SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 10-QSB


            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                     For the Quarter Ended January 24, 1998
                           Commission File No. 1-11254

                           VERMONT PURE HOLDINGS, LTD.

             (Exact name of registrant as specified in its charter)

         Delaware                                             06-1325376
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                           Identification No.)

                     Route 66; PO Box C; Randolph, VT 05060
               (Address of principal executive offices) (Zip Code)

                                  (802)728-3600
              (Registrant's telephone number, including area code)

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 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.

                                                                 Outstanding at
        Class                                                     March 3, 1998

Common Stock, $.001 Par Value                                       10,279,540



<PAGE>


                   VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES

                                      INDEX

                                                                    Page Number
Part I - Financial Information

   Item 1.           Financial Statements

                     Consolidated Balance Sheet as of
                     January 24, 1998 (unaudited) and
                     October 25, 1997                                       4

                     Consolidated Statement of Operations
                     (unaudited) for the Three Months ended
                     January 24, 1998 and January 25, 1997                  5

                     Consolidated Statement of Cash Flows
                     (unaudited) for the Three Months ended
                     January 24, 1998 and January 25, 1997                  6

                     Notes to Consolidated Financial Statements
                     (unaudited)                                       7 - 10

   Item 2.           Management's Discussion and Analysis of
                     Financial Condition and Results of
                     Operation                                        11 - 13

Part II - Other Information                                           14 - 15

   Item 1.           Legal Proceedings

   Item 2.           Changes in Securities

   Item 3.           Defaults upon Senior Securities

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

   Item 5.           Other Information

   Item 6.           Exhibits and Reports on Form 8-K

                     Signature                                             16

                                                         2

<PAGE>


                                                                   Page Number

Exhibit Index                                                              17

   Asset Purchase Agreement between Vermont Pure Holding, Ltd. and
   Vermont Coffee Time, Inc. relating to the purchase certain assets and
   liabilities dated December 19, 1997.

   Promissory Note Between Vermont Pure Springs, Inc. and Vermont
   Pure Holdings and Vermont Coffee Time, Inc. dated January 5, 1998.

   Security Agreement between Vermont Pure Springs and Vermont
   Pure Holdings and Vermont Coffee Time, Inc. dated January 5, 1998.

   Consulting Agreement between Amy Berger and Vermont Pure Holdings,
   Ltd. dated January 5, 1998.

   Distribution Rights Agreement between Vermont Pure Springs, Inc. and
   Akva Hf. dated December 9, 1997.

   Packing and Distribution Agreement between Vermont Pure Springs, Inc.
   and Akva Hf. dated December 9, 1997.


                                                         3

<PAGE>

<TABLE>
<CAPTION>


                  VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                                               January 24,                  October 25,
                                                                  1998                         1997
                                                          ======================         =================
                                                               (Unaudited)
                                     ASSETS

CURRENT ASSETS:
<S>                                                      <C>                         <C>  
        Cash                                              $          470,689          $         93,808
        Accounts receivable                                        1,940,599                 1,974,765
        Inventory                                                    881,970                   978,473
        Current portion of deferred tax asset                        326,000                   326,000
        Other current assets                                         157,025                   288,627
                                                          ___________________         _________________

        TOTAL CURRENT ASSETS                                       3,776,283                 3,661,673
                                                          ___________________         _________________

PROPERTY AND EQUIPMENT - net of 
   accumulated depreciation                                        7,572,804                 7,332,912
                                                          ___________________         _________________


OTHER ASSETS:
        Intangible assets - net of accumulated                     6,777,201                 5,216,300
            amortization
        Deferred tax asset                                           218,000                   218,000
        Other assets                                                 188,034                   117,881
                                                          ___________________         _________________
                                                                   7,183,235                 5,552,181
                                                          ___________________         _________________

                                                          $       18,532,322         $      16,546,766
                                                          ===================         =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
        Accounts payable                                  $        1,168,323         $       1,099,094
        Current portion of customer deposits                          52,201                    49,534
        Accrued expenses                                           1,073,370                   986,961
        Line of credit                                               980,621                   238,021
        Current portion of long term debt                            977,355                   885,748
        Current portion of obligations under 
          capital lease                                              110,297                   144,944
                                                          ___________________         _________________
        TOTAL CURRENT LIABILITIES                                  4,362,167                 3,404,302
              
