U.S. Securities and Exchange Commission
                             Washington, D.C. 20549


                                   Form 10-QSB


(Mark One)
[ X ]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
          For the quarterly period ended June 30, 1997

[   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
          For the transition period from _______to________


                         Commission file number: 0-26998


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


                New York                              11-3104480
      (State or other jurisdiction                    (IRS Employer
     of incorporation or organization)           Identification Number)


                     11 Oval Drive, Islandia, New York 11722
                    (Address of principal executive offices)


                                 (516) 342-1515
                           (Issuer's telephone number)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements for the past 90 days. 
Yes [ X ] No [ ]

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest  practicable date: Common Stock, par value $.001
per share - 8,741,018 shares outstanding as of August 8, 1997.

     Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]


<PAGE>


                          PART I. FINANCIAL INFORMATION



Item                                                                      Page

Item 1.   Condensed Consolidated Financial Statements (Unaudited):

          Condensed Consolidated Balance Sheets as of June 30, 1997 
           and December 31, 1996. . . . . . . . . . . . . . . . . . . . . . .3
          Condensed Consolidated Statements of Income for the Three 
           and Six Months Ended June 30, 1997 and 1996. . . . . . . . . . . .4
          Condensed Consolidated Statements of Cash Flows for the 
           Six Months Ended June 30, 1997 and 1996. . . . . . . . . . . . . .5
          Notes to Condensed Consolidated Financial Statements. . . . . . . .6


Item 2.   Management's Discussion and Analysis or Plan of Operation. . . . .8

<PAGE>


               ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
  
                                                             June 30,            December 31,
                                                               1997                   1996
                                                           (Unaudited)               (Note)

                              ASSETS
Current assets:
<S>                                                        <C>                     <C>        
 Cash and cash equivalents . . . . . . . . . . .           $ 1,117,415             $ 3,042,051
 Accounts receivable, net. . . . . . . . . . . .                31,093                  16,392
 Inventory . . . . . . . . . . . . . . . . . . .               528,968                 287,462
 Prepaid expenses. . . . . . . . . . . . . . . .               214,214                 138,295
                                                           -----------             -----------
      Total current assets . . . . . . . . . . .             1,891,690               3,484,200
Fixed assets, net. . . . . . . . . . . . . . . .               325,618                 367,618
Other assets . . . . . . . . . . . . . . . . . .                23,084                  23,084
                                                           -----------             -----------
                                                           $ 2,240,392             $ 3,874,902
                                                           -----------             -----------


               LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable. . . . . . . . . . . . . . . .           $   352,619             $   703,955
 Accrued expenses. . . . . . . . . . . . . . . .                75,373                 215,802
 Due to related party. . . . . . . . . . . . . .                 4,616                 153,513
 Loans payable and accrued interest to 
     officers/shareholders . . . . . . . . . . .               218,190                 282,880
 Note payable. . . . . . . . . . . . . . . . . .               500,000                 500,000
 Deposits. . . . . . . . . . . . . . . . . . . .                10,000                  10,000
                                                           -----------             -----------
   Total current liabilities . . . . . . . . . .             1,160,798               1,866,150
                                                           -----------             -----------
Accrued litigation settlement cost . . . . . . .                64,969               1,208,813
                                                           -----------             -----------
Shareholders' equity:
 Series A nonredeemable, 9% cumulative preferred stock:
   3,000,000 shares authorized; 833,333 issued and
   outstanding (liquidation value $2,619,375 at June
   30, 1997 and $2,506,875 at December 31, 1996)).           2,500,000               2,500,000
 Common stock, par value $.001 per share: 25,000,000 
   authorized; 8,796,690 and 8,776,690 shares issued
   and outstanding as of June 30, 1997 and December
   31, 1996, respectively. . . . . . . . . . . .                 8,797                   8,777
 Additional paid-in capital. . . . . . . . . . .            12,828,307              11,419,483
 Accumulated deficit . . . . . . . . . . . . . .           (14,095,291)            (12,900,000)
 Accumulated foreign currency translation 
   adjustment. . . . . . . . . . . . . . . . . .                (4,500)                 (5,633)
                                                           -----------             -----------
                                                             1,237,313               1,022,627
 Less treasury stock, at cost: 55,672 shares
   of common stock . . . . . . . . . . . . . . .              (222,688)               (222,688)
                                                           -----------             -----------
      Total shareholders' equity . . . . . . . .             1,014,625                 799,939
                                                           -----------             -----------
      Total liabilities and stockholders' 
        equity . . . . . . . . . . . . . . . . .           $ 2,240,392             $ 3,874,902
                                                           -----------             -----------

<FN>
Note: The balance  sheet at December  31, 1996 has been derived from the audited
      financial  statements  at  that  date  but  does  not  include  all of the
      information  and  footnotes  required  by  generally  accepted  accounting
      principles for complete financial statements.
</FN>
</TABLE>


                  See notes to condensed financial statements.

