INDEX


Part I.  Financial information


  Item 1.  Condensed consolidated financial statements:

                 Balance sheet as of December 31, 1998 and
                  June 30, 1998                                         F-2

                 Statement of operations for the six and three
                  months ended December 31, 1998 and 1997               F-3

                 Statement of cash flows for the six months
                  ended December 31, 1998 and 1997                      F-4

                 Notes to condensed consolidated financial
                  statements                                         F-5 - F-10


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


Part II.  Other information

Exhibits and reports on Form 8-K

Signatures


<PAGE>



                  ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                       DECEMBER 31, 1998 AND JUNE 30, 1998
                                   (Unaudited)

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

                                     ASSETS
                                                                                  December 31,          June 30,
                                                                                     1998                 1998
Current assets:
  Cash                                                                             $ 1,827,387        $13,381,678
  Trade acceptance draft receivable, bank                                           14,266,234          1,248,368
  Accounts receivable, less allowance for
   doubtful accounts of $350,000 and $61,700
   at December 31, 1998 and June 30, 1998,
   respectively                                                                     14,825,300         11,031,201
  Trade acceptance drafts, on hand                                                   6,286,823
  Prepaid expenses                                                                     202,498             74,669
                                                                                   -----------        -----------
    Total current assets                                                            37,408,242         25,735,916
                                                                                   -----------        -----------

Property and equipment:
  Furniture and fixtures                                                               671,606            524,282
  Leasehold improvements                                                               143,916            143,916
                                                                                   -----------        -----------
                                                                                       815,522            668,198
  Less accumulated depreciation                                                        349,350            293,519
                                                                                   -----------        -----------
                                                                                       466,172            374,679
                                                                                   -----------        -----------
Other assets:
  Patent right                                                                               1                  1
  Security deposit                                                                      30,287             26,806
                                                                                   -----------        -----------
                                                                                        30,288             26,807
                                                                                   -----------        -----------

                                                                                   $37,904,702        $26,137,402


                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Cash advance from bank                                                           $ 7,718,079
  Accounts payable and customer reserves
   payable                                                                           4,503,350        $ 3,195,691
  Accrued expenses                                                                      11,086             17,439
  Deferred income                                                                      102,083             14,190
  Income taxes payable                                                                 312,719            285,441
                                                                                   -----------        -----------
    Total current liabilities                                                       12,647,317          3,512,761
                                                                                   -----------        -----------

Commitments

Deferred rent liability                                                                 24,094             31,721
                                                                                   -----------        -----------

Shareholders' equity:
  Common  stock,  $.0001 par value,  authorized  100,000,000  shares  issued and
   outstanding 8,559,551 at December 31, 1998 and 8,541,051
   at June 30, 1998                                                                        856                854
  Common stock purchase warrants
  Additional Paid in capital                                                        14,550,466         14,489,668
  Retained earnings                                                                 11,134,325          8,102,398
                                                                                   -----------        -----------
                                                                                    25,685,647         22,592,920
  Common stock held in treasury, 31,500 shares                                   (    452,356)                   
                                                                                  -----------         -----------
                                                                                    25,233,291         22,592,920

                                                                                   $37,904,702        $26,137,402
                                                                                   ===========        ===========
</TABLE>


     See notes to condensed consolidated financial statements.
                                                                          F-2


<PAGE>



                  ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

          FOR THE SIX AND THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997
                                  (Unaudited)






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



                                                        Six months ended                      Three months ended
                                                         December 31,                          December 31,
                                                1998                1997             1998                 1997
                                                ----                ----             ----                 ----


Net sales                                    $84,214,434        $43,117,444        $46,063,498        $23,115,859

Cost of sales                                 77,536,285         39,307,247         42,315,438         21,013,001
                                             -----------        -----------        -----------        -----------

Gross profit                                   6,678,149          3,810,197          3,748,060          2,102,858

Selling, general and
 administrative
 expenses                                      2,847,196          1,589,073          1,595,552            903,006
                                             -----------        -----------        -----------        -----------

Income from operations                         3,830,953          2,221,124          2,152,508          1,199,852
                                             -----------        -----------        -----------        -----------

