SECURITIES AND EXCHANGE COMMISSION
                                              Washington, D.C. 20549




                                                    FORM 10-QSB

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

                      For the quarterly period ended   September 30, 1996

                                                        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 October 29, 1996

Common Stock, par value $0.0001
 per share                                               6,330,681




<PAGE>























                                        INDEX



Part I.  Financial information


  Item 1.  Consolidated condensed financial statements:


                 Balance sheet as of September 30, 1996                   F-2

                 Statement of operations for three
                  months ended September 30, 1996 and 1995                F-3

                 Statement of changes in shareholders' equity             F-4

                 Statement of cash flows for the three
                  months ended September 30, 1996 and 1995                F-5

                Notes to consolidated condensed financial statements F-6 - F-10



  Item 2.  Management's discussion and analysis of financial
            condition                                               F-11 - F-15


Part II.  Other information


Signatures

















                                                                        F-1


<PAGE>



                                   ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                                       CONDENSED CONSOLIDATED BALANCE SHEET

                                                SEPTEMBER 30, 1996
                                                    (Unaudited)




                                                      ASSETS


Current assets:
  Cash, including time deposits of $750,000                        $1,920,876
  Accounts receivable, less allowance for
   doubtful accounts of $25,000                                     3,886,019
  Trade acceptance draft receivable, bank (Note 7)                  2,884,817
  Accounts receivable, other                                           99,242
  Prepaid expenses                                                     62,248
  Interest receivable                                                   6,559
                                                                    ----------
     Total current assets                                           8,859,761
                                                                    ---------

Property and equipment:
  Furniture and fixtures                                              169,790
  Leasehold improvements                                              113,902
                                                                      -------
                                                                      283,692
  Less accumulated depreciation                                       178,828
                                                                      -------
                                                                      104,864
                                                                      -------

Other asset, security deposits                                         15,983
                                                                       ------

                                                                   $8,980,608
                                                                   ==========



                    LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:
  Cash advance from bank (Note 7)                                  $  547,615
  Accounts payable                                                  1,580,983
  Accrued expenses                                                      9,076
  Due to affiliates                                                     3,126
  Income taxes payable (Note 8)                                        28,777
                                                                    ----------
    Total current liabilities                                       2,169,577
                                                                    ---------

Commitments (Note 5)

Deferred rent liability (Note 5)                                      53,444
                                                                    ----------

Shareholders' equity:
  Common stock, $.0001 par value; authorized
   100,000,000 shares, issued and outstanding 6,191,681                  619
  Common stock purchase warrants (Note 9)
  Additional paid in capital                                       4,715,091
  Retained earnings                                                2,041,877
                                                                  ----------
                                                                   6,757,587
                                                                   ---------

                                                                  $8,980,608
                                                                  ==========







     See notes to condensed consolidated financial statements.
                                                                          F-2



<PAGE>



                        ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                       CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                       THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
                                       (Unaudited)












                                                  1996               1995
                                                  ----               ----


Net sales                                     $7,578,034         $5,481,776

Cost of sales                                  6,903,814          5,038,646
                                              ----------         ----------

Gross profit                                     674,220            443,130

Selling, general and administrative
 expenses                                        385,362            286,852
                                               ----------         ----------

Income from operations                           288,858            156,278
                                               ----------         ----------

Other income (charges):
  Interest income                                 10,499             29,098
  Interest expense                           (    25,512)       (    24,809)
                                               ----------         ----------
                                             (    15,013)             4,289
                                               ----------         ----------

Income before income taxes                       273,845            160,567

Income tax expense (Note 9)                       13,970             16,771
                                               ----------         ----------

Net income                                    $  259,875         $  143,796
                                               ==========         ==========

Earnings per common share:
  Primary                                     $     0.05         $     0.03
                                               ==========        ===========
  Fully diluted                               $     0.04         $     0.03
                                               ==========        ===========

Weighted average common shares
 outstanding (Note 10)
   Primary                                     5,701,621          5,330,681
                                               ==========         ==========
   Fully diluted                               5,811,621          5,330,681
                                               ==========         ==========
















     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, 1994 TO SEPTEMBER 30, 1996
                              (Unaudited)