<PAGE>


               ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                         Three Months Ended            Six Months Ended
                                              June 30,                      June 30,
                                          1997         1996           1997          1996

<S>                                     <C>          <C>           <C>           <C>       
Net sales. . . . . . . . . . . . .      $   32,920   $      --     $   33,963    $       --
Cost of goods sold . . . . . . . .          17,770          --         18,333            --
                                        ----------   ---------     -----------   ----------
Gross profit . . . . . . . . . . .          15,150          --         15,630            --

Costs and expenses:
 Cost of merchandise shipped -
   subsequently recalled . . . . .              --     293,672             --       556,026
 Research and development. . . . .          65,093      72,287        152,796       183,443
 Selling, general and 
  administrative . . . . . . . . .         419,670     662,253      1,083,604     1,268,208
Litigation settlement  . . . . . .              --     382,683             --       382,683
                                        ----------   ---------     -----------   ----------
      (Loss) from operations . . .        (469,613) (1,410,895)    (1,220,770)   (2,390,360)

Interest and other income. . . . .          15,905      12,981         42,932        48,978
Interest expense . . . . . . . . .          (8,232)    (12,722)       (17,453)      (21,718)
                                        ----------   ---------     -----------   ----------
      Net (loss) . . . . . . . . .      $ (461,940)$(1,410,636)   $(1,195,291)  $(2,363,100)
                                        ----------   ---------     -----------   ----------
Net (loss) per share . . . . . . .      $     (.06)$      (.17)   $      (.15)  $      (.29)
                                        ----------   ---------     -----------   ----------
Weighted average number of common
 shares outstanding. . . . . . . .       8,741,018   8,418,170      8,739,352     8,250,761

</TABLE>

                  See notes to condensed financial statements.

<PAGE>


               ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                               Six Months Ended June 30,
                                                               1997                 1996
Cash flows from operating activities:
<S>                                                        <C>                 <C>          
Net (loss)                             . . . . . .         $ (1,195,291)       $ (2,363,100)
Adjustments to reconcile net (loss) to net cash 
  (used in) operating activities:
 Depreciation and amortization . . . . . . . . . .               42,000               30,000
 Common stock issued for services and litigation 
  settlement . . . . . . . . . . . . . . . . . . .                   --              990,000
Changes in operating assets and liabilities:
 (Decrease) in accounts receivable . . . . . . . .              (14,701)            (104,841)
 (Increase) decrease in inventory. . . . . . . . .             (241,506)            (227,793)
 (Increase) decrease in prepaid expenses and
   other current assets. . . . . . . . . . . . . .              (75,919)              41,957
 Decrease in restricted cash . . . . . . . . . . .                   --            1,017,317
 (Decrease) in amounts due to related party. . . .             (148,897)                  --
 (Decrease) in deposit . . . . . . . . . . . . . .                   --              (13,568)
 Increase (decrease) in accounts payable and 
  accrued expenses . . . . . . . . . . . . . . . .             (326,765)              43,038
 Increase in accrued interest to officers. . . . . . . .          5,310                   --
 (Decrease) in accrued litigation settlement . . . . . .             --             (607,317)
 Other . . . . . . . . . . . . . . . . . . . . . . . . .          1,133                   -- 
                                                           -------------       --------------
      Net cash (used in) operating activities. . . . . .     (1,954,636)          (1,194,307)
                                                           -------------       --------------
Cash flows from investing activities:
Sales of marketable securities . . . . . . . . . . . . .             --            1,296,487
Acquisition of fixed assets . . . . . . . . . . .  . . .             --              (44,902)
                                                           -------------       --------------
      Net cash provided by investing activities. . . . .             --            1,251,585
                                                           -------------       --------------

Cash flows from financing activities:
Proceeds from sale of common stock . . . . . . . . . . .         30,000              116,538
Proceeds from notes payable. . . . . . . . . . . . . . .             --              500,000
                                                           -------------       --------------
      Net cash provided by financing activities. . . . . .       30,000              616,538
                                                           -------------       --------------

NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . .   (1,924,636)             673,816
Cash and cash equivalents - Beginning of period. . . . . .    3,042,051              524,231
Cash and cash equivalents - End of period. . . . . . . .    $ 1,117,415        $   1,198,047
                                                           -------------       --------------

Supplemental disclosure of non-cash financing activities:
     In March  1997,  certain  officers  and members of  management  contributed
315,000 shares of Common Stock to the Company to settle litigation that had been
accrued in the amount of $1,143,844.
     In June 1997,  certain  officers  exchanged  $230,000  of  liabilities  for
options to purchase 115,000 shares of Common Stock.
     In August 1997, the Company elected to issue an additional 39,972 shares of
Series A  Preferred  Stock to the holder of the  outstanding  Series A Preferred
Stock in lieu of payment of a cash  dividend  of  $119,375  on such  outstanding
Series A Preferred Stock.

Supplemental disclosure of cash flow information:
Interest paid during the period. . . . . . . . . . . . . . .$    13,143        $      13,184
</TABLE>

                    The attached notes are made a part hereof

<PAGE>

               ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.   Basis of Presentation.

     The  accompanying   unaudited  condensed  financial  statements  have  been
prepared by Alcohol Sensors International,  Ltd. (the "Company"), without audit,
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information and with the  instructions to Form 10-QSB and Item 310 of
Regulation  S-B.  Accordingly,  they do not include all of the  information  and
footnote  disclosures  required by generally accepted accounting  principles for
complete  financial  statements.  In the opinion of management,  all adjustments
(consisting  of  normal  recurring  accruals)   considered  necessary  for  fair
presentation have been included. The balance sheet at December 31, 1996 has been
derived from the audited financial  statements at that date but does not include
all the  information  and footnote  disclosures  required by generally  accepted
accounting  principles  for  complete  financial  statements.   These  financial
statements should be read in conjunction with the audited  financial  statements
and footnotes  thereto  included in the Company's Annual Report on Form 10-KSB/A
No. 1, filed on April 28, 1997 (Commission File No.: 0-26998).

     Operating  results for the three and six month  periods ended June 30, 1997
are not necessarily  indicative of the results that may be expected for the year
ending December 31, 1997.


2.   Significant Accounting Policies.

     Loss per share of common stock:

     Net loss per share of common stock is based on the weighted  average number
of shares outstanding during each period.

     Inventory:

     Inventory  consisting of electronic  components,  is stated at the lower of
cost (first in - first out basis) or market.  Inventory is comprised of finished
goods, of $20,678, and components of $508,290.


3.   Product Recall.

     In the late spring of 1996, the Company became aware of  inconsistencies in
certain integral components of the Company's  Sens-O-Lock  product  manufactured
for the  Company  and other  manufacturing  and quality  control  problems.  The
Company  discontinued  manufacturing  of the Sens-O-Lock  units and recalled the
product.  The statement of operations for the six months ended June 30, 1996 has
been  adjusted  for sales  returns  related  to the  recall  of the  Sens-O-Lock
product.  During the second quarter of 1996, the Company determined to develop a
new  technology  for its  Sens-O-Lock  product line and wrote down  inventory by
approximately $556,000 in connection thereto.


4.   Note Payable.

     The Company has a line of credit of $500,000, bearing interest at the prime
rate,  and  is  secured  by  a  $500,000  certificate  of  deposit.  The  amount
outstanding under this line of credit was $500,000 at December 31, 1996 and June
30, 1997. The amount of the  certificate of deposit is included in cash and cash
equivalents.



<PAGE>

5.   Legal Proceedings.

     The Company and certain of its former  officers were named as defendants in
an action  commenced in July 1997 in the New York State Supreme Court,  New York
County,  in an action  entitled Jack Gracian v. Alcohol  Sensors  International,
Ltd., Robert B. Whitney and John T. Ruocco.  The plaintiff alleges that, in July
1989, he entered into an agreement with the individual  defendants and a company
named  "International  Beverage  Machine"  pursuant  to which he  claims he paid
certain funds which the individual defendants promised would be used to purchase
stock in Alcohol Sensors,  Inc., which plaintiff claims to be the predecessor to
the Company. The plaintiff alleges damages of $13,500,000.  The Company believes
plaintiff's  claims  against  the  Company  are  without  merit and  intends  to
vigorously  defend  itself in this  action.  The  Company  is in the  process of
preparing  its answer in this  action.  The  ultimate  outcome of this action is
unknown at this time.


