UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q



(Mark One)

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

For the quarterly period ended August 31, 1997
                                       OR

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

For the transition period from ________ to ___________

                         Commission file number: 0-1460


                              ANDERSEN GROUP, INC.

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

                             CONNECTICUT 06-0659863

                    (Address of Principal Executive Offices)
                1280 Blue Hills Avenue, Bloomfield, CT 06002-1374
                                                  (860) 242-0761





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 ____

There were  1,934,478  shares of the  Registrants  Common  Stock,  no par value,
outstanding as of October 15, 1997.




<PAGE>


                              ANDERSEN GROUP, INC.
                                    FORM 10-Q

                                TABLE OF CONTENTS


                                                                      Page No.

Part I - Financial Information

   Item 1   Financial Statements:
        Consolidated Balance Sheets
                  August 31, 1997 and February 28, 1997                      3

         Consolidated Statements of Operations for the
                  Three and Six months Ended August 31, 1997 and 1996        4

         Consolidated Statements of Cash Flows for the
                  Six months Ended August 31, 1997 and 1996                  5

         Notes to Consolidated Financial Statements                          6

         Managements Discussion and Analysis of
                  Financial Condition and Results of Operations              7



Part II - Other Information



         Item 1 - Legal Proceedings                                          9

         Item 3 - Defaults Upon Senior Securities                           10

         Item 4 - Submission of Matters to a Vote of Security Holders       11

         Item 6 - Exhibits and Reports on Form 8-K                          11

         Signatures                                                         1
<PAGE>

Part I.  Financial Information

Item 1.  Financial Statements




                              ANDERSEN GROUP, INC.
                           Consolidated Balance Sheets
                                 (In thousands)

<TABLE>
<CAPTION>                                                                               August 31,1997          February 28, 1997
ASSETS                                                                        (Unaudited)

<S>                                                                                     <C>                       <C>
                                                                                       
Current assets:
 Cash and cash equivalents                                                        $ 2,673                   $ 3,219
 Marketable securities                                                             10,267                     5,345
 Accounts and other receivables less
  allowances of $232 and $190                                                       3,450                     2,773
 Inventories                                                                        9,080                     9,040
 Prepaid expenses and other assets                                                    160                       516
                                                                                 --------                  --------
   Total current assets                                                            25,630                    20,893
                                                                                 --------                  --------

Property, plant and equipment                                                      21,954                    20,946
Accumulated depreciation                                                          (12,315)                  (11,610)
                                                                                 --------                  --------
Property, plant and equipment, net                                                  9,639                     9,336
                                                                                 --------                  --------

Prepaid pension expense                                                             4,420                     4,274
Investment in Digital GraphiX                                                         165                     1,346
Investment in Institute for Automated Systems                                         890                       835
Other assets                                                                        1,565                       993
                                                                                 --------                  --------

                                                                                 $ 42,309                  $ 37,677
                                                                                 ========                  ========

LIABILITIES, REDEEMABLE  CONVERTIBLE PREFERRED
 STOCK AND COMMON AND OTHER STOCKHOLDERS EQUITY
Current liabilities:
 Current maturities of long-term debt                                             $   478                   $   773
 Short-term debt                                                                    3,408                     2,305
 Accounts payable                                                                   1,313                     1,398
 Deferred income taxes                                                                  1,592                   564
 Other current liabilities                                                          4,176                     3,670
                                                                                  -------                   -------
   Total current liabilities                                                       10,967                     8,710
                                                                                  -------                   -------

Commitments and contingencies (Note 7)

Long-term debt, less current maturities                                             6,877                     7,041
Other long-term obligations                                                         1,635                     1,121
Deferred income taxes                                                               2,252                     2,267

Redeemable cumulative convertible preferred
  stock                                                                             4,750                     4,891
                                                                                    -----                     -----
Common and other stockholders equity:
 Common stock                                                                       2,103                     2,103
 Additional paid-in capital                                                         3,248                     3,248
 Retained earnings                                                                 10,567                     8,386
 Treasury stock                                                                       (90)                      (90)
                                                                                 --------                  --------
   Total common and other stockholders equity                                     15,828                    13,647
                                                                                --------                  --------