        Long term debt                                             6,534,930                 5,435,292
        Obligations under capital lease                              339,725                   304,597
        Customer deposits                                            817,810                   760,559
                                                          ___________________         _________________
        TOTAL LIABILITIES                                          12,054,632                9,904,750
                                                          ___________________         _________________

STOCKHOLDERS' EQUITY:
        Common stock - $.001 par value, 20,000,000 
          authorized shares, issued and outstanding, 
          10,207,371 shares as of January 24, 1998
          and 10,131,980 shares at October 25, 1997                    10,207                   10,132
        Paid in capital                                            22,747,343               22,447,092
        Accumulated deficit                                       (16,279,860)             (15,815,208)
                                                          ___________________         _________________
        TOTAL STOCKHOLDERS' EQUITY                                  6,477,690                6,642,016
                                                          ___________________         _________________

                                                          $        18,532,322         $     16,546,766
                                                          ===================         =================
                                       4
                       See Notes to Financial Statements


</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                  VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS




                                                                                                  Three months ended
                                                                                ====================================================
                                                                                     January 24,                      January 25
                                                                                        1998                             1997
                                                                                ===================             ====================
                                                                                    (Unaudited)                       (Unaudited)   
<S>                                                                            <C>                              <C>    
SALES                                                                           $         4,407,086              $        2,315,415

COST OF GOODS SOLD                                                                        1,942,154                       1,230,895
                                                                                ____________________             ___________________
GROSS PROFIT                                                                              2,464,932                       1,084,520
                                                                                ____________________             ___________________

OPERATING EXPENSES:
     Selling, general and administrative expense                                          2,017,100                       1,237,486
     Advertising expenses                                                                   640,897                         420,656
     Amortization                                                                           120,706                          34,599
                                                                                ____________________             ___________________

TOTAL OPERATING EXPENSES                                                                  2,778,703                       1,692,741
                                                                                ____________________             ___________________

PROFIT (LOSS) FROM OPERATIONS                                                              (313,771)                       (608,221)
                                                                                ____________________             ___________________

OTHER INCOME (EXPENSE):  
     Interest - net                                                                        (151,284)                        (72,991)
     Miscellaneous                                                                              403                          10,971
                                                                                ____________________             ___________________
TOTAL OTHER INCOME (EXPENSE)                                                               (150,881)                        (62,020)
                                                                                ____________________             ___________________

NET PROFIT (LOSS)                                                               $          (464,652)             $         (670,241)
                                                                                ====================             ===================

BASIC EARNINGS (LOSS) PER SHARE                                                              ($0.05)                         ($0.07)
                                                                                ====================             ===================

Weighted Average Shares Used in Computation                                              10,162,759                       9,678,268
                                                                                ====================             ===================


                                       5
                       See Notes to Financial Statements

</TABLE>
<PAGE>

<TABLE>
<CAPTION>
 
                   VERMONT PURE HOLDINGS, LTD AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS
 
 
                                                                                          Three months ended
                                                                            ________________________________________    
                                                                                January 24,           January 25,
                                                                                   1998                   1997
                                                                            _________________      _________________
                                                                                (Unaudited)          (Unaudited)
<S>                                                                         <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                               $        (464,652)      $         (670,241)
     Adjustments to reconcile net loss to net 
       cash from operating activities:
     Depreciation                                                                     292,674                 175,734
     Amortization                                                                     120,706                  34,599
     (Gain) loss on disposal of property and equipment                                (13,029)                (10,248)
                                                                            _________________      __________________
                                                                                      (64,301)               (470,156)
 
