<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

     X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15D OF THE SECURITIES
   -----  EXCHANGE ACT OF 1934 

          FOR THE QUARTERLY PERIOD ENDED DECEMBER, 31 1997

                                       OR

          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15D OF THE SECURITIES
   -----  EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO ______

Commission File Number
----------------------
       1-10471

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

                 Delaware                                       75-2057054
                 --------                                       ----------
        (State or other jurisdiction                         (I.R.S. Employer
     of Incorporation or Organization)                      Identification No.)


650 S. Royal Lane, Suite 100, Coppell, Texas                      75019
--------------------------------------------                      -----
  (Address of principal executive offices)                       Zip Code


Registrants' telephone number, including area code (972) 393-3800
                                                   --------------


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   .
                                       ---    ---
4,350,000 shares of Common Stock were outstanding as of January 9, 1998.

                                       1

<PAGE>   2


                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES

                     Index to Quarterly Report on Form 10-Q



Part I.  Financial Information

         Item 1.  Financial Statements (unaudited)

                  Condensed Consolidated Statements of Income for the three
                  months and six months ended December 31, 1997 and 1996.

                  Condensed Consolidated Balance Sheets as of December 31, 1997
                  and June 30, 1997.

                  Condensed Consolidated Statement of Changes in Shareholders'
                  Equity for the six months ended December 31, 1997.

                  Condensed Consolidated Statements of Cash Flows for the six
                  months ended December 31, 1997 and 1996.

                  Notes to Condensed Consolidated Financial Statements.

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


Part II. Other Information

                  Item 1.  Legal Proceedings
                  Item 2.  Changes in Securities
                  Item 3.  Defaults Upon Senior Securities
                  Item 4.  Submission of Matters to a Vote of Security
                           Holders
                  Item 5.  Other Information
                  Item 6.  Exhibits and Reports on Form 8-K

                                       2

<PAGE>   3


                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)



<TABLE>
<CAPTION>
                                         FOR THE THREE MONTHS ENDED         FOR THE SIX MONTHS ENDED
                                        -----------------------------     -----------------------------
                                        December 31,     December 31,     December 31,     December 31,
                                            1996             1997             1996             1997
                                        ------------     ------------     ------------     ------------
<S>                                     <C>              <C>              <C>              <C>         
Net Sales                               $  8,872,621     $  9,005,351     $ 19,655,491     $ 20,537,453
Cost of goods sold                         5,595,989        5,432,765       12,415,673       12,372,318
                                        ------------     ------------     ------------     ------------
  Gross profit                             3,276,632        3,572,586        7,239,818        8,165,135
                                        ------------     ------------     ------------     ------------

Selling, general and 
 administrative expenses                   2,335,703        2,380,552        4,517,773        4,682,606
Interest expense, net                        334,886          310,336          648,469          667,722
Depreciation and
 amortization                                 97,809           93,914          194,017          189,125
                                        ------------     ------------     ------------     ------------

    Total expenses                         2,768,398        2,784,802        5,360,259        5,539,453
                                        ------------     ------------     ------------     ------------

Income before
 income taxes                                508,234          787,784        1,879,559        2,625,682

Provision for
 income taxes                                169,251          283,603          697,803          943,075
                                        ------------     ------------     ------------     ------------

Net income                              $    338,983     $    504,181     $  1,181,756     $  1,682,607
                                        ============     ============     ============     ============


Basic and diluted
 earnings per share                     $        .07     $        .12     $        .25     $        .39
                                        ============     ============     ============     ============

Shares outstanding
 assuming dilution                         4,622,323        4,369,066        4,699,142        4,368,178
                                        ============     ============     ============     ============
</TABLE>

                       SEE ACCOMPANYING NOTES TO CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS

                                       3

<PAGE>   4


                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                     ASSETS


<TABLE>
<CAPTION>
                                                         December 31,
                                          June 30,           1997
                                            1997          (Unaudited)
                                        ------------     ------------
<S>                                     <C>              <C>         
Current assets:
  Cash                                  $    615,173     $    382,477
  Accounts receivable - trade,
    net of allowance                       7,599,775        6,055,088
  Inventory                               10,925,342       10,369,999
  Prepaid expenses and other
   current assets                          1,290,503        1,282,668
                                        ------------     ------------

