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   September 30, 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 October 31, 1997

Common Stock, par value $0.0001
 per share                                               8,043,352




<PAGE>


















                                                       INDEX



Part I.  Financial information


  Item 1.  Consolidated condensed financial statements:


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

               Statement of operations for three
               months ended September 30, 1997 and 1996                 F-3

               Statement of changes in shareholders' equity             F-4

               Statement of cash flows for the three
               months ended September 30, 1997 and 1996                 F-5

               Notes to consolidated condensed financial statements  F-6 - F-12



  Item 2.  Management's discussion and analysis of financial
            condition                                               F-13 - F-16


Part II.  Other information


Signatures




















                                                                          F-1


<PAGE>



                                   ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                                       CONDENSED CONSOLIDATED BALANCE SHEET

                                       SEPTEMBER 30, 1997 AND JUNE 30, 1997
                                                    (Unaudited)



                                                      ASSETS

<TABLE>
<CAPTION>
<S>                                                                               <C>                <C>
                                                                                   September 30,        June 30,
                                                                                        1997              1997

Current assets:
  Cash, including time deposits of $2,606,847 at    
   September 30, 1997                                                              $ 2,924,109        $ 7,352,465
  Accounts receivable, less allowance for
   doubtful accounts of $35,000                                                     11,157,228          5,269,516
  Accounts receivable, trade acceptance drafts                                       7,270,841          6,477,424
  Prepaid expenses                                                                      37,370              9,010
                                                                                   -----------        -----------
     Total current assets                                                           21,389,548         19,108,415
                                                                                   -----------        -----------

Property and equipment:
  Furniture and fixtures                                                               333,095            308,717
  Leasehold improvements                                                               143,915            142,672
                                                                                   -----------        -----------
                                                                                       477,010            451,389
  Less accumulated depreciation                                                        228,190            213,084
                                                                                   -----------        -----------
                                                                                       248,820            238,305
                                                                                   -----------        -----------

Other asset, security deposits                                                          23,742             17,742
                                                                                   -----------        -----------

                                                                                   $21,662,110        $19,364,462



                                       LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:
  Cash advance from bank                                                           $   339,815        $ 1,019,392
  Customer deposits                                                                                        26,587
  Accounts payable                                                                   3,262,682          1,995,148
  Accrued expenses                                                                       7,116             11,759
  Payroll taxes payable                                                                  2,764              6,862
  Income taxes payable                                                                 107,636             67,432
                                                                                   -----------        -----------
    Total current liabilities                                                        3,720,013          3,127,180
                                                                                   -----------        -----------

Commitments

Deferred rent liability                                                                 41,912             45,165
                                                                                   -----------        -----------

Shareholders' equity:
  Common stock,  $.0001 par value;  authorized  100,000,000  shares,  issued and
   outstanding 8,014,251 shares at September 30, 1997 and
   7,470,681 at June 30, 1997                                                              801                747
  Common stock purchase warrants
  Additional paid in capital                                                        13,260,946         12,505,787
  Retained earnings                                                                  4,638,438          3,685,583
                                                                                   -----------        -----------
                                                                                    17,900,185         16,192,117

                                                                                   $21,662,110        $19,364,462
</TABLE>




     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, 1997 AND 1996
                                                    (Unaudited)












<TABLE>
<CAPTION>
<S>                                                                                   <C>                 <C> 
                                                                                      1997                1996
                                                                                      ----                ----


Net sales                                                                          $20,001,585         $7,578,034

Cost of sales                                                                       18,294,246          6,903,814
                                                                                   -----------         ----------

Gross profit                                                                         1,707,339            674,220

Selling, general and administrative
 expenses                                                                              686,067            385,362
                                                                                   -----------         ----------

Income from operations                                                               1,021,272            288,858
                                                                                   -----------         ----------

Other income (charges):
  Miscellaneous income                                                                   9,436
  Interest income                                                                       50,368             10,499
  Interest expense                                                               (      4,484)       (    25,512)
                                                                                  -----------         ----------
                                                                                        55,320       (    15,013)
                                                                                   -----------        ----------

Income before income taxes                                                           1,076,592            273,845

Income tax expense                                                                     123,737             13,970
                                                                                   -----------         ----------

