<PAGE>




                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                             ----------------------

                                    FORM 10-Q

                   Quarterly Report Under Section 13 or 15(d)

                     of the Securities Exchange Act of 1934

                             ----------------------

                For the quarterly period ended December 31, 2000

                         Commission File Number 0-18711

                       ACTRADE FINANCIAL TECHNOLOGIES LTD.
                     (formerly Actrade International, Ltd.)

              Incorporated under the laws of the State of Delaware
               I. R. S. Employer Identification Number 13-3437739



                  7 Penn Plaza, Suite 422, New York, N.Y. 10001
                         Telephone Number (212) 563-1036


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                     Yes  X   No
                         ---    ---

Indicate the number of Shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date. As of January 29, 2001 there
were outstanding 9,057,520 shares of Common Stock, par value $.0001.







<PAGE>




                                      INDEX


PART I.  FINANCIAL INFORMATION



Item 1.   Consolidated Financial Statements (Unaudited)

<TABLE>
<CAPTION>
                                                                        Page
       <S>                                                              <C>
       Consolidated balance sheets as of December 31, 2000 and
           June 30, 2000                                                 3

       Consolidated statements of income for the six and
            three months ended December 31, 2000 and 1999                4

       Consolidated statements of cash flows for the six
           months ended December 31, 2000 and 1999                       5

      Notes to consolidated financial statements                         6

Item 2.   Management's discussion and analysis of financial
             condition and results of operations                         8

PART II.  OTHER INFORMATION

Item 6.  Exhibits and reports on Form 8-K                               16

Signatures                                                              17

</TABLE>

                                       2







<PAGE>




ACTRADE FINANCIAL TECHNOLOGIES LTD. AND SUBSIDIARIES
 (Formerly Actrade International, Ltd.)

CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
                  DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS


<TABLE>
<CAPTION>

                                                                                     DECEMBER 31,        JUNE 30,
                                                                                         2000              2000
                                                                                     (UNAUDITED)
<S>                                                                                     <C>               <C>
ASSETS
  CURRENT ASSETS:
     Cash and cash equivalents                                                          $14,445           $9,424
     Accounts receivable - trade                                                         21,230           18,202
     Trade acceptance drafts receivable and investment in and due from
        qualifying special purpose entity (net of deferred income
       and allowance for doubtful accounts of $1,512 and $4,140 at
       December 31, 2000 and $1,311 and $3,044 at June 30, 2000)                         39,687           44,717
     Deferred income taxes                                                                1,418              905
     Other current assets                                                                   303              423
                                                                                        -------          -------
         Total Current Assets                                                            77,083           73,671

   PROPERTY AND EQUIPMENT, NET                                                            1,960            1,844

   OTHER ASSETS                                                                             671              401
                                                                                        -------          -------
TOTAL ASSETS                                                                            $79,714          $75,916
                                                                                        =======          =======
LIABILITIES AND STOCKHOLDERS' EQUITY
  CURRENT LIABILITIES:
     Short-term borrowings                                                              $25,714          $32,707
     Other current liabilities                                                            2,678            2,731
                                                                                        -------          -------
         Total Current Liabilities                                                       28,392           35,438
                                                                                        -------          -------

  STOCKHOLDERS' EQUITY:
     Common stock, $0.0001 par value; authorized 100,000,000 shares, issued and
       outstanding 9,433,850 and 9,057,520 shares at December 31, 2000 and
       9,332,865 and 8,983,695 shares at June 30, 2000                                        1                1
     Additional paid-in capital                                                          22,525           21,505
     Retained earnings                                                                   36,296           25,640
     Accumulated other comprehensive income (loss)                                           27               (9)
     Treasury stock at cost                                                              (7,527)          (6,659)
                                                                                        -------          -------
          Total Stockholders' Equity                                                     51,322           40,478
                                                                                        -------          -------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                              $79,714          $75,916
                                                                                        =======          =======

</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       3







<PAGE>


              ACTRADE FINANCIAL TECHNOLOGIES LTD. AND SUBSIDIARIES
                     (Formerly Actrade International, Ltd.)

