SECURITIES AND EXCHANGE COMMISSION
                                              Washington, D.C. 20549




                                                     FORM 10-Q

              (X)       Quarterly  Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

                      For the quarterly period ended   December 31, 1997

                                                        or

              ( )     Transition Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1939

                   For the transition period from              to


Commission File Number:  0-18711




                           ACTRADE INTERNATIONAL, LTD.
         (Exact name of small business issuer as specified in its charter)




          Delaware                              13-3437739
(State or other jurisdiction of            (I.R.S. Employer
incorporation or organization)             Identification Number)


                    7 Penn Plaza, New York, NY  10001

             (Address of principal executive offices)


Issuer's telephone number, including area code:       (212) 563-1036
                                                     -----------------


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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


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 December 31, 1997

Common Stock, par value $0.0001
 per share                                               8,263,751




<PAGE>


















                                                       INDEX



Part I.  Financial information


  Item 1.  Condensed consolidated financial statements:


        Balance sheet as of December 31, 1997 and
         June 30, 1997                                             F-2

        Statement of operations for six and three
         months ended December 31, 1997 and 1996                   F-3

        Statement of shareholders' equity                          F-4

        Statement of cash flows for the six months
         ended December 31, 1997 and 1996                          F-5

        Notes to consolidated condensed financial statements    F-6 - F-13



  Item 2.  Management's discussion and analysis of financial
            condition                                              F-14-F17



Part II.  Other information


Signatures




















                                                                         F-1


<PAGE>



                                   ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                                       CONDENSED CONSOLIDATED BALANCE SHEET

                                        DECEMBER 31, 1997 AND JUNE 30, 1997
                                                    (Unaudited)



                                               ASSETS

                                                   December 31,        June 30,
                                                      1997              1997

Current assets:
  Cash at December 31, 1997                       $ 2,532,068      $ 7,352,465
  Accounts receivable, less allowance for
   doubtful accounts of $35,000                    13,389,460        5,269,516
  Accounts receivable, trade acceptance drafts      5,383,194        6,477,424
  Prepaid expenses                                     12,903            9,010
                                                   -----------      -----------
     Total current assets                          21,317,625       19,108,415
                                                   -----------      -----------

Property and equipment:
  Furniture and fixtures                              412,422          308,717
  Leasehold improvements                              143,915          142,672
                                                   -----------     -----------
                                                      556,337          451,389
  Less accumulated depreciation                       247,266          213,084
                                                   -----------     -----------
                                                      309,071          238,305
                                                   -----------     -----------

Other asset, security deposits                         26,542           17,742
                                                   -----------     -----------

                                                  $21,653,238      $19,364,462
                                                  ===========      ===========



                                       LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:
  Cash advance from bank                                           $ 1,019,392
  Customer deposits                                                     26,587
  Accounts payable                               $ 1,995,808         1,995,148
  Accrued expenses                                    44,425            11,759
  Payroll taxes payable                                                  6,862
  Income taxes payable                               174,071            67,432
                                                  -----------      -----------
    Total current liabilities                      2,214,304         3,127,180
                                                  -----------      -----------

Commitments

Deferred rent liability                               38,657            45,165
                                                 -----------       -----------

Shareholders' equity:
  Common stock,  $.0001 par value;  authorized  100,000,000  shares,  issued and
  outstanding 8,263,751 shares at December 31,1997 and
  7,470,681 at June 30, 1997                            826                747
  Common stock purchase warrants
  Additional paid in capital                     13,676,921         12,505,787
  Retained earnings                               5,722,530          3,685,583
                                                -----------        -----------
                                                 19,400,277         16,192,117
                                                 ----------         ----------

                                                $21,653,238        $19,364,462
                                                ===========        ===========






     See notes to condensed consolidated financial statements.
                                                                            F-2


<PAGE>



                     ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                    CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

               FOR THE SIX AND THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
                                       (Unaudited)






<TABLE>
<CAPTION>
<S>                                        <C>        <C>                        <C>         <C>



                                                        Six Months Ended                      Three Months Ended
                                                          December 31,                           December 31,



                                                1997                 1996              1997                1996
                                                ----                 ----              ----                ----


Net sales                                    $43,117,444        $16,458,567        $23,115,859         $8,880,533

Cost of sales                                 39,307,247         14,860,738         21,013,001          7,956,924
                                             -----------        -----------        -----------         ----------

Gross profit                                   3,810,197          1,597,829          2,102,858            923,609

Selling, general and
 administrative expenses                       1,589,073            903,359            903,006            517,997
                                             -----------        -----------        -----------         ----------

Income from operations                         2,221,124            694,470          1,199,852            405,612
                                             -----------        -----------        -----------         ----------

Other income (charges):
  Miscellaneous income                             9,435
  Interest income                                 62,220             15,881             11,852              5,382
  Interest expense                         (     62,540)      (     31,562)      (     58,056)       (     6,050)
                                            -----------        -----------        -----------         ----------

                                                   9,115      (     15,681)      (     46,204)       (       668)
                                             -----------       -----------        -----------         ----------

Income before income
 taxes                                         2,230,239            678,789          1,153,648            404,944

Income tax expense                               193,292             46,735             69,555             32,765
                                             -----------        -----------        -----------         ----------

Net income                                   $ 2,036,947        $   632,054        $ 1,084,093         $  372,179
                                             ===========        ===========        ===========         ==========

Earnings per common share:
  Primary                                    $       .24        $      0.10        $       .13$     0.06
                                              ===========        ===========        =====================
  Fully diluted                              $       .24        $      0.10        $       .13$     0.06
                                              ===========        ===========        =====================

Weighted average common shares outstanding:
   Primary                                     8,434,256          6,120,337          8,615,574          6,465,153
                                             ===========        ===========        ===========         ==========
   Fully diluted                               8,434,256          6,120,337          8,615,574          6,465,153
                                             ===========        ===========        ===========         ==========