     Changes in assets and liabilities (net of 
       effect of acquisitions): 
     (Increase) Decrease in accounts receivable                                       142,313                 162,422
     (Increase) Decrease in inventory                                                 136,988                 (16,046)
     (Increase) Decrease in other current assets                                      131,602                 (42,609)
     (Increase) Decrease in other assets                                             (149,694)                123,355
     (Decrease) Increase in accounts payable                                          (63,016)               (160,252)
     (Decrease) Increase in customer deposits                                          13,242                  (1,370)
     (Decrease) Increase in accrued expenses                                           86,409                 175,600
                                                                            _________________      __________________
CASH USED IN OPERATING ACTIVITIES                                                     233,543                (229,056)
                                                                            _________________      __________________     
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property, plant and equipment                                       (414,100)               (209,179)
     Proceeds from sale of fixed assets                                                13,029                  16,636
     Cash expended for acquisitions                                                (1,331,169)                      0
                                                                            _________________      __________________
CASH USED IN INVESTING ACTIVITIES                                                  (1,732,240)               (192,543)
                                                                            _________________      __________________
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from line of credit                                                     742,600                 355,316
     Proceeds from debt                                                             1,365,489                 110,725
     Principal payments of debt                                                      (243,461)               (120,546)
     Sale of Common Stock                                                              10,950                       0
                                                                            _________________      __________________
CASH PROVIDED BY FINANCING ACTIVITIES                                               1,875,578                 345,495
                                                                            _________________      __________________

NET INCREASE (DECREASE) IN CASH                                                       376,881                 (76,104)
 
CASH - Beginning of period                                                             93,808                 783,081
                                                                            _________________      __________________
CASH  - End of period                                                        $        470,689        $        706,977
                                                                            =================      ==================
  
Cash paid for interest                                                       $        160,952        $        161,286
                                                                            =================      ==================



                                       6
                       See Notes to Financial Statements
</TABLE>
<PAGE>
                  VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)


1.       BASIS OF PRESENTATION

         The accompanying  unaudited consolidated financial statements have been
         prepared in accordance with Form 10-QSB instructions and in the opinion
         of  management  contain  all  adjustments  (consisting  of only  normal
         recurring accruals) necessary to present fairly the financial position,
         results of operations,  and cash flows for the periods  presented.  The
         results  have  been  determined  on the  basis  of  generally  accepted
         accounting  principles and practices applied consistently with the Form
         10-KSB for the year ended October 25, 1997.

         Certain information and footnote  disclosures  normally included in the
         financial  statements  presented in accordance with generally  accepted
         accounting  principles have been condensed or omitted. The accompanying
         consolidated  financial  statements  should be read in conjunction with
         the financial  statements and notes thereto  incorporated  by reference
         from the  Company's  Form  10-KSB and Annual  Report for the year ended
         October 25, 1997.

2.       SIGNIFICANT ACCOUNTING POLICIES

         In February  1997,  the  Financial  Accounting  Standards  Board issued
         Statement on Financial  Accounting  Standards  No. 128,  "Earnings  Per
         Share" (FAS No. 128) which became effective for both interim and annual
         financial  statements  for periods  ending after December 15, 1997. FAS
         No. 128  requires a  presentation  of  "Basic"  and (where  applicable)
         "Diluted" earnings per share.  Generally,  Basic earnings per share are
         computed on only the weighted  average number of common shares actually
         outstanding  during the period and the  Diluted  computation  considers
         potential   shares  issuable  upon  exercise  or  conversion  of  other
         outstanding instruments where dilution would result.  Furthermore,  FAS
         No. 128 requires the restatement of prior period reported  earnings per
         share to conform to the new standard.

         The Basic loss per share was $.05 for the fiscal  quarter ended January
         24, 1998 and $.07 for the fiscal  quarter  ended  January 25, 1997.  On
         these  dates,  the Company had other  potentially  dilutive  securities
         consisting  of options and warrants of 2,132,187  and 1,755,000 for the
         respective  periods.  Since the  Company  incurred  a loss in the first
         quarter of both 1998 and 1997,  inclusion  of these  securities  in the
         earnings per share calculation would be antidilutive.
         Consequently, diluted earnings per share has not been presented.




                                                         7

<PAGE>



3.       LINE OF CREDIT

         On January 24, 1998 the Company had borrowed $980,621 from its line of
         credit with  Chittenden  Bank.  Under the formula of the  agreement the
         Company was eligible to borrow $1,500,000.