                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

--------------------------------------------------------------------------------
                  DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS

<TABLE>
<CAPTION>

                                                               SIX MONTHS ENDED             THREE MONTHS ENDED
                                                                 DECEMBER 31,                  DECEMBER 31,
                                                        ---------------------------  ---------------------------
                                                                2000          1999           2000          1999

<S>                                                          <C>            <C>            <C>           <C>
Revenue:
          Trade Acceptance Drafts                            $13,243        $8,151         $6,887        $4,078
          International Merchandise Trade                     13,671         5,524          7,474         2,844
                                                             -------        ------         ------        ------
Total Revenue                                                 26,914        13,675         14,361         6,922
                                                             -------        ------         ------        ------

Operating Expenses:
          General and administrative                          (5,329)       (4,063)        (2,757)       (2,024)
          Bad debt                                            (1,261)       (2,316)          (690)       (1,385)
          Interest, net                                       (8,330)       (2,316)        (4,621)       (1,394)
                                                             -------        ------         ------        ------
Total Operating Expenses                                     (14,920)       (8,695)        (8,068)       (4,803)
                                                             -------        ------         ------        ------

Income before Provision for Income Taxes                      11,994         4,980          6,293         2,119

Provision for Income Taxes                                    (1,338)         (473)          (532)         (120)
                                                             -------        ------         ------        ------
Net Income                                                   $10,656        $4,507         $5,761        $1,999
                                                             =======        ======         ======        ======

Net Income per Common Share:
Basic                                                          $1.18         $0.52          $0.64         $0.23
Diluted                                                        $1.01         $0.51          $0.55         $0.22

Weighted Average Number of Shares Outstanding:
Basic                                                      9,015,474     8,587,831      9,038,132     8,646,428
Diluted                                                   10,601,676     8,862,945     10,466,318     9,068,434
</TABLE>


SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.



                                       4











<PAGE>



ACTRADE FINANCIAL TECHNOLOGIES LTD. AND SUBSIDIARIES
(Formerly Actrade International, Ltd.)

CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
--------------------------------------------------------------------------------
                              DOLLARS IN THOUSANDS

<TABLE>
<CAPTION>
                                                                                     SIX MONTHS ENDED
                                                                                      DECEMBER 31,
                                                                            ------------------------------------
                                                                                 2000              1999

<S>                                                                           <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                                  $10,656               $4,507
  Adjustments to reconcile net income to net cash provided by
     (used in) by operating activities:
      Depreciation and amortization                                               453                  129
      Bad debt expense                                                          1,261                2,316
      Deferred income                                                             201                  419
      Loss (income) from qualifying special purpose entity                        137               (1,304)
      Compensation expense-amortization of warrants issued                          0                  124
      Deferred income taxes                                                      (513)                (854)
 Changes in operating assets and liabilities:
      Accounts receivable - trade and
       trade acceptance drafts receivable and investment in and
        due from qualifying special purpose entity                                403              (21,363)
     Other assets                                                                (163)                 (90)
     Other current liabilities                                                    (53)               2,009
                                                                              -------              -------
Net cash provided by (used in) operating activities                            12,382              (14,107)
                                                                              -------              -------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of property and equipment                                          (520)                (675)
                                                                              -------              -------
Net cash used in investing activities                                            (520)                (675)
                                                                              -------              -------

CASH FLOWS FROM FINANCING ACTIVITIES
     Change in short-term borrowings                                           (6,993)              13,961
     Proceeds from stock option exercise                                          152                  121
                                                                              -------              -------
Net cash provided by financing activities                                      (6,841)              14,082
                                                                              -------              -------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                            5,021                 (700)

Cash, beginning of period                                                       9,424                5,199
                                                                              -------              -------

CASH, END OF PERIOD                                                           $14,445               $4,499
                                                                              =======               ======

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Interest paid during the fiscal period                                    $8,386                 $800
                                                                               ======                 ====

     Income taxes paid during the fiscal period                                $2,550                 $959
                                                                               ======                 ====

     Exercise of options in exchange for common stock                            $868               $1,734
                                                                                 ====               ======

</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.