</TABLE>










     See notes to condensed consolidated financial statements.
                                                                            F-3


<PAGE>



                             ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                             FOR THE PERIOD JULY 1, 1995 TO DECEMBER 31, 1997
                                           (Unaudited)









<TABLE>
<CAPTION>
<S>                                             <C>      <C>                  <C>               <C>               <C>



                                                          Common Stock          Additional
                                                          $.0001 Par Value       Paid in           Retained
                                                  Shares         Amount          Capital           Earnings           Total


Balance at June 30, 1995                         5,330,681         $533        $ 2,041,873       $1,024,628        $ 3,067,034

Issuance of common stock                           352,500           35          1,065,264                           1,065,299

Net income for the year
 ended June 30, 1996                                                                                757,374            757,374
                                                 ---------         ----         ----------       ----------         ----------

Balance at June 30, 1996                         5,683,181          568          3,107,137        1,782,002          4,889,707

Issuance of common stock                           652,500           65          1,922,214                           1,922,279

Issuance of common stock on
 exercise of stock purchase
 options                                           450,000           45            987,455                             987,500

Issuance of common stock                           685,000           69          6,488,981                           6,489,050

Net income for the year
 ended June 30, 1997                                                                              1,903,581          1,903,581
                                                 ---------         ----        -----------      -----------        -----------

Balance at June 30, 1997                         7,470,681          747         12,505,787        3,685,583         16,192,117

Issuance of common stock on
 exercise of stock purchase
 options                                           793,070           79          1,171,134                           1,171,213

Net income for the six
 months ended December
 31, 1997                                                                                         2,036,947          2,036,947
                                                 ---------         ----        -----------      -----------        -----------

Balance at December 31,
 1997                                            8,263,751         $826        $13,676,921       $5,722,530        $19,400,277
                                                 =========         ====        ===========       ==========        ===========



</TABLE>








     See notes to condensed consolidated financial statements.
                                                                             F-4


<PAGE>



                  ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                   SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996
                                   (Unaudited)








<TABLE>
<CAPTION>
<S>                                                                               <C>                <C>

                                                                                        1997               1996
                                                                                        ----               ----

Cash flow from operating activities:
  Net income                                                                        $2,036,947         $  632,054
  Adjustments to reconcile net income
   to cash provided by operating activities:
     Depreciation                                                                       34,182
  Changes in assets and liabilities:
    Accounts receivable                                                           ( 7,025,714)       ( 3,211,690)
    Accounts receivable, other                                                                             59,785
    Prepaid expenses                                                              (     3,893)       (    10,238)
    Interest receivable                                                                                     2,719
    Accounts payable                                                                       660       (   310,838)
    Accrued expenses                                                                    32,666       (     4,719)
    Payroll taxes payable                                                         (     6,862)
    Income taxes payable                                                               106,639             25,433
    Customer deposits                                                             (    26,587)       (    55,954)
    Security deposits                                                             (     8,800)       (       950)
    Deferred rent                                                                 (     6,508)       (     5,031)
                                                                                   ----------         ----------

    Net cash used in operating activities                                         ( 4,867,270)       ( 2,879,429)
                                                                                   ----------         ----------

Investing activities:
  Purchase of property and equipment                                              (   104,948)       (    52,771)
                                                                                   ----------         ----------

    Net cash used in investing activities                                         (   104,948)       (    52,771)
                                                                                   ----------         ----------

Financing activities:
  Proceeds from issuance of common stock                                             1,171,213          2,038,800
  Decrease in cash advances, bank                                                 ( 1,019,392)       (   502,846)
                                                                                   ----------         ----------

    Net cash provided by financing activities                                          151,821          1,535,954
                                                                                    ----------         ----------

Net increase (decrease) in cash                                                   ( 4,820,397)       ( 1,396,246)

Cash, beginning of period                                                            7,352,465          1,924,805
                                                                                    ----------         ----------

Cash, end of period                                                                 $2,532,068         $  528,559
                                                                                    ==========         ==========

Supplemental  disclosures from cash flow information:  Cash paid during the year
   for:
     Interest                                                                       $   62,540         $   37,251
                                                                                    ==========         ==========
     Income taxes                                                                   $  101,446         $   15,973
                                                                                    ==========         ==========


</TABLE>





     See notes to condensed consolidated financial statements.
                                                                         F-5


<PAGE>



                              ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                 SIX MONTHS ENDED DECEMBER 31, 1997
                                            (Unaudited)






     1. The accompanying  unaudited  financial  statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information  and with the  instructions to Form 10-Q.  Accordingly,  they do not
include all of the  information  and  footnotes  required by generally  accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management,  all adjustments  considered  necessary for a fair presentation have
been  included.  The results of  operations  for the three  months  ended is not
necessarily  indicative  of the  results to be expected  for the full year.  For
further  information,   refer  to  the  consolidated  financial  statements  and
footnotes  thereto  included in the  Company's  annual report for the year ended
June 30, 1997,  included in its Annual Report filed on Form 10-K.  All reference
to  Actrade  in these  footnotes,  relate to Actrade  International,  Inc.,  the
Company's wholly owned subsidiary.  Actrade International,  Ltd., "The Company,"
is referred to as ACI.





