stock, without par value                           7,477,418

Documents Incorporated by Reference:   None
<PAGE>

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

Information Regarding Directors

       The  following  table lists the name and age of each director and nominee
for director of ARTRA, his business  experience  during the past five (5) years,
his positions with ARTRA and certain directorships.
<TABLE>
<CAPTION>
 Name                      Age     Position and Experience
 -------------             ---     ---------------------------
Term Expiring at Next Shareholders' Meeting at which Directors are Elected
<S>                         <C>    <C>                                                                              
 John Harvey (1)            64     Chairman of the Board of Directors and Chief  Executive  Officer of ARTRA;
                                   Director since 1968; Chairman of the Board of Directors,  1985 to December
                                   1995 and the Chief  Executive  Officer from 1990 to April 1993 of COMFORCE
                                   Corporation  (temporary   professional   employment,   formerly  The  Lori
                                   Corporation),   currently  a  21%  owned   equity   investment   of  ARTRA
                                   ("COMFORCE");  a Director of Plastic  Specialties and  Technologies,  Inc.
                                   ("PST")  (textiles,  hose and tubing);  and Director of Ozite  Corporation
                                   ("Ozite"),  the  majority  parent  of PST  (textiles,  hose  and  tubing).
                                   Director of Pure Tech  International,  Inc.,  the  successor  by merger to
                                   Ozite.

 Peter R. Harvey (2)        61     President and Chief Operating Officer and a Director since 1968;  Director
                                   from 1985 to December 1995 and a vice  president  through  January 1996 of
                                   COMFORCE   (temporary   professional   employment,   formerly   The   Lori
                                   Corporation),  currently a 21% owned equity  investment of ARTRA; a former
                                   Director and Chief Operating Officer of SoftNet Systems,  Inc. ("SoftNet")
                                   During  1995,  Mr.  Harvey  resigned  from  all  of the  Softnet  offices,
                                   formerly  The Vader  Group Inc.  (image  processing  and health  care cost
                                   containment);  Vice  President  and  Director  of Ozite  Corporation,  the
                                   majority  parent of PST (textiles,  hose and tubing)  (textiles,  hose and
                                   tubing).  Director of Pure Tech  International,  Inc.,  the  successor  by
                                   merger to Ozite.  Former  Director of Rymer Foods Inc.,  (portion  control
                                   meat products and seafood)

 Gerard M. Kenny (3)        44     Director  since  1988;  Executive  Vice  President  and  Director of Kenny
                                   Construction Company since 1982 (diversified heavy construction);  General
                                   Partner of Clinton Industries  (investments),  a limited partnership since
                                   1972.
</TABLE>
<PAGE>

       Directors  are elected in three classes to serve for terms of three years
(or the balance of the term of the class) and until their  successors  have been
elected and qualified.  The Articles of  Incorporation  require that six persons
serve on the Board of Directors for staggered terms,  with two directors elected
annually.  Three vacancies  presently exist due to the failure of the Company to
identify persons qualified and willing to fill these vacancies.  The Company has
been unable to identify candidates due to various factors,  including the severe
financial  difficulties  the  Company  has  experienced  in  recent  years,  its
inability  to obtain  directors  liability  insurance  coverage and the risks of
personal liability that would be faced by any person serving on the Board.

       John  Harvey  and Peter R.  Harvey  are  brothers.  COMFORCE  was a 64.3%
subsidiary  of  ARTRA  and  ARTRA  now  owns  21% of  that  Company.  Pure  Tech
International, Inc., and PST are affiliates of ARTRA.

Information Regarding Executive Officers

       Set forth below is  information  concerning  the  executive  officers and
other key employees of ARTRA who were in office as of April 25, 1996.

Name                   Age      Position
- -----------------      ---      ----------------

John Harvey             64      Chairman of the Board 
                                and Chief Executive Officer  

Peter R. Harvey         61      President and Chief Operating Officer  

John G. Hamm            57      Executive Vice President 

Robert S. Gruber        62      Vice President - Corporate Relations  

James D. Doering        59      Vice President, Treasurer 
                                and Chief Financial Officer

John Conroy             52      Vice President - Corporate Administration 

Lawrence D. Levin       44      Controller  

Edwin G. Rymek          66      Secretary  


       John  Harvey,   Chairman  and  Chief  Executive  Officer  of  ARTRA.  See
"Information  Concerning  Directors"  above for a  description  of Mr.  Harvey's
relevant business experience.

       Peter R. Harvey,  President  and Chief  Operating  Officer of ARTRA.  See
"Information  Concerning  Directors"  above for a  description  of Mr.  Harvey's
relevant business experience.
<PAGE>

       John G. Hamm,  Executive Vice President of ARTRA.  Mr. Hamm has served as
Executive  Vice  President,  since  February 1988, and Vice President - Finance,
from 1975 until 1988,  of ARTRA.  Mr.  Hamm has also served as Vice  President -
Finance, from June 1990 until July 1994, and as a Director, from 1984 until July
1994,  of Ozite  Corporation.  Mr.  Hamm also  serves as a  Director  of SoftNet
Systems, Inc. since 1985 and of PST from 1987 until January 1996.

       Robert S. Gruber,  Vice  President - Corporate  Relations  of ARTRA.  Mr.
Gruber has served as Vice President - Corporate Relations of ARTRA since 1975.