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


Balance at June 30, 1994  5,006,354  $ 501   $1,474,331  $  616,835  $2,091,667

Exercise of warrants        324,327     32      567,542                 567,574

Net income for the year
 ended June 30, 1995                                        407,793     407,793
                           ---------   ----   ----------  ---------- ----------

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    508,500      51    1,607,954              1,608,005

Net income for the three
 months ended September 30,
 1996                                                       259,875     259,875
                          ---------    ----   ---------- ----------  ----------

Balance at September 30, 
1996                     $6,191,681    $619   $4,715,091 $2,041,877  $6,757,587
                          =========    ====  ==========  ==========  ==========





















     See notes to condensed consolidated financial statements.


                                                                          F-4


<PAGE>



                  ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                      THREE MONTHS ENDED SEPTEMBER 30, 1996
                                   (Unaudited)



                                                        1996              1995
                                                        ----              ----

Cash flow from operating activities:
  Net income                                        $  259,875       $  143,796
  Adjustments to reconcile net income
   to cash provided from operating
   activities:
     Depreciation                                        6,802            5,503
  Changes in operating assets and liabilities:
    Increase in accounts receivable                (   831,000)     ( 1,079,185)
    Increase (decrease) in accounts receivable,
     other                                         (    99,242)         105,722
    Increase in prepaid expenses                   (    37,433)     (     3,042)
    Increase in interest receivable                (     3,397)     (    29,100)
    Increase (decrease) in accounts payable        (   291,897)         919,668
    Decrease in accrued expenses                   (     1,953)     (     9,300)
    Increase in payroll taxes payable                                       910
    Increase in income taxes payable                     7,475            7,494
    Decrease in customer deposits                  (    55,954)
    Increase in security deposits                  (       949)
    Decrease in deferred rent                      (     2,516)     (     1,809)
    Decrease in deferred taxes                                           13,439
                                                     ----------       ----------

    Net cash provided from (used in) operating
     activities                                    ( 1,050,189)          74,096
                                                     ----------       ----------

Investing activities:
  Source of cash:
    Decrease in loans receivable, affiliates            77,164 
Use of cash:
    Purchase of property and equipment             (     7,973)    (     4,117)
                                                     ----------      ----------

    Net cash provided from (used in) investing
     purchase                                           69,191     (     4,117)
                                                     ----------      ----------

Financing activities:
  Sources of cash:
    Proceeds from issuance of common stock           1,608,005
    Increase in cash advances from bank                                  6,626
  Use of cash:
    Decrease in long-term debt                                     (    45,000)
    Decrease in cash advances, bank                (   630,936)
                                                     ----------     -----------

    Net cash provided from (used in ) financing
     activities                                        977,069     (    38,374)
                                                     ----------      ----------

Net increase (decrease) in cash                    (     3,929)         31,605

Cash, beginning of period                            1,924,805       1,769,049
                                                    ----------      ----------

Cash, end of period                                 $1,920,876      $1,800,654
                                                    ==========      ==========

Supplemental disclosures from cash flow information:
   Cash paid during the year for:
     Interest                                       $   27,465     $   25,109
                                                    ==========      ==========
     Income taxes                                   $   15,973     $      700
                                                    ==========      ==========



        See  notes  to  condensed   consolidated  financial statements


                                                                          F-5


<PAGE>



                         ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                     NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                          THREE MONTHS ENDED SEPTEMBER 30, 1996
                                     (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-QSB.
     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 six 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, 1996, included in its Annual Report filed on Form 10-KSB.  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.  Amworld  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.

     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.


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.  and  American  Cooling,   Inc.  are  included  as  the
subsidiaries of Actrade International, Ltd.

                                                                           F-6


<PAGE>



                  ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                       THREE MONTHS ENDED SEPTEMBER 30, 1996
                                 (Unaudited)



4.  Related party transactions:

     During each of the three years ended  September  30, 1996,  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:

    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
$653 plus cost of living  increases  annually,  capped @ 5% per annum. The lease
was renewed on December 24, 1994 for a three year period under the above terms.


    In August 1996,  Actrade  entered into a 12 month lease expiring  August 31,
1997 with an Illinois  office  suite.  Both parties have the option to terminate
the lease with 30 days written  notice to either party on November 30, 1996. The
lease provides for monthly payments of $1,100 on the first day of each month.