2. Organization of the Company:

     The Company, formerly Acquisition Capability, Inc., was incorporated in the
State of Delaware on April 3, 1987. On September 2, 1988,  the Company  acquired
100% of the issued and  outstanding  shares of Allstate Travel Corp., a New York
corporation incorporated on August 13, 1985 and Actrade International,  Corp., a
New York  corporation  incorporated  on July 18,  1985.  Allstate  operates as a
travel agency.  Actrade  represents various U. S. manufacturers and distributors
by buying and exporting their products overseas. Actrade Capital, Inc., a wholly
owned subsidiary of Actrade International, Ltd., was incorporated in Delaware in
May of 1991.  Actrade  Capital,  Inc. offers  alternatives to existing  accounts
receivable   financing  to  both  domestic  and  foreign   companies.   Standard
Corporation,  a wholly  owned  foreign  corporation  and  subsidiary  of Actrade
International,  Corp.,  was  incorporated in Antigua and Bermuda on February 12,
1988  and  was  acquired  in  January  1990.  On  December  22,  1991,  Standard
Corporation  changed  its  corporate  name to Actrade  South  America.  American
Cooling,  Inc., a wholly owned  subsidiary  of Actrade  International,  Ltd. was
incorporated in Delaware in 1992 and was inactive. American Care Industries, was
incorporated  in 1993 and was  inactive.  American  Care  Industries,  Inc. is a
wholly owned subsidiary of Actrade International,  Ltd. Amworld Credit, Inc. was
incorporated in 1994 and was inactive at September 1994. On August 14, 1997, TAD
International Ltd. was incorporated  under the laws of Antiqua and Barluda.  TAD
International,  Ltd. is a wholly owned subsidiary of Actrade International, Ltd.
and has been inactive since formation.

     The Company sells  predominantly  in the foreign  market through its wholly
owned foreign subsidiary,  Actrade South America. There is no guarantee that the
foreign  market will  continue to develop since the  possibility  of foreign and
domestic government  intervention,  economic conditions world wide and any other
unforeseen situations may occur.





                                                                           F-6


<PAGE>



                            ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   SIX MONTHS ENDED DECEMBER 31, 1997
                                            (Unaudited)



3. Principles of consolidation:

     The consolidated  financial statements of Actrade  International,  Ltd. and
subsidiaries  include the accounts of all significant wholly owned subsidiaries,
after elimination of all significant intercompany transactions and accounts. The
accounts of Allstate Travel Corp., Actrade South America, a foreign corporation,
Actrade Capital,  Inc., American Cooling,  Inc. and TAD International,  Ltd. are
included as the subsidiaries of Actrade International, Ltd.


4. Related party transactions:

     During each of the three years ended December 31, 1997, the Company and its
subsidiaries have advanced and received funds to and from related parties.  Such
receivable and payables are non-interest bearing and are due on demand.

     The  Company  has  entered  into  several  employment  agreements  with its
officers and shareholders.



5.  Leases:

     From March 1, 1989 to February 28, 1990,  the Company and its  subsidiaries
used office facilities under a non-cancelable operating sublease which commenced
March 1,  1989  and was to  expire  February  28,  1992.  The  related  sublease
agreement  provided for monthly  rentals of $4,000 and gave a subsidiary  of the
Company the option to renew,  for an  additional  three years (to  February  28,
1995), at the same monthly rental.



    In February  1990,  the Company  agreed with the lessor and sublessor of its
facilities  to  discontinue  its  sublease.  In the year ended June 30, 1991 the
Company  received $12,750 in settlement of the lease. The amount was recorded as
a reduction in selling,  general and administrative  expenses. In February 1990,
the Company  executed a lease  agreement with a related  corporation who was the
lessor of the facility from an unrelated  third party.  The lease in August 1991
was assigned to the Company from the related party.  The Company  simultaneously
assigned  said lease to Actrade in accordance  with the terms of the lease.  The
agreement  provides for monthly rentals of $4,200  (commencing June 1, 1991) and
annual increases of 4.5% and expires February 28, 2000.


     In lieu of rent for the first  fifteen  (15) months,  the Company  incurred
costs totaling approximately $87,000 for leasehold  improvements.  The leasehold
improvements  and the  total  rent  concessions  are being  amortized  using the
straight  line method over the entire term of the lease.  The  resulting  unpaid
rent over the abatement period is included in deferred rent liability.


     In December 1991,  Actrade entered into a non-cancelable 36 month operating
lease to house its Florida  office.  The lease provides for monthly  payments of
$734 plus cost of living  increases  annually,  capped @ 5% per annum. The lease
was renewed on December 24, 1994 for a three year term under the above terms and
expires on December 24, 1997. This


                                                                           F-7


<PAGE>



                             ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   SIX MONTHS ENDED DECEMBER 31, 1997
                                             (Unaudited)




5.  Leases (continued):

     lease was not renewed as the Company moved its offices under the terms of a
new lease signed  December 16, 1997. The lease is for a one year period expiring
December 25, 1998 and carries rent at $14,685 per year or $1,224 per month.


     In  August  1996,  Actrade  Capital,  Inc.  entered  into a 12 month  lease
expiring  on August 31,  1997 for space in an  Illinois  office  suite which was
extended  until October 31, 1997.  Both parties have the option to terminate the
lease with thirty days written  notice to either party.  The lease  provides for
monthly  payments  of  $1,100 on the first  day of each  month.  This  lease was
extended until October 31, 1997, at which time the lease was terminated.


     On October 13, 1997 Actrade  Capital,  Inc. entered into a three year lease
expiring  October 31, 2000 in an illinois  office suite.  The lease provides for
monthly payments of $2,502.00 increasing annually at a rate of 1.5%.


     In May 1997, Actrade Capital, Inc. entered into a 15 month lease for office
space in Utah.  The lease  expires  July 31,  1998 and calls  for  monthly  rent
payments in the amount of $329. In April 1997,  Actrade  Capital,  Inc.  entered
into a lease  agreement for additional  space in its New York office.  The lease
expires  on March 31,  2000 and calls for rent of $1,628  per month in the first
year,  $1,672  per month in the  second  year and  $1,716 per month in the third
year. This lease terminated January 31, 1998.


     Beginning  July  1,  1997,  Actrade  entered  into a  lease  agreement  for
additional  space in its New York  facility.  The lease,  which  carries rent at
$3,000 per month, expires on October 31, 1998.


     On  October  15,  1997,  Actrade  Capital,  Inc.  entered  into a lease  in
Pennsylvania  for a six and one-half month period with monthly rentals of $1,400
per month.