4.       ACQUISITIONS

         A. Akva - On December 9, 1997 the  Company  entered  into a packing and
         distribution  rights agreement and a distribution rights agreement with
         Akva,  Hf. The  purpose of the  agreements  is to allow the  Company to
         distribute  Akva, an Icelandic spring water, on an exclusive basis. The
         rights were acquired for 25,000  shares of the  Company's  common stock
         valued at $107,812  and 50% of the profits  resulting  from the sale of
         Akva  products  from  January 1, 1999  through  December  31, 2004 to a
         maximum of $500,000 for the term. The Company will pay a packing fee to
         Akva    for    bottling    the    product    and    will    charge    a
         marketing/administration   fee  as  outlined  in  the  agreements.  The
         agreements at cancelable by the Company with 90 day written notice.

         B. Vermont Coffee Time - On January 5, 1998, the Company  completed the
         purchase of  substantially  all of the assets of Vermont  Coffee  Time,
         Inc. a company  operating  distribution  routes for water and coffee to
         homes and offices and commercial vending services primarily in Northern
         Vermont.  The purchase price of the assets was  $1,431,564.  Chittenden
         Bank financed  $1,000,000 of the purchase from the  acquisition  credit
         facility that was provided by the loan  agreement  dated June 20, 1997.
         The balance of the purchase price was settled by the issuance of a note
         to the seller of $250,000 and by the  issuance of 45,391  shares of the
         Company's common stock valued at $181,564.

5.       LONG TERM DEBT

         The Company  entered  into a note with  Vermont  Coffee  Time,  Inc. on
         January 5, 1998 in conjunction with the purchase of certain assets from
         that  Company.  The term of the note is five  years.  It is  payable in
         equal monthly  installments  based on a ten year  amortization  at 8.5%
         interest.  There is a lump sum of $154,179 due on January 5, 2003.  The
         loan is secured by all tangible and intangible assets pertaining to the
         Asset Purchase agreement governing this transaction.

6.       INTANGIBLE ASSETS

         The  value of the  distribution  rights  obtained  from  Akva,  Hf.  in
         exchange for the Company's stock will be amortized over six years.  The
         price of the  Company's  stock was $4.3125 per share at the time of the
         closing. Based on the issuance of 25,000 shares, distribution rights at
         the time of the sale were valued at $107,812.

         Goodwill that resulted from the acquisition of the assets of Vermont 
         Coffee Time, Inc. will

                                                         8

<PAGE>



         be amortized over 30 years and was calculated as follows:

         Purchase Price                                              $1,431,564
         Acquisition Costs                                               81,169
         Fair Value of Tangible and Identifiable Intangible Assets     (397,910)
         Liabilities Assumed                                            248,618
                                                                    ___________
         Total                                                       $1,363,441
                                                                    ===========
         In  conjunction  with  the   acquisition,   the  Company  entered  into
         non-competition, employment and consulting agreements with the owner of
         Vermont Coffee Time, Inc.,  pursuant to which she will receive payments
         of  $20,000 a year over three  years.  The  assets  acquired  consisted
         primarily of coolers, brewers, vehicles, and customer lists.

7.       COMMITMENTS

         A. Leased Space - The Company  entered  into a lease for 18,000  square
         feet of  space in  Halfmoon,  New  York.  The  space  will be used as a
         bottling,  warehouse,  and distribution plant for the Company's upstate
         New York Home and Office  operations.  This space  replaces  the former
         headquarters  of Excelsior  Spring  Water,  in  Saratoga,  NY which the
         Company  currently  leases on a month to month  basis.  The lease  will
         commence  approximately  April 1, 1998 and the term of the new lease is
         10 years.  Annual  rent  payments  in the first year of the lease total
         $90,000 and increase slightly each year thereafter.

         B. Production Capacity - In order to increase production capacity,  the
         Company  has made  plans  to  acquire  new  production  equipment  from
         December 1997 through April 1998. The equipment  includes a five gallon
         filling line and associated  equipment for  installation in the Albany,
         New York area.  Additionally,  the Company is replacing its filling and
         packaging  machinery in its PET bottling facility in Randolph,  VT. The
         acquisition of this equipment for an aggregate  amount of approximately
         $800,000 is being financed by and lease with KeyCorp Leasing. The lease
         is for six years  with a market  value buy out of the  equipment  after
         that term. As of January 24, 1998 the Company had closed on $326,000 of
         the total amount of the lease. The company is treating this arrangement
         as an operating lease.