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

                  September 30, 1997                  $77,744
                  September 30, 1998                  $73,010
                  September 30, 1999                  $73,286
                  September 30, 2000                  $31,208


     Lease expense  amounted to $18,329 and $19,128 for the three  months ended
       September 30, 1996 and 1995 respectively.



                                                                          F-7


<PAGE>



                       ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                   NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                            THREE MONTHS ENDED SEPTEMBER 30, 1996
                                       (Unaudited)





6.  Income taxes:

    The components of income tax expense are:
                                                 Three months      Three months
                                                    Ended             Ended
                                                 September 30      September 30
                                                    1996              1995
                                                    ----              ----
    Income taxes currently payable:
      Federal                                   $  7,218            $12,687
      State                                        6,652              3,544
                                                 --------            -------
                                                  13,870             16,231
                                                 --------            -------

    Deferred tax expense arising from:
      Excess of Financial accounting
       depreciation over tax                   (     277)         (    110)

      Excess of rent expense for financial
       accounting over tax deductible rent           377               650
                                                 --------           -------
                                                     100               540
                                                 --------           -------

    Total income tax expense                    $ 13,970           $16,771
                                                ========           =======


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


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

                                              Three months         Three months
                                                 Ended                Ended
                                              September 30         September 30
                                                 1996                 1995
                                                 ----                 ----
   Computed tax at the expected
    statutory rate                            $106,799              $61,239

   Surtax exemption                          (  14,544)            ( 11,233)

   State income taxes, net of federal
    tax benefit                                  6,652                3,544

   Foreign income                            (  85,037)            ( 33,933)

   Tax benefit from utilization of net
     operating loss carryover                                      (  3,386)

   Other                                           100                  540
                                               --------             -------
   Income tax expense                         $ 13,970              $16,771
                                               ========             =======








                                                                           F-8


<PAGE>



                     ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                        THREE MONTHS ENDED SEPTEMBER 30, 1996
                                 (Unaudited)






6.  Income taxes (continued):

    The effective statutory rate for 1996 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
$2,176,384 at September 30, 1996 and $1,412,576 at September 30, 1995.


     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.



8.  Trade Acceptance Drafts receivable, bank:

     As of September 30, 1996, 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 Portugues De
Atlantico  (Bank).  The total TAD amounts due from the banks were  $2,884,817 at
September 30, 1996.  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 and Actrade Capital,  Inc. has granted a security interest in all TAD's
purchased by the bank and all accounts  represented  by the TAD's  together with
all  guaranties  and  collateral,  and all proceeds of the above.  The bank will
purchase each TAD by advancing to Actrade  Capital,  Inc. 75% of the face amount
of each TAD assigned and  delivered  by overdraft on the Actrade  Capital,  Inc.
account. At September 30, 1996 the advances on the overdraft account amounted to
$547,615. As each TAD is collateralized, the face amount will be credited to the
Actrade account to reduce the advanced overdraft. 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-9


<PAGE>



                   ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                     THREE MONTHS ENDED SEPTEMBER 30, 1996
                              (Unaudited)






8.  Outstanding warrants to purchase common stock:

     At September  30, 1996,  the Company had  outstanding  warrants to purchase
110,000  shares of the  Company's  common stock at prices  ranging from $1.75 to
$2.25 per share. The warrants became  exercisable in 1996 and expire in 2001. At
September  30,  1996,  110,000  shares of common  stock were  reserved  for that
purpose.



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


                                                        1996             1995
                                                        ----             ----

     Primary weighted average of shares
      actually outstanding                          5,701,621        5,330,681

     Common stock purchase warrants                   110,000
                                                    ----------       ---------
     Fully diluted weighted average common
      shares outstanding                            5,811,621        5,330,681
                                                    =========        =========


