       James D. Doering,  Vice President,  Treasurer and Chief Financial Officer
of ARTRA. Mr. Doering has served as Vice President, since 1980, Treasurer, since
1987, Chief Financial Officer, since February 1988, and Controller, from 1980 to
1987,  of  ARTRA.  Mr.  Doering  has also  served  as Vice  President  and Chief
Financial Officer of COMFORCE (formerly Lori) from February 1988 through January
1996.

       John Conroy,  Vice  President - Corporate  Administration  of ARTRA.  Mr.
Conroy has served as Vice President - Corporate Administration since March 1990.
Prior  thereto,  he served as Vice  President  -  Corporate  Administration,  of
Sargent-Welch  Scientific  Company from  September  1988 to December  1989.  Mr.
Conroy  previously  served in various risk management  positions with ARTRA from
1978 to September 1988, most recently as Corporate Risk Director.

       Lawrence  D.  Levin,  Controller  of  ARTRA.  Mr.  Levin  has  served  as
Controller, since 1987, Assistant Treasurer and Assistant Secretary, since 1980,
and Assistant Controller, from 1980 to 1987, of ARTRA. Mr. Levin has also served
as  Controller  of  COMFORCE  (formerly  Lori)  since  December  1989 and as the
Assistant  Chief  Financial  Officer of COMFORCE  from May 1993 through  January
1996.

       Edwin G. Rymek,  Secretary of ARTRA. Mr. Rymek has served as Secretary of
ARTRA since 1987 and Secretary of COMFORCE from 1982 through 1995.

       Officers  are  appointed  by the  boards  of  directors  of ARTRA and its
subsidiaries and serve at the pleasure of each respective board.  Except for the
relationship  of Peter R. Harvey (a director  and  executive  officer)  and John
Harvey (a director and executive officer), who are brothers, there are no family
relationships  among the executive officers and/or directors,  nor are there any
arrangements or  understandings  between any officer and another person pursuant
to which he was appointed to office except as may be hereinafter described.
<PAGE>

Item 11.  Executive Compensation

Directors' Compensation

       Directors  who are not  employees  of  ARTRA  ("Outside  Directors")  are
entitled to receive an annual retainer of $4,000 and $250 per meeting  attended;
however,  no fees were paid to Outside  Directors in 1995. Each Outside Director
who sits on an  established  committee  of ARTRA is entitled to receive $150 per
committee  meeting  attended.  Employees  of ARTRA who also  serve as  directors
receive no additional compensation for such service.

Executive Officer Compensation

       The  following  table  shows  all  compensation  paid  by  ARTRA  and its
subsidiaries for the fiscal years ended December 28, 1995, December 29, 1994 and
December 30, 1993, to the chief executive officer of ARTRA and each of its other
most  highly  compensated  executive  officers  who were  serving  as  executive
officers  of ARTRA as of  December  28,  1995 and  whose  compensation  exceeded
$100,000 in 1995.

                           SUMMARY COMPENSATION TABLE

<TABLE>                             
<CAPTION>
                                            Annual Compensation(1)       Long Term Compensation(1)
                                            ----------------------       -------------------------
                                                                           Securities          All
                                                                          Underlying(3)       Other
          Name and                      Salary       Salary                 Options -        Compen-
    Principal Positions       Year       Paid      Deferred(2)   Bonus    No. of Shares      sation
    -------------------       ----       ----      -----------   -----    -------------      ------
<S>                           <C>      <C>             <C>       <C>         <C>            <C>      
         John Harvey,         1995     $126,200        $-0-      $ -0-       $ -0-          $2,520(4)
      Chairman and Chief      1994      126,200         -0-        -0-       4,000           2,520(5)
      Executive Officer       1993      126,200         -0-        -0-         -0-           2,431(5)
                                                

                                                

      James D. Doering,       1995       49,900       83,500       -0-         -0-           3,470(4)
        V.P. and Chief        1994      111,333       22,267       -0-         -0-           3,000(5)
      Financial Officer       1993      111,133       22,267       -0-      31,000           3,054(5)
                                                

                                                 
        John G. Hamm,         1995       49,900       83,500       -0-         -0-           3,470(4)
          Executive           1994      111,133       22,267       -0-         -0-           3,000(5)
        Vice President        1993       55,667       22,267       -0-      13,200           2,210(5)
                                                

                                                
      Robert S. Gruber,       1995       92,000       69,000        -0-         -0-          2,868(4)
        Vice President        1994          -0-       18,400        -0-         -0-          3,000(5)
     Corporate Relations      1993       62,753      110,400        -0-      12,000          4,831(5)
                                                      
- -----------------------
<FN>
   (1)   No additional annual compensation was paid, no restrictive stock awards
         or stock appreciation  rights were granted,  and no long term incentive
         plan payouts were made to any of the officers listed in the table. Only
         compensation earned in 1995 (irrespective of the year in which paid) is
         considered in determining inclusion in this table.

   (2)   Salaries  are  shown as paid (or  deferred)  in the  year  earned.  Any
         deferred  salaries paid in a year subsequent to the year earned are not
         shown as paid in such  subsequent  year.  All salary  deferrals for the
         years 1993, 1994 and 1995 have been paid as of the date hereof.
<PAGE>

   (3)   All of the  options  shown  in  this  column  were  granted  under  the
         Company's  1985 Stock  Option  Plan at an  exercise  price of $3.75 per
         share, being the closing price of the Company's common stock on the New
         York Stock  Exchange  on the date of grant  (January  8,  1993).  These
         options expire January 8, 2003.

