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 April 25, 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                                          May 29, 1998

Common Stock, $.001 Par Value                                     10,287,187



<PAGE>

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

                                      INDEX
<S>                                                                                   <C>   
                                                                                        Page Number
Part I - Financial Information

         Item 1.           Financial Statements

                           Consolidated Balance Sheets as of
                           April 25, 1998 (unaudited) and
                           October 25, 1997                                                         4

                           Consolidated Statements of Operations (unaudited)
                           for the Six Months and Three Months ended
                           April 25, 1998 and April 26, 1997                                        5

                           Consolidated Statements of Cash Flows
                           (unaudited) for the Six Months ended
                           April 25, 1998 and April 26, 1997                                        6

                           Notes to Consolidated Financial Statements
                           (unaudited)                                                          7 - 11

         Item 2.           Management's Discussion and Analysis of
                           Financial Condition and Results of
                           Operation                                                           12 - 15

Part II - Other Information                                                                    16 - 17

         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                                                              18

                                        2
</TABLE>
<PAGE>


                                                                   Page Number

Exhibit Index                                                        19

Exhibit #                 Description


         Asset Purchase Agreement between Vermont Pure Holding, Ltd. and Sagamon
         Springs, Inc. relating to the purchase certain assets and liabilities 
         dated January 31, 1998.

         Agreement and Collateral Assignment of Lease between Vermont Pure 
         Holding, Ltd. and Sagamon Springs, Inc. dated January 30, 1998.

         Security Agreement between Vermont Pure Holding, Ltd. And Sagamon 
         Springs, Inc. dated January 6, 1998.

         Term Note for $65,000 between Vermont Pure Holding, Ltd. And Sagamon 
         Springs, Inc. dated January 6, 1998.

         Non Compete Agreement of Fred Beauchamp and Jim Creed between Vermont 
         Pure Holding, Inc, and Sagamon Springs, Inc. dated January 6, 1998.

         Loan and Security Agreement Between Vermont Pure Springs, Inc. and 
         CoreStates Bank, N.A. dated April 8, 1998

         
                                        3

<PAGE>
PART I - Item 1
<TABLE>
<CAPTION>
                             VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARY

                                    CONSOLIDATED BALANCE SHEETS
                                                                          April 25,                              October 25,
                                                                            1998                                    1997
                                                                 -------------------------               -------------------------
                                                                        (Unaudited)
<S>                                                            <C>                                      <C> 
                                               ASSETS

CURRENT ASSETS:
                 Cash                                             $                300,544                $                 93,808
                 Accounts receivable                                             2,752,338                               1,974,765
                 Inventory                                                       1,233,642                                 978,473
                 Current portion of deferred tax asset                             326,000                                 326,000
                 Other current assets                                              195,752                                 288,627
                                                                  -------------------------               -------------------------

                   TOTAL CURRENT ASSETS                                          4,808,276                               3,661,673
                                                                  -------------------------               -------------------------

PROPERTY AND EQUIPMENT - net of accumulated depreciation                         7,940,100                               7,332,912
                                                                  -------------------------               -------------------------


OTHER ASSETS:
                 Intangible assets - net of accumulated amortization             7,056,369                               5,216,300
                 Deferred tax asset                                                218,000                                 218,000
                 Other assets                                                       86,343                                 117,881
                                                                  -------------------------               -------------------------

                   TOTAL OTHER ASSETS                                            7,360,712                               5,552,181
                                                                  -------------------------               -------------------------

TOTAL ASSETS                                                      $             20,109,088                $             16,546,766
                                                                  =========================               =========================

                                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
                 Accounts payable                                 $              2,127,167                $              1,099,094
                 Current portion of customer deposits                               55,195                                  49,534
                 Accrued expenses                                                  728,580                                 986,961
                 Line of credit                                                                                            238,021
                 Current portion of long term debt                                 348,062                                 885,748
                 Current portion of obligations under capital lease                 72,081                                 144,944
                                                                  -------------------------               -------------------------

                   TOTAL CURRENT LIABILITIES                                     3,331,085                               3,404,302

                 Long term debt                                                  1,765,617                               5,435,292
                 Long term obligations under capital lease                         330,923                                 304,597
                 Line of credit                                                  6,942,605                                   -
                 Long term portion of customer deposits                            864,727                                 760,559
                                                                  -------------------------               -------------------------

                   TOTAL LIABILITIES                                            13,234,957                               9,904,750
                                                                  -------------------------               -------------------------