8.       STOCK ISSUANCES

         The Company  issued  25,000  shares of its common  stock on December 9,
         1997 in conjunction with the purchase of distribution rights from Akva,
         Hf. valued at $107,812.

         The Company issued 45,391 shares of its common stock valued at $181,564
         on  January  5, 1998 as part of the  purchase  of the assets of Vermont
         Coffee Time, Inc.

         As part of the agreement to purchase the stock of A.M. Fridays, Inc. in
         July, 1997,  the Company agreed to pay contingent consideration in the 
         event gross sales of A.M. Fridays exceed $1,135,000 from the period of 
         January 1, 1997 to January 2, 1998.  The sales for this

                                        9

<PAGE>



         period were $1,461,676.  On February 2, 1998, the Company issued 72,169
         shares of its common stock, valued at $288,676.  This will be accounted
         for as part of the purchase price and accordingly booked as goodwill as
         of the transaction date.

9.       CONTINGENCIES

         Former Employees
         On  March 1,  1996,  the  Company  brought  suits  against  two  former
         employees  alleging that they had breached  their  agreements  with the
         Company.  The suits seek permanent  injunctive  relief and damages.  On
         April 1, 1996 the  Company  was  granted a  preliminary  injunction  in
         Vermont  Superior  Court  that  prevented  the  former  employees  from
         pursuing  ventures  competitive  to the Company.  A future hearing will
         address the permanency of the injunction.  Subsequently, both employees
         filed counterclaims  against the Company seeking monetary damages.  The
         Company has  certain  defenses  arising  out of its claims  against the
         employees that it will assert when necessary.

         On February 24, 1997 the Company  reached a settlement  with one of the
         two former employees  involved in ongoing  litigation with the Company.
         The settlement had no material financial impact on the Company and both
         parties agreed to release their claims against each other.

         The Company does not anticipate  that the outcome of the remaining suit
         will have a material financial impact on the Company.

10.      SUBSEQUENT EVENTS

         A. On January 30, 1998 the Company  purchased certain assets of Sagamon
         Spring Water Company of Rutland,  Vermont.  The assets  included a five
         gallon water bottle filler and  ancillary  equipment,  exclusive  water
         rights to a spring located in Tinmouth,  Vermont,  and exclusive use of
         the Sagamon trade name. The purchase price was approximately $270,000.

         B. On January 26, 1998 the Company signed a commitment  letter to close
         on a new credit  facility with CoreStates  Bank. The facility  replaces
         substantially all of the financing with Chittenden Bank. The commitment
         is for up to  $15,000,000,  $2,000,000 of which is for working  capital
         with the balance  available for  acquisitions  subject to the terms and
         conditions set forth by the facility. The interest rate on the facility
         is the LIBOR rate plus 250 basis  points  which was 8.1% as of February
         24, 1998. The term of the agreement is five years.  Chittenden  Bank is
         not participating in this loan facility.







                                       10

<PAGE>





PART I - Item 2

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following  discussion and analysis  should be read in  conjunction  with the
financial statements and notes thereto as filed in the Company's Form 10-KSB for
the year ended October 26, 1996.

                           Forward-Looking Statements

When used in the Form  10-QSB  and in future  filings  by the  Company  with the
Securities  and Exchange  Commission,  the words or phrases "will likely result"
and "the Company  expects,"  "will  continue,"  "is  anticipated,"  "estimated,"
"project,"  or  "outlook"  or  similar  expressions  are  intended  to  identify
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation  Reform Act of 1995.  The  Company  wishes to caution  readers not to
place undue reliance on any such forward-looking statements, each of which speak
only as of the date made.  Such  statements  are  subject  to certain  risks and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
historical  earnings and those presently  anticipated or projected.  Among these
risks  are  water  supply  and  bottling  capacity  constraints  in the  face of
significant  growth,  dependence  on  outside  distributors,   and  reliance  on
commodity price fluctuations as they influence raw material pricing. The Company
has no obligation to publicly  release the result of any revisions  which may be
made to any  forward-looking  statements to reflect anticipated or unanticipated
events or circumstances occurring after the date of such statements.