Net income                                                                         $   952,855         $  259,875
                                                                                   ===========         ==========

Earnings per common share:
  Primary                                                                      $      0.12$     0.05
                                                                               =====================
  Fully diluted                                                                $      0.12$     0.05
                                                                               =====================

Weighted average common shares
 outstanding
   Primary                                                                           8,059,416          5,811,621
                                                                                   ===========         ==========
   Fully diluted                                                                     8,059,416          5,811,621
                                                                                   ===========         ==========




</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 SEPTEMBER 30, 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                                           543,570           54            755,159                             755,213

Net income for the three
 months ended September
 30, 1997                                                                                           952,855            952,855
                                                 ---------         ----        -----------      -----------        -----------

Balance at September 30,
 1997                                            8,014,251         $801        $13,260,946       $4,638,438        $17,900,185
                                                 =========         ====        ===========       ==========        ===========




</TABLE>







     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, 1997 AND 1996
                                   (Unaudited)









<TABLE>
<CAPTION>
<S>                                                                                     <C>                <C> 
                                                                                        1997               1996
                                                                                        ----               ----

Cash flow from operating activities:
  Net income                                                                        $  952,855         $  259,875
  Adjustments to reconcile net income
   to cash provided by operating activities:
     Depreciation                                                                       15,106              6,802
  Changes in other operating assets and liabilities:
    Accounts receivable                                                           ( 6,681,129)       (   831,000)
    Accounts receivable, other                                                                       (    99,242)
    Prepaid expenses                                                              (    28,360)       (    37,433)
    Interest receivable                                                                              (     3,397)
    Accounts payable                                                                 1,267,534       (   291,897)
    Accrued expenses                                                              (     4,643)       (     1,953)
    Payroll taxes payable                                                         (     4,098)
    Income taxes payable                                                                40,204              7,475
    Customer deposits                                                             (    26,587)       (    55,954)
    Security deposits                                                             (     6,000)       (       949)
    Deferred rent                                                                 (     3,253)       (     2,516)
                                                                                   ----------         ----------

    Net cash used in operating activities                                         ( 4,478,371)       ( 1,050,189)
                                                                                   ----------         ----------

Investing activities:
  Decrease in loans receivable, affiliates                                                                 77,164
  Purchase of property and equipment                                              (    25,621)       (     7,973)
                                                                                   ----------         ----------

    Net cash provided by (used in) investing
     activities                                                                   (    25,621)             69,191
                                                                                   ----------          ----------

Financing activities:
  Proceeds from issuance of common stock                                               755,213          1,608,005
  Decrease in cash advances, bank                                                 (   679,577)       (   630,936)
                                                                                   ----------         ----------

    Net cash provided by financing activities                                           75,636            977,069
                                                                                    ----------         ----------

Net decrease in cash                                                              ( 4,428,356)       (     3,929)

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

Cash, end of period                                                                 $2,924,109         $1,920,876
                                                                                    ==========         ==========

Supplemental disclosures from cash flow information:
   Cash paid during the year for:
     Interest                                                                       $    4,484         $   27,465
                                                                                    ==========         ==========
     Income taxes                                                                   $   88,946         $   15,973
                                                                                    ==========         ==========

</TABLE>





     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, 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.  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.









                                                                       F-6


<PAGE>



                           ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                THREE MONTHS ENDED SEPTEMBER 30, 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. and
      American Cooling, Inc. are included as the subsidiaries of Actrade
      International, Ltd.



4. Related party transactions:

    During each of the three years ended September 30, 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.






                                                                        F-7


<PAGE>



                         ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                     NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                              THREE MONTHS ENDED SEPTEMBER 30, 1997
                                         (Unaudited)




5.  Leases (continued):

    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.

    In August  1996,  Actrade  Capital,  Inc.  entered  into a 12  month  lease
    expiring on August 31, 1997 for space in an Illinois office suite.  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.

    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.

    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.

    Beginning November 1, 1997, Actrade Capital, Inc. entered into a lease
    agreement for office space in Illinois.  The lease is for a one year
    period and carries rent at $2,502 per month.