STOCKHOLDERS' EQUITY:
                 Common stock - $.001 par value, 20,000,000                         10,280                                  10,132
                   authorized shares, 10,131,980 issued and outstanding
                   shares at October 25, 1997  and 10,279,540 issued and
                   outstanding shares at April 25, 1998
                 Paid in capital                                                23,035,946                              22,447,092
                 Accumulated deficit                                           (16,172,095)                            (15,815,208)
                                                                  -------------------------               -------------------------

                   TOTAL STOCKHOLDERS' EQUITY                                    6,874,131                               6,642,016
                                                                  -------------------------               -------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $             20,109,088                $             16,546,766

                                                                   =========================               =========================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                   VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS


<S>                                    <C>                  <C>                  <C>                      <C>   

                                                     Six months ended                            Three months ended
                                        ---------------------------------------   -------------------------------------------------
                                              April 25,             April 26,             April 25,                 April 26,
                                                1998                  1997                  1998                       1997
                                        ------------------   ------------------   ----------------------    -----------------------
                                        ------------------   ------------------   ----------------------    -----------------------
                                            (Unaudited)           (Unaudited)          (Unaudited)                   (Unaudited)

SALES                                    $      10,562,013    $       6,531,677    $           6,154,927      $           4,216,262

COST OF GOODS SOLD                               4,460,310            3,089,297                2,518,156                  1,858,402
                                        ------------------   ------------------   ----------------------     ----------------------

GROSS PROFIT                                     6,101,703            3,442,380                3,636,771                  2,357,860
                                        ------------------   ------------------   ----------------------     ----------------------

OPERATING EXPENSES:
  Selling, general and 
     administrative expense                      4,371,473            2,547,797                2,354,373                  1,310,311
  Advertising expenses                           1,480,180            1,265,030                  839,283                    844,374
  Amortization                                     262,681               82,403                  141,975                     47,804
                                        ------------------   ------------------   ----------------------     ----------------------

TOTAL OPERATING EXPENSES                         6,114,334            3,895,230                3,335,631                  2,202,489
                                        ------------------   ------------------   ----------------------     ----------------------

PROFIT (LOSS) FROM OPERATIONS                      (12,631)            (452,850)                 301,140                    155,371
                                        ------------------   ------------------   ----------------------     ----------------------

OTHER INCOME (EXPENSE):
  Interest - net                                  (345,780)            (151,871)                (194,496)                   (78,880)
  Miscellaneous                                      1,524                2,136                    1,121                     (8,835)
                                        ------------------   ------------------   ----------------------    -----------------------

TOTAL OTHER INCOME (EXPENSE)                      (344,256)            (149,735)                (193,375)                   (87,715)
                                        ------------------   ------------------   ----------------------    -----------------------

NET  INCOME  (LOSS)                      $        (356,887)   $        (602,585)   $             107,765     $               67,656
                                        ==================   ==================   ======================    =======================

NET INCOME  (LOSS) PER SHARE - BASIC     $           (0.03)   $           (0.06)   $                0.01     $                 0.01
                                        ==================   ==================   ======================    =======================

Weighted Average Shares Used
     in Computation                             10,220,923            9,687,792               10,279,540                  9,697,316
                                        ==================   ==================   ======================    =======================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                   VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                               Six months ended
                                                                                ----------------------------------------------------
                                                                                       April 25,                   April 26,
                                                                                         1998                        1997
                                                                                ------------------------    ------------------------
                                                                                ------------------------    ------------------------
                                                                                    (Unaudited)                    (Unaudited)
<S>                                                                             <C>                         <C> 

CASH FLOWS FROM OPERATING ACTIVITIES:
                 Net loss                                                        $              (356,887)    $             (602,585)
                 Adjustments to reconcile net loss to net cash from 
                    operating activities:
                   Depreciation                                                                  554,222                    268,327
                   Amortization                                                                  262,681                     82,403
                   (Gain) loss on disposal of property and equipment                                  71                        194