6.   Computation of Loss per Share.

     The Company's  loss per share,  as reflected in the condensed  consolidated
financial statements has been computed as follows:

<TABLE>
<CAPTION>
                                                Three Months Ended              Six Months Ended
                                                     June 30,                       June 30,
                                               1997            1996            1997           1996

<S>                                        <C>             <C>             <C>            <C>         
Net (loss) . . . . . . . . . . . . . .     $ (461,940)     $(1,410,636)    $(1,195,291)   $(2,363,100)
Cumulative dividend of preferred
 stock . . . . . . . . . . . . . . . .        (56,250)              --        (112,500)            --
                                           -----------     ------------    ------------   ------------
Net (loss) attributable to common
 stock . . . . . . . . . . . . . . . .     $ (518,190)     $(1,410,636)    $(1,307,719)   $(2,363,100)
                                           -----------     ------------    ------------   ------------
Weighted average number of common
 shares outstanding. . . . . . . . . .      8,741,018        8,418,170       8,739,357      8,250,761
                                           -----------     ------------    ------------   ------------
Net loss per share . . . . . . . . . .     $     (.06)     $      (.17)    $      (.15)   $      (.29)
                                           -----------     ------------    ------------   ------------
</TABLE>

<PAGE>


Item 2.   Management's Discussions and Analysis or Plan of Operations.

     Statements  contained in this Quarterly  Report on Form 10-QSB that are not
based upon historical fact are "forward looking  statements"  within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking statements included
in this Form 10-QSB  involve known and unknown  risks,  uncertainties  and other
factors which could cause actual results,  performance  (financial or operating)
or achievements  expressed or implied by such forward looking  statements not to
occur or be realized.  Such forward looking statements  generally are based upon
the best estimates by the Company or future results, performance or achievement,
based upon current conditions and the most recent results of operations. Forward
looking  statements may be identified by the use of forward looking  terminology
such  as  "may,"  "will,"   "expect,"   "believe,"   "estimate,"   "anticipate,"
"continue," or similar terms, variations of those terms or the negative of those
terms.

     Potential risks and uncertainties include, among other things, such factors
as the results of the  Company's  research and  development  efforts  related to
technology  for the next  generation  Sens-O-Lock  product,  the  quality of the
components,  manufacturing,  design and quality  control of the current and next
generation of the  Sens-O-Lock  product,  the enactment and  enforcement of laws
relating to the use of products  such as the  Company's  Sens-O-Lock  product in
connection with sentencing for alcohol-related crimes and violations,  the level
of insurance  industry  adoption of  discounts,  if any, for the use of products
such as the Company's  Sens-O-Lock product, the amount of sales of the Company's
products,  the competitive  environment within the industry in which the Company
competes,  the level and costs incurred in connection with the Company's product
development  efforts,  market  acceptance  of the  Company's  products,  certain
technological considerations,  competition,  dependence on key personnel and the
other  factors  including  those  disclosed  and  discussed  in  this  "Item  2.
Management's Discussion and Analysis or Plan of Operation" and in other sections
of this Form 10-QSB.  Readers of this Form 10-QSB should carefully consider such
risks,  uncertainties and other  information,  disclosures and discussions which
contain  cautionary  statements  identifying  important factors that could cause
actual results to differ  materially  from those provided in the forward looking
statements.

General

     The Company  markets and sells  electronic  after-market  safety  products,
including  a  patent-pending   line  of  ignition   interlock   devices  to  the
corporate/commercial  and individual  markets under the Sens-O-Lock  brand name.
The Company's Sens-O-Lock  equipment is designed to detect,  evaluate and assist
in the prevention of an alcohol  impaired  driver from operating a vehicle.  The
Company  also  markets and sells,  under the  WeatherEye  brand name,  a line of
modular products designed to automatically  engage and adjust the headlights and
taillights of automobiles depending upon weather and sunlight conditions.