                              Results of Operations

Sales - Sales for the first three months of fiscal year 1998 were $4,407,086, an
increase of  $2,091,671 or 90% over sales of  $2,315,415  for the  corresponding
period  last  year.  Excluding  sales  attributable  to  the  acquisitions  made
subsequent  to the first  quarter  of 1997  sales in the first  three  months of
fiscal 1998 were 27% over the corresponding period last year.

Sales for retail-size  products increased $838,082,  or 57%, for the first three
months of fiscal year 1998 compared to the corresponding  period a year ago. The
increase was a result of volume  increases  related to the  continued  growth of
both  the  Vermont  Pure  brand  and  secondary  labels.   Brand  awareness  was
accelerated  during the quarter through  increased  promotion.  This, as well as
increased  market  penetration and development of new markets,  were responsible
for the sales growth. Average selling price for the first three months of fiscal
year 1997 was up 4% from the previous year. The total 37% increase was accounted
for in the following  distribution  channels:  27%  attributable to Vermont Pure
sizes, 8% attributable to Hidden Spring,  and 2% attributable to private labels.
The Akva brand had no material impact on sales for the quarter.

Sales for the home and office division increased $1,226,379, or 139%, for the 
first three months of

                                       11

<PAGE>



fiscal  year 1998  compared  to the prior  year.  A  substantial  portion of the
increase in sales for this division can be attributed to acquisitions. Exclusive
of  acquisitions,   sales  of  home  and  office  related   products   increased
approximately 10% for the first quarter of fiscal year 1998.

Cost of Goods Sold - For the three months, Cost of Goods Sold was $1,942,154 for
fiscal year 1998 compared to  $1,230,895 in fiscal year 1997  resulting in gross
profits of $2,464,932,  or 56% of sales, for fiscal year 1998 and $1,084,520, or
47% of sales,  for fiscal  year 1997.  The  increase  in gross  profit for first
quarter was due to a  considerable  increase in sales volume which resulted in a
lower  cost per unit.  In  addition,  the  Company's  raw  material  costs  were
significantly  lower during the quarter than for the comparable period last year
as a result of new bottle  processing  and  pricing  that was  effective  in the
second quarter of fiscal 1997. Raw material costs remained stable throughout the
first quarter of 1998. However, the Company's bottle prices are dependant on the
market costs of resin,  and the  stability of these costs cannot be  guaranteed.
Significant  price  fluctuations  in the future  could  result in  corresponding
positive or negative effects on cost of goods sold and gross profit.

Operating  Expenses - For the first three months of fiscal year 1998 compared to
the  corresponding  period in fiscal year 1997,  total  operating  expenses were
$2,778,703  and  $1,692,741,  respectively,  an increase of  $1,085,962  or 64%.
Selling,  general and administrative expenses increased by $779,614, or 63%, for
the first  three  months of fiscal  year 1997.  The  increase in these costs was
largely  due to  conversion  and  operating  costs  associated  with the  recent
acquisitions.  The  Company  anticipates  that  it  will  continue  to  work  on
maximizing the operating  efficiencies of the acquired  companies.  However,  no
assurance can be given that this effort will yield savings. Advertising expenses
increased  by $220,241,  or 52%, for the three month period in 1998  compared to
the  corresponding  period of fiscal 1997. The increase in advertising  expenses
was  due  to  higher  promotional  expenses  associated  with  increased  market
penetration and brand awareness.  Given the competitive  nature of the industry,
the Company  anticipates that it will continue to spend  significant  amounts in
the future for  advertising  and  promotion  as it  continues  to develop  brand
recognition  and increase  market  penetration.  For the first quarter of fiscal
year 1998  amortization  increased $86,107 from the same quarter a year ago as a
result of increased goodwill from new acquisitions.


Profit/Loss From Operations - Loss from operations for the first three months of
fiscal year 1998 was $313,771 as compared to a loss from  operations of $608,221
for the same period last year, an improvement of $294,450.  The improvement,  in
what is  historically  the Company's  weakest  quarter,  is  attributable to the
increase  in sales  coupled  with a decrease  in raw  material  costs and volume
efficiencies. The Company plans to continue to create greater consumer awareness
and to find  alternate  distribution  channels for its retail product and expand
its home and office distribution which is a less cyclical business. No assurance
can be given that this plan will be successful.