   Total current assets                   20,430,793       18,090,232
                                        ------------     ------------


Property and equipment, net                9,531,403        9,405,061
                                        ------------     ------------

Other assets:
  Goodwill, net                              171,571          143,749
  Other assets                               143,913          108,332
                                        ------------     ------------

         Total other assets                  315,484          252,081
                                        ------------     ------------

                                        $ 30,277,680     $ 27,747,374
                                        ============     ============
</TABLE>

                       SEE ACCOMPANYING NOTES TO CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS

                                       4

<PAGE>   5


                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                              December 31,
                                              June 30,           1997
                                                1997          (Unaudited)
                                            ------------      ------------
<S>                                         <C>               <C>         
Current liabilities:
  Note payable, facility -
   current portion                          $    529,872      $    595,713
  Revolving line of credit                    10,000,000         7,000,000
  Accounts payable - trade and
   commissions                                   510,007           410,617
  Income taxes payable                           204,191            11,003
  Other accrued liabilities                      243,410           483,429
                                            ------------      ------------

         Total current liabilities            11,487,480         8,500,762

  Note payable, facility -
   long term portion                           7,989,259         7,152,064
   Other liabilities                              81,205            81,205
                                            ------------      ------------

   Total liabilities                          19,557,944        15,734,031
                                            ------------      ------------

Shareholders' equity:
 Series A cumulative, convertible,
  callable preferred stock, $1.00
  par value, 2,000,000 shares
  authorized; 32,000 shares issued                32,000            32,000
 Common stock, $.01 par value,
   15,000,000 shares authorized,
   6,166,024.5 and 4,110,683 shares
   issued as of December 31, 1997
   and June 30, 1997, respectively                41,107            61,660
Additional paid-in capital                     7,095,571         7,075,018
Retained earnings                             11,186,507        12,724,114
                                            ------------      ------------
                                              18,355,185        19,892,792

 Less:  treasury stock, 1,816,024.5 and
   1,178,683 common shares at cost as
   of December 31, 1997 and June 30,
   1997, respectively, and 32,000
   preferred shares at cost                   (7,635,449)       (7,879,449)
                                            ------------      ------------

         Total shareholders' equity           10,719,736        12,013,343
                                            ------------      ------------

                                            $ 30,277,680      $ 27,747,374
                                            ============      ============
</TABLE>


                       SEE ACCOMPANYING NOTES TO CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS

                                       5

<PAGE>   6

                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                   FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                         Voting
                                      Common Stock            Series A    Additional                     Treasury
                                -------------------------    Preferred      Paid-In       Retained         Stock
                                  Shares        Amount         Stock        Capital       Earnings        Amount         Total
                                -----------   -----------   -----------   -----------    -----------    -----------    -----------
<S>                             <C>           <C>           <C>           <C>            <C>            <C>            <C>        
Balance as of June 30, 1997     4,110,683.0   $    41,107   $    32,000   $ 7,095,571    $11,186,507    ($7,635,449)   $10,719,736

Stock Repurchase                         --            --            --            --             --       (244,000)      (244,000)

Cash Dividends                           --            --            --            --       (145,000)            --       (145,000)

Stock Split                     2,055,341.5        20,553            --       (20,553)            --             --             --

Net Income for the six months
ended December 31, 1997                  --            --            --            --      1,682,607             --      1,682,607
                                -----------   -----------   -----------   -----------    -----------    -----------    -----------

                                6,166,024.5   $    61,660   $    32,000   $ 7,075,018    $12,724,114    ($7,879,449)   $12,013,343
                                ===========   ===========   ===========   ===========    ===========    ===========    ===========
</TABLE>

     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       6

<PAGE>   7


                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                    FOR THE SIX MONTHS ENDED
                                                 ------------------------------
                                                 December 31,      December 31,
                                                     1996              1997
                                                 ------------      ------------
<S>                                              <C>               <C>         
Net cash provided by
  operating activities                           $    166,450      $  3,961,072
                                                 ------------      ------------


Cash flows from investing activities:
  Net additions to equipment                          (93,906)          (33,414)
                                                 ------------      ------------

  Net cash used in investing activities               (93,906)          (33,414)
                                                 ------------      ------------