     After the Company's  initial sale of approximately  700 Sens-O-Lock  units,
the  Company  became  aware in late Spring  1996 of  inconsistencies  in certain
integral  components  manufactured for the Company and other  manufacturing  and
quality  control  problems.  As a result,  in the second  quarter  of 1996,  the
Company  discontinued  manufacturing  of the Sens-O-Lock  product,  recalled the
Sens-O-Lock  units which had been sold,  ceased marketing efforts and wrote down
its  inventory  by  approximately  $556,000.  Since that time,  the  Company has
devoted  substantially  all of its resources to research and  development of new
technology for the Sens-O-Lock  product line,  developing new relationships with
other component  suppliers and manufacturers  improving the Company's  component
and manufacturing quality control procedures. In addition, the Company continued
to enhance  the  Sens-O-Lock  operating  software to meet the  requirements  for
foreign markets.

     The Company has  conducted  various  tests upon the  prototypes of its next
generation Sens-O-Lock product,  utilizing the results of the Company's research
and development  efforts.  These  pre-production  prototypes have been placed in
U.S. and European automobiles.  The Company expects to be retooling,  completing
final parts  procurement  and  preparing  for  production  during  September and
October  1997.  The next  generation  Sens-O-Lock  product  will be  required to
undergo  certification testing prior to actual United States market introduction
for the legislative market,  pursuant to National Highway  Transportation Safety
Administration guidelines. The Company believes that, for the U.S. voluntary and
commercial markets, no such testing is required.


<PAGE>

     The Company continues to evaluate other sensing  technologies  currently in
use within the industry. The Company intends to continue to utilize its research
and  development  efforts to ensure that the  Company's  proprietary  technology
remains  "cutting edge" while providing the Company with  alternative  technical
options for different target markets and for possible use in future  generations
of the Sens-O-Lock product. The Company may also utilize several technologies to
bring products to market as expeditiously as practicable.

     The Company  has  continued  its  development  of a network of  independent
representatives  and dealers  covering most of the continental  United States to
sell,  install and service  its  Sens-O-Lock  product.  The  Company's  business
strategy  will  concentrate  on  penetrating  three  markets:  (a) the voluntary
market,  which includes parents of teenage drivers;  (b) individuals  subject to
legislative or judicial  supervision (e.g., persons convicted of alcohol-related
or other crimes or violations);  and (c) the commercial market comprising truck,
buses and taxi fleets.  The Company intends to seek insurance  discounts to help
drive the market  for  Sens-O-Lock  product  and to assist in the  lobbying  for
stricter federal and state laws requiring drivers  convicted of  alcohol-related
or other  crimes or  violations  to install an ignition  interlock  device.  The
Company is evaluating strategies, marketing plans and programs which will enable
it to work jointly with major  insurance  companies to enhance their  respective
markets.  However,  there can be no assurance that the Company and such or other
insurance companies will agree upon a strategy, plan or program or that any such
strategy,  plan or program,  if adopted, or the Company's  independent  lobbying
efforts, will result in revenues to the Company or the commercial success of its
products.

Results of Operations

Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996

     Net Sales.  The Company had net sales of $32,920 for the three months ended
June 30,  1997,  compared  with no net sales for the three months ended June 30,
1996,  after adjustment for the subsequent  recall of the Company's  Sens-O-Lock
product.  The  Company's  sales,  in the 1997  period,  were of its  Weather-Eye
products.

     Cost of Goods Sold.  Cost of goods sold for the  three-month  period  ended
June 30, 1997 was $17,770, compared to zero in the 1996 period, after adjustment
for the subsequent  recall of the Company's  Sens-O-Lock  product.  All costs of
goods sold,  in the 1997 period,  were for the  Company's  Weather Eye products.
Costs of goods sold  consists  primarily  of  product  costs,  freight  charges,
royalties and inventory allowances for damaged and obsolete products.

     Costs and Expenses.  For the  three-month  period ended June 30, 1996,  the
Company  incurred  costs of $293,672  with  respect to the  Sens-O-Lock  product
shipped during the 1996 period which was subsequently recalled. No similar costs
were incurred in the 1997 period.

     Research and development expenses for the three-month period ended June 30,
1997 were $65,093,  a decrease of $7,174 or approximately  9.9% from $72,287 for
the three months ended June 30, 1996,  primarily due to the focus of the Company
in addressing  specific  areas related to the new  technology  anticipated to be
incorporated into the next generation Sens-O-Lock product.

     Selling,  general and  administration  expenses for the three-month  period
ended June 30, 1997 were $419,670, a decrease of $242,583 or 36.6% from $662,253
for the three  months ended June 30, 1996.  Commencing  in the first  quarter of
1997, the Company began to reduce the number of its employees until such time as
the next  generation  Sens-O-Lock  product was in production.  In addition,  the
salaries of the Company's  executive  officers and other employees were deferred
or reduced  by  approximately  70%.