                                                                                 $ 42,309                  $ 37,677
                                                                                 ========                  ========

</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>

                              ANDERSEN GROUP, INC.
                      Consolidated Statements of Operations
                      (In thousands, except per share data)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                          Three-months ended August 31,                 Six-months ended August 31,
                                               1997                 1996                     1997                 1996
<S>                                       <C>                   <C>                     <C>                   <C>
Sales and revenues:
 Net sales                                  $ 6,896              $ 5,944                  $14,364              $13,333
 Investment and other
  income (loss)                               3,728                 (402)                   4,018                  259
                                            -------              ------- -                -------              -------
                                             10,624                5,542                   18,382               13,592
                                            -------              -------                  -------              -------

Costs and expenses:
 Cost of sales                                4,416                3,936                    9,219                8,592
 Selling, general and
  administrative                              2,014                1,662                    3,891                3,466
 Research and development                       403                  364                      820                  725
 Interest expense                               261                  203                      489                  401
                                            -------              -------                  -------              -------
                                              7,094                6,165                   14,419               13,184
                                            -------              -------                  -------              -------
Income (loss) before
 Income taxes                                 3,530                 (623)                   3,963                  408

 income taxes                                 3,530                 (623)                   3,963                  408
Income tax (expense)
 Benefit                                     (1,419)                 249                   (1,585)                (163)
                                            -------              -------                  --------             -------
 benefit                                     (1,419)                 249                   (1,585)                (163)
                                            -------              -------                  -------              -------
Net income (loss)                             2,111                 (374)                   2,378                  245
Reversal of
preferred                                        37                    -                       37                    -
 dividends
Preferred dividend                             (108)                (100)                    (234)                (242)
                                            -------              -------                  -------              -------
 requirement

Income (loss) applicable
 to common shares                            $2,040                ($474)                  $2,181                   $3
                                            =========            =======                  =======              =======

Earnings (loss) per common Share:
 Primary                                     $ 1.04               ($0.25)                   $1.12                $0.00
                                           --------              -------                  -------             --------

 Fully diluted                               $ 0.79               ($0.25)                   $0.91                $0.00
                                            =======              =======                  =======              =======

Weighted average common
 and common equivalent
 shares outstanding                       1,956,734            1,946,051                1,953,445            1,946,051


</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>






                              ANDERSEN GROUP, INC.
                      Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                               Six-months ended August 31,
                                                                                   1997                   1996

<S>                                                                             <C>                       <C>
Cash flows from operating activities:
Net income                                                                       $2,378                    $245
Adjustments to reconcile net income
 to net cash provided by (used for) operating
 activities:
   Depreciation, amortization and accretion                                         773                     734
   Deferred income taxes                                                          1,013                     (83)
   Pension income                                                                  (146)                   (124)
   Net realized and unrealized gains from
     marketable securities and investments                                       (3,603)                     92
   Purchases of marketable securities                                            (1,467)                 (1,124)
   Sales of marketable securities                                                     -                     506
Changes in operating assets and liabilities:
   Accounts and notes receivable                                                   (677)                    436
   Inventories                                                                      (40)                  1,530
   Prepaid expenses and other assets                                                342                      (1)
   Accounts payable                                                                (263)                 (2,315)
   Accrued expenses and other long-term
    obligations                                                                     445                     (88)
                                                                                 ------                 -------

   Net cash used for operating activities                                        (1,245)                   (192)
                                                                                 ------                 -------

Cash flows from investing activities:
   Purchase of property and equipment                                            (1,059)                   (797)
   Proceeds from sale of property, plant
    and equipment                                                                     -                      25
   Investments in other assets                                                      (55)                   (297)
   Proceeds from collection of long-term
     investments                                                                  1,329                       -
                                                                                 ------                --------