Cash flows from financing activities:
  Principal payments for
  Note payable, facility                             (239,383)         (771,354)
  Stock repurchase                                 (1,369,614)         (244,000)
  Net proceeds from (principal payments for)
  revolving line of credit                          1,300,000        (3,000,000)
  Cash dividends                                      (61,434)         (145,000)
                                                 ------------      ------------
  Net cash used for
    financing activities                             (370,431)       (4,160,354)
                                                 ------------      ------------

 Net decrease in cash                                (297,887)         (232,696)
 Cash at beginning of year                            663,057           615,173
                                                 ------------      ------------

 Cash at end of period                           $    365,170      $    382,477
                                                 ============      ============
</TABLE>


Supplemental disclosures of cash flow information:

<TABLE>
<CAPTION>
                                                    FOR THE SIX MONTHS ENDED
                                                 ------------------------------
                                                 December 31,      December 31,
                                                     1996              1997
                                                 ------------      ------------
<S>                                              <C>               <C>         
Cash paid during the period for:
  Interest                                       $    648,469      $    667,722
                                                 ============      ============

  Income taxes                                   $    713,410      $  1,136,263
                                                 ============      ============
</TABLE>


                       SEE ACCOMPANYING NOTES TO CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS

                                       7

<PAGE>   8


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                        OF CRAFTMADE INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                                December 31, 1997
                                   (Unaudited)


Note 1 - BASIS OF PREPARATION AND PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
and include all adjustments which are, in the opinion of management, necessary
for a fair presentation. The condensed consolidated financial statements include
the accounts of the Company and its subsidiaries. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The Company believes that the
disclosures are adequate to make the information presented not misleading;
however, it is suggested that these financial statements be read in conjunction
with the financial statements and the notes thereto which are incorporated by
reference in the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1997. The financial data for the interim periods may not necessarily be
indicative of results to be expected for the year.


Note 2 - EARNINGS PER SHARE

During the three months ended December 31, 1997, the Company adopted Statement
of Financial Accounting Standards No. 128, Earnings Per Share. This statement
requires interim and annual presentation of basic and diluted earnings per share
("EPS") by all entities that have issued common stock or potential common stock
if those securities are traded in a public market. The objective of basic and
diluted EPS is to measure the performance of an entity over the reporting period
while giving effect to the dilutive potential of all common shares that were
outstanding during the period. This statement also requires a reconciliation of
the numerator and denominator of the diluted EPS computation. EPS data for the
period ended December 31, 1997 and all prior periods have been restated to
conform with the provisions of this statement.

                                       8

<PAGE>   9

The following is a reconciliation of the numerator and denominator used in the
basic and diluted EPS calculation:

<TABLE>
<CAPTION>
                    FOR THE THREE MONTHS ENDED       FOR THE SIX MONTHS ENDED
                   ----------------------------    ----------------------------
                   December 31,    December 31,    December 31,    December 31,
                       1996            1997            1996            1997
                   ------------    ------------    ------------    ------------
<S>                <C>             <C>             <C>             <C>         
Basic EPS
Numerator          $    338,983    $    504,181    $  1,181,756    $  1,682,607
                   ------------    ------------    ------------    ------------

Denominator:
Common Shares
Outstanding           4,612,311       4,350,000       4,688,630       4,350,261
                   ------------    ------------    ------------    ------------

Basic EPS          $        .07    $        .12    $        .25    $        .39
                   ============    ============    ============    ============

Diluted EPS:
Numerator          $    338,983    $    504,181    $  1,181,756    $  1,682,607
                   ------------    ------------    ------------    ------------

Denominator:
Common Shares                                                                  
Outstanding           4,612,311       4,350,000       4,688,630       4,350,261
Options                  10,012          19,066          10,512          17,917
                   ------------    ------------    ------------    ------------
Total Shares          4,622,323       4,369,066       4,699,142       4,368,178
                   ============    ============    ============    ============

Diluted EPS        $        .07    $        .12    $        .25    $        .39
                   ============    ============    ============    ============
</TABLE>


Note 3 - STOCK SPLIT

On September 26, 1997, the Board of Directors declared a three-for-two split of
the Company's Common Stock effected in the form of a 50% stock dividend. New
shares were issued November 15, 1997 to holders of record as of the close of
business on October 31, 1997. Common Stock issued, additional paid-in capital
and treasury stock as of December 31, 1997 have been adjusted to reflect the
stock split. In addition, earnings per share and weighted average share data for
the three and six months ended December 31, 1996 have been restated to reflect
the stock split.