                                                                          F-10


<PAGE>






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






I.      Results of Operations

During the first three  months of fiscal 1997,  ended  September  30, 1996,  the
Company has combined gross revenues of $7,578,034, as compared to $5,481,776 for
the first three  months of fiscal  1996.  During this  period,  cost of revenues
totaled  $6,903,814  (approximately  91% of  total  revenues),  as  compared  to
$5,038,646 (921% of total revenues).  This represented a slight decrease in cost
of revenues  when  expressed as a percentage  of total  revenues,  reversing the
trend  experienced  during fiscal 1995 and early 1996, when cost of revenues for
the 1996  first  quarter  rose from  88.3% of total  revenues  during  the first
quarter of fiscal  1995.  This  resulted in gross  profits  from  operations  of
$674,220 for the first  quarter of fiscal 1997,  an increase of almost  $231,090
(or approximately 52% higher than the first quarter of fiscal 1996). with income
from  operations  of $288,858 for this  period,  as compared to $156,278 for the
same period last year, an increase of approximately 84.8% over last year.

As discussed in the Company's 10-KSB for the year ended December 31, 1996, there
were two basic  reasons for the  escalating  higher cost of goods,  particularly
when expressed as a percentage of total revenues.  Essentially the nature of the
profit  margins  typical for the  operation  of both  Actrade  S.A.  and Actrade
Capital,  Inc.  ("Capital") have been significantly lower than those experienced
by the Company's other operating  divisions.  Consequently,  management believes
that escalation in cost of revenues experienced throughout fiscal 1995 and early
1996 was due to the changing "mix" in the Company's  revenues resulting from the
higher  percentage of total  revenues  represented  by Actrade S.S. and Capital.
During the first three months of fiscal 1997, in  combination,  Actrade S.A. and
Capital  represented  $5,566,459 of the Company's total revenues for the period,
or over 73%. Although,  in management's opinion, this percentage may continue to
show a further modest increase as Capital  accelerates its marketing  initiative
(see discussion below), management believes that the prior trend of accelerating
costs of revenues has now stabilized  and should not be a significant  factor in
the future.

As in the past,  management is unable to predict  whether or not the  relatively
low profit margins will persist with respect to revenues from Actrade S.A.
during the balance of fiscal 1997.

As a result of  management's  decision  to  substantially  accelerate  marketing
activities by Capital during fiscal 1997,  management  does not believe that the
comparison  of the first  quarter of fiscal 1997 to fiscal 1996 is indicative of
the results to be expected for all of fiscal 1997.  based upon the first quarter
of fiscal 1997,  and  management's  expected  results from its newly  introduced
marketing incentive for Capital, no estimate of operating results can be made at
this time, although management believes that the Company will, on a consolidated
basis,  continue  reflect net  operating  profits  above the levels  experienced
during fiscal 1996.










                                                                          F-11


<PAGE>








The  increase in gross  revenues  during  this period  (over 38% above the first
three months of fiscal  1996) was  primarily  due to the  expansion of Actrade's
operations  through (I) the continued  growth of Capital,  discussed  separately
below (see "III Actrade Capital,  Inc. And The Trade Acceptance Draft Program"),
and (ii) the continued growth within Actrade's existing product lines, including
Actrade S.A. As was the case during fiscal 1996, the increase in revenues during
this  period  resulted  from  increased  product  sales  rather  than from price
increases  for the  Company's  products  and  operating  revenues  derived  from
Capital.

As a result of foregoing  factors,  the Company's net operating income expressed
as a percentage of gross  revenues  increased  from 2.6% at the end of the first
quarter of fiscal 1996 to 3.4% at the end of the first  quarter of fiscal  1997.
For the reasons discussed above, management believes that this ratio will remain
stable  during  fiscal  1997.  Further,   management  believes  the  results  of
operations  for the first quarter of fiscal 1997 show the  continued  success of
the Company's expansion program and its cost cutting measures.

After  interest  income of $10,499 and interest  expense of $25,512  during this
period (compared to $29,098 and $24,809 respectively during the first quarter of
fiscal 1996),  and all allowance for income tax expense,  the Company realized a
net profit for the period of  $259,875  as  compared  to  $143,796  for the same
period last year, an increase of approximately 80.7%. Management attributes this
substantial  increase  principally  to the higher  revenues  from  Capital  (see
"Actrade Capital, Inc. And The Trade Acceptance Draft Program") below.

During the first  quarter of fiscal 1997,  Allstate  had, and continues to have,
extremely  limited  operations,   a  situation  expected  to  continue  for  the
foreseeable  future.  During the first three months of fiscal  1997,  Allstate's
total sales have aggregated only $4,253, which continue to account for less than
1/10 of 1% of the Company's total revenues for this period.