   Net cash provided by (used for) investing
     activities                                                                     215               (1,069)
     ----------                                                                     ---               -------



Cash flows from financing activities:
   Principal payments on long-term debt                                            (459)                   (157)
   Issuance of short-term debt, net                                                                           -
                                                                                  1,103
   Redemption of preferred stock                                                   (160)                      -
   Capitalized lease obligations incurred                                             -                     210
                                                                                -------                 -------

   Net cash provided by financing activities                                        484                      53
                                                                                ---------               -------

   Net decrease in cash and cash equivalents                                       (546)                 (1,208)
   Cash and cash equivalents - beginning of
    period                                                                        3,219                   4,116
                                                                                -------                 -------

   Cash and cash equivalents - end of period                                     $2,673                 $ 2,908
                                                                                =======                 =======
</TABLE>

See accompanying notes to consolidated financial statements.



<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)      Accounting Policies

The accompanying  interim  consolidated  financial  statements and related notes
should be read in  conjunction  with the  Consolidated  Financial  Statements of
Andersen Group, Inc. and related notes as contained in the Annual Report on Form
10-K for the  fiscal  year  ended  February  28,  1997.  The  interim  financial
statements  include  all  adjustments   (consisting  only  of  normal  recurring
adjustments)  and accruals  necessary in the judgment of  management  for a fair
presentation of such statements.

(2)      Marketable Securities

During the  fourth  quarter of the prior  fiscal  year and the six months  ended
August 31, 1997,  the Company  invested a total of  $1,450,000 in a portfolio of
Russian  equity  securities  managed by a third party  investment  advisor.  The
reported market value of these  securities at August 31, 1997 was  approximately
$5,098,000.  However,  due to concerns  regarding the  volatility of the Russian
securities  market  and  liquidity  issues,   the  Company  has  recorded  these
investments  net of a  reserve,  of  $1,020,000,  for a net  carrying  value  of
approximately $4,078,000.  Accordingly,  the Company recognized net appreciation
on this portfolio of $2,558,000 and $2,628,000,  respectively, for the three and
six months ended August 31, 1997. This reserve,  which was increased by $418,000
during the three months ended  August 31, 1997,  will be evaluated  periodically
and  adjusted  based  upon  an  assessment  of the  market  conditions  and  the
composition of the investments within the portfolio.

(3)      Inventories

Inventories consisted of the following:
<TABLE>
<CAPTION>

                                                                       (In thousands)
                                                        August 31,             February 28,
                                                             1997                   1997
                                                        ---------              ---------
         <S>                                           <C>                    <C>
         Raw materials                                  $   1,959              $  3,111
         Work in process                                    4,203                 3,877
         Finished goods                                     3,821                 2,955
                                                        ---------              --------
                                                            9,983                 9,943
         LIFO Reserve                                        (903)                 (903)
                                                        ---------             ---------
                                                        $   9,080              $  9,040
                                                        =========              ========
</TABLE>

(4)      Income Taxes

Income tax (expense) benefit  represents an estimate of the effective income tax
rate for the current fiscal year.

(5)      Dividends

The Companys Redeemable  Cumulative  Convertible  Preferred Stock (the Preferred
Stock) is entitled to accrue quarterly  dividends  ranging from $.1875 to $.4375
per share, based upon the consolidated operating income (as defined) of The J.M.
Ney Company (Ney), a wholly-owned subsidiary of the Company. Due to restrictions
in the Companys debt covenants as discussed below, no dividends were declared on
the  Preferred  Stock during the three and  six-month  periods  ended August 31,
1997,  although  they were  accrued at rates of $0.3763  and  $0.8138 per share,
respectively.