Note 4 - CONTINGENCIES

The lamp division is currently pursuing an aggressive strategy of inventory
reduction through select "seconds" retailers and overhead reduction. The
Company's management believes that this process will be completed by June 1998.
Management will continue to closely monitor this division and its financial
results to determine the feasibility of this division continuing as a
single-customer manufacturer with limited overhead or the dissolution of this
division. At the current time, management believes that the continued reduction
of inventory can be accomplished without material charges against earnings.

                                       9

<PAGE>   10

ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS.

Cautionary Statement

With the exception of historical information, the matters discussed under
"Results of Operations" and "Liquidity and Capital Resources" contain
forward-looking statements. There are certain important factors that could cause
actual results to differ materially from those anticipated by some of the
forward-looking statements. Some of these factors include, among other things,
changes in anticipated levels of sales, whether due to future national or
regional economic conditions or competitive conditions, changes in 
relationships with customers including, but not limited to, the lamp division's 
relationship with its major customer, customer acceptance of existing and new 
products, pricing pressures due to excess capacity, raw material cost 
increases, changes in tax rates, changes in interest rates, unfavorable 
political or economic developments in the Republic of Taiwan, the location of 
the Company's principal vendor, declining conditions in the home construction 
industry, and other uncertainties, all of which are difficult to predict and 
many of which are beyond the control of the Company.

Results of Operations

Net sales increased $132,730, or 1.5%, for the three months ended December 31,
1997 to $9,005,351, up from $8,872,621 for the same period last year. For the
six months ended December 31, 1997, net sales were $20,537,453, an increase of
$881,962, or 4.5%, from sales of $19,655,491 for the same six month period last
year. These increases were primarily the result of the success of the bathstrip
product line introduced in January 1997. Fan sales during the three months ended
December 31, 1997 were relatively consistent with fan sales for the same three
month period last year due to fewer available shipping days during this period
compared to last year. The Company's management anticipates that the fan
division's current marketing strategy of selective expansion of its distribution
base and new product introductions will yield strong growth consistent with
prior years, provided that new home construction does not experience a downturn
similar to 1995. In addition, the Company's management anticipates that the
bathstrip lighting product line will continue to provide an immediate impact to
sales growth since it complements the fan division's product lines and utilizes
the same distribution network and independent sales force that currently exists
within the fan division. Lamp sales decreased $57,000 for the six months ended
December 31, 1997 compared with the same six month period last year because
orders have failed to recover from the internal restructuring of the lamp
division's primary customer. This division is currently pursuing an aggressive
strategy of inventory reduction through select "seconds" retailers and overhead
reduction. The Company's management anticipates that the inventory reduction and
overhead reduction

                                       10

<PAGE>   11
process will be completed by June 1998. Management will continue to closely
monitor this division and its financial results to determine the feasibility of
continuing this division as a single-customer manufacturer with limited 
overhead or dissolving this division. At the current time, management believes 
that the continued reduction of inventory can be accomplished without material 
charges against earnings.

Gross profit for the three month period ended December 31 increased to
$3,572,586, or 39.7% of sales, in 1997 from $3,276,632, or 36.9% of sales, in
1996. For the six month period ended December 31, gross profit increased to
$8,165,135, or 39.8% of sales, in 1997 from $7,239,818, or 36.8% of sales, in
1996. These increases were primarily attributable to price concessions received 
from the Company's overseas supplier and an increase in demand for the fan 
division's higher end product line. The Company's management anticipates that 
gross margins will continue to improve, provided that the Company continues to 
benefit from favorable product costs and increasing customer demand and that
the aggressive inventory reduction of the lamp division does not adversely
affect overall Company margins.