    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:


                      September 30, 1998                         $131,154
                      September 30, 1999                         $ 96,645
                      September 30, 2000                         $ 29,023


      Rent  expense   amounted  to  $32,507  and  $18,329  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 and 1995,  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

                                  THREE MONTHS ENDED SEPTEMBER 30, 1997
                                             (Unaudited)






6. Income taxes:

    The components of income tax expense are:
                                                Three months      Three months
                                                   Ended             Ended
                                                September 30      September 30
                                                   1997              1996
    Income taxes currently payable:
      Federal                                   $ 80,967          $  7,218
      State                                       44,270             6,652
                                                --------           --------
                                                 125,237            13,870
                                                --------           --------

    Deferred tax expense arising from:
      Excess of Financial accounting
       depreciation over tax                   (   1,012)        (     277)

      Excess of rent expense for financial
       accounting over tax deductible rent    (     488)               377
                                                --------           --------
                                              (   1,500)               100
                                                --------           --------

    Total income tax expense                   $123,737           $ 13,970
                                               ========            ========


    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
                                                      1997             1996
                                                      ----             ----
      Computed tax at the expected
       statutory rate                              $410,254          $106,799

      Surtax exemption                            (  16,750)        (  14,544)

      State income taxes                             44,270             6,652

      Foreign income                              ( 312,537)        (  85,037)

      Other                                       (   1,500)              100
                                                   --------           --------
      Income tax expense                           $123,737          $ 13,970
                                                   ========           ========










                                                                           F-9


<PAGE>



                                ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                    THREE MONTHS ENDED SEPTEMBER 30, 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
    $4,542,751 at September 30, 1997 and $2,176,384 at September 30, 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 March 31, 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
    Portuguese De Atlantico (Bank). The total TAD amounts due from the banks
    were  $7,270,841 at September 30, 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 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, 1997 the advances on the  overdraft  account
    amounted to  $339,815.  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-10


<PAGE>



                        ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                   NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                            THREE MONTHS ENDED SEPTEMBER 30, 1997
                                      (Unaudited)





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

                                                           1997       1996
                                                           ----       ----
         Weighted average of shares
           actually outstanding                        7,663,755    5,701,621
         Common stock purchase warrants and
           options                                       395,661      110,000
                                                       ---------    ---------

         Primary and fully diluted weighted average
           common shares outstanding                   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       238,318     (w)     $1.35       06/30/98
   Amos Aharoni      06/30/96       200,000     (w)      3.35       06/30/99
   Amos Aharoni      06/06/97       132,915     (w)      5.00       09/30/99
   Amos Aharoni      06/06/97       176,629     (w)      6.05       12/31/99
   Amos Aharoni      06/06/97       207,157     (w)      9.70       03/31/00
   Amos Aharoni      02/06/97         3,000     (o)      5.00       12/31/00
                                   ---------
                                    958,019
                                    -------

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











                                                                         F-11


<PAGE>


                    ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                       THREE MONTHS ENDED SEPTEMBER 30, 1997
                                (Unaudited)





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

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


    Leon Schorr       01/21/97     2,500    (o)       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
                                   -----

    Mitch Menik       03/12/97    12,500    (w)       2.50         03/11/00
    Mitch Menik       09/12/96    12,500    (o)       2.50         09/12/00
    Mitch Menik       02/06/97     1,000    (o)       5.00         12/31/00
                                ---------
                                  26,000
                                  ------


    Other employees   01/21/97    10,000    (o)       6.40         01/20/01

    Other employees   02/06/97    45,500    (o)       5.00         12/31/00
                                ---------
                                  55,500
                                  ------

          Total                1,055,519
                               =========


    In  the quarter ended September 30, 1997, 543,570 warrants were exercised at
    prices  ranging  from $1.25 to $6.40,  resulting  in net proceeds to the
    Company of $755,213 and the issuance of 543,570 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.



















                                                                         F-12


<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 1998,  ended  September  30, 1997,  the
Company had combined  gross revenues of  $20,001,585,  as compared to $7,578,034
for the first three  months of fiscal 1997,  an increase of almost 164%.  During
this period, cost of revenues totaled $18,294,246, as compared to $6,903,814 for
the same period last year,  virtually  unchanged at  approximately  91% of total
revenues.  This resulted in gross profits from  operations of $1,707,339 for the
first quarter of fiscal 1998, an increase of $1,033,119 (or  approximately  153%
higher than the first quarter of fiscal 1997), with net profits from operations,
after provision for taxes, of $952,855 for this period,  as compared to $259,875
for the same period last year, an increase of approximately 267% over last year.
Based upon the Company's  currently issued an fiscal 1998 reached $0.12 per 
share,as compared to $0.05 per share for the first quarter of fiscal 1997.