     Litigation  settlement costs for the three-month period ended June 30, 1996
was $382,683. There were no litigation settlement costs in the 1997 period.


<PAGE>

     Interest and Other  Income.  Interest and other income for the  three-month
period  ended June 30,  1997 was  $15,905,  an  increase of $2,924 or 22.5% from
$12,981  for the three  months  ended June 30,  1996,  primarily  as a result of
higher  average cash balances  during the 1997 period caused by from the sale by
the Company in December 1996 of Series A Non-Redeemable 9% Cumulative  Preferred
Stock with an aggregate  liquidation  preference  of  $2,500,000  (the "Series A
Stock").

     Interest  Expense.  Interest expense for the three-month  period ended June
30,  1997 was $8,232,  a decrease of $4,490 or 35.3% from  $12,722 for the three
months ended June 30, 1996,  primarily as a result of the  availability  of cash
resulting from the sale of the Series A Stock in December 1996.

     Net Loss.  As a result of the  foregoing,  the net loss for the 1997 period
was $461,940,  a decrease of $948,696 or approximately 67.3% from $1,410,636 for
the 1996 period. The net loss per share for the 1997 period was $.06 compared to
$.17  for the 1996  period,  as a result  of the  reduced  net loss for the 1997
period,  partially offset by the effect of the cumulative dividend on the Series
A Stock for the 1997 period.

Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996

     Net Sales The  Company  had net sales of $33,963  for the six months  ended
June 30,  1997,  compared  with no net sales for the six  months  ended June 30,
1996,  after adjustment for the subsequent  recall of the Company's  Sens-O-Lock
product.  The  Company's  sales,  in the 1997  period,  were of its  Weather-Eye
products.

     Cost of Goods Sold. Cost of goods sold for the six-month  period ended June
30, 1997 was $18,333,  compared to no such costs in the 1996  six-month  period,
after adjustment for the subsequent recall of the Company's Sens-O-Lock product.
All costs of goods sold, in the 1997 period,  were for the Company's Weather Eye
products.

     Costs and  Expenses.  For the  six-month  period ended June 30,  1996,  the
Company  incurred  costs of $556,026  with  respect to the  Sens-O-Lock  product
shipped during the 1996 six-month  period which was  subsequently  recalled.  No
similar costs were incurred in the 1997 six-month period.

     Research and development  expenses for the six-month  period ended June 30,
1997 were  $152,796,  a decrease of $30,647 or 16.7% from  $183,443  for the six
months  ended  June 30,  1996,  primarily  due to the  focus of the  Company  in
addressing  specific  areas  related  to the new  technology  anticipated  to be
incorporated into the next generation Sens-O-Lock product.

     Selling, general and administration expenses for the six-month period ended
June 30, 1997 were  $1,083,604,  a decrease of $184,604 or  approximately  14.6%
from  $1,268,208  for the six months  ended June 30,  1996.  A majority  of such
reduction in selling,  general and  administrative  expenses resulted  primarily
from second  quarter cost cutting  efforts.  Commencing  in the first quarter of
1997, the Company began to reduce the number of its employees until such time as
the next  generation  Sens-O-Lock  product was in production.  In addition,  the
salaries of the Company's  executive  officers and other employees were deferred
or reduced by approximately 70%.

     Litigation  settlement  costs for the six-month  period ended June 30, 1996
was $382,683.  There were no litigation  settlement  costs in the 1997 six-month
period.

     Interest and Other  Income.  Interest  and other  income for the  six-month
period  ended June 30,  1997 was  $42,932,  a  decrease  of $6,046 or 12.3% from
$48,978 for the six months ended June 30, 1996,  primarily as a result of higher
average cash balance in the prior period.

     Interest Expense.  Interest expense for the six-month period ended June 30,
1997 was $17,453,  a decrease of $4,265 or 19.6% from $21,718 for the six months
ended June 30, 1996, primarily as a result of the availability of cash resulting
from the sale of the Series A Stock in December 1996.


<PAGE>

     Net Loss. As a result of the foregoing, the net loss for the 1997 six-month
period was $1,195,291, a decrease of $1,167,809 or 49.4% from $2,363,100 for the
1996 six-month period.  The net loss per share for the 1997 six-month period was
$.15  compared to $.29 for the 1996 period,  as a result of the reduced net loss
for the 1997 six-month period,  partially offset by the effect of the cumulative
dividend on the Series A Stock for the 1997 six-month period.