                                       5








<PAGE>



              ACTRADE FINANCIAL TECHNOLOGIES LTD. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                              DOLLARS IN THOUSANDS



1.   Summary of Significant Accounting Policies:

     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
     interim periods are 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
     Annual Report of Actrade Financial Technologies Ltd. (the "Company") and
     subsidiaries on Form 10-K for the fiscal year ended June 30, 2000.

     The consolidated financial statements include the accounts of the Company
     and its subsidiaries. All intercompany balances and transactions have been
     eliminated in consolidation.

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make certain
     estimates and assumptions that affect the reported amounts of assets and
     liabilities. It also requires disclosure of contingent assets and
     liabilities at the date of the financial statements and the reported
     amounts of revenues and expenses during the reporting period. Actual
     results could differ from these estimates.

     The Company has adopted the Securities and Exchange Commission Staff
     Accounting Bulletin No. 101 ("SAB 101") - Revenue Recognition in Financial
     Statements. SAB 101 was issued to provide guidance in applying generally
     accepted accounting principles to the large number of revenue recognition
     issues that registrants encounter. Accordingly, the Company changed the
     income statement presentation of Revenue - International Merchandise Trade
     from reflecting sales and cost of sales to a net basis. In addition, the
     Company will no longer disclose, in the consolidated statements of income,
     Gross Sales - Trade Acceptance Drafts and Gross Sales - International
     Merchandise Trade. The prior period presentation has been changed to
     conform to the current period presentation. The adoption of SAB 101 did not
     have any impact on the net income of the Company.

2.   Segment Information:

     The Company's business operations are divided into two principal business
     segments: the trade acceptance draft program and international merchandise
     trade activities. The Company's business segments are based on business
     units or entities that offer different products and services. They are
     managed separately because each business segment requires different
     strategic initiatives and marketing.


                                       6







<PAGE>




     The following is a summary of the Company's segment information:


<TABLE>
<CAPTION>
                                          SIX MONTHS ENDED DECEMBER 31,  THREE MONTHS ENDED DECEMBER 31,
                                          ----------------------------   ----------------------------
                                                 2000          1999             2000          1999
<S>                                           <C>          <C>               <C>           <C>
Revenue:
  Trade Acceptance Drafts                       $13,243      $ 8,151           $ 6,887       $4,078
  International Merchandise Trade                13,671        5,524             7,474        2,844
                                                -------      -------           -------       ------
                                                $26,914      $13,675           $14,361       $6,922
                                                =======      =======           =======       ======

Income before Provision for
  Income Taxes:
  Trade Acceptance Drafts                       $ 2,695      $ 1,192           $ 1,080       $  343
  International Merchandise Trade                 9,299        3,788             5,213        1,776
                                                -------      -------           -------       ------
                                                $11,994      $ 4,980           $ 6,293       $2,119
                                                =======      =======           =======       ======

Depreciation and Amortization:
  Trade Acceptance Drafts                       $   446      $   121           $   211       $   59
  International Merchandise Trade                     7            8                 3            4
                                                -------      -------           -------       ------
                                                $   453      $   129           $   214       $   63
                                                =======      =======           =======       ======

Interest Expense:
  Trade Acceptance Drafts                       $ 4,629      $   903           $ 2,569       $  496
  International Merchandise Trade                 3,804        1,429             2,114          905
                                                -------      -------           -------       ------
                                                $ 8,433      $ 2,332           $ 4,683       $1,401
                                                =======      =======           =======       ======

<CAPTION>
                                              December 31,
                                                 2000                      June 30, 2000
                                              ------------                 -------------
Total Assets:
  Trade Acceptance Drafts                       $28,893                        $34,356
  International Merchandise Trade                50,821                         41,560
                                                -------                        ------
                                                $79,714                        $75,916
                                                =======                        =======
</TABLE>


                                       7







<PAGE>



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

  GENERAL STATEMENT - FACTORS THAT MAY AFFECT FUTURE RESULTS.