      Future minimum lease  payments  required  under  non-cancelable  operating
        leases by fiscal year are as follows:

                      December 31, 1998                           $104,118
                      December 31, 1999                           $ 51,002
                      December 31, 2000                           $ 30,908

      Rent  expense   amounted  to  $79,165  and  $41,713  for  1997  and  1996,
        respectively.



     Actrade South America, maintains a separate sales office in Israel, held by
a  commissioned  sales  agent of the  Company.  The terms of the  agreement  are
reviewable  yearly  and the  annual  fee was  $9,000 in 1997 and $6,000 in 1996,
subject to adjustment  based upon the commissions  paid to the agent during such
year.




                                                                         F-8


<PAGE>



                              ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   SIX MONTHS ENDED DECEMBER 31, 1997
                                             (Unaudited)





6. Income taxes:

    The components of income tax expense are:
                                                   Six months       Six months
                                                     Ended            Ended
                                                   December 31     December 31
                                                     1997              1996
                                                     ----              ----
    Income taxes currently payable:
      Federal                                      $126,095         $ 33,134
      State                                          67,197           17,006
                                                   --------          --------
                                                    193,292           50,140
                                                   --------          --------

    Deferred tax expense arising from:
      Excess of Financial accounting
       depreciation over tax                     (   2,024)        (   1,443)

      Excess of tax deductible rent over rent
       expense for financial accounting purposes (     976)        (   1,962)
                                                   --------          --------
                                                 (   3,000)        (   3,405)
                                                   --------          --------

    Total income tax expense                      $193,292          $ 46,735
                                                  ========           ========



    Deferred income tax provisions resulting from differences between accounting
    for  financial  statement  purposes  and  accounting  for tax  purposes  are
    reflected above.

    Areconciliation  of income tax expense at the  statutory  rate to income tax
     expenses at the Company's effective rate is as follows:



                                                 Six months         Six months
                                                   Ended              Ended
                                                 December 31        December 31
                                                    1997               1996
                                                    ----               ----
      Computed tax at the expected
       statutory rate                            $843,587           $259,351

      Surtax exemption                          (  16,750)        (  16,750)

      State income taxes                           67,197            17,006

      Foreign income                            ( 697,742)        ( 209,467)

      Other                                     (   3,000)        (   3,405)
                                                  --------          --------

      Income tax expense                         $193,292          $ 46,735
                                                 ========           ========








                                                                          F-9


<PAGE>



                              ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                  SIX MONTHS ENDED DECEMBER 31, 1997
                                           (Unaudited)






6.  Income taxes (continued):

    The effective statutory rate for 1997 was 39% for federal tax purposes.

     The  Company has made  adjustments  to  eliminate  the tax  provisions  for
foreign earnings since said earnings are  undistributed  and will be permanently
invested.   The  cumulative  amounts  of  foreign  undistributed   earnings  are
$5,548,539 at December 31, 1997 and $2,495,444 at December 31, 1996.



     The  Company has adopted  SFAS 109 for the fiscal  year  beginning  July 1,
1993.  SFAS 109 changes  accounting  for income taxes from the deferred  method,
required by APB-11 to the  asset/liability  method,  commonly referred to as the
liability method. The deferred method places primary emphasis on the matching of
revenues and expenses.  The  liability  method  places  primary  emphasis on the
valuation of current and deferred tax assets and  liabilities.  The significance
of the impact that SFAS 109 will have on the financial statements is expected to
be immaterial  and will have no impact on any other  significant  matters of the
Company.  The effect of  initially  adopting  SFAS 109 will be  reported  as the
cumulative effect of a change in accounting principle in accordance with APB-20.



     The  Company has adopted  SFAS 109 for the fiscal  year  beginning  July 1,
1993.  SFAS 109 changes  accounting  for income taxes from the deferred  method,
required by APB-11 to the  asset/liability  method,  commonly referred to as the
liability method. The deferred method places primary emphasis on the matching of
revenues and expenses.  The  liability  method  places  primary  emphasis on the
valuation of current and deferred tax assets and liabilities.



7. Accounts receivable, trade acceptance drafts:

     As of December 31, 1997, Actrade Capital,  Inc., formerly Amworld Commerce,
Inc., a wholly owned  subsidiary of Actrade  International,  Ltd.,  had sold and
assigned all outstanding  Trade Acceptance Drafts (TAD's) to Banco Portuguese De
Atlantico  (Bank).  The total TAD amounts due from the banks were  $5,383,194 at
December 31, 1997.  The bank  purchases the TAD's at the face value and advances
these  amounts to Actrade  Capital,  Inc. The bank  purchases  the TAD's without
recourse,  Actrade  Capital,  Inc. has granted a security  interest in all TAD's
purchased by the bank for all accounts  represented  by the TAD's  together with
all guaranties and collateral. As each TAD is collected, the face amount will be
credited to the Actrade account.  Interest is payable at 1% over prime per annum
on the  outstanding  advances,  which  will be  charged on the first day of each
month.








                                                                        F-10


<PAGE>



                               ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   SIX MONTHS ENDED DECEMBER 31, 1997
                                            (Unaudited)





8. Reconciliation of shares used in computation of earnings per share:


                                         Six months ended    Six months ended
                                           December 31,        December 31,
                                        1997        1996      1997       1996
                                        ----        ----      ----       ----
         Weighted average of shares
           actually outstanding      8,076,470  5,985,337   7,663,755 5,701,621
         Common stock purchase
           warrants and options        357,786    135,000     395,661   110,000
                                     ---------  ---------   --------- ---------

         Primary and fully diluted
           weighted average common
           shares outstanding        8,434,256  6,120,337   8,059,416 5,811,621
                                     =========  =========   ========= =========




9. Pending litigation:

     The Company is currently engaged in litigation  against a former consultant
retained to assist in  introducing  the Company to the  brokerage  community and
with it's investor relations. The consultant was paid a cash retainer and was to
receive common stock purchase warrants for services rendered. The consultant, to
the  detriment of the Company,  terminated  services on behalf of Actrade.  As a
result of the termination, Actrade has refused to honor the warrants.