Other income (charges):
  Interest income                                 51,844             62,220              6,179             11,852
  Interest expense                         (    471,084)      (     62,540)      (    281,578)      (     58,056)
  Miscellaneous income                                                9,435                                      
                                             -----------        -----------        -----------        -----------
                                           (    419,240)              9,115      (    275,399)      (     46,204)
                                            -----------         -----------       -----------        -----------

Income before income
 taxes                                         3,411,713          2,230,239          1,877,109          1,153,648

Income tax expense                               379,786            193,292            238,410             69,555
                                             -----------        -----------        -----------        -----------

Net income                                   $ 3,031,927        $ 2,036,947        $ 1,638,699        $ 1,084,093
                                             ===========        ===========        ===========        ===========

Earnings per common
 share:
   Primary                               $       .35        $       .24        $      0.19        $      0.13
                                         ===========        ===========        ===========        ===========
   Fully diluted                         $       .35        $       .24        $      0.19        $      0.13
                                         ===========        ===========        ===========        ===========


Weighted average common shares outstanding:
   Primary                                     8,702,932          8,434,256          8,693,592          8,615,574
                                             ===========        ===========        ===========        ===========
   Fully diluted                               8,702,932          8,434,256          8,693,592          8,615,574
                                             ===========        ===========        ===========        ===========




</TABLE>







     See notes to condensed consolidated financial statements
                                                                            F-3


<PAGE>



                  ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                   SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997
                                   (Unaudited)



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



                                                                               December 31,          December 31,
                                                                                  1998                   1997


Operating activities:
  Net income                                                                    $ 3,031,927           $ 2,036,947
  Adjustments to reconcile net income to
   cash provided from operating activities:
     Depreciation                                                                    55,831                34,182
     Changes in assets and liabilities:
       Accounts, bank and trade acceptances
        receivable                                                            ( 16,811,965)         (  7,025,714)
       Prepaid expenses                                                       (    127,829)         (      3,893)
       Inventory, trade acceptance drafts                                     (  6,286,823)
       Accounts payable                                                           1,307,659                   660
       Accrued expenses                                                       (      6,353)                25,804
       Deferred income                                                               87,893
       Income taxes payable                                                          27,278               106,639
       Deferred rent                                                          (      7,627)         (      6,508)
       Security deposits                                                      (      3,481)         (      8,800)
       Customer deposits                                                                            (     26,587)
                                                                                -----------          -----------

       Net cash used in operating activities                                  ( 18,733,490)         (  4,867,270)
                                                                               -----------           -----------

Investing activities:
  Purchase of treasury stock                                                  (    452,356)
  Property and equipment                                                      (    147,324)         (    104,948)
                                                                               -----------           -----------

       Net cash used in investing activities                                  (    599,680)         (    104,948)
                                                                               -----------           -----------

Financing activities:
  Proceeds from issuance of common stock                                             60,800             1,171,213
  Cash advances from bank                                                         7,718,079         (  1,019,392)
                                                                                -----------          -----------

       Net cash provided by financing activities                                  7,778,879               151,821
                                                                                -----------           -----------

Net decrease in cash                                                          ( 11,554,291)         (  4,820,397)

Cash, beginning of period                                                        13,381,678             7,352,465
                                                                                -----------           -----------

Cash, end of period                                                             $ 1,827,387           $ 2,532,068
                                                                                ===========           ===========

Supplemental disclosures of cash flow information:
   Cash paid during the year for:
     Interest                                                                   $   462,024           $    62,540
                                                                                ===========           ===========
     Income taxes                                                               $   346,462           $   101,446
                                                                                ===========           ===========



</TABLE>




     See notes to condensed consolidated financial statements
                                                                            F-4


<PAGE>



                  ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                       SIX MONTHS ENDED DECEMBER 31, 1998
                                   (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, 1998,  included in its Annual Report filed on Form 10-K.  All reference
to  Actrade  in these  footnotes,  relate to Actrade  International,  Ltd.,  the
Company's wholly owned subsidiaries.