                 Changes in assets and liabilities (net of effect 
                    of acquisitions):
                   (Increase) Decrease in accounts receivable                                   (669,424)                  (462,746)
                   (Increase) Decrease in inventory                                             (214,684)                   249,175
                   (Increase) Decrease in other current assets                                   132,875                     (1,056)
                   (Increase) Decrease in other  assets                                         (110,370)                   193,126
                   (Decrease) Increase in accounts payable                                       895,828                    437,439
                   (Decrease) Increase in customer deposits                                       63,153                     14,015
                   (Decrease) Increase in accrued expenses                                      (258,381)                    60,782
                                                                                ------------------------    ------------------------
CASH PROVIDED BY OPERATING ACTIVITIES                                                            299,084                    239,074
                                                                                ------------------------    ------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
                 Purchase of property, plant and equipment                                      (878,115)                  (293,720)
                 Proceeds from sale of fixed assets                                                    -                     40,500
                 Cash used in acquistion                                                      (1,566,169)                  (383,295)
                                                                                ------------------------    ------------------------
CASH USED IN INVESTING ACTIVITIES                                                             (2,444,284)                  (636,515)
                                                                                ------------------------    ------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
                 Proceeds from line of credit                                                  1,511,979                    110,805
                 Proceeds from debt                                                            8,302,705                    435,725
                 Principal payments of debt                                                   (7,473,698)                  (391,345)
                 Sale of common stock                                                             10,950                          0
                                                                                ------------------------    ------------------------
CASH PROVIDED BY FINANCING ACTIVITIES                                                          2,351,936                    155,185
                                                                                ------------------------    ------------------------
NET INCREASE (DECREASE) IN CASH                                                                  206,736                   (242,256)

CASH - Beginning of period                                                                        93,808                    783,081
                                                                                ------------------------    ------------------------

CASH  - End of period                                                            $               300,544     $              540,825
                                                                                ========================    ========================



Cash paid for interest                                                           $               345,780     $              183,772
                                                                                ========================    ========================
</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
         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 to
         conform to the new standard.

         The Basic  loss per share was $.03 and $.06 for the six months and $.01
         for both of the  quarters  ended  April 25,  1998 and  April 26,  1997,
         respectively.  On  these  dates,  the  Company  had  other  potentially
         dilutive securities consisting of options and warrants of 2,127,187 and
         1,775,000 for the respective  years.  Since the Company incurred a loss
         in the first six  months  of both  1998 and 1997,  inclusion  the these
         securities in the earnings per share calculation would be antidilutive.
         Consequently,  diluted  earnings per share has not been  presented  for
         that period.  For the quarters  ended April 25, 1998 and April 26, 1997
         inclusion  of dilutive  securities  in earnings  per share  calculation
         resulted  in no change  from the basic  earnings  per share.  Therefore
         diluted earning per share was not presented.

                                        7

<PAGE>







3.       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
         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. The
         Company pays a packing fee to Akva for bottling the product and charges
         a  marketing/administration  fee as  outlined  in the  agreements.  The
         agreements are cancelable by the Company with 90 days 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
         $181,564 worth of the Company's common stock. The note was subsequently
         paid off on  April 8,  1998 as part of the  CoreStates  line of  credit
         agreement.

         C.  Sagamon  Springs  Water of Vermont,  Inc. - On January 30, 1998 the
         Company  purchased  certain assets of Sagamon  Springs 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
         spring  site  and  bottling   equipment  from  this   acquisition   are
         geographically  located close to the  Company's New York  operations to
         help them meet their increased demands for product.  The purchase price
         of the assets was $275,000.  Of this amount $170,000 was paid with cash
         and the remaining balance financed with notes from the sellers.


4.       LONG TERM DEBT

         A. Vermont Coffee Time, Inc.- The Company gave a note to 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. As noted in item 4B above this note has been paid off.


                                        8

<PAGE>



         B.  CoreStates  Banks N.A. - The Company  entered  into a five (5) year
         revolving credit line with CoreStates Banks N.A. on April 18, 1998. The
         purpose  of  the  loan  is  for  permitted   acquisitions  and  capital
         expenditures,  working capital and to refinance existing term debt. The
         Company is  entitled  to borrow up to $15  million  under the terms and
         conditions of the  agreement.  Of this amount $2 million is allowed for
         working capital with the balance available for acquisitions.  As of May
         29,1998  $6,942,605  had  been  borrowed  against  this  facility.  The
         facility was used to repay working  capital and  acquisition  debt from
         the  Chittenden  bank,  the  acquisition  debt of Happy Ice and Vermont
         Coffee  Time,  Inc. as well as the mortgage  note to Randolph  National
         Bank which was secured by the Company's principal facility. Under the
         agreement the Company is required to pay interest  monthly at a rate of
         LIBOR plus 2.5%,  currently  approximately  8.2%. The interest rate can
         decrease  during  the term  based  on  certain  performance  parameters
         outlined in the  agreement.  The line of credit is contingent  upon the
         Company  continuing  to meet  certain  loan  covenants.  The  covenants
         pertain to certain financial ratios as well as affirmative and negative
         covenants that are standard for credit facilities of this type.


5.       LINE OF CREDIT

         On April  25,  1998 the  Company  had  borrowed  $1,752,000  from the
         working  capital  portion  of its line of credit  with  CoreStates
         Banks. The Company was eligible to borrow $2,000,000 as