10. Common stock purchase warrants and options outstanding:

    Summary of warrants (w) and options (o) outstanding:


                              Warrants    (w)    Exercise       Expiration
                     Date     Options     (o)     Price            Date

    Amos Aharoni   06/30/95    38,318    (w)    $ 1.35           06/30/98
    Amos Aharoni   06/30/96   200,000    (w)      3.35           06/30/99
    Amos Aharoni   10/01/96   132,915    (w)      5.00           09/30/99
    Amos Aharoni   01/01/97   176,629    (w)      6.05           12/31/99
    Amos Aharoni   04/01/97   207,157    (w)      9.70           03/31/00
    Amos Aharoni   06/01/97     3,000    (o)      5.00           12/31/00
    Amos Aharoni   07/01/97   220,000    (o)     11.20           06/30/00
    Amos Aharoni   10/01/97    56,382    (o)     13.53           09/30/00
                             ---------
                            1,034,401
                            ---------

    John Woerner   02/06/97     2,500    (w)      5.00           12/31/00
                            ---------








                                                                           F-11


<PAGE>



                                ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                    SIX MONTHS ENDED DECEMBER 31, 1997
                                                (Unaudited)





10. Common stock purchase warrants and options outstanding (continued):

    Summary of warrants (w) and options (o) outstanding (continued):

                                     Warrants  (w)     Exercise     Expiration
                        Date         Options   (o)       Price        Date

   Leon Schorr        01/21/97        2,500    (w)       6.40       01/20/01
   Leon Schorr        02/06/97        2,500    (o)       5.00       12/31/00
   Leon Schorr        02/06/97        3,000    (o)       5.00       12/31/00
                                   ---------
                                      8,000
                                   ---------

   Elizabeth Melnick   11/30/95       20,000    (o)       1.50       11/29/99
   Elizabeth Melnick   08/08/96        5,000    (o)       3.00       08/08/96
   Elizabeth Melnick   01/01/97        2,500    (o)       5.00       12/31/00
   Elizabeth Melnick   01/01/97        3,000    (o)       5.00       12/31/00
   Elizabeth Melnick   01/21/97        2,500    (w)       6.40       01/20/01
                                    ---------
                                      33,000
                                    ---------

   Other employees    various        60,660    (o)       1.50         2000
                                   ---------
                                                     to 12.55
          Total                   1,138,561
                                  =========


    In the quarter ended December 31, 1997,  793,070  warrants were exercised at
    prices ranging from $1.25 to $6.40, resulting in net proceeds to the Company
    of $1,171,213 and the issuance of 793,070 common shares.

    The  Company  has  elected to  continue  use of the  methods  of  accounting
    described  by APB-25  "Accounting  for Stock Issued to  Employees"  which is
    based on the intrinsic  value of equity  instruments and has not adopted the
    principles of SFAS-123  "Accounting for Stock Based Compensation"  effective
    for fiscal year beginning  after  December 15, 1995,  which is based on fair
    value.  There  is  no  significant   difference  between  compensation  cost
    recognized by APB-25 and the fair value method of SFAS-123.  The Company has
    not  recognized  compensation  on the  granting  of options or  warrants  to
    employees and consultants since the fair value of warrants or options is the
    same as or less than the exercise price.



11. Subsequent events:

    On  January  22,  1998,  the  Company  issued  Amos  Aharoni,  as  part of a
    compensation  agreement,  an option for  1,000,000  shares of the  Company's
    common  stock at an  exercise  price of $15.40 per share with an  expiration
    date of January 22, 2005.  The exercise  price of the option is equal to the
    market value on the date of grant.









                                                                         F-12


<PAGE>



                              ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                    SIX MONTHS ENDED DECEMBER 31, 1997
                                               (Unaudited)







11. Subsequent events (continued):

     In October 1995, the FASB issued Statement 123,  Accounting for Stock-based
Compensation  (SFAS 123). This statement is effective for transactions  that are
entered  into in fiscal  years  beginning  after  December  15,  1995.  SFAS 123
establishes a fair value-based  method of accounting for employee stock options.
This  method  provides  for  compensation  cost  to be  charged  to  results  of
operations  at the grant  date.  However,  the  statement  allows  companies  to
continue to follow the accounting treatment prescribed by Accounting  Principles
Board  Opinion  25.  Opinion  25  generally  requires  compensation  cost  to be
recognized only for the excess of the quoted market price at the grant date over
the price that an  employee  must pay to acquire  stock.  Companies  electing to
continue  with Option 25 must take  disclosure  of net income as if SFAS 123 had
been adopted.



     The Company has determined the method of accounting that it will follow for
stock options by continuing the use of Opinion 25. However, the Company does not
expect  that  adoption  of the  requirements  of SFAS 123 would  have a material
impact  on  the  financial  position,  results  of  operations  or  cash  flows.
Accordingly, no compensation cost will be recognized in 1998.



     In January 1998, Amos Aharoni assigned to the Company all patent rights for
the trade acceptance draft process for $1.



























                                                                        F-13

<PAGE>



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

I.  Results of Operations

During the first six months of fiscal 1998, ended December 31, 1997, the Company
had combined gross revenues of  $43,117,444,  as compared to $16,458,587 for the
first six months of fiscal 1997, an increase of almost 162%. During this period,
cost of revenues  totaled  $39,307,247,  as compared to $14,860,738 for the same
period last year,  virtually  unchanged at approximately  91% of total revenues.
This resulted in gross profits from  operations of $3,810,197 for the first half
of fiscal 1998, an increase of $2,212,368 (or approximately 138% higher than the
first half of fiscal 1997),  with net profits from  operations,  after provision
for interest and taxes,  of $2,036,947 for this period,  as compared to $632,054
for the same period last year, an increase of approximately 222% over last year.
Based upon the Company's  currently issued and outstanding shares, the Company's
earnings per share for the first half of fiscal 1998,  ended  December 31, 1997,
reached $0.24 per share, as compared to $0.10 per share for the first quarter of
fiscal 1997, an increase of 140%.