Under the terms of the Companys 10 1/2% Convertible Subordinated Debentures, the
Company has been  restricted  from paying  dividends on its capital  stock since
April 1993 and will  continue to be  restricted  until such time as the Companys
cumulative  consolidated earnings, as defined, reach specified amounts.  Through
August 31, 1997,  approximately  $1,112,000 has been accrued for this arrearage.
(For further information  concerning the Companys ability to pay dividends on or
purchase or redeem its capital  stock see the  Liquidity  and Capital  Resources
section of  Managements  Discussion  and  Analysis of  Financial  Condition  and
Results  of  Operations,  and  also  Part  II,  Item 3 -  Defaults  Upon  Senior
Securities).

(6)      Earnings Per Share

Earnings per share is computed  based on the weighted  average  number of common
and common  equivalent shares  outstanding.  Fully diluted net income (loss) per
share assumes full conversion of all convertible securities into common stock at
the  later  of  the   beginning  of  the  year  or  date  of  issuance,   unless
anti-dilutive.  (For the  current  fiscal  year,  see  Exhibit 11  Statement  re
Computation  of Per Share  Earnings).  The effects of the assumed  conversion of
convertible securities was anti-dilutive in the prior fiscal year.

In February 1997, the Financial  Accounting  Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share (SFAS 128), effective
for periods  ending after  December 15, 1997.  This  statement  will replace the
presentation  of primary  earnings  per share  (EPS)  with basic EPS,  and fully
diluted EPS with diluted EPS. For the three and  six-month  periods ended August
31, 1997,  basic EPS would have been  unchanged  from that which is presented as
primary  EPS and  diluted  EPS would  have  been  unchanged  from that  which is
presented as fully diluted EPS.

(7)      Contingencies

Ney is contingently  liable under a $500,000  standby letter of credit issued by
its primary lending bank.

Item 2.  Managements Discussion and Analysis of Financial Condition and Results
         of Operations

For the three  months ended  August 31,  1997,  the Company  recorded net income
applicable to common shareholders of $2,040,000 or $1.04 per share, primary, and
$0.79 per share,  fully diluted,  as compared to a net loss of $474,000 or $0.25
per share for the comparable quarter in the prior fiscal year.

For the six months  ended  August 31,  1997,  the  Company  recorded  net income
applicable  to common shares of  $2,181,000,  or $1.12 per share,  primary,  and
$0.91 per share,  fully  diluted.  This compares  with net income of $3,000,  or
$0.00 per share for the six months ended August 31, 1996.

REVENUES
Revenues for the three months ended August 31, 1997 totaled $10,624,000 which is
a 91.7%  increase  from the revenues  reported for the prior fiscal years second
quarter.  This increase  represents the combination of a 16.0% increase in sales
and an increase of $4,130,000 in investment and other income (loss). Through the
six-month  period ended August 31, 1997,  revenues  totaled  $18,382,000,  or an
increase  of 35.2%  over the  prior  years  comparable  six-month  total.  Sales
increases of 7.7% and an increase of $3,759,000  in investment  and other income
produced the year-over-year revenue growth.

During the three months ended August 31, 1997, the Company recorded  significant
income related to realized and unrealized  investment  gains from a portfolio of
Russian securities.  For the three and six-month periods then ended,  $2,558,000
and $2,628,000, respectively of such gains were recorded, although an additional
$418,000 and $1,020,000, respectively, were deferred from recognition to provide
a valuation  allowance to account for  volatility  and  liquidity  concerns.  At
August 31, 1997, the portfolio of Russian investments was recorded at a carrying
value of $4,078,000, net of the aforementioned $1,020,000 valuation allowance.

Additionally,  increases  in  unrealized  gains from a portfolio of common stock
primarily comprised of financial institutions,  produced increases in unrealized
gains of  $803,000  and  $812,000,  respectively,  for the three  and  six-month
periods  ended August 31, 1997.  In the prior  fiscal  year,  these  investments
produced  investment  gains of $48,000 and  $126,000,  respectively,  during the
comparable three and six-month periods.  During the prior fiscal years first six
months,  the Company also  recorded a $400,000  mark down in the market value of
its common stock investment in Phoenix Shannon,  p.l.c. This entire  investment,
along with a $1 million note receivable  from Phoenix  Shannon was  subsequently
written off in their entirety in the third quarter of the prior fiscal year.