2. Organization of the Company:

     The  Company  was  incorporated  in the State of Delaware on April 3, 1987.
Actrade Capital, Inc. a wholly owned subsidiary of Actrade International,  Ltd.,
was  incorporated  in  Delaware in May of 1991.  Actrade  Capital,  Inc.  offers
alternatives to existing accounts  receivable  management to domestic companies.
Actrade  International  Corp., a New York corporation,  was incorporated on July
18, 1985.  Actrade  represents  various U. S.  manufacturers and distributors by
buying and exporting  their products  overseas.  Actrade South  America,  Inc. a
wholly owned foreign corporation and subsidiary of Actrade International, Corp.,
was incorporated in Antigua and Bahamas on February 12, 1988 and was acquired in
January 1990. On August 14, 1997,  TAD  International  Ltd. and on May 29, 1998,
Actrade Forfaiting, Inc. were incorporated under the laws of the Commonwealth of
the Bahamas.  Both  Companies  are wholly owned  subsidiaries  of Actrade  South
America, Inc. TAD International, Ltd. has been inactive since inception. Actrade
Forfaiting,  Inc.  deals with trade  acceptance  drafts  (TAD's) on the  foreign
market  and  began  operations  in  June  of  1998.  In  October  1998,  Actrade
Forfaiting,  Inc. changed its name to Actrade  Resources,  Inc. In July of 1998,
Actrade  Capital Canada,  Ltd. was  incorporated  under the laws of Canada.  The
Company is a wholly owned subsidiary of Actrade Forfaiting,  Inc. and deals with
trade acceptance drafts (TAD's) on the Canadian market,  beginning operations in
October of 1998.











                                                                          F-5


<PAGE>



                  ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                       SIX MONTHS ENDED DECEMBER 31, 1998
                                   (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 Actrade South America, a foreign corporation,  Actrade International
Corp.  and Actrade  Capital,  Inc. are included as the  subsidiaries  of Actrade
International,  Ltd. Actrade Resources, Inc. (formerly Actrade Forfaiting, Inc.)
and TAD  International,  Ltd.  are  included as  subsidiaries  of Actrade  South
America.  Actrade  Capital  Canada,  Ltd. is included as a subsidiary of Actrade
Forfaiting, Inc.


4. Risks and uncertainties:

     With respect to Actrade  Capital,  Inc.  and its TAD  Program,  the Company
faces strong competition from many established financial institutions, including
banks,  insurance  companies and receivables  financing  (factoring)  companies.
Actrade Capital,  Inc.'s TAD Program (see Note 8) is based upon the introduction
of a Trade Acceptance Draft (TAD). There is no assurance that management will be
successful in either gaining the necessary market acceptance for the TAD Program
or in  securing  adequate  additional  capital to expand to its full  commercial
potential.

     A portion  of the  Company's  sales  are in  foreign  markets.  There is no
guarantee   that  the  foreign   market  will  continue  to  develop  since  the
incorporation  of  foreign  and  domestic  government   intervention,   economic
conditions world wide and any other unforeseen situations may occur.


5. Related party transactions:

     During each of the three years ended December 31, 1998, 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.










                                                                          F-6


<PAGE>



                  ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                       SIX MONTHS ENDED DECEMBER 31, 1998
                                   (Unaudited)






6.  Leases:
                                                           Monthly
         Location              Term                        Payment

         New York       03/01/90 to 03/31/00        $5,715.58 to $6,241.58
         New York       11/01/98 to 03/31/99                      5,131.38
         New York       04/01/97 to 03/31/00         1,628.63 to  1,716.28
         Illinois       11/01/97 to 10/31/00         2,502.00 to  2,576.00
         Florida        12/25/97 to 12/25/98                      1,223.75
         California     11/20/98 to 11/30/99                      1,448.00
         Georgia        09/01/98 to 08/31/01         3,274.38 to  3,474.20
         Israel         month to month                 500.00 to  1,100.00
         Bahamas        month to month                              500.00
         Canada         11/01/98 to 10/31/01                      2,260.00


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

                    December 31, 1999                           $198,767
                    December 31, 2000                             93,637
                    December 31, 2001                             27,794
                                                                --------
                                                                $320,198
                                                                ========

      Rent  expense  amounted  to  $133,970  and  $79,165  for  1998  and  1997,
        respectively.