II.     Discussion of Financial Condition

On a consolidated  basis,  at September 30, 1996 the Company had total assets of
$8,980,608  (compared with  $8,088,521 at June 30, 1996, the end of fiscal 1996)
with total  liabilities  of  $2,223,021  (compared  with  $3,198,814 at June 30,
1996). Of the Company's assets at September 30, 1996, $1,920,876 was in the form
of cash  and  cash  equivalents  (compared  to  $1,924,805  at June  30,  1996),
$3,886,019  represents accounts  receivable  (compared to $3,361,821 at June 30,
1996),  and $2,884,817 was in the form of trade  acceptance  drafts  receivable,
bank (compared to $2,578,015 at June 30, 1996). The very slight decrease in cash
on hand at September 30, 1996 was  principally  due to routine  fluctuations  in
cash on hand  from the  Company's  operations..  The  increase  of  $520,565  in
accounts receivables  outstanding at September 30, 1996, as well as the decrease
in accounts payable  ($1,580,983 at September 30, 1996 compared to $1,872,880 at
June 30, 1996) was  principally  due to the normal effects of increased sales by
Actrade S.A.,  coupled with the Company's  election to pay down its  outstanding
payables  with a  portion  of the funds  received  from the  Company's  recently
completed  private  placement  of its  securities.  Similarly,  the  substantial
decrease in cash  advanced from bank,  which  represents  the Company's  advance
payment  from the sale of the  trade  acceptance  drafts  to its bank  under its
credit  agreements,  ($547,615 at September  30, 1996  compared to $1,178,551 at
June 30, 1996) also  represents  the election by the Company not to draw against
its available  credit lines with its bank but,  rather,  to utilize a portion of
the funds raised in its recently completed private placement.




                                                                          F-12


<PAGE>













The Company's accounts payable are all current.

At September 30, 1996 the Company had Retained Earnings of $2,041,877 with total
Shareholders'  Equity of $6,757,587,  compared with  $1,782,002 and  $4,889,707,
respectively,  at June 30, 1996. The principal source of funds for the Company's
operations are revenues earned by the Company's operating subsidiaries. However,
during the first quarter of fiscal 1997, the Company completed a further portion
of its recently  completed  private  placement of its securities and received an
additional  $1,658,250,  gross proceeds,  which also accounts,  in part, for the
substantial increase in Stockholders' Equity.

At September 30, 1996 the Company had property and equipment,  less  accumulated
depreciation,  of $104,864  (compared to $103,705 at June 30, 1996) and deferred
taxes and deposits of $13,970, compared to $21,302 at the end of fiscal 1996. In
connection with the Company's  relocation  during fiscal 1990, it received an 18
month rent abatement.  In conformity with  accounting  procedures,  the value of
this  abatement  is  amortized  over the  life of the  lease.  Consequently,  at
September  30,  1996 the Company  continued  to show  $53,444 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 capital  expenditures  for the balance of fiscal  1997.  Thereafter,  future
capital  expenditures  will be decided  based  upon  operating  results  and net
revenues  from  operations.   At  present,  the  Company's  principal  expansion
activities involve the net revenues from operations.  At present,  the Company's
principal  expansion  activities involve the marketing of Capital's TAD Program,
which activities involve no significant capital expenditures.

Management  continues  to  investigate  new  product  lines for  addition to its
existing product offerings through its international trade division.

With respect to the Company's  working capital needs,  management  believes that
operating  revenues from its subsidiaries will continue to reflect a profit on a
consolidated  basis  during the  balance of fiscal 1997 and  management  expects
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
which are  expected to be adequate to meet the  Company's  requirements  for the
foreseeable future.

As of the date of this report,  of the Company's  total  accounts  receivable at
June 30, 1996, in the amount of $3,361,821 approximately 95% have been collected
and, of the balance, approximately $168,000 is secured by commercial documentary
drafts.