<PAGE>
Sales from the Companys operating  subsidiaries,  The J. M. Ney Company (J. M.
Ney) and Ney Ultrasonics Inc., (Ney Ultrasonics) increased by 16.0% and 7.7%,
respectively,  during the three and six-month periods ended August 31, 1997 over
comparable periods in the prior fiscal year. The sales growth reflects three and
six-month growth rates for J. M. Ney of 8.5% and 4.1%, respectively,  and growth
of 66.6% and 27.1%, respectively,  for Ney Ultrasonics.  The continued expansion
of J. M. Neys manufacturing platform has supported growth in a few key customer
relationships.  Ney Ultrasonics  continues to experience  sales growth as future
evidence of market acceptance of its products. At August 31, 1997, sales backlog
for this division was a record $2.1 million.

COST OF SALES
Cost of sales for the three  months ended  August 31, 1997  reflects  margins of
35.9% versus margins for the prior years second  quarter of 33.8%.  Year-to-date
margins are 35.8%, versus 35.6% for the first half of the prior fiscal year. The
short-term  impact of rapid  increases  in the costs of  palladium  and platinum
during the six months  ended  August 31, 1997 had the effect of reducing  margin
improvements that would have been otherwise more significant.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
---------------------------------------------
Selling,  general and administrative  costs during the three months ended August
31, 1997,  were  $352,000 or 21.2%  greater than the costs  incurred  during the
comparable period in the prior fiscal year. Year-to-date,such costs are $425,000
or 12.3%  greater  than the prior  fiscal  years  first half  totals.  Increased
personnel recruitment expenses,  costs relating to a new software implementation
process and increased  costs at Ney  Ultrasonics  due to staff  additions,  have
contributed to these expenses  increasing at a rate greater than the increase in
sales.

RESEARCH  AND   DEVELOPMENT   EXPENSES
--------------------------------------
Research and development costs increased 10.7% and 13.1%,  respectively,  during
the three-month and six-month  periods ended August 31, 1997 over the comparable
periods in the prior fiscal year.  Such increases  primarily  reflect  increased
sales activity and the continued commitment to support future sales growth.

INTEREST EXPENSE
Interest expense during the three months ended August 31, 1997 totaled $261,000,
or 28.6% greater than  interest  expense  incurred in the second  quarter of the
prior fiscal year. For the six-month  period ended August 31, 1997, the increase
in interest  expense  over the prior year  totaled  $88,000 or 21.9%.  Increased
borrowings at J. M. Ney to support facility expansion and capital  expenditures,
as well as significant  increases in the borrowing  rates related to a financing
program for palladium and platinum,  offset the lower interest costs  associated
with the reduction of the  outstanding  principal  amount of the Companys  10.5%
Convertible Subordinated Debentures.  Although borrowing rates for palladium and
platinum  have  come down from peak  levels  noted in June and July  1997,  they
remain at high levels of  approximately  20% per annum.  J. M. Ney utilizes such
programs  primarily  to  hedge  its  exposure  on its  precious  metal  refining
activities,  and has instituted  additional  charges to its customers to reflect
these market conditions.

INCOME  TAXES
-------------
Income  taxes  have been  accrued  at rates  which the  Company  estimates  will
approximate  its  effective  income tax rate for the year.  Estimates  of timing
differences  between financial reporting and income tax reporting have been made
and reflected in changes to the deferred income tax liability accounts.

PREFERRED DIVIDENDS
Preferred dividends,  including the amortization of issuance discounts,  totaled
$108,000 for the quarter  ended August 31, 1997,  versus  $100,000 for the prior
years  second  fiscal  quarter.  This  increase  reflects  the  net of  improved
operating  income  of J. M.  Ney and Ney  Ultrasonics,  on  which  the  dividend
calculation is based, and fewer preferred shares  outstanding,  due to purchases
of Preferred  Stock in both the fourth  quarter of the prior fiscal year and the
quarter ended August 31, 1997.