   (4)   These amounts represent the Company's  contributions to the 401(k) plan
         amounts   contributed  to  ARTRA  GROUP  Incorporated   Employee  Stock
         Ownership Plan (the "ESOP").  See note 5 below for a further discussion
         of the ESOP.

   (5)   These  amounts  represent  the  closing  price  on the New  York  Stock
         Exchange  of  Common  Stock as of the date the  named  officers  became
         entitled to receive the stock (i.e., December 29, 1994 and December 30,
         1993) pursuant to the ESOP. During 1995, ARTRA contributed 8,750 common
         shares to the Plan  with a fair  market  value of  $42,000  ($4.75  per
         share) for the plan year ending  December  28,  1995 and 15,000  common
         shares to the Plan  with a fair  market  value of  $71,250  ($4.75  per
         share) for the plan year ending  December 29, 1994.  ARTRA  contributed
         65,000  common  shares to the Plan with a fair market value of $423,000
         ($6.50 per share) for the plan year ending December 30, 1993. Effective
         August 1, 1995, the Company terminated the ESOP and is currently is the
         process of distributing the related Employee accounts to participants.
</FN>
</TABLE>

       No options  to  purchase  capital  stock of the  Company  or other  stock
appreciation  rights  were  granted  by the  Company  in  1995  pursuant  to the
Company's 1985 Stock Option Plan to any other executive  officers of the Company
named in the Summary  Compensation  Table.  On December 15, 1995,  the Company's
board of  directors  approved  the grant to the Chief  Executive  Officer and to
certain executive officers of the Company of options to purchase an aggregate of
505,000  shares of the  Company's  common  stock at $3.65 per share  (being  the
closing  price of the  Company's  common stock as reported on the New York Stock
Exchange on December  14,  1995).  The  issuance of these  options is subject to
approval of the proposed 1996 Stock Option Plan by the Company's shareholders.
<PAGE>

       The  following  table sets forth  information  concerning  the  aggregate
number and values of options held by the Chief  Executive  Officer and the other
executive officers of the Company listed in the Summary Compensation Table as of
December 28, 1995 which were granted to such officers in  consideration of their
services as officers or directors  of the Company.  No options held by the Chief
Executive  Officer or any other executive  officers of the Company listed in the
Summary Compensation Table were exercised in 1995.

                     AGGREGATED OPTION EXERCISES IN 1995 AND
                      OPTION VALUES AS OF DECEMBER 28, 1995


<TABLE>
<CAPTION>
                       
                                                                     Number of           Value of Unexercised
                                                                    Unexercised             In-the-Money
                                                                Options at 12-28-95      Options at 12-28-95
                           Shares Acquired          Value           Exercisable/            Exercisable/
      Name                   on Exercise          Realized        Unexercisable(1)         Unexercisable(2)
- ------------------         ---------------        ---------     -------------------       ------------------ 
<S>                               <C>              <C>                 <C>                   <C>           
John Harvey                       0                $    0              80,000/               $ 117,600/None
                                                                           0

James D. Doering                  0                     0              62,000/                  88,350/None
                                                                           0

John G. Hamm                      0                     0              39,200/                  56,500/None
                                                                           0

Robert S. Gruber                  0                     0              21,000/                  29,775/None
                                                                           0
- -------------------------------
<FN>


(1)      See the notes under  "Principal  Shareholders" for a description of the 
         options (including  exercise prices) granted  to each  of the executive 
         officers listed in this table.

(2)      The listed  options  were issued at per share  exercise  prices of from
         $3.65 per share to $3.75 per share. The market price of Common Stock as
         of the close of  trading  on  December  28,  1995 on the New York Stock
         Exchange was $5.125 per share.

</FN>
</TABLE>
<PAGE>

           Compensation Committee Interlocks And Insider Participation

       Authority  to  determine  the  compensation  of  executive   officers  is
conferred upon the Company's Board of Directors or, in the case of officers paid
by  Bagcraft  Corporation  of  America  ("Bagcraft"),  by  Bagcraft's  Board  of
Directors. The salary of John Harvey was paid by Bagcraft.

       ARTRA's Board did not consider the  compensation of its officers in 1995.
The decisions  concerning  the cash  compensation  of these  executive  officers
(including of John Harvey,  the Chairman and Chief  Executive  Officer of ARTRA,
who was  compensated  by Bagcraft for his services as its Chairman) were made by
Peter R. Harvey,  the President and Chief Operating  Officer of ARTRA.  Although
ARTRA has an Option and  Compensation  Committee  formed to  consider  and award
options  under  ARTRA's 1985 Stock Option Plan,  this  committee did not meet in
1995. In December,  1995, the ARTRA Board awarded options to the Chief Executive
Officer  and  to  certain   executive   officers  subject  to  approval  by  the
shareholders  of the  proposed  1996 Stock Option  Plan.  Peter R. Harvey,  John
Harvey and Gerard  Kenny  executed the consent  approving  these  awards.  These
awards were granted as  compensation  for late salary payments during the period
1991 to 1995. See "Transactions with Management and Others" for a description of
various  transactions  and  relationships  between the Company and each of these
directors.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Securities Ownership of Certain Beneficial Owners