Other  Income/Expense - Net interest expense increased $78,293, or 107%, for the
first quarter of fiscal year 1998,  respectively,  compared the first quarter in
fiscal  year 1997.  The  increase  in  interest  expense  was  primarily  due to
increased borrowing to fund capital equipment  requirements  through a bank line
of credit and finance the recent acquisitions.


                                       12

<PAGE>



Net  Profit/Loss  - The  Company's net loss for the first three months of fiscal
year 1998 was $464,652  compared to $670,241 for the  corresponding  period last
year, an improvement of $205,589 or 31%.

                         Liquidity and Capital Resources

Largely  as a result of  reduction  of the net loss,  cash flow from  operations
showed an improvement for the first three months of fiscal year 1998 as compared
to the  corresponding  period in fiscal  year  1997.  The net cash  inflow  from
operations  improved  to  $246,572  from  an  outflow  of  $229,056,  for  those
respective periods.  The Company's primary  requirements for capital continue to
be for  the  marketing  and  promotional  activities  needed  to  effect  market
penetration and expand sales,  acquiring  operating assets needed to accommodate
the growth of the business,  and scheduled debt repayments.  These  requirements
may result in continued net cash outflows on a seasonal basis.

As of January 24, 1998,  the Company had a working  capital  deficit of $585,884
compared to positive  working  capital of $257,371 at the end of its fiscal year
on October  25,  1997.  The  decrease in working  capital of $843,255  reflects,
primarily, the use of cash to fund the operating loss for the quarter,  purchase
equipment,  for  scheduled  debt  repayment  and  to  finance  acquisitions  and
resulting  integration  costs.  As of March 3, 1998 the Company had  borrowed on
$1,394,202 its line of credit compared to a $238,021 balance at the beginning of
the fiscal  year.  The maximum  amount  available  to borrow as of that date was
$1,500,000,  based on the level of receivables  and inventory.  The Company pays
interest on any outstanding principal at the prime rate as published in the Wall
Street  Journal plus .50%,  which was 9.00% per annum on March 3, 1998. The loan
facility is secured by all the inventory,  receivables and intangible  assets of
the Company and expires June 1, 1999.  The Company plans to replace this line of
credit  during  the  second  quarter  with  an  operating  line of  credit  with
CoreStates Bank, in Philadelphia,  with a maximum limit of $2,000,000.  The line
will be  secured  by  substantially  all of the  Company's  assets  and  have an
interest rate based on LIBOR plus 250 basis points, presently about 8.1%

At October 25, 1997,  the Company had recorded a deferred tax asset of $544,000.
Based on current  levels.  No  adjustments  were made to this amount  during the
first quarter of 1998. Further recognition is dependant on future earnings.

The Company borrowed  $1,000,000  during the fiscal quarter from Chittenden Bank
in connection with the acquisition of the assets of Vermont Coffee Time, Inc. In
addition to the note,  the Company  issued a note payable to the former owner of
the  acquired  company of  $250,000,  payable  over the next five  years,  at an
interest  rate  of  8.5%.   The  existing   acquisition   debt  to   Chittenden,
approximately  $4.3 million,  is expected to be refinanced  with CoreStates Bank
under the agreement  mentioned  above. In addition,  the commitment  letter with
CoreStates  Bank provides an  additional  amount of  approximately  $8.7 million
available for future acquisitions if they meet defined parameters.

The Company has reduced its cash usage over the last year and  anticipates  that
its working capital  position will improve in future quarters and is adequate to
fund operations when supplemented by its operating line of credit.  Future sales
growth and acquisitions may require significant  capital additions.  The Company
anticipates that it will be able to use its own resources and obtain financing

                                       13

<PAGE>



for this  expansion  although no assurance can be given that  financing  will be
available.  The Company is pursuing an active program of evaluating  acquisition
options. To complete any acquisitions, the Company anticipates using its capital
resources and the CoreStates facility described above.

                                       14

<PAGE>



PART II - Other Information

Item 1 - Legal Proceedings

         None

Item 2 - Changes in Securities

(a)      None

(b)      None

(c)      The  following  shares  were  issued  pursuant  to Section  4(2) of the
         Securities  Act of 1933 as  transactions  by an issuer not  involving a
         public offering:

         The Company issued 25,000 of its unregistered common shares on December
         9, 1997 in conjunction  with the purchase of  distribution  rights from
         Akva,  Hf. The price of the stock on that date was  $4.3125  per share.
         20,000  shares were  issued to Akva Hf. and 2,500  shares each to David
         Thibodeau and William Bennet.