Total selling, general and administrative expenses increased $44,849 to
$2,380,552, or 26.4% of sales, for the three months ended December 31, 1997,
compared to $2,335,703, or 26.3% of sales, for the same three month period last
year. Total selling, general and administrative expenses increased $164,833 to
$4,682,606, or 22.8% of sales, for the six months ended December 31, 1997,
compared to $4,517,773, or 23.0% of sales, for the same six month period last
year. These increases were primarily attributable to increases in sales
commissions and certain other costs directly correlated to sales. The Company's
management anticipates that, in the future, selling, general and administrative
expenses as a percentage of net sales will remain fairly constant due to the
relatively fixed nature of the majority of the Company's overhead expenses.

Net interest expense decreased $24,550, to $310,336 for the three months ended
December 31, 1997 from $334,886 for the same three month period in 1996. For the
six months ended December 31, 1997, interest expense was $667,722, an increase
of $19,253 from interest expense of $648,469 for the same six month period last
year. During the six months ended December 31, 1997, the Company utilized excess
cash flow to decrease the outstanding balance on its line of credit by
$3,000,000 and to pay down its facility note payable by an additional $500,000.
The Company's management intends to continue this strategy of debt reduction as
excess cash flow is available.

                                       11

<PAGE>   12

Liquidity and Capital Resources

The Company's cash decreased $232,696, from $615,173 at June 30, 1997 to
$382,477 at December 31, 1997. The Company's operating activities provided cash
of $3,961,072. The primary sources of the cash were improved operations and
decreases in accounts receivable and inventory.

The $33,414 of cash used for investing activities related to the purchase of
general warehouse and office equipment.

The $4,160,354 of cash used for financing activities was primarily the result of
the paydown of $3,000,000 on the Company's line of credit, principal payments of
$771,354 made towards the facility note and the repurchase of 32,000 shares of
the Company's common stock at an aggregate cost of $244,000.

At December 31, 1997, subject to continued compliance with certain covenants and
restrictions, the Company had an additional $5,000,000 available on its
$12,000,000 line of credit. The Company's management believes that its current
line of credit, combined with cash flows from operations, is adequate to fund
the Company's current operating needs, annual payments under the facility note
payable approximating $1,400,000 and its projected growth over the next twelve
months. In addition, the Company has begun to utilize excess cash flow to reduce
outstanding indebtedness, decreasing such indebtedness by an additional
$3,500,000 during the six months ended December 31, 1997. It is management's
intention to continue this strategy of debt reduction as excess cash flow is
made available.

The Company has elected to discontinue its stock repurchase program. Pursuant to
this program, the Company had purchased a total of 601,269 shares of the
Company's Common Stock prior to the Company's three-for-two stock split
effective October 31, 1997, at an aggregate cost of $4,576,623.

At December 31, 1997, $7,747,777 remained outstanding under the twelve year note
payable for the Company's 378,000 square foot operating facility. The Company
continues to lease 80,000 square feet of this facility to an unrelated party at
a lease rate of $20,000 per month, expiring December 1998. The Company's
management believes that this facility will be sufficient for its purpose for
the foreseeable future.

The year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business

                                       12

<PAGE>   13
 activities. The Company has purchased the upgrade for its current software to
resolve this issue, the cost of which was not significant, and plans to
implement this upgrade within the next twelve months. The Company also plans to
upgrade systems as needed that will already be year 2000 compliant. The Company
will investigate its customers and suppliers within the next twelve months in
order to insure that their year 2000 issues will not affect the Company's
operations.

                                       13

<PAGE>   14

                                     PART II

                                OTHER INFORMATION

Item 1.  Legal Proceedings

         not applicable

Item 2.  Changes in Securities

         not applicable

Item 3.  Defaults Upon Senior Securities

         not applicable

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

         not applicable

Item 5.  Other Information

         not applicable

Item 6.  Exhibits and Reports of Form 8-K

         a).      Exhibits
                  27       Financial Data Schedule

         b).      Reports on Form 8-K
                  none

                                       14

<PAGE>   15


                                    SIGNATURE

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

                                       CRAFTMADE INTERNATIONAL, INC.
                                                (Registrant)



Date January 9, 1998                       /s/ JAMES R. RIDINGS
     --------------------------        ------------------------------------
                                               JAMES R. RIDINGS
                                              President and Chief
                                               Executive Officer


                                       15
<PAGE>   16

                               INDEX TO EXHIBITS

EXHIBIT
NUMBER            DESCRIPTION
------            -----------

  27              Financial Data Schedule