Liquidity and Capital Resources

     During the six month  period ended June 30, 1997,  the  Company's  cash and
cash equivalents decreased by $1,924,636 from $3,042,051 at December 31, 1996 to
$1,117,415  at June 30,  1997,  primarily  as a result  of using  $1,954,636  in
operations.  At June 30, 1997,  the Company had working  capital of $730,892,  a
decrease of $887,158  from working  capital of  $1,681,050 at December 31, 1996.
The  Company  believes  that its  existing  cash and cash  equivalents  and cash
generated  from  operations,  if any,  together with the Company's  reduction of
operating  expenses and deferral of approximately 70% of management's  salaries,
should be sufficient for existing  operations through the end of 1997.  However,
the Company  anticipates  requiring  additional sources of financing in order to
complete research and development,  conduct final parts procurement and commence
marketing  activities  relating  to  the  introduction  of the  next  generation
Sens-O-Lock  product.  Although the Company successfully sold the Series A Stock
in December  1996,  there can be no assurances  that the Company will be able to
obtain additional financing,  if at all, or that such financing will be on terms
acceptable  to the Company.  The Company is pursuing a possible  offering of its
equity or debt securities;  however,  there can be no assurance that the Company
will be successful in completing such an offering.

     In December  1996,  the Company issued 833,333 shares of Series A Stock and
warrants,  expiring in December  1998, to purchase  833,333 shares of the common
stock,  par value $.01 per share (the "Common  Stock"),  of the  Company,  at an
exercise  price of $5.50  per  share.  The  Series A Stock is  convertible  into
555,556  shares of Common  Stock at $4.50 per  share  (subject  to  adjustment).
Dividends accrue on the Series A Stock at 9% per annum (compounded semi-annually
on any accrued and unpaid dividends). The Company has the option to pay interest
on the Series A Stock in cash or in kind with respect to the first four interest
payments.  The Company  received  gross  proceeds  from the sale of the Series A
Stock and warrants of $2,500,000.

     The Company's  operating  activities  for the first six months of 1997 used
cash of  $1,954,336,  primarily  as a result of the net loss of  $1,195,291,  an
increase in  inventory of $241,506 as the Company  prepares for the  anticipated
release of the next generation  Sens-O-Lock product, the payment of $148,897 due
a related  party and a decrease  in accounts  payable  and  accrued  expenses of
$326,765.

     The Company's net cash provided by financing  activities for the six months
ended June 30, 1997 was $30,000 as the result of the  exercise of certain of the
warrants sold in the Company's initial public offering.

     In  order to  conserve  cash,  commencing  in March  1997,  certain  of the
Company's  officers  deferred a portion of their salaries.  As of June 10, 1997,
the amount of deferred salary totaled $230,000. On June 10, 1997, those officers
agreed to the  cancellation  of $230,000 of such deferred salary in exchange for
the issuance of options to purchase an aggregate 115,000 shares of Common Stock.
These options are  exercisable  through June 9, 2002 at $2.00 per share. On June
10, 1997, the closing price of the Common Stock was $2-9/16 per share.

     The  Company has  established  a plan of  operations  pursuant to which the
Company intends to purchase raw materials, components and manufacturing services
to assemble units which will be sold to the Company's developing dealer network.
The Company  intends to fund  additional  research  and  development,  including
engineering,  personnel costs, laboratory equipment, purchases, rental costs and
independent  laboratory  testing  services,  through cash flow  generated by the
anticipated  sale of the next  generation  Sens-O-Lock  product,  along with the
Company's  WeatherEye  products.  There can be no assurance,  however,  that the
Company will be successful in attaining its sales goals, nor that attaining such

<PAGE>

goals will have the  desired  effect on the  Company's  cash  resources.  If the
Company  does  not  attain  its  revenue  and  cash  collection  goals or if the
Company's  cash  resources  are not  sufficient,  it may be  necessary to obtain
additional  sources of financing.  There can be no assurance that such financing
will be available on terms  acceptable to the Company or on a timely basis or at
all.