     With the exception of historical information, the matters discussed in
     Management's Discussion and Analysis of Financial Condition and Results of
     Operations contain forward looking statements under the 1995 Private
     Securities Litigation Reform Act (the "Reform Act") that involve various
     risks and uncertainties. Typically, these statements are indicated by words
     such as "anticipates," "expects," "believes," "plans," "could," and similar
     words and phrases. Factors that could cause the Company's actual results to
     differ materially from management's projections, forecasts, estimates and
     expectations include but are not limited to, the following:

         Changes in the Company's currently available credit facilities;

         The inability of the Company to extend or secure additional credit
         facilities to fund the anticipated expansion of sales under its E-TAD
         Program as defined below;

         Unexpected economic changes both in the United States and overseas;

         The imposition of new restrictions or regulations affecting either the
         Company's international merchandise trade activities or its E-TAD
         Program, either in the US or in Canada.

    To the extent possible, the following discussion will highlight the relative
    needs of the Company with respect to both its international merchandise
    trade activities and in connection with the ongoing expansion of its E-TAD
    Program.

           SEGMENT REPORTING DISCLOSURES.

    The Company's sales are generated from two major business segments: the
    trade acceptance draft program ("TAD Program"), including the recently
    introduced E-TAD Program, and international merchandise trade. For purposes
    of this Report, references to the E-TAD Program include the original TAD
    Program. A TAD is a post-dated payment draft prepared by the seller of goods
    or services ("Supplier") and accepted by the buyer of the goods or services
    ("Buyer") by the Buyer signing and delivering the draft back to the
    Supplier. The E-TAD Program denotes the Company's ongoing plan for all
    aspects of TADs to be processed, marketed, and fulfilled electronically,
    including prospective E-commerce applications. The E-TAD Program is operated
    by Actrade Capital, Inc. ("Capital") in the United States and Actrade
    Capital Canada, Inc. ("Actrade Canada") in Canada. The Company's
    international merchandise trade operations are conducted through Actrade
    International Corp. ("International"), which is engaged in the re-sale of
    American made products to foreign buyers and Actrade S.A., including its
    wholly owned subsidiary Actrade Resources, Inc. ("Resources"), which engage
    in the sale of non-US products to foreign buyers. See discussion immediately
    below.


                                       8







<PAGE>




           CHANGES IN INCOME STATEMENT INFORMATION


   Beginning with the Company's 10-K Report for fiscal 2000, the Company adopted
   Securities and Exchange Commission Staff Accounting Bulletin No. 101
   ("SAB101") - Revenue Recognition in Financial Statements. In essence, the
   adoption of SAB101 changed the presentation of revenue information on the
   Consolidated Statements of Income of the Company. In conformity with the
   requirements of SAB101, the Company's Consolidated Statements of Income
   simply reflect "Revenue". In the case of Capital, "Revenue" represents the
   net of total TAD originations (i.e. the face amount of the TADs purchased by
   Capital) less the cost of purchasing those TADs. Similarly "Revenues" from
   its International Merchandise Trade activities are also reported on a net
   basis. This change provides uniformity of presentation among the Company's
   two major revenue sectors.

   On a combined basis the term "Revenue" is the equivalent of the amount
   reported as "Gross Profit" in prior periods. All prior period amounts and
   discussions have been changed to reflect the new presentation of revenues.

   The adoption of SAB 101 did not have any impact on the net income of the
Company.


I.   RESULTS OF OPERATIONS - SIX AND THREE MONTHS ENDED DECEMBER 31, 2000,
     FISCAL 2001 COMPARED TO SIX AND THREE MONTHS ENDED DECEMBER 31, 2000,
     FISCAL 2000.

     All figures included in the following discussion have been rounded to the
nearest $1,000 for presentation purposes.

        A. SIX MONTHS ENDED DECEMBER 31, 2000 VS. DECEMBER 31, 1999:

         REVENUE:

     For the first six months of fiscal 2001, the Company had consolidated
     revenue of $26,914,000 as compared to $13,675,000 for the same period in
     fiscal 2000, an increase of 96.8%. This increase resulted from substantial
     revenue increases in each of the Company's business segments as outlined
     below.