The substantial increase in gross revenues during the first half of fiscal 1998,
which  equaled over 99% of the  Company's  total  revenues  during all of fiscal
1997, was primarily due to the expansion of the Company's operations through (i)
significantly increased revenues by Actrade Capital Inc. ("Capital") through its
TAD Program, discussed separately below (see "III. Actrade Capital, Inc. And The
Trade  Acceptance Draft Program") and (ii) the increased sales by its subsidiary
Actrade S.A.

With respect to the three months ended December 31, 1997, gross revenues reached
$23,115,859 (up over 160% from the second quarter of fiscal 1997;  gross profits
climbed to  $2,102,858  (an  increase  of over 128% from the  second  quarter of
fiscal 1997);  income from operations  totaled $1,199,852 (up approximately 196%
from the same period in fiscal 1997); and net earnings after interest income and
interest expense and allowance for taxes reached $1,084,093 (an increase of 192%
from fiscal 1997),  or  approximately  $0.13 per share for the second quarter of
fiscal  1998 as  compared  to $0.06 per share for the  second  quarter of fiscal
1997. The cost of revenues  during the second quarter of fiscal 1998,  expressed
as a percentage of gross  revenues was 90.9%,  as compared to 89.6% for the same
period last year.


 As a result of the  foregoing  factors,  the  Company's  net  operating  income
expressed as a percentage of gross  revenues  continued to increase from 4.2% at
the end of the first half of fiscal  1997 to almost 4.8% at the end of the first
quarter of fiscal 1998 and  reaching a new high of almost 5.2% at the end of the
first half of fiscal 1998.  This continued the trend  experienced  during fiscal
1997 and, in significant part, reflected the success of the Company's commitment
to Capital's TAD Program.  Although management believes that continued increases
in  revenues by Capital  and by Actrade  S.A.  during the balance of fiscal 1998
will help this ratio to remain  stable,  management  cannot  predict  the impact
thereon of the substantial  expenditures anticipated in connection with the next
phase of Capital's expansion program.


In addition,  a review of the Company's  Statement of Operations  shows that the
cost of  goods  sold,  as a  percentage  of  total  sales,  has  increased  from
approximately  83% in fiscal 1990 to approximately  90.7% for fiscal 1997 (which
is slightly lower than the 91.7% level reached in fiscal 1996) and approximately
91.5% for the first  half of fiscal  1998.  This  increase  is the result of the
markup  experienced by Capital being lower than the markup  associated  with the
Company's  international  trade  operations.  As  revenues  from the TAD Program
increase as a percentage  of overall  revenues,  the  Company's  overall  profit
margins will decrease.

Continuing the trend first established at the end of the first quarter of fiscal
1998, the major portion of the Company's revenues,  over 57.5% at the end of the
first  half  of  fiscal  1998,  are  now  derived  from  Capital's  TAD  Program
($24,806,174  during  the first  half of fiscal  1998),  with the  international
trading division accounting for slightly over 33% ($14,420,358) of the Company's
total gross revenues for this period.


 As  stated  in the  Company's  Annual  Report  on Form  10-K for  fiscal  1997,
 management may elect to terminate  Allstate's  operations and to phase out this
 aspect of its  operations  during fiscal 1998. No final  decision on this issue
 has yet been reached.  During the first half of fiscal 1998,  Allstate's  total
 sales  aggregated  only $16,446 which  amounted for less than 1/10 of 1% of the
 Company's total revenue.
                                                                          F-14

<PAGE>                                                                  
                                                

II.  Discussion of Financial Condition


 On a consolidated  basis,  at December 31, 1997 the Company had total assets of
$21,653,238 (compared with $19,364,462 at June 30, 1997, the end of fiscal 1997)
with total current  liabilities of $2,214,304  (compared with $3,127,180 at June
30, 1997). Of the Company's  assets at December 31, 1997,  $2,532,068 was in the
form of cash and cash equivalent  (compared to $7,352,465 at June 30, 1997). The
substantial  decrease in cash and cash  equivalent at December 31, 1997 reflects
the utilization of a significant  portion of the proceeds of a private placement
of the Company's  common stock  completed on June 30, 1997,  wherein the Company
realized  $6,850,000 in gross  proceeds,  most of which  remained in the form of
cash at the Company's fiscal year-end. For the most part, the proceeds from this
private  placement  were  utilized to  purchase  TADs as part of  Capital's  TAD
Program.


In  addition to cash,  $9,573,742  represents  trade  accounts  receivable,  and
$9,198,912 represented TADs receivable (including $5,383,194 of TADs, which have
been sold to a bank).  The increase in the Company's assets at December 31, 1997
over fiscal year end was  principally  due to the  increase in cash on hand,  an
increase in trade acceptance  drafts  receivable,  including both "TADs in safe"
and "Due from banks," and trade accounts receivable.


 At December 31, 1997, the Company's  total  stockholders'  equity  increased to
$19,400,277,  as compared to $16,192,117 at June 30, 1997. The principal  source
of funds for the  Company's  operations  are  revenues  earned by its  operating
subsidiaries.  As previously reported, on June 30, 1997, the Company concluded a
private placement of its common stock pursuant to Regulation D promulgated under
the Securities Act of 1933 and received gross proceeds  therefrom of $6,850,000.
Virtually all the proceeds from this offering were designated by the Company for
the continued  expansion of Capital's TAD Program. A significant  portion of the
proceeds received were utilized for the purchase of TADs by Capital.