       As of April 25, 1996,  there were 7,482,418 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 March
20, 1995 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 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 April 25, 1996,  3,750 shares of Series A Preferred Stock of ARTRA,
par value  $1,000 per share,  were  issued and  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.
<PAGE>


                                         Number of Shares     Percent of Shares
         Name of                           Beneficially          Beneficially
     Beneficial Owner                         Owned                 Owned     
     ----------------                      ------------          ------------ 

Research Center of Kabbalah(1)                600,772                 8.0%

Peter R. Harvey(2)                            398,176                 5.3%

John Harvey(3)                                227,565                 3.0%

Gerard M. Kenny(4)                            240,048                 3.2%

John G. Hamm(5)                                 42,248                0.6%

Robert S. Gruber(6)                             40,481                0.5%

James D. Doering(7)                             66,620                0.9%

All directors and
  executive officers as
          a group (9 persons)                 1,123,221              14.2%

                                                 

(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 514,522  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,  and 65,000 shares of
         Common Stock issuable  under a warrant which expires  December 31, 1998
         at an exercise price of $7.00 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 331,548  shares held  directly by him (of which  300,725 are
         Common Stock and 1,523 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 ESOP  account,  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.
<PAGE>

(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  ESOP  account,  5,746  shares  held  in  his  individual
         retirement  account,  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, 4,700 shares issuable under a warrant which expires, February 1,
         1999, at an exercise  price of $5.50 per share,  1,500 shares  issuable
         under a warrant which  expires  March 30, 1999 at an exercise  price of
         $5.625 per share 6,000 shares  issuable  under a warrant  which expires
         January  20,  2000 at an  exercise  price of  $4.75  per  share  and an
         aggregate of 52,007 shares issuable under warrants  expiring at various
         dates in 2000  received  in 1995 as  additional  compensation  for 1995
         short-term  loans at  exercise  prices of $3.75 per share to $6.125 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 $56.76
         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 $15.00 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)      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, 1,639 shares held in his 401(k) plan, 1,266 shares held in his
         ESOP  account,  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,  and 13,200 shares issuable under an
         option which expires  January 8, 2003 at an exercise price of $3.75 per
         share.
<PAGE>

(6)      The shares of Common Stock  beneficially owned by Mr. Gruber consist of
         17,317  shares  held  directly  by him,  943  shares  held in his  ESOP
         account,  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,  and 12,000  shares  issuable  under an option which expires
         January 8, 2003 at an exercise price of $3.75 per share.

(7)      The shares of Common Stock beneficially owned by Mr. Doering consist of
         2,000 shares held by him in joint  tenancy with his wife,  1,693 shares
         held  in  his  ESOP  account,  1,118  shares  held  in  his  individual
         retirement  account,  25,000  shares  issuable  under an  option  which
         expires  December  19,  2000 at an  exercise  price of $3.65 per share,
         6,000 shares issuable under an option which expires  September 19, 2001
         at an exercise  price of $3.65 per share,  and 31,000  shares  issuable
         under an option which expires  January 8, 2003 at an exercise  price of
         $3.75 per share.
<PAGE>

Item 13.  Certain Relationships And Related Transactions

         1.  On  August  5,  1982,  ARTRA  acquired  36.6%  of  the  issued  and
outstanding  common shares of COMFORCE (formerly Lori) plus preferred shares for
$2,250,000 (the "Investment"). The Investment was carried at cost plus equity in
undistributed   earnings  (loss)  since  the  date  of  acquisition,   less  the
amortization  over a  25-year  period of the  excess of cost over the  equity in
COMFORCE's net assets at the date of acquisition.

         On February 8, 1985,  COMFORCE  acquired in an arms-length  transaction
negotiated by management of ARTRA, through a wholly-owned subsidiary, all of the
issued and outstanding  shares of New  Dimensions,  a creator and distributor of
fashion jewelry, for consideration of $28,500,000 including cash of $21,850,000,
a $3,000,000  9% promissory  note due February 8, 1990 (which was  prepaid),  an
earnout equal to 20% of New  Dimension's  pre-tax  earnings  during the calendar
years 1985 through  1989 and 200,000  shares of ARTRA's  common stock  delivered
from its  treasury  with an agreed  fair  market  value of  $20.00  per share or
$4,000,000.  The delivery of ARTRA's  shares to the former  shareholders  of New
Dimensions  was approved by ARTRA's  shareholders  at their July 18, 1985 annual
meeting.

         In exchange for the 200,000 shares of its common stock,  ARTRA received
534,878 shares of COMFORCE's  common stock (thereby  increasing its ownership of
COMFORCE from 36.6% to 55.9%) and 10,000 shares of COMFORCE's Series B Preferred
stock  convertible into additional  COMFORCE common shares.  In exchange for the
cancellation  of advances by ARTRA to COMFORCE,  amounting to  $6,457,000  as of
January  31,  1985,  and an  additional  cash  advance by ARTRA to  COMFORCE  of
$7,300,000,  which  latter sum was used by COMFORCE  to acquire New  Dimensions,
ARTRA received 10,000 shares of COMFORCE Series A Preferred stock.