                                       9







<PAGE>



     E-TAD PROGRAM

     Revenue for the six months ended December 31, 2000 from the E-TAD Program
     totaled $13,243,000, as compared to $8,151,000 in the six months ended
     December 31, 1999, an increase of 62.5%. This increase represents a higher
     volume of E-TAD transactions that management believes were a direct result
     of the accelerated marketing and expansion program begun during the prior
     fiscal year and which continues today. (See also "EXPENSES" and "LIQUIDITY
     AND CAPITAL RESOURCES" below).

     For the six months ended December 31, 2000, total TAD originations
     (representing the face amount of all TAD transactions) totaled
     $164,948,000.


     INTERNATIONAL MERCHANDISE TRADE

     Revenue from international merchandise trade during this period climbed to
     $13,671,000 for the first six months of fiscal 2001, as compared to
     $5,524,000 for the first six months of fiscal 2000, an increase of 147.5%.
     This increase was the result of increased product sales by Resources,
     rather than from price increases for the products sold. Management
     attributes the continued growth in this business sector to the ability to
     provide immediate payment to foreign suppliers as well as facilitating
     access to flexible payment terms for the buyers. During the first six
     months of fiscal 2001, the Company's principal overseas markets continued
     to be (i) South America (ii) Europe, (iii) the Pacific Rim and (iv) Middle
     East.

     See "CONSOLIDATED FINANCIAL STATEMENTS - NOTE 2, SEGMENT INFORMATION" for
     additional information.

          EXPENSES:

     GENERAL AND ADMINISTRATIVE

     General and administrative expenses for the six months ended December 31,
     2000 were $5,329,000, as compared to $4,063,000 for the same period last
     year, an increase of 31.2%. This increase includes $527,000 of additional
     fees paid in connection with the increased international trade revenues
     noted above as well as increased legal fees. The legal fee increase of
     $847,000 reflects increased litigation costs to recover monies from
     defaulted TAD's. Most of these costs have been incurred in connection with
     the litigation described in Note 13 to the financial statements of the
     Company's Annual Report on Form 10-K for the fiscal year ended June 30,
     2000. Compensation (including commissions and facility costs) declined to
     $2,279,000 in the first six months of fiscal 2001 from $2,621,000 in the
     prior period. This reflected cost reductions arising from the closing of
     Capital's offices in California and Georgia and the associated reduction in
     personnel, offset in part by expansion of sales, back-office personnel and
     additional office space to support the new E-TAD Program. This expansion
     also accounted for the $234,000 increase in other components of general and
     administrative expenses.


                                       10







<PAGE>



     With respect to the balance of fiscal 2001, management projects the costs
     related to the E-TAD Program operations will continue to escalate,
     particularly as marketing efforts for the E-TAD Program increase and
     Capital implements its E-Commerce program. However, management believes
     that the impact of these continued increased costs would be outweighed by
     increased revenue as the benefits of the fiscal 2001 business and system
     development mature.


     BAD DEBT

     Bad debt expense arises almost exclusively from the TAD business segment.
     International merchandise trade transactions are generally secured and the
     Company has had no history of losses. For the first six months of fiscal
     2001, the Company provided for bad debt expense in the amount of $1,261,000
     as compared to $2,316,000 in the first six months of fiscal 2000. In
     evaluating bad debts, management looks at the adequacy of its allowance for
     doubtful accounts based on the status of individual past due accounts as
     well as estimating the aggregate amount realizable based on aging.

     INTEREST

     For the first six months of fiscal 2001, the Company incurred net interest
     expense of $8,330,000 as compared to $2,316,000 in the same period last
     year. This increase is due to volume growth in both business segments. Fees
     and other expenses resulting from the ongoing need for new credit
     facilities are expensed as incurred due to the short-term nature of these
     facilities. Interest expense is expected to rise consistent with expected
     revenue growth in both business segments noted above.