         The Company issued 45,391 of its unregistered  common shares on January
         5, 1998 as part of the  purchase of the assets of Vermont  Coffee Time,
         Inc.  The price of the stock on that date was $4 per share.  All shares
         were issued to the sole stockholder Vermont Coffee Time, Inc.

         As part of the  agreement to purchase the stock of A.M.  Fridays,  Inc.
         (AMF) in July, 1997, the Company agreed to contingent  consideration in
         the event  gross  sales of AMF  exceed  $1,135,000  from the  period of
         January  1, 1997 to January 2,  1998.  The sales for this  period  were
         $1,461,676.  On February 2, 1998,  the Company  issued 72,169 shares of
         its  unregistered  common shares,  valued at $4 per share,  the closing
         price of its  registered  shares on December 31, 1997,  in  conjunction
         with this agreement.  All shares were issued to the sole stockholder of
         AMF.

         In addition,  5,000 shares of the Company's  unregistered  common stock
         was issued to an  employee of the  Company  upon the  exercise of 5,000
         stock  options  granted  under the 1993  Performance  Equity Plan.  The
         exercise  price  was $2.18 per  share  and the  shares  were  issued on
         November 17, 1997.

Item 3 - Defaults upon Senior Securities

         None

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

         None

                                       15

<PAGE>




Item 5 - Other Information

         None

Item 6 - Exhibits and Reports on Form 8-K

         Exhibit #                   Description

            10.1   Asset Purchase Agreement between Vermont Pure Holding, Ltd.
                   and Vermont Coffee Time, Inc. relating to the purchase 
                   certain assets and liabilities dated December 19, 1997.

            10.2   Promissory Note Between Vermont Pure Springs, Inc. and 
                   Vermont Pure Holdings and Vermont Coffee Time, Inc. dated 
                   January 5, 1998.

            10.3   Security Agreement between Vermont Pure Springs and Vermont
                   Pure Holdings and Vermont Coffee Time, Inc. dated January 5,
                   1998.

            10.4   Consulting Agreement between Amy Berger and Vermont Pure
                   Holdings, Ltd. dated January 5, 1998.

            10.5   Distribution Rights Agreement between Vermont Pure Springs, 
                   Inc. and Akva Hf. dated December 9, 1997.

            10.6   Packing and Distribution Agreement between Vermont Pure 
                   Springs, Inc. and Akva Hf. dated December 9, 1997.



                                       16

<PAGE>





                                    SIGNATURE


Pursuant to the  requirements of Section 13 or 15(d) 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:            March 10, 1998
                  Randolph, Vermont


                                     VERMONT PURE HOLDINGS, LTD.

                                     By: /s/ Bruce S. MacDonald
                                             Bruce S. MacDonald
                                     Vice President, Chief Financial Officer
                                    (Principal Accounting Officer and Principal
                                                  Financial Officer)


                                       17

<PAGE>


                                  EXHIBIT INDEX


         Exhibit #                         Description

            10.1    Asset Purchase Agreement between Vermont Pure Holding, Ltd.
                    and Vermont Coffee Time, Inc. relating to the purchase 
                    certain assets and liabilities dated December 19, 1997.

            10.2    Promissory Note Between Vermont Pure Springs, Inc. and 
                    Vermont Pure Holdings and Vermont Coffee Time, Inc. dated
                    January 5, 1998.

            10.3    Security Agreement between Vermont Pure Springs and Vermont
                    Pure Holdings and Vermont Coffee Time, Inc. dated January 5,
                    1998.

            10.4    Consulting Agreement between Amy Berger and Vermont Pure
                    Holdings, Ltd. dated January 5, 1998.

            10.5    Distribution Rights Agreement between Vermont Pure Springs, 
                    Inc. and Akva Hf. dated December 9, 1997.

            10.6    Packing and Distribution Agreement between Vermont Pure 
                    Springs, Inc. and Akva Hf. dated December 9, 1997.

            27.     Financial Data Schedule


                                       18