7. Income taxes:

    The components of income tax expense are:
                                                         1998            1997
                                                         ----            ----
    Income taxes currently payable:
      Federal                                          $218,280       $129,095
      State                                             150,386         67,197
                                                       --------        --------
                                                        368,666        196,292
                                                       --------        --------
    Deferred tax expense arising from:
      Excess of Financial accounting
       depreciation over tax                          (   5,829)     (   2,024)

      Other                                              16,949      (     976)
                                                        --------      --------
                                                         11,120      (   3,000)
                                                        --------      --------

    Total income tax expense                            $379,786       $193,292
                                                        ========       ========










                                                                           F-7


<PAGE>



                  ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                       SIX MONTHS ENDED DECEMBER 31, 1998
                                   (Unaudited)







7.  Income taxes (continued):

    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:



                                                      1998               1997
                                                      ----               ----

      Computed tax at the expected
       statutory rate                             $1,159,982          $843,587

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

      State income taxes                             150,386            67,197

      Foreign income                             (   924,952)        ( 697,742)

      Other                                           11,120         (   3,000)
                                                   ----------         --------

      Income tax expense                          $  379,786          $193,292
                                                   ==========         ========



    The effective statutory rate for 1998 was 34% 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
$10,325,063 at December 31, 1998 and $5,548,539 at December 31, 1997.



     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.










                                                                           F-8


<PAGE>



                  ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                       SIX MONTHS ENDED DECEMBER 31, 1998
                                   (Unaudited)








8. Trade Acceptance Drafts receivable, bank:

    As of December 31, 1998, the Company had total TAD amounts due from banks of
$14,103,410.  The bank  purchases the TAD's at the face value and advances these
amounts to  Actrade.  The bank  purchases  the TAD's  without  recourse  and the
Company has granted a security  interest in all TAD's  purchased by the bank and
all accounts  represented  by the TAD's together with all proceeds of the above.
The bank  will  purchase  each  TAD from  Actrade  that  has been  assigned  and
delivered,  whereby  providing  financing in an overdraft or loan agreement.  At
December 31, 1998 there were advances of $7,718,079  on the  overdraft.  As each
TAD is  collateralized,  the face amount will be credited to the Actrade account
to reduce the advance overdraft.  Interest is payable at 1% over prime per annum
on the first day of each month.



    As of December 31, 1998, the Company had sold TAD's to a banking institution
in the amount of  $162,824.  This amount was due from the bank at  December  31,
1998 and collected in January.


    As of December 31, 1998,  Actrade  Capital,  Inc. has recorded in income all
TAD's issued with a 90 day  expiration  date.  Any TAD's issued for over 90 days
have been  recorded  with  deferred  income at December  31, 1998  amounting  to
$102,083.


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



                                               Six and three months ended
                                                     December 31,
                                            1998                       1997
                                            ----                       ----

   Weighted average of shares
    actually outstanding          8,531,963   8,531,823   8,076,470   8,257,788
   Common stock purchase
    warrants and options            170,969     161,769     357,786     357,786
                                    ---------   ---------  ---------  ---------

   Primary and fully diluted
    weighted average common
    shares outstanding            8,702,932   8,693,592   8,434,256   8,615,574
                                  =========   =========   =========   =========












                                                                           F-9


<PAGE>


                  ACTRADE INTERNATIONAL, LTD. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                       SIX MONTHS ENDED DECEMBER 31, 1998
                                   (Unaudited)







10. Common stock purchase warrants and options:

     In the six months ended December 31, 1998,  18,500  warrants were exercised
at prices ranging from $3.00 to $6.40,  resulting in net proceeds to the Company
of $76,000 and the issuance of 18,500 common shares.

     In the quarter ended December 31, 1998, the Company refunded an overpayment
from the exercise of certain  warrants in June of 1998.  This refund amounted to
$15,200.


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


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

11. Patent rights:

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







                                                                        F-10


<PAGE>




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



I.  Results of Operations

During the first six months of fiscal 1999, ended December 31, 1999, the Company
had combined gross sales of $84,214,434, compared with $43,117,444 for the first
six months of fiscal  1998,  an increase of more than 95%.  During this  period,
cost of sales  totaled  $77,536,285  (or 92% of total  sales),  as  compared  to
$39,307,247 for the same period last year (or slightly over 91% of total sales).
The  continued  increase in cost of sales as a percentage of total sales results
from  the  fact  that  profit  margins  experienced  by  Actrade  Capital,  Inc.
("Capital")   are  lower  than  the  margins   associated   with  the  Company's
international  trade operations.  As sales from Capital's Trade Acceptance Draft
Program (the "TAD  Program")  increase as a  percentage  of overall  sales,  the
Company's overall profit margins will continue to decrease.