            PRE-TAX INCOME:

     E-TAD PROGRAM

     Pre-tax income attributable to the TAD business segment was $2,695,000 for
     the first six months of fiscal 2001, as compared to $1,192,000 for the
     first six months of fiscal 2000, an increase of 126.1%. Management believes
     that this significant improvement reflects the investment made in the
     expansion of the E-TAD program during fiscal 2000 and that such improvement
     will continue during the balance of fiscal 2001.

     INTERNATIONAL MERCHANDISE TRADE

     Pre-tax income for the six months ended December 31, 2000 from
     international merchandise trade operations totaled $9,299,000 as compared
     to $3,788,000 for the first six months of fiscal 2000, an increase of just
     over 145.5%. Management believes that these operations will continue to
     grow during the foreseeable future although no assurance can be given that
     the rate of growth will continue to be sustained.


                                       11







<PAGE>




            NET INCOME:

     After provision for income taxes, the Company reported net income for the
     first six months of fiscal 2001 of $10,656,000, or $1.01 per share
     (diluted), as compared to $4,507,000 or $0.51 per share (diluted), for the
     first six months of fiscal 2000. This represented an increase in net income
     of 136.4% over the same period last year and an increase in earnings per
     share of 98.0% over last year. The tax provision increased from $473,000 in
     the first six months of fiscal 2000 to $1,338,000 in the current period
     primarily due to increased pre-tax income from the TAD segment. Income tax
     has not been provided on unrepatriated earnings of foreign subsidiaries, as
     currently it is the intention of the Company to reinvest such earnings in
     their foreign operations. Substantially all of the pre-tax income for the
     International Merchandise Trade segment is comprised of such unrepatriated
     earnings.

         B. THREE MONTHS ENDED DECEMBER 31, 2000 VS. DECEMBER 31, 1999:

         REVENUE:

     For the three months ended December 31, 2000 of fiscal 2001, the Company
     had consolidated revenue of $14,361,000 as compared to $6,922,000 for the
     same period in fiscal 2000, an increase of 107.5%. This increase resulted
     from substantial revenue increases in each of the Company's business
     segments as outlined below.

     E-TAD PROGRAM

     Revenue for the second quarter of fiscal 2001 from the E-TAD Program
     totaled $6,887,000, as compared to $4,078,000 in the second quarter of
     fiscal 2000, an increase of 68.9%. This increase represents a higher volume
     of E-TAD transactions that management believes were a direct result of the
     accelerated marketing and expansion program begun during the prior fiscal
     year and which continues today. (See also "EXPENSES" and "LIQUIDITY AND
     CAPITAL RESOURCES" below).

     For the second quarter of fiscal 2001, total TAD originations (representing
     the face amount of all TAD transactions) totaled $81,508,000.

     INTERNATIONAL MERCHANDISE TRADE

     Revenue from international merchandise trade during this period climbed to
     $7,474,000 for the second quarter of fiscal 2001, as compared to $2,844,000
     for the second quarter of fiscal 2000, an increase of 162.8%. This increase
     was the result of increased product sales by Resources, rather than from
     price increases for the products sold. Management attributes the continued
     growth in this business sector to the ability to provide immediate payment
     to foreign suppliers as well as facilitating access to flexible payment
     terms for the buyers. During the three months of fiscal 2001, the Company's
     principal overseas markets continued to be (i) South America (ii) Europe,
     (iii) the Pacific Rim and (iv) Middle East.


                                       12







<PAGE>



     See "CONSOLIDATED FINANCIAL STATEMENTS - NOTE 2, SEGMENT INFORMATION" for
additional information.

            EXPENSES:

     GENERAL AND ADMINISTRATIVE

     General and administrative expenses for the three months ended December 31,
     2000 were $2,757,000, as compared to $2,024,000 for the same period last
     year, an increase of 36.2%. The major component of this increase was a
     legal fee increase of $553,000. This reflects increased litigation costs to
     recover monies from defaulted TAD's. Most of these costs were incurred in
     connection with the litigation described in Note 13 to the financial
     statements of the Company's Annual Report on Form 10-K for the fiscal year
     ended June 30, 2000. Other general and administrative expenses increased
     $180,000. This represents expansion of the sales and back office personnel
     and facilities to support the new E-TAD program. This was partially offset
     by cost reductions arising from the closing of Capital's offices in
     California and Georgia and the associated reduction in personnel and
     facility costs.