         On August 13, 1985, COMFORCE  stockholders  approved a 1-for-30 reverse
split of all  authorized,  issued,  outstanding  and  reserved  shares of common
stock,  increased the number of resulting  authorized  shares of COMFORCE common
stock from  1,833,333 to 6 million and approved a 1-for-10  reverse split of all
issued,  outstanding  and reserved  shares of its  preferred  stock.  ARTRA then
converted its shares of COMFORCE Series B Preferred stock into 1,099,108  shares
of COMFORCE common stock,  thereby increasing its ownership interest in COMFORCE
to 72.8%.

         In  December  1985,  ARTRA  purchased,  50,000  COMFORCE  common  stock
purchase  warrants  (14.4% of the  347,600  outstanding  common  stock  purchase
warrants) for $391,000.  The warrants were issued in conjunction with a 1985 New
Dimensions bond offering.  The warrants, as adjusted,  provided for the purchase
of 75,000 COMFORCE shares at $12.00 per share and were convertible into COMFORCE
common  stock at the rate of 0.375  shares  of  COMFORCE  common  stock for each
warrant.  In September  1990,  ARTRA converted such warrants and received 18,750
shares of COMFORCE  common  stock  therefor.  Although the  conversion  of these
warrants increased the number of shares of COMFORCE common stock
<PAGE>

owned by ARTRA,  the  conversion of warrants by others at the same time resulted
in a decrease of ARTRA's  ownership of COMFORCE  common stock from 68% to 66.7%.
As of December  30, 1993 and  November 2, 1995,  ARTRA's  ownership  of COMFORCE
common stock was 66.7% and 64.3%, respectively.

         ARTRA and a  wholly-owned  subsidiary of ARTRA held notes from COMFORCE
at December 31, 1992 in the amount of $16,025,000  which were due April 1, 1994.
Due to the  limited  ability of  COMFORCE  to receive  funds from its  operating
subsidiaries,  effective  July 1, 1989 ARTRA placed an indefinite  moratorium on
the accrual of interest on its COMFORCE note and declaration of dividends on its
COMFORCE preferred stock. The terms of the notes provided that the maturity date
would be  automatically  extended at the end of each  quarter to fifteen  months
beyond the current quarter until ARTRA provides  written notice to establish the
due date at such  fifteen  month  maturity.  A bank lender is the pledgee of the
COMFORCE  preferred  stock owned of record by ARTRA as collateral  for ARTRA and
New  Dimensions  bank  loans.  In  February  1993,  ARTRA  and its  wholly-owned
subsidiary transferred these notes to COMFORCE's capital account.

         During  1994,  ARTRA made net advances to COMFORCE of  $2,531,000.  The
advances  consisted of a $1,850,000  short-term  note with  interest at 10%, the
proceeds  of which were used to fund the  $1,900,000  cash  payment to a bank in
conjunction  with a debt settlement  agreement with COMFORCE's bank lender,  and
certain  non-interest  bearing  advances used to fund COMFORCE  working  capital
requirements.

         Effective  December 29, 1994,  ARTRA exchanged  $2,242,000 of its notes
and advances for additional COMFORCE Series C preferred stock. Additionally, the
debt  settlement  agreement  required ARTRA to contribute cash of $1,500,000 and
ARTRA common stock with a fair market value of $2,500,000 to COMFORCE's  capital
account.

         Effective  October 17, 1995,  COMFORCE  acquired one hundred percent of
the capital stock of COMFORCE Global, Inc. ("Global"),  formerly Spectrum Global
Services,  Inc.  d/b/a  YIELD  Global,  a wholly  owned  subsidiary  of Spectrum
Information Technologies,  Inc. for consideration of approximately $6.4 million,
net of cash  acquired,  consisting  of cash of  approximately  $5.6  million and
500,000 shares of COMFORCE common stock issued as consideration for various fees
and guarantees associated with the transaction.  The cash consideration included
net cash payments to the selling shareholders of approximately $5.2 million. The
500,000 shares of COMFORCE common stock issued as  consideration  for the Global
transaction  included  150,000  shares  issued to Peter R.  Harvey,  then a vice
president and director of COMFORCE and 100,000  COMFORCE common shares issued to
ARTRA for their  guarantees  to the  selling  shareholder  of the payment of the
Global purchase price at closing. The shares issued to Peter R. Harvey and ARTRA
are  subject  to  approval  by  the  issuer's  shareholders.   Additionally,  in
conjunction  with the COMFORCE  Global  acquisition,  ARTRA has agreed to assume
substantially all pre-existing  COMFORCE  liabilities and indemnify  COMFORCE in
the event any future  liabilities  arise concerning  pre-existing  environmental
matters and business related litigation.
<PAGE>

         In the fourth  quarter of 1995,  ARTRA  exchanged  its  interest in the
entire issue of COMFORCE Series C cumulative  preferred stock for 100,000 shares
of COMFORCE common stock.  The issuance of these COMFORCE common shares to ARTRA
are subject to approval  by the  COMFORCE's  shareholders.  During  1995,  ARTRA
received  $399,000 of advances from  COMFORCE.  In 1996,  the COMFORCE  advanced
ARTRA an  additional  $54,000.  ARTRA  repaid the above  advances  and paid down
$647,000 of the pre-existing COMFORCE liabilities it assumed in conjunction with
the COMFORCE Global acquisition.