Such dividends  total $234,000 for the six months ended August 31, 1997,  versus
$242,000 for the first six months of the prior fiscal year.  Per share  dividend
accruals have increased from  approximately  $0.733 per preferred  share for the
six months ended August 31, 1996 to approximately  $0.814 for the current fiscal
years  first six  months,  however,  fewer  outstanding  preferred  shares  have
resulted in the lower accrual.

During the quarter  ended  August 31,  1997,  the Company  purchased  8,744
shares of the  preferred  stock  resulting in a reversal of  previously  accrued
dividends and accreted discounts of $37,000.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

At  August  31,  1997,  the  Companys  cash,  cash  equivalents  and  marketable
securities  totaled  $12,940,000,  an  increase  of  51.1%  over  the  total  of
$8,564,000  recorded at February 28, 1997.  The increase is primarily the result
of  $2,628,000  of  recorded  appreciation  of  securities  within the  Companys
investment  portfolio of securities of Russian companies.  This appreciation has
been  recorded net of a valuation  reserve of  $1,020,000 at August 31, 1997. At
August 31,  1997,  the net carrying  value of the Russian  stock  portfolio  was
$4,078,000,   while  a  portfolio  of  financial   institutions  was  valued  at
$4,439,000.  In addition,  appreciation  totaling  $812,000 in other  securities
within the Companys short term investment portfolio,  which includes investments
in financial  institutions  and in the common stock of Centennial  Cellular (the
purchaser  of  the  Companys  former  cellular  operations)  contributed  to the
increase in marketable  securities  investments.  Additional  liquidity was also
generated  from the receipt of an initial  liquidating  dividend  and  principal
payments on a note  receivable from Digital  GraphiX,  which is now in the final
stages of its liquidation.

During the first six months of the current fiscal year, the Company  repurchased
$300,000 principal amount of its 10.5% Convertible Subordinated Debentures,  and
subsequent  to August 31, 1997,  purchased  an  additional  $266,0000  principal
amount of such notes.  Accordingly,  the sinking fund  requirements of the issue
have been  fulfilled for the current  fiscal year,  and a credit of $109,000 has
been generated towards next years requirement of $834,000.

The Company  believes that, in addition to  availability  under a line of credit
between its  primary  subsidiary,  J. M. Ney,  and a  commercial  bank and under
available lease lines,  funds from operations and sales of existing  investments
will be  sufficient  to meet its  anticipated  working  capital and debt service
requirements for the foreseeable future.

The indenture relating to the Companys 10.5% Convertible Subordinated Debentures
contains a covenant  restricting the payment of dividends,  on or repurchases or
redemptions  of the Companys  capital  stock.  As the result of preferred  stock
repurchases  and losses  incurred  in recent  years,  the  Company is  currently
prohibited  by such  covenant  (except as provided by a Capital  Stock  Purchase
Program,  which has been  approved  by a  majority  in  principal  amount of the
non-affiliated  bondholders,  that solely  permits the Company to purchase up to
$6.0 million of capital stock) from making such payments on the Preferred  Stock
or the Common Stock until such time as the sum of (i) the  aggregate  cumulative
consolidated  net income;  (ii) the aggregate net cash proceeds  received by the
Company  from  sales of shares  of its  capital  stock  for cash;  and (iii) the
aggregate net cash proceeds  received by the Company from sales of  indebtedness
of the company  convertible into stock of the Company,  to the extent such stock
has been converted into stock of the Company (collectively, the Consolidated Net
Income)  exceeds the sum of the aggregate  amount of all dividends  declared and
all such other payments and distributions on account of the purchase, redemption
or other  retirement  of any shares of stock of the Company  (collectively,  the
Distributions).  At August 31, 1997,  Distributions  exceeded  Consolidated  Net
Income by  approximately  $2,065,000 and the Company had utilized  approximately
$550,000 of the $6.0 million  available  pursuant to the Capital Stock  Purchase
program to purchase shares of the Preferred Stock.