Currency Fluctuations

     The Company anticipates marketing internationally, as well as in the United
States.  To the extent the  Company  is able to market its  products  in foreign
countries,  the  Company  will  become  subject  to the  risks  associated  with
international sales, including,  but not limited to, regulatory controls imposed
by foreign  governments,  shipping delays,  customs duties and export quotas and
other  trade   restrictions,   increased   collection  risks  and  international
political,  regulatory and economical developments,  any one of which could have
an  adverse  effect on the  Company's  operating  results.  To the  extent  that
revenues  are  derived in  currencies  other than U.S.  Dollars,  the  Company's
operating results may be affected adversely by fluctuations in currency exchange
rates. The Company has not engaged in currency-hedging  transactions intended to
reduce the effect of  fluctuations  in currency  exchange rates on the Company's
foreign business  operations.  Even if the Company were to determine that it was
in its best interests to enter into any such hedging transactions in the future,
there can be no  assurance  that the Company  will be able to do so or that such
transactions, if entered into, will materially reduce the effect of fluctuations
in currency exchange rates on the Company's foreign business operations.

Inflation

     The Company believes that inflation has generally not had a material impact
on its operations.

<PAGE>


                           PART II. OTHER INFORMATION

Item 1.   Legal Proceedings.

     Reference is hereby made to the  Company's  Annual  Report on Form 10-KSB/A
No. 1 for the fiscal year ended  December  31, 1996,  Item 3 thereof  (page 14),
filed April 28,  1997  (Commission  File No.:  0-26998),  and to the  references
therein, for a discussion of all material pending legal proceedings to which the
Company or any of its subsidiaries are parties.

     The Company and certain of its former  officers were named as defendants in
an action  commenced in July 1997 in the New York State Supreme Court,  New York
County,  in an action  entitled Jack Gracian v. Alcohol  Sensors  International,
Ltd,  Robert B. Whitney and John Ruocco.  The  plaintiff  alleges  that, in July
1989, he entered into an agreement with the individual  defendants and a company
named  "International  Beverage  Machine"  pursuant  to which he  claims he paid
certain funds which the individual defendants promised would be used to purchase
stock in the Company. The plaintiff alleges damages of $13,500,000.  The Company
believes plaintiff's claims against the Company are without merit and intends to
vigorously  defend  itself in this  action.  The  Company  is in the  process of
preparing  its answer in this  action.  The  ultimate  outcome of this action is
unknown at this time.


Item 2.   Changes in Securities.

     None.


Item 3.   Defaults upon Senior Securities.

     None.


Item 4.   Submission of Matters to a Vote of Security Holders.

     None.


Item 5.   Other Information.

Recent Developments:

     On April 17, 1997, the Board of Directors of the Company  appointed  Steven
A. Martello as President,  replacing Robert B. Whitney, who resigned for medical
reasons.  Contemporaneous  with such  appointment,  (a) Michael A. Sylvester was
appointed Executive Vice President of Sales, in addition to retaining his duties
as the  Company's  Treasurer  and Chief  Financial  Officer,  and (b)  Joseph M.
Lively,  Esq., was appointed the Company's  Vice  President and Chief  Operating
Officer, in addition to retaining his duties as the Company's General Counsel.

     On July 2, 1997,  Mr.  Whitney  resigned as a director and Chief  Executive
Officer of the Company,  as well as a director of Alcohol Sensors  Europe,  Plc,
the Company's 80%-owned subsidiary ("ASE").

     On July 14, 1997,  John T. Ruocco  resigned as a Senior Vice  President and
director of the Company, as well as a director of ASE, also for medical reasons,
and the Company's  Board of Directors (a) appointed Mr.  Martello as Chairman of
the Board and Chief Executive Officer of the Company,  and (b) appointed Michael
Ghazarian,  a director and the Managing Director of ASE, a Vice President of the
Company.


<PAGE>

Item 6.   Exhibits and Reports on Form 8-K.

     (a)  Exhibits.

     Set forth below are all exhibits to this Quarterly Report on Form 10-QSB.

Exhibit
Number    Description
27        Financial Data Schedule.

     (b)  Reports on Form 8-K.

     The Company did not file any Current Reports on Form 8-K during the quarter
ended June 30, 1997.



<PAGE>


                                   SIGNATURES

     In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                          ALCOHOL SENSORS INTERNATIONAL, LTD.


Dated:    August 19, 1997                 By:/s/ Steven A. Martello
                                             Steven A. Martello, President
                                             (Principal Executive Officer)


Dated:    August 19, 1997                 By:/s/ Michael A. Sylvester
                                             Michael A. Sylvester
                                             Executive Vice President of Sales,
                                             Treasurer and  Chief Financial 
                                                  Officer
                                             (Principal Financial Officer)