         John Harvey was the chief  executive  officer  and the  chairman of the
board of COMFORCE until November 1995.  Peter R. Harvey was a vice president and
a director of COMFORCE  through  January 1, 1996.  James D. Doering was the vice
president and chief financial officer of COMFORCE through January 1996. Lawrence
D. Levin was the controller and assistant  chief  financial  officer of COMFORCE
through January 1996. Edwin Rymek was the secretary of COMFORCE through November
1995.

         2. In November  1989,  ARTRA borrowed  $500,000 from John Harvey,  on a
short-term basis, with an interest rate of 15% per annum. The loan was repaid in
April 1990. In July 1990, ARTRA borrowed additional funds from John Harvey which
were repaid in June 1992. During 1992 and 1994, ARTRA borrowed  additional funds
from John  Harvey,  payable on demand.  As of November 2, 1994,  $42,000 of such
borrowed amounts (including accrued interest) remained outstanding.

         In January 1995, ARTRA borrowed an additional $100,000 from John Harvey
on a  short-term  basis  evidenced  by a note due  March  20,  1995 and  bearing
interest at 8% per annum. This loan, as well as other short-term borrowings from
John Harvey,  aggregating  $175,000 at December  28, 1995,  have been renewed as
they matured during 1995. As additional  compensation  the loans provide for the
issuance of warrants to purchase  ARTRA  common  shares,  as  determined  by the
number of days the loans are outstanding. Through February 29, 1996, John Harvey
has received  warrants to purchase an aggregate of 58,007 shares of ARTRA common
stock  at  prices   ranging  from  $3.75  to  $6.125  per  share  as  additional
compensation for his loans to ARTRA.

         3. During 1990 and 1991,  ARTRA made  advances to Peter R.  Harvey,  of
which $820,000 (including $112,000 in accrued interest) remained  outstanding at
December 30, 1993.  The  outstanding  principal  balance of these advances bears
interest at the prime rate plus 2%. ARTRA had previously borrowed funds from Mr.
Harvey  evidenced by a $2,000,000  ARTRA note payable to him. Upon Mr.  Harvey's
surrender of this note to ARTRA (which note had  previously  been pledged by him
to secure obligations he owed to another company),  ARTRA applied the $2,000,000
to amounts due from him.

         In addition to the advances  made directly by ARTRA,  certain  advances
were previously made to Mr. Harvey by Bagcraft prior to its acquisition by ARTRA
in 1990. In December 1993,  $1,894,000,  representing  the total amount of these
advances (including accrued interest of
<PAGE>

$120,000)  was  transferred  from  ARTRA's  Bagcraft  subsidiary  to  ARTRA as a
dividend (a portion of which interest has been reserved on ARTRA's books).

       In May  1991,  ARTRA's  Fill-Mor  subsidiary  made  advances  to Peter R.
Harvey. The advances, made out of a portion of the proceeds of a short-term bank
loan bear  interest  at the prime rate plus 2%. The amount of these  advances at
March 30,  1995 was  $1,540,000  (including  $398,000 of accrued  interest).  In
April, 1995, these advances from ARTRA's Fill-Mor  subsidiary to Peter R. Harvey
were transferred to ARTRA as a dividend.

       The  aggregate  amount  of all  advances  to Mr.  Harvey  which  remained
outstanding as of March 28, 1996 was $5,112,000 (including $1,220,000 of accrued
interest).  Commencing  January 1, 1993 to date,  interest on these  advances to
Peter R. Harvey has been accrued and fully reserved.

       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.  Additionally,  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,  in recent  years Mr.  Harvey has  guaranteed  various
obligations of ARTRA without compensation.

       Under   Pennsylvania   Business   Corporation  Law  of  1988,   ARTRA  (a
Pennsylvania  corporation) is permitted to make loans to officers and directors.
Further,  under the  Delaware  General  Corporation  Law,  Fill-Mor  (a Delaware
corporation) is permitted to make loans to an officer (including any officer who
is also a  director,  as in the  case of  Peter  R.  Harvey),  whenever,  in the
judgment  of the  directors,  the loan can  reasonably  be  expected  to benefit
Fill-Mor.

       At the September 19, 1991 meeting,  ARTRA's Board of Directors  discussed
but did not act on a proposal to ratify the  advances  made by ARTRA to Peter R.
Harvey.  The 1992  advances  made by ARTRA to Peter R. Harvey  were  ratified by
ARTRA's Board of Directors. In the case of the loan made by Fill-Mor to Peter R.
Harvey,  the Board of Directors of Fill-Mor approved the borrowing of funds from
Fill-Mor's  bank loan  agreement,  a condition of which was the application of a
portion of the proceeds  thereof to the payment of certain of Peter R.  Harvey's
loan obligations to the bank.  However,  the resolutions did not acknowledge the
use of such  proceeds  for this purpose and the formal loan  documents  with the
bank did not set forth this  condition  (though in fact,  the  proceeds  were so
applied by the bank).

       As partial  collateral for amounts due from Peter R. Harvey,  the Company
has received the pledge of 1,523 shares of ARTRA redeemable  preferred stock (at
face of $1,523,000) 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
<PAGE>

ARTRA  whereby Mr. Harvey  pledged  additional  collateral  consisting of 42,067
shares of ARTRA common stock and 707,281 shares of PureTech International, Inc.,
a publicly traded corporation.