FORWARD LOOKING STATEMENTS

This report  contains  forward-looking  statements,  estimates  or plans,  which
involve known and unknown risks, uncertainties and other factors which may cause
the actual results,  performance or achievements of the Company to be materially
different  from results or plans  expressed  or implied by such  forward-looking
statements.


Part II.  Other Information


Item 1.  Legal Proceedings

As previously  reported in the Companys Annual Report on Form 10-K for the
year ended  February 28,  1997,  in July 1996,  two  lawsuits  were filed in the
United  States   District   Court  for  the  District  of  New  Jersey,   MORTON
INTERNATIONAL,  INC. V. A.E. STALEY MFG. CO. ET AL, and VELSICOL  CHEMICAL CORP.
V. A.E.  STALEY MFG. CO. ET AL, in which Morton and  Velsicol,  assert a private
right  of  action  pursuant  to  the   Comprehensive   Environmental   Response,
Compensation  and Liability Act (CERCLA)  against  approximately 95 companies,
including  The J. M.  Ney  Company  (Ney),  relating  to the  Ventron/Velsicol
<PAGE>
Superfund Site located in Wood Ridge and Carlstadt,  New Jersey (the Site). In
addition, in December 1996, Morton and Velsicol filed a First Amended Complaint,
alleging an alternative basis for liability under the Resources Conservation and
Recovery Act (RCRA).  Specifically, the plaintiffs allege that Ney was among a
group of companies  that were  generators  of hazardous  substances,  which were
ultimately processed at the Site and contributed to the alleged contamination at
the Site. The suits, which duplicate each other in all material  respects,  seek
to recover the plaintiffs  unspecified  past and future costs of remediation of
the Site. The investigation at the Site to determine the extent of contamination
has not been  completed  and no plan for  remediation  has been  developed.  The
plaintiffs  have not been able to  provide  the  defendants  with any  confirmed
figures with respect to past costs and no figures at all for its future costs.

Based on preliminary  disclosure of  information  relating to the claims made by
plaintiffs and defendants in January 1997, Ney is one of the smaller  parties to
have had any transactions  with one of the plaintiffs  predecessors in interest.
However,  at this time,  there is  insufficient  information  to  determine  the
appropriate allocation of costs between or among the defendants, if liability to
the generator defendants is ultimately proved.

The Company is  investigating  whether any  liability,  which may accrue at some
future date, may be subject to  reimbursement in whole or in part from insurance
proceeds.  As of this date,  the Company  has no basis to  conclude  whether the
litigation  may be material to the  Companys  financial  condition  or business.
Accordingly, the Company intends to vigorously defend the lawsuit.

In August  1997,  The J. M. Ney Company  (Ney) was included as a defendant in an
asbestos related civil action for negligence and product  liability filed in the
Court of Common  Pleas of  Allegheny  County,  Pennsylvania  entitled,  James S.
Cathers and Sylvia Jean Cathers,  his wife,  (collectively,  the  Plaintiffs) v.
Kerr  Corporation,  Whip-Mix  Corporation,  The J. M. Ney Company  and  Dentsply
Corporation,  Inc. (collectively,  the Defendants) in which the Plaintiffs claim
damages in excess of $30,000 (the  jurisdictional  limit) from being  exposed to
asbestos and asbestos products alleged to have been manufactured and supplied by
the  Defendants,  including  Neys  former  Dental  Division,  while  one  of the
Plaintiffs  worked in a dental lab from 1960 to 1986. The Plaintiffs allege that
this exposure to asbestos and asbestos  products caused one of the Plaintiffs to
develop mesothelioma.  The Plaintiffs have not provided any specific allegations
of facts as to which Defendants may have  manufactured or supplied  asbestos and
asbestos products which are alleged to have caused the injury.

The  Company  is  investigating  whether  any  liability,   may  be  subject  to
reimbursement in whole or in part from insurance proceeds.  As of this date, the
Company  has no basis to  conclude  that the  litigation  may be material to the
Companys financial  condition or business.  Accordingly,  the Company intends to
vigorously defend the lawsuit.