In the first  half of fiscal  1999,  a  majority  of the  Company's  sales  were
generated by Capital's TAD Program which had sales of $50,462,255, almost 60% of
total sales for the period,  with the international  trading division accounting
for the balance.

During the first half of fiscal  1999,  gross  profits from  operations  reached
$6,678,149,  an increase of $2,867,952 (or  approximately  75.3% higher than the
first half of fiscal 1998).  Net profits from operations for this period,  after
provision  for  interest  and  taxes,  climbed to  $3,031,927,  as  compared  to
$2,036,947  for the same period last year,  an  increase of  approximately  49%.
Based upon the Company's currently issued and outstanding  shares,  earnings per
share for the first half of fiscal 1999 reached $0.35 per share,  as compared to
$0.24 per share for the first half of fiscal 1998, an increase of almost 46%.

The  substantial  increase in gross  sales  during the first half of fiscal 1999
continues to be due primarily to the ongoing expansion of operations through (i)
significantly  increased  sales by Capital  through its TAD  Program,  discussed
separately below (see "III. Actrade Capital, Inc. And The Trade Acceptance Draft
Program") and (ii) increased sales by its subsidiary Actrade S.A.

With respect to the three months ended December 31, 1998,  gross sales increased
to $46,063,498  (up over 99% from the second quarter of fiscal 1998) while gross
profits  climbed to $3,748,060  (an increase of over 78% from the second quarter
of fiscal  1998).  During the second  quarter  income  from  operations  totaled
$2,152,508  (up over 79% from the same period in fiscal 1998) and net  earnings,
after  interest  income and interest  expense and allowance  for taxes,  reached
$1,638,699 (an increase of over 51% from fiscal 1998).  Second  quarter  earning
per share  totaled  approximately  $0.19 as  compared to $0.13 per share for the
second quarter of fiscal 1998, an increase of over 46%. Cost of sales during the
second quarter, as a percentage of gross sales, was almost 91.9%,  compared with
90.9% for the same period last year.



II.  Discussion of Financial Condition

     On a consolidated  basis, at December 31, 1998 the Company had total assets
of  $37,904,702,  with total current  liabilities of $12,647,317  (compared with
$26,137,402  and $3,512,761,  respectively,  at June 30, 1998, the end of fiscal
1998). Of the Company's assets at December 31, 1998,  $1,827,387 was in the form
of cash and cash  equivalent  (compared to  $13,381,678  at June 30, 1998).  The
substantial  decrease in cash and cash  equivalent at December 31, 1998 reflects
the  utilization of available cash on hand for the purchase of TADs in Capital's
TAD Program.


     In  addition  to cash,  the Company  had at  December  31,  1998,  Accounts
Receivable (less an allowance for doubtful accounts of $350,000) of $14,825,300.
In addition,  Capital has "trade  acceptances  drafts  receivable,  bank" in the
amount  of  $14,266,234,  representing  TADs  that  have been sold to a bank and
"trade acceptance  drafts,  on hand" of $6,286,823,  representing TADs that were
held in inventory and not sold to banks.  The increase in assets at December 31,
1998 over fiscal  year-end,  was  principally  due to a substantial  increase in
purchases of TADs by both Capital and Actrade Resources. This increased activity
also resulted in a corresponding increase in liabilities,  as reflected in "cash
advance from bank", which represents utilization by Capital of its credit lines,
and trade accounts receivable.

     During December 1998 the Company  concluded an interim  financing  facility
with a major financial institution which provided Capital with up to $10 Million
of additional funding ability for the purchase of TADs. The Company is currently
negotiating  a permanent  facility,  expected to be for $25 Million,  which will
replace the interim facility.


     At December 31, 1998, the Company's total stockholders' equity increased to
$25,233,291 as compared to $22,592,920 at June 30, 1998. The principal  source
of funds for the  Company's  operations  continues to be revenues  earned by its
operating subsidiaries.



During the balance of the current fiscal year, ending June 30, 1999, 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.

     At December  31,  1998 the  Company  also had  property,  less  accumulated
depreciation,  of $466,172  (compared to $374,679 at June 30, 1998) and security
deposits and prepaid expenses $30,288 and $202,498  respectively.  In connection
with the Company's  relocation  during fiscal 1990, it received an 18-month rent
abatement from its landlord. To conform to applicable accounting procedures, the
value of this  abatement  is being  amortized  over  the life of the  lease.  At
December  31,  1998 the  Company  continued  to show  $24,094 in  deferred  rent
liability.