       In February  1996, a bank agreed to discharge all amounts under its ARTRA
notes ($12,063,000 plus accrued interest) and certain  obligations of Mr. Harvey
for consideration of $6,000,000,  consisting of a cash payment of $5,150,000 and
Mr. Harvey's  $850,000 note payable to the bank.  ARTRA recognized a gain on the
discharge of its bank  indebtedness  in the first quarter of 1996 and recorded a
receivable for Mr.  Harvey's  prorata share of the debt discharge  funded by the
Company. As collateral for this advance and other previous advances,  Mr. Harvey
provided ARTRA a $2,150,000 security interest in certain real estate.

       4. During 1986 and through  August 10, 1988,  ARTRA entered into a series
of  short-term  borrowing  agreements  with private  investors.  Each  agreement
granted an investor a put option,  principally  due in one year,  that  required
ARTRA to repurchase any or all of the shares sold at a 15% to 20% premium during
a specified put period.  Kenny Construction Company ("Kenny") entered into a put
option  agreement  with ARTRA,  which has been extended from time to time,  most
recently on November 11, 1992. At such time ARTRA and Kenny agreed to extend the
put option  whereby  Kenny  received the right to sell to ARTRA 23,004 shares of
ARTRA  common  stock at a put  price of $38.85  plus an amount  equal to 15% per
annum for each day from March 1, 1991 to the date of payment by ARTRA ($75.07 at
March 28, 1996),  which option  expires  December 31, 1997.  Gerard M. Kenny,  a
director of ARTRA, is the President and Chief  Executive  Officer and a director
of Kenny and beneficially owns 16.66% of Kenny's capital stock.

       5. On March 21,  1989,  ARTRA  borrowed  $5,000,000  from its bank lender
evidenced by a  promissory  note.  This note has been amended and extended  from
time to time.  The  borrowings on this note are  collateralized  by, among other
things,  a $2,500,000  personal  guaranty by Kenny (see  paragraph 5 above for a
discussion of Mr. Gerard M. Kenny's  relationship  with Kenny).  Kenny  received
compensation in the form of 833 shares of ARTRA common stock for each month that
its guaranty remained outstanding.  Through November 2, 1994, Kenny had received
49,980 shares of ARTRA common stock as compensation for its guaranty.

       On March 31, 1994,  ARTRA  entered into a series of  agreements  with its
bank lender and with Kenny. Under the terms of these agreements, Kenny purchased
a  $2,500,000  participation  in the  $5,000,000  note  payable to ARTRA's  bank
lender.  Kenny's  participation  is evidenced  by a  $2,500,000  ARTRA note (the
"Kenny  Note")  bearing  interest at the prime rate.  As  consideration  for its
purchase  of this  participation,  the  bank  lender  released  Kenny  from  its
$2,500,000 loan guaranty. As additional consideration,  Kenny received an option
to put back to ARTRA  the  49,980  shares  of ARTRA  common  stock  received  as
compensation  for its  $2,500,000  ARTRA loan  guaranty at a price of $15.00 per
share. The put option is subject to increase at the rate of
<PAGE>

$2.25 per  share  per  annum  ($19.50  at March  28,  1996).  The put  option is
exercisable  on the  later of the  date the  Kenny  Note is  repaid  or the date
ARTRA's obligations to its bank lender are fully paid.

       6. On September 27, 1989, ARTRA received a proposal to purchase  Bagcraft
from Sage Group, Inc.  ("Sage"),  a privately-owned  corporation.  On August 24,
1990, Sage was merged with and into Ozite.  Peter R. Harvey,  ARTRA's President,
and John Harvey, ARTRA's Chairman of the Board of Directors,  were the principal
shareholders  of Sage and are the  principal  shareholders  of Ozite.  Effective
March 3, 1990, a wholly-owned  subsidiary of ARTRA  indirectly  acquired 100% of
the issued and outstanding  common shares of BCA Holdings,  Inc.,  which in turn
owns 100% of the stock of  Bagcraft,  for  total  consideration  which was to be
issued to Sage,  upon  approval of ARTRA's  shareholders,  consisting of 772,000
shares of ARTRA's  common  stock and 3,750 shares of its $1,000 par value junior
non-convertible  payment-in-kind  preferred stock bearing a dividend rate of 6%.
The issuance of the ARTRA common stock and preferred stock as consideration  was
approved  by  ARTRA's  shareholders  at the  December  1990  annual  meeting  of
shareholders.  Upon the August  1990  merger of Sage into  Ozite,  Ozite  became
entitled to receive this consideration. Ozite subsequently transferred the ARTRA
common and preferred stock to its PST subsidiary.

         Ozite  subsequently  reacquired the 3,750 shares of preferred  stock in
February 1992, 1,523 of which shares were subsequently  assigned to Peter Harvey
in  consideration  of his discharge of certain  indebtedness  of Ozite to him in
April 1992. As described in paragraph 4 above,  Mr.  Harvey  pledged these 1,523
shares to ARTRA.  In connection  with the settlement of debt with its creditors,
Ozite  issued 147 shares and  42,067  shares of the ARTRA  preferred  and common
stock,  respectively,  to Peter Harvey and 35 shares of the ARTRA  preferred and
common stock, respectively,  to John Harvey. The $4,750,000 price of the 772,000
shares of common stock and 3,750 shares of preferred stock was equal to the fair
market  value  thereof as of January 31, 1991 as  determined  by an  independent
investment banking firm engaged by PST to make such determination.