     With respect to the balance of fiscal 2001, management projects the costs
     related to the E-TAD Program operations will continue to escalate,
     particularly as marketing efforts for the E-TAD Program increase and
     Capital implements its E-Commerce program. However, management believes
     that the impact of these continued increased costs would be outweighed by
     increased revenue as the benefits of the fiscal 2001 business and system
     development mature.

     BAD DEBT

     Bad debt expense arises almost exclusively from the TAD business segment.
     International merchandise trade transactions are generally secured and the
     Company has had no history of losses. For the three months ended December
     31, 2000 of fiscal 2001, the Company provided for bad debt expense in the
     amount of $690,000 as compared to $1,385,000 during the same quarter of
     fiscal 2000. In evaluating bad debts, management looks at the adequacy of
     its allowance for doubtful accounts based on the status of individual past
     due accounts as well as estimating the aggregate amount realizable based on
     aging.

     INTEREST

     For the second quarter of fiscal 2001, the Company incurred net interest
     expense of $4,621,000 as compared to $1,394,000 in the same period last
     year. This increase is due to volume growth in both business segments. Fees
     and other expenses resulting from the ongoing need for new credit
     facilities are expensed as incurred due to the short-term nature of these
     facilities. Interest expense is expected to rise consistent with expected
     revenue growth in both business segments noted above.


                                       13







<PAGE>



           PRE-TAX INCOME:

     E-TAD PROGRAM

     Pre-tax income attributable to the TAD business segment was $1,080,000 for
     the second quarter of fiscal 2001, as compared to $343,000 for the second
     quarter of fiscal 2000, an increase of 214.9%. Management believes that
     this significant improvement reflects the investment made in the expansion
     of the E-TAD program during fiscal 2000 and that such improvement will
     continue during the balance of fiscal 2001.

     INTERNATIONAL MERCHANDISE TRADE

     Pre-tax income for the three months ended December 31, 2000 from
     international merchandise trade operations totaled $5,213,000 as compared
     to $1,776,000 for the three months ended December 31, 1999, an increase of
     193.5%. Management believes that these operations will continue to grow
     during the foreseeable future although no assurance can be given that the
     rate of growth will continue to be sustained.

          NET INCOME:

     After provision for income taxes, the Company reported net income for the
     second quarter of fiscal 2001 of $5,761,000, or $0.55 per share (diluted),
     as compared to $1,999,000 or $0.22 per share (diluted), for the second
     quarter of fiscal 2000. This represented an increase in net income of
     188.2% over the same period last year and an increase in earnings per share
     of 149.7% over last year. The tax provision increased from $120,000 for the
     second quarter of fiscal 2000 to $532,000 in the current period primarily
     due to increased pre-tax income from the TAD segment. Income tax has not
     been provided on unrepatriated earnings of foreign subsidiaries, as
     currently it is the intention of the Company to reinvest such earnings in
     their foreign operations. Substantially all of the pre-tax income for the
     International Merchandise Trade segment is comprised of such unrepatriated
     earnings.


     II.  DISCUSSION OF FINANCIAL CONDITION - LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 2000, the Company had working capital of $48,691,000 as
     compared to working capital of $38,233,000 at June 30,2000. As of December
     31, 2000 the Company had cash and cash equivalents of $14,445,000 as
     compared to $9,424,000 at June 30, 2000. Short-term borrowings decreased
     $6,933,000 from June 30 to December 31, 2000. Such changes in working
     capital, short-term borrowings, and cash and cash equivalents resulted from
     normal variations in the utilization of these items by Capital in its
     operations, and not due to any trend which is expected to have a continuing
     effect upon operations in the future. However, consistent with prudent
     business practice, management attempts to minimize cash at Capital so as to
     reduce short-term borrowings and related interest expense.