Item 3.  Defaults Upon Senior Securities

As discussed  above in Note 5,  Dividends,  and in  Managements  Discussion  and
Analysis of Results of Operations and Financial  Condition Liquidity and Capital
Resources,  the Company is not permitted to pay dividends on its capital  stock.
As a result of this  restriction,  the  Company  was  precluded  from paying the
Preferred  Stock  dividend  earned for each of the four quarters in fiscal years
1994,  1995,  1996 and 1997,  respectively,  and is  precluded  from  paying the
Preferred  Stock  dividend  earned for each of the two the quarters ended August
31, 1997. These dividends are ordinarily payable within 45 days after the end of
the quarter.  Therefore,  while the  quarterly  fiscal 1994 through May 31, 1997
dividends  are in arrears,  the dividend for the quarter  ended August 31, 1997,
which was in the amount of $0.3763 per share,  will be in arrears on October 16,
1997.  The  aggregate  arrearage for all  dividends  (including  that payable on
October 15, 1997) is approximately $1,112,000.

As of October 16, 1994, the Company was in arrears for six consecutive  quarters
in the  payment  of the  dividends  on the  Preferred  Stock.  The  terms of the
Preferred  Stock  provide  that once the Company is in arrears on the payment of
the dividends on the Preferred Stock for six consecutive  quarters,  the holders
of the Preferred  Stock,  voting together as a class,  are entitled to elect one
additional  director to the Companys Board of Directors at any annual meeting of
shareholders or a special meeting held in place thereof, or at a special meeting
of the holders of the Preferred  Stock. If, and when, the dividends which are in
arrears on the  Preferred  Stock shall have been paid or declared  and set apart
for  payment,  the rights of the  holders of the  Preferred  Stock to elect such
additional  director shall cease (but always subject to the same  provisions for
the vesting of such voting rights in the case of any similar  future  arrearages
in  dividends),  and the term of office of any person  elected  director  by the
holders of the  Preferred  Stock shall  terminate.  As of October 15,  1997,  no
special meeting of the preferred stockholders has been held or scheduled.

<PAGE>
Item 4.  Submission of Matters to a Vote of Security Holders

         (a) The  Registrants  Annual  Meeting was held on June 24, 1997 for the
             purpose of electing Directors.

         (b) The following Directors were elected:

                  Oliver R. Grace, Jr.
                  Francis E. Baker
                  Peter N. Bennett
                  John S. Grace
                  Louis A. Lubrano
                  James J. Pinto

         (c) Votes for and against for each Director were as follows:

          Directors  Francis E. Baker, Oliver R.Grace, Jr., Louis A. Lubrano and
James J.  Pinto  each  received  1,679,337  votes for and 9,844  votes  against.
Directors  Peter N. Bennett and John S. Grace  received  1,679,037 and 1,679,333
votes for, respectively, and 10,244 and 9,848 votes against, respectively.

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits required by Item 601 of Regulation S-K:

     Exhibit        11.1 - Statement Re  Computation  of Per Share  Earnings for
                    the three months ended August 31, 1997.
     Exhibit        11.2  Statement Re Computation of Per Share Earnings for the
                    six months ended August 31, 1997.
     Exhibit        27.1 -  Financial  Data  Schedule  for the six months  ended
                    August 31, 1997.
     Exhibit        27.2 - Amended  Financial  Data  Schedule for the six months
                    Ended August 31, 1996.

No reports on Form 8-K were filed during the quarter ended August 31, 1997.

<PAGE>

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.


ANDERSEN GROUP, INC.



By:      /s/ Oliver R. Grace, Jr.
         Oliver R. Grace, Jr.
         President and Chief Executive Officer

Date:    October 15, 1997



By:      /s/ Andrew M. OShea
         Andrew M. OShea
         Treasurer

Date:    October 15, 1997