     Based  upon  available  cash  on  hand,   current  and  anticipated  credit
facilities 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 1999.  Thereafter,  future
capital  expenditures will be decided based upon operating results and available
revenues from operations.  Apart from expenses  associated with the expansion 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.

     At December 31, 1998, the Company had total outstanding  liabilities to its
bank of $7,718,079, representing advances against Capital's credit facilities in
connection with the sale of TADs.  These credit  facilities are fully secured by
the proceeds  due from TADs which have been sold to the bank  involved but which
have not yet been  collected.  Consequently,  the  payment of these  outstanding
loans is not expected to have any impact upon the Company's liquidity. This loan
amount is constantly changing based upon a number of factors including the total
amount of TADs sold to the bank and the extent to which Capital needs to utilize
this credit facility.


     Actrade Capital Inc. And The Trade Acceptance Draft Program.



     During the first half of fiscal 1999,  Capital's sales reached $50,462,255,
as compared with  $22,306,043  for the first half of fiscal 1998, an increase of
over 126%.  Cost of sales  totaled  $46,864,469  resulting  in gross  profits of
$3,597,786  during the first half as  compared  to  $23,234,002  and  $1,572,172
respectively for the same period in fiscal 1998. This represented an increase in
gross profits of more than 128% over last year. After general and administrative
expenses of $2,223,440,  interest expense of $457,748 (net of interest income of
$13,059) and provision for taxes of $152,513,  Capital  realized net income from
its  operations  of  $764,085,  as  compared  to net income of only  $372,263 an
increase of over 105%.

IV.  Trends Affecting Liquidity, Capital Resources and Operations


A.       Actrade Capital, Inc.

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


B.       Actrade International Corp. - Export Division.

     Over the years,  economic  conditions in the United States have caused many
American   manufacturers  to  seek  new  markets  for  their  products  and,  in
particular,  to turn to foreign markets to boost domestic  sales.  This trend is
now being  affected by a number of other  factors  that could  adversely  affect
future growth rates for the Company's export operations.  Most importantly among
these has been the renewed  strength of the  American  Dollar  compared to other
currencies which has had the effect of making American products too expensive to
compete with foreign-made  products.  Principally this is due to the impact that
reduced foreign labor costs have upon the price of competitive merchandise.


Actrade S.A. - International Trade Division.

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

Another result of these  changing world  conditions has been the impact upon the
availability (or lack thereof) 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 market  demand,  in fiscal 1997 the Company  initiated a
further expansion of the international trading operations of Actrade S.A. Due to
the  financial  strength of the Company,  Actrade S.A. has been in a position to
fill the financing  void created by the dramatic  increase in worldwide  demand,
thereby allowing it to capture a larger share of the current market demand.



     The effects of this trend are evident in the  Company's  operating  results
for both fiscal 1998 and during the current period.  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. "Year 2000" Compliance.

     The Year 2000 issue is the result of computer  programs being written using
two digits, rather than four to define the applicable year. Any of the Company's
computer programs that have  data-sensitive  software may recognize a date using
"00" as the year 1900 rather than the year 2000.  This could  result in a system
failure or miscalculations causing disruptions of operations,  including,  among
other things, a temporary inability to process  transactions,  send invoices, or
engage in similar normal business activities.

     Based upon an assessment  made during fiscal 1998, the Company is currently
updating all versions of operations  and  financial  software so that all of its
systems will utilize dates beyond December 31, 1999 properly.  In addition,  the
Company has evaluated all of its auxiliary computer application systems for Year
2000 compliance and believes that the planned modifications and conversions will
allow it to mitigate the Year 2000 issue.


The  Company  also  plans  to  initiate  formal  communications  with all of its
significant  suppliers,  financial institutions and major customers to determine
the extent to which the Company may be vulnerable to any third parties'  failure
to remediate their own Year 2000 issues.  The financial impact to the Company of
bringing its equipment and systems into Year 2000  compliance is not anticipated
to be material to its financial position or results of operations.

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:  January 28, 1999



                                    ACTRADE INTERNATIONAL, LTD.




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