The  substantial  increase in gross revenues  during the first quarter of fiscal
1998, which equaled approximately 46% of the Company's total revenues during all
of fiscal 1997,  was primarily due to the expansion of the Company's  operations
through  (i) the  increased  sales  by its  subsidiary  Actrade  S.A.  and  (ii)
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").  The increase in revenues  during the first
quarter of fiscal  1998 was the  result of  increased  product  sales by Actrade
S.A.,  rather  than  from  price  increases  for  the  Company's  products,  and
substantially increased operating revenues derived from Capital.

As a result  of the  foregoing  factors,  the  Company's  net  operating  income
expressed as a percentage of gross  revenues  increased  from 3.4% at the end of
the first  quarter of fiscal 1997 to a new high of almost 4.8% at the end of the
first quarter 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.

For the first time in the Company's history, the major portion ,over 57%, of the
Company's revenues are derived by Capital  ($11,505,082 during the first quarter
of  fiscal  1998),  with  Actrade  S.A.,  the  Company's  international  trading
subsidiary,  representing  slightly over 33%  ($6,673,976)  of the Company total
gross revenues for this period.

As stated in the Company's  Annual Report on Form 10-K for fiscal 1997, in light
of  management's  continued  emphasis  on  the  expansion  of  Actrade's  export
operations  and the ongoing  expansion of Capital's TAD Program,  management may
elect to  terminate  Allstate's  operations  and to phase out this aspect of its
operations  during  fiscal  1998.  During  the first  quarter  of  fiscal  1998,
Allstate's  total sales  aggregated only $10,486,  which accounted for less than
1/10  of 1% of  the  Company's  total  revenues.  II.  Discussion  of  Financial
Condition

On a consolidated  basis,  at September 30, 1997 the Company had total assets of
$21,662,110 (compared with $19,364,462 at June 30, 1997, the end of fiscal 1997)
with total current  liabilities of $3,720,013 (compared with $3,127,180 at June
30, 1997). Of the Company's assets at September 30, 1997,  $2,924,109 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 September 30, 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,  $7,249,757  represents  trade  accounts  receivable,  and
$11,213,312  represented  TADs receivable  (including  $7,270,841 of TADs, which
have been sold to a bank). The increase in the Company's assets at September 30,
1997 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.

                                                                           F-13

<PAGE>




At September 30, 1997, the Company's  total  stockholders'  equity  increased to
$17,900,185 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.  On May 30, 1997, the Company commenced a private placement of its
common stock  pursuant to Regulation D promulgated  under the  Securities Act of
1933. As of June 30, 1997,  the end of the fiscal year, the Company had received
gross proceeds from this private placement of $6,850,000, virtually all of which
has been designated by the Company for the continued  expansion of Capital's TAD
Program.  The Company  terminated this private placement  effective the close of
business on June 30, 1997. As mentioned  above,  a significant  portion of these
proceeds were  utilized  during the first quarter of fiscal 1998 in 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  September  30,  1997  the  Company  also  had  property,   less  accumulated
depreciation,  of $248,820, (compared to $238,305 at June 30, 1997) and security
deposits and prepaid expenses of $23,742 and $37,370 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 September 30, 1997 the Company  continued to show $41,912
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.

The Company's  outstanding loans payable to Banco Portugues do Atlantico ("BPA")
in the amount of $339,815,  represent  advances  against  Capital's  credit line
which is fully secured by the proceeds due from TADs which have been sold to BPA
but which have not yet been collected.  This loan amount is constantly  changing
based upon a number of factors  including  the total  amount of TADs sold to BPA
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 of $4.5 Million, in
the aggregate, with BPA. During June, 1997, Capital secured an additional credit
facility,  similar to the one it has with BPA, from Summit Bank, New Jersey,  in
the amount of $3  Million.  This  facility  will be  available  to  finance  the
continued purchase of TADs by Capital from its customers in much the same manner
as the BPA facility. Consequently, the payment of these outstanding loans is not
expected to have an impact upon the Company's liquidity.