 During the balance of the  current  fiscal  year,  ending  June 30,  1998,  the
Company projects no significant  additional  capital  expenditures in connection
with any of the Company's  operations  except in  connection  with the continued
expansion of the operations of Capital.  Management  plans to establish a number
of additional  Sales and Marketing  Offices in connection  with the marketing of
Capital's  TAD Program and has during the first quarter  established  definitive
plans for three new sales offices for Capital.  However, no estimate can be made
at this time of the total cost of such expansion or the potential impact, either
positive or negative, upon revenues or profits during fiscal 1998.


At  December  31,  1997  the  Company  also  had  property,   less   accumulated
depreciation,  of $309,071, (compared to $238,305 at June 30, 1997) and security
deposits,  prepaid expenses and loans to employees of $26,542, $7,517 and $5,386
respectively. In connection with the Company's relocation during fiscal 1990, it
received an 18-month rent abatement from its landlord.  To conform to applicable
accounting  procedures,  the value of this abatement is being amortized over the
life of the lease. At December 31, 1997 the Company continued to show $38,657 in
deferred rent liability.


 Based  upon  available  cash on hand and  expected  revenues  from  operations,
management is of the opinion that it will have adequate  available funds to meet
its anticipated  capital  expenditures  and cash needs for the balance of fiscal
1998.  Thereafter,  future  capital  expenditures  will be  decided  based  upon
operating  results and available  revenues from operations.  Apart from expenses
associated  with the  implementation  of Capital's  operations,  which cannot be
estimated at this time,  management  projects no significant  additional capital
expenditures in connection with its operations during the next twelve months.


 On  a  consolidated  basis,   management  believes  that  operations  from  its
subsidiaries  will  continue to reflect a profit in fiscal  1998 and  management
expects that  revenues  will be adequate to meet the  Company's  operating  cash
needs. The Company plans to draw working capital from cash on hand and operating
revenues.

 At December  31, 1997,  the Company had totally  eliminated  outstanding  loans
payable  to its  bank,  which  had  totaled  $339,815  at  September  30,  1997,
representing  advances  against  Capital's  credit line. This credit line from a
major  European  Bank is fully  secured by the proceeds due from TADs which have
been sold to its bank but which have not yet been collected.  Consequently,  the
payment of these  outstanding  loans is not  expected to have an impact upon the
Company's liquidity. This loan amount is constantly changing based upon a number
of factors including the total amount of TADs sold to the bank and the extent to
which  Capital  needs to utilize  this credit  facility.  As of the date of this
Report,  the Company has a total credit facility  available of $3.5 Million,  in
the aggregate,  with its bank. As of December 31, 1997, no part of this facility
was being used by Capital.
                                                                           F-15
<PAGE>

 During June, 1997,  Capital secured an additional  credit facility from a major
US bank,  in the  amount of $3  Million.  At  December  31,  1997 this  facility
remained  unused  and  management  is now  negotiating  to extend and expand the
credit facility.  If these  negotiations  are successful,  this facility will be
available  to  finance  the  continued  purchase  of TADs by  Capital  from  its
customers in much the same manner as its other existing bank facility.


Effective December 15, 1997, the Company secured a third facility for up to $5.5
Million from a private  financial  overseas  institution.  This facility permits
Capital to sell TADs  received  from  qualified  customers  to this  institution
without  recourse to  Capital.  During any period  where this  facility is used,
Capital  will be charged  interest  on open  amount  during the time TADs remain
unpaid equal to Libor plus 2 points.



Actrade Capital Inc. And The Trade Acceptance Draft Program.

Following a complete  revision of the operating  plan for Capital in late fiscal
1993,  management developed new trade financing programs intended to be marketed
to domestic companies in the United States. In late fiscal 1993, Capital offered
its first financial program to assist companies in the management and collection
of small open accounts  receivable - The TAD Program.  During  fiscal 1994,  the
first  full  year  of  operations  for  this  Program,  although  still  in  its
development stage, Capital generated gross revenues of $927,757,  as compared to
$247,809 during fiscal 1993. During fiscal 1994 the Company incurred general and
administrative   expenses  directly  attributable  to  Capital's  operations  of
$180,469 resulting in a loss from Capital's  operations,  before interest income
and expenses, of $76,649. After interest income of $28,956,  interest expense of
$1,918 and provision for taxes of $779, the net loss from operations for Capital
during  fiscal  1994 was  $50,390.  Although  showing a modest  loss,  Capital's
operating results for fiscal 1994 exceeded management's expectations.

 During fiscal 1995, management decided to implement an aggressive new marketing
plan for the TAD  Program,  principally  in  response to the  perceived  need to
educate  potential  participants in the Program about how trade acceptances work
and how they could  benefit from the TAD  Program.  As a result,  during  fiscal
1995,  Capital generated total gross revenues of $3,703,493,  almost 300% higher
than in fiscal  1994.  Direct  general and  administrative  expenses for Capital
totaled  $120,175  during fiscal 1995 and, had  management not elected to make a
year-end allocation of indirect general and administrative  over-head costs, net
income before taxes would have been  approximately  $215,153.  However,  due the
year-end  allocation to Capital of a share of the Company's indirect general and
administrative  costs in the amount of $208,000,  Capital  reflected net pre-tax
income of only $7,153.


During fiscal 1996,  Capital  generated gross revenues of $7,993,932,  over 116%
higher than fiscal  1995,  with direct  general and  administrative  expenses of
$274,265,  a decrease of over 16% from  fiscal 1995 (as  adjusted to include the
1995 year-end allocation). For fiscal 1996, Capital operations reflected a gross
profit of $526,386,  with net pre-tax  income of  $106,377,  an increase of more
than 1,387% from fiscal 1995.