                                                                          F-13


<PAGE>










III.    Impact of Financial Service Division

During  fiscal  1994,  the first full year of  operations  for the TAD  Program,
although still in its  development  stage,  Capital  generated gross revenues of
$927,757 (as compared to $247,809  during  fiscal 1993)  resulting in a net loss
from  operations  for  Capital  of  $50,390.  Although  showing  a modest  loss,
Capital's operating results for fiscal 1994 exceeded management's  expectations.
During fiscal 1995, management  implemented an aggressive new marketing plan for
the TAD  Program,  principally  in  response  to the  perceived  need to educate
potential  participants in the TAD 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  fiscal  1994,  which  resulted in a net
operating profit for fiscal 1995 of $7,153 - however, had management not elected
to make a year-end  allocation of indirect general and administrative  over-head
costs in the amount of $208,000,  net  operating  profits for Capital would have
been approximately $215,153.

Capital's  operating  revenues  during the first  quarter of fiscal 1997 totaled
$3,046,421,  or  approximately  40% of the Company's  total revenues during this
period as compared to total revenues of $1,522,564,  or  approximately  27.8% of
total revenues,  during the first quarter of fiscal 1996. Revenues for the first
quarter of fiscal 1997  represented an increase of  approximately  100% over the
same period last year.  During this period,  Capital also had interest income of
$10,499,  incurred selling,  general and administrative expenses of $158,986 and
interest expense of $25,479, which resulted in net operating income before taxes
of $22,620.


IV.     Trends Affecting Operations

Over the years  management  has  observed a  substantial  increase in demand for
American  made  products.  In  management's  opinion,  this is due to a  renewed
confidence  in quality of  American  products  and the  relative  weakness of US
dollar as compared to other major foreign currencies.  This has formed the basis
of the Company's operating  philosophy since 1989 and, in management's  opinion,
continues to favor continued growth over the foreseeable  future.  Combined with
the  recent  changes  in world  political  structures,  particularly  in Eastern
Europe,  management  believes  that world  demand  for  American  products  will
continue to increase at least over the foreseeable future.

Economic conditions in the United States have caused many American manufacturers
to seek new markets for their  product  and, in  particular,  to turn to foreign
markets to boost domestic sales.  Management  believes that this trend,  coupled
with renewed demand for American  products and improved  buying power of foreign
currencies,  has been  beneficial  to the Company and has been a major factor in
its growth over the past three years. This trend, although expected to continued
for the foreseeable  future,  is now being affected by a number of other factors
which could  adversely  affect  future  growth rates for the  Company's  present
operations.










                                                                        F-14


<PAGE>









Recently,  management  has  observed  that,  with the  collapse  of  traditional
political and  ideological  barriers,  the demand for products from all parts of
the world has increased perceptibly with many developing and third world nations
now  looking  for  products  from  many  different  countries.   This  has  been
particularly  true of countries  with "soft"  currencies  (i.e.  currencies  not
readily  exchangeable  into  established  currencies such as British pounds,  US
dollars,  etc.),  such as the  emerging  countries of Eastern  Europe,  which at
present are unable to pay for their purchases in US dollars. Management believes
that the greatest demand for all kinds of foreign products (including those from
US and other industrial  nations) will be seen from these newly developing third
world  countries over the next few years.  To meet this changing  market demand,
the Company initiated an expansion of Actrade's  operations by providing foreign
sources for products.

Over the  long-term,  as the US  economy  continued  to  improve  and the dollar
strengthens with respect to other currencies,  foreign buying power for American
products may decrease  causing foreign buyers to look for  comparable,  but less
expensive,  products from other sources. Although it is impossible to predict at
this time the  extent to which this  trend may  affect  the  competitiveness  of
American products overseas,  it is likely that any significant decline in buying
power of foreign  currencies  will have an  adverse  impact  upon the  Company's
present  operations.  Although no assurances can be given,  management  believes
that by  utilizing  its  foreign  network  both to promote new sales of American
products and 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.

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


Part II.  Other information


Item 6. Exhibits and Reports on Form 8-K

        None during this report

                                                                          F-15

<PAGE>



                             SIGNATURES


Pursuant to the regulations 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: October 31,1996




                                     ACTRADE INTERNATIONAL, LTD.


                                     BY:/S/Amos Aharoni
                                       ___________________________
                                       Amos Aharoni
                                       Chief Executive Officer