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     At December 31, 2000, Capital had approximately $31.2 million in Surety
     bonds guaranteeing payment of E-TADs it had purchased, in addition to $12.5
     million in credit insurance.

     In recent years, the Company has experienced growth in its accounts
     receivable due to the nature of the revenue made by its international
     merchandise trade division. Revenue by International principally involves
     larger, higher priced products. Consequently, the average invoice amounts,
     as well as the average per item cost is relatively high, resulting in
     higher costs as well as higher accounts receivable and payable. On the
     other hand, the revenue generated by Actrade S.A. arises from the sale of
     less expensive foreign- made products where the typical margins are much
     lower than for similar American products. These factors continued to be
     true throughout the first half of fiscal 2001 and are expected to continue
     for the foreseeable future.

     At December 31, 2000, the Company's total stockholders' equity increased to
     $51,322,000 as compared to $40,478,000 at June 30, 2000. The principal
     source of funds for the Company's operations continues to be revenues
     earned by its operating subsidiaries.

     During the balance of fiscal 2001, the Company projects no significant
     additional capital expenditures in connection with any of the Company's
     international merchandise trade operations. Management plans to utilize
     current cash on hand in connection with its international merchandise trade
     operations principally for (i) general working capital reserves to meet any
     extraordinary or unexpected expenses; (ii) and to finance, if required, the
     Company's trade operations.

     However, in connection with the E-TAD Program, management expects that it
     will have significant additional capital expenditures relating to the
     ongoing expansion of sales and marketing operations, including
     implementation of its E-Commerce initiative.

     At December 31, 2000, there existed four credit facilities with four
     different banks through which the purchase of TADs were financed: a $25
     million securitization facility; $20 million and $40 million credit
     facilities with two financial institutions in the United States; and a CN$5
     million (Canadian) credit facility with a financial institution in Canada.
     In order to sustain a future growth rate comparable to that experienced in
     the past few years, management will need to further expand its credit
     facilities and other means for financing its purchase of E-TADs. Although
     discussions are ongoing with several other financial institutions to add
     additional credit facilities to fund the future expansion of the TAD
     Program, no assurance can be given that such discussions will result in the
     completion of any new financing facilities. However, based upon its
     experience with its present lenders, as well as discussions with other
     financial institutions, management believes that it will be able to secure
     adequate financing to sustain the growth of the TAD Program in the
     foreseeable future.

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


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  RECENT ACCOUNTING PRONOUNCEMENTS

  In September 2000, the Financial Accounting Standards Board issued Statement
  of Financial Standards ("SFAS") No. 140, Accounting for Transfers and
  Servicing of Financial Assets and Extinguishments of Liabilities. SFAS No. 140
  replaces SFAS No. 125, issued in June 1996. It revises the standards for
  accounting for securitizations and other transfers of financial assets and
  collateral and requires certain disclosures, but it carries over most of the
  provisions of SFAS No. 125 without reconsideration. SFAS No. 140 is effective
  for transfers and servicing of financial assets and extinguishments of
  liabilities occurring after March 31, 2001. SFAS No. 140 is effective for
  recognition and reclassification of collateral and for disclosures relating to
  securitization transactions and collateral for fiscal years ending after
  December 15, 2000. The Company is currently evaluating this pronouncement;
  however, the Company does not expect it to have a material effect on its
  financial position or results of operations.



     PART II. OTHER INFORMATION


     Item 6.  Exhibits and Reports on Form 8-K

         The Issuer filed a Report on Form 8-K dated October 30, 2000 recasting
(for informational purposes only) previously issued unaudited quarterly income
statements. This was done in connection with the Issuer's adoption of SAB 101-
REVENUE RECOGNITION IN FINANCIAL STATEMENTS.


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                                   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:  January 29, 2001



ACTRADE FINANCIAL TECHNOLOGIES LTD.


BY: /s/ Joseph P. D'Alessandris
    ---------------------------
        Chief Financial Officer




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