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.

                                                                        F-14

<PAGE>



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  overhead 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 quarter of fiscal 1998, Capital's revenues reached $11,505,082,
over 54% of  Capital's  total  revenues  during  fiscal  1997.  Cost of revenues
totaled  $10,804,324  resulting in gross  profits of $700,759  during the first
quarter. After general and administrative expenses of $445,256, interest expense
of $4,484 and provision for taxes of $43,500,  Capital  realized net income from
its  operations of $207,519,  over 92% of Capital's  total net income for fiscal
1997.  During the first quarter,  management  began  implementation  of the next
phase of its expansion program.

IV.  Trends Affecting Liquidity, Capital Resources and 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 the quality of American  products  and the  relative  weakness in
recent  years of the US dollar as compared to other  major  foreign  currencies.
This formed the basis of the Company's  operating  philosophy since 1989 and, in
management's  opinion,  continues to favor growth over the  foreseeable  future.
Combined with recent changes in world political structures,  management believes
the demand for  American  products  will  continue  to  increase at least in the
foreseeable future.

Over the past decade,  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  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 four years.  This trend,
although expected to continue 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.

However, 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.),  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 the US and other  industrial  nations) will come
from these new developing third world countries over the next few years. To meet
this changing  market  demand,  the Company  initiated an expansion of Actrade's
operations  through  the  establishment  of Actrade  S.A.,  which is intended to
compliment current operations by providing foreign sources for products.

As the US economy  continues to improve and the dollar  strengthens with respect
to other  currencies,  foreign  buying power for American  products may decrease
with foreign buyers looking for comparable,  but less  expensive,  products from
other sources.

                                                                         F-15

<PAGE>



Although it is  impossible  to predict 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 Actrade'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.

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 91.5% for the first  quarter  of
fiscal 1998. This increase is the result of three principal factors.  First, the
recessionary  factors which  influenced  economic  conditions both in the United
States  and  other  major  industrial  nations  worldwide  over the past  decade
resulted in a significant  increase in competition for a shrinking market.  This
resulted in the need to reduce profit margins in order to remain  competitive in
the world markets.  Second, as the Company's operations have expanded the nature
and mix of the products  sold by the Company it has also  changed from  smaller,
less  expensive  products  to larger  or more  expensive  products,  such as the
commercial and industrial air  conditioning  and  refrigeration  equipment which
made up a significant proportion of the Company's total sales since fiscal 1992.
With such  higher  priced  products,  the profit  margins  are  typically  less.
Finally,  the sales by Actrade S.A.  have  typically  consisted of larger orders
primarily for computer systems and related equipment from foreign sources, which
typically are based upon lower profit  margins.  In  combination,  these factors
resulted in a higher percentage cost of sales for the Company.

Management  believes that for the foreseeable future the greatest demand for all
kinds of foreign products (including those from industrialized nations including
the US) will continue to come from the new developing and third world countries.
As a result of the elimination of old political and ideological  barriers,  many
other  factors now have an effect  upon the  markets  for US  products  overseas
including, among others, lower foreign labor costs and, probably most important,
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 an
expansion of the  international  trading  operations of Actrade S.A.,  which was
originally formed to compliment  current operations by providing foreign sources
for  products  to meet  foreign  demand.  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  $6,673,976  for the first  quarter of fiscal 1998.  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.

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

VI Inflation.

During the past few years  inflation  in the United  States has been  relatively
stable which, coupled with the relative strength of foreign currencies discussed
above,  has had a beneficial  effect upon the  Company's  operations in that the
products it offers  have been  competitively  priced in  relation to  comparable
foreign made products. In management's opinion, this is expected to continue for
the foreseeable  future.  However,  should the American economy again experience
double  digit  inflation  rates,  as was the case in the past,  the impact  upon
prices for  American  goods  could  adversely  affect the  Company's  ability to
effectively compete in its overseas markets.


                                                                       F-16


<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:  October 31, 1997



ACTRADE INTERNATIONAL, LTD.




BY:_/s/Alex Stonkus___________________
   Alex Stonkus,
   Chief Financial Officer