       7. In 1987,  the  predecessor  of PST acquired a $5,000,000  subordinated
note bearing  interest at a rate of 13.5% per annum and 50,000 shares of 13-1/2%
cumulative redeemable preferred stock of Bagcraft with a liquidation  preference
of $5,000,000 with $10,000,000 of the net proceeds of its public offering in May
1987.  Interest  accrued  on the  note at a rate of  13.5%  per  annum.  No cash
payments of  interest  were made  during the term of the note.  However,  during
1992,  per agreement  with PST, the interest  payments for 1992 were remitted to
ARTRA and the noteholder  received  preferred  stock of Bagcraft's  parent,  BCA
Holdings, Inc. ("BCA") having a liquidation value of $675,000. In December 1993,
the  principal  outstanding  under this note was repaid in full from proceeds of
Bagcraft's  new credit  facility with an  institutional  lender and PST accepted
additional  BCA  preferred  stock having a  liquidation  value of  $3,000,000 in
satisfaction of all unpaid accrued interest thereon.
<PAGE>

       The  BCA  preferred  stock  provides  a  $1,000  per  share   liquidation
preference and annual  cumulative cash dividends of $60.00 per share when and if
declared by BCA. The Bagcraft redeemable  preferred stock remains outstanding as
of the date hereof.  As of March 28,  1996,  dividends in the amount of $523,000
had cumulated thereon.

       Effective  February 1, 1996,  BCA,  Bagcraft  and Ozite  entered  into an
agreement  to  exchange  certain  preferred  stock  between  the  Companies.  In
connection with the agreement, BCA issued to Bagcraft 8,135 shares of BCA Series
B preferred stock (with a liquidation  preference equal to $1,000 per share) for
cash of $4,135,000.  Bagcraft in turn exchanged the BCA Series B preferred stock
for  Bagcraft  redeemable  preferred  stock (82.7% of 50,000  shares,  or 41,350
shares)  held by Ozite.  Funds for the  transaction  were  obtained  by Bagcraft
through an advance under its revolving credit.  BCA then upstreamed the proceeds
to ARTRA for working capital purposes.

       As a result  of the  preferred  stock  exchange  agreement,  17.3% of the
original Bagcraft redeemable  preferred stock and the prorata share of dividends
remain  outstanding   February  1,  1996.  Dividends  related  to  the  Bagcraft
redeemable  preferred  stock exchanged have been forgiven in accordance with the
agreement.   The  dividend  forgiveness  will  be  reflected  in  the  Company's
consolidated financial statements in the first quarter of 1996.

       8. On March 9, 1990,  Maynard K. Louis,  a former  member of the Board of
Directors,  made a loan to ARTRA in the  principal  amount of  $500,000  bearing
interest at the rate of 10% per annum.  This loan was repaid in 1992 through the
issuance to Mr.  Louis of 68,198  shares of ARTRA's  common  stock.  On April 2,
1992, Mr. Louis made a loan to ARTRA in the principal amount of $100,000 bearing
interest at the rate of 9% per annum,  which loan,  due April 1, 1994,  has been
extended.  On October 1, 1993, Mr. Louis made a short term loan in the principal
amount of $75,000  bearing  interest  at the rate of 8% per annum to ARTRA's BCA
Holdings Inc. and A G Holding  Corp.  subsidiaries  due October 22, 1993,  which
loan had not been repaid as of November 2, 1994. As consideration  for making or
agreeing to extend  these  loans,  Mr.  Louis  received the warrants to purchase
ARTRA's  common  stock  described  in  note  9 to  the  table  under  "Principal
Shareholders."

       9. During 1993,  The  Research  Center of Kabbalah  ("RCK"),  which holds
approximately  8% of  ARTRA's  outstanding  Common  Stock  (including  the stock
issuable  upon the exercise of  warrants) as of December 28, 1995,  made certain
short-term loans to the Company of which  $2,000,000,  with interest at 10%, was
outstanding  at December  31, 1993.  As  additional  compensation,  RCK received
warrants  to purchase  an  aggregate  of 86,250  ARTRA  common  shares at prices
ranging  from $6.00 to $7.00 per share  based upon the market of ARTRA's  common
stock at the date of issuance.  The warrants  expire five years from the date of
issuance.  In January 1994,  Kabbalah made an additional  $1,000,000  short-term
loan to the Company,  also with  interest at 10%. The proceeds of this loan were
used to pay down various ARTRA short-term loans and other debt  obligations.  In
December,  RCK  received  126,222  shares of ARTRA common in payment of past due
interest through October 31, 1995.
<PAGE>

                                    SIGNATURE


       The  undersigned  Registrant  hereby  files this  amendment  to it Annual
Report on Form 10-K for the fiscal year ended  December  28, 1995 to include the
information required by Part III thereto.

       Pursuant to the requirements of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunder duly authorized.




                                          ARTRA GROUP INCORPORATED

                                  ------------------------------------ 
                                                Registrant







 Dated:   April 26, 1996                     JAMES D. DOERING
                                  ------------------------------------- 
                                             JAMES D. DOERING
                                         Vice President/Treasurer
                                          Chief Financial Officer




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