During fiscal 1997,  ended June 30, 1997,  Capital  generated  gross revenues of
$21,668,573,  over 171%  higher  that  fiscal  1996,  with  direct  general  and
administrative  expenses of $993,197,  an increase of 262% over fiscal 1996. The
dramatic increase in both gross revenues and general and administrative expenses
during fiscal 1997 were the direct result of management's  aggressive  expansion
of its marketing  efforts for its TAD Program during fiscal 1997, which included
the  opening of two  Regional  Sales and  Marketing  offices.  For fiscal  1997,
Capital's  operations  reflected a gross profit of $1,366,322 (up more than 159%
from fiscal 1996),  with net pre-tax  income of $224,669 (up more than 111% over
fiscal 1996).


During the first half of fiscal 1998, Capital's revenues reached $24,806,174, as
compared with  $7,312,871 for the first half of fiscal 1997 (ended  December 31,
1996), an increase of over 239%. Cost of revenues totaled $23,234,002  resulting
in gross profits of  $1,572,172  during the first half as compared to $6,853,928
and $458,943 respectively. This represented an increase in gross profits of more
than  242%  over  last  year.  After  general  and  administrative  expenses  of
$1,071,823,  interest  expense of $62,392  and  provision  for taxes of $65,694,
Capital realized net income from its operations of $372,263,  as compared to net
income of only  $91,064  an  increase  of over 308%.  During the first  quarter,
management began  implementation of the next phase of its expansion program.  It
remains too early for management to make any forecast with respect to the impact
upon the Company earnings resulting from these new efforts.
                                                                          F-16

<PAGE>

As  previously  reported,  on December 2, 1997 the United States Patent
Office  officially  granted to Mr. Amos Aharoni a patent with respect to the use
of trade  acceptance  drafts in Capital's TAD Program.  Mr. Aharoni has assigned
all  of  his  right,  title  and  interest  in and to  said  patent  to  Actrade
International,  Ltd. in  consideration of the payment of $1.00. Mr. Aharoni will
not be  entitled  to  receive  any other  form of  compensation  or  royalty  in
connection with said patent.


IV.  Trends Affecting Liquidity, Capital Resources and Operations

Actrade International Corp. - Export Division.

Over the years,  economic  conditions  in the United  States  have  caused  many
American   manufacturers  to  seek  new  markets  for  their  products  and,  in
particular,  to turn to foreign  markets  to boost  domestic  sales.  Management
believes  that over the past  several  years this trend,  coupled  with  renewed
demand for American  products and improved  buying power of foreign  currencies,
has been  beneficial to the Company" export division and has been a major factor
in the growth of this division.

This  trend is now being  affected  by a number  of other  factors  which  could
adversely affect future growth rates for the Company's export  operations.  Most
importantly  among these has been the renewed  strength of the  American  Dollar
compared  to other  currencies  which  has had the  effect  of  making  American
products too expensive to compete with foreign-made  products.  Principally this
is due to the impact  that  reduced  foreign  labor costs have upon the price of
competitive merchandise.




Actrade S.A. - International Trade Division.


 To meet the changing conditions in the international  marketplace,  the Company
initiated an expansion of the  operations  of Actrade  S.A.,  which  compliments
export operations by providing foreign sources for products. Management believes
that by utilizing the foreign  network  available to Actrade S.A. as a source of
comparable,  less  expensive  foreign made  products,  the Company will gain the
flexibility  needed to meet changing  product  demands over the coming years and
adequately  offset any decline in its export  operations.  These changing trends
have been the principal  reason for the dramatic  increase in sales  revenues by
Actrade S.A.



Another result of these changing  world  conditions,  which recently have had an
adverse   impact  on  foreign   markets  for  US  products  (and  probably  most
importantly)  has been the  impact  of the  availability  of (or lack of)  trade
financing.  In management's  opinion, the real "key" to success in international
trading has, at least at present,  become the ability to provide trade financing
in addition to competitive  pricing for products.  To meet this changing  market
demand,  during  fiscal 1997 the Company  initiated a further  expansion  of the
international  trading  operations of Actrade S.A. Due to the financial strength
of the Company,  Actrade S.A. has been in a position to fill the financing  void
created by the dramatic  increase in worldwide  demand,  thereby  allowing it to
capture a larger share of the current market demand.

The effects of this trend are  evident in the  Company's  operating  results for
both fiscal  1997 and during the  current  period.  Sales by Actrade  S.A.  rose
dramatically  from  $7,689,000  during fiscal 1996 to $14,743,695  during fiscal
1997 and  $14,420,358  for the first half of fiscal 1998 (compared to $5,379,169
for the first half of fiscal 1997). Apart from proving  management's  assumption
that as sales of US products decrease,  sales of foreign products will increase,
these results also point out another  important  factor,  to wit, that worldwide
demand for all types of  products  is  increasing.  However,  management  cannot
predict whether the extraordinary rise in sales revenues  experienced by Actrade
S.A.  will  continue.  At  present,   while  product  demand  is  high  and  the
availability of trade financing is low, Actrade S.A. enjoys a favorable position
in the market.  As these factors  stabilize and as trade financing  becomes more
readily available, it is likely that this advantage will decrease.

C. Actrade Capital, Inc.

With respect to the TAD Program,  management has not identified any trends which
have had, or which can reasonably be expected in the future to have, any adverse
impact upon the  operations of Capital or the TAD Program in general.  As of the
date of this report,  management is not aware of any other  company  operating a
program similar to the TAD Program and, as demonstrated by Capital's growth rate
since the  introduction  of the TAD Program (see  discussion  above),  Capital's
revenues and profits continue to reach new record levels each quarter.


Management  knows of no other  trends  reasonably  expected  to have a  material
impact upon the Company's operations or liquidity in the foreseeable future.

                                                                        F-17


<PAGE>



Part II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

         None during this period.


                                                                        


<PAGE>






                            SIGNATURES




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



Dated:  February 4, 1998



                                    ACTRADE INTERNATIONAL, LTD.




                                    BY:_/s/Alexander C.  Stonkus
                                       Alexander C. Stonkus,
                                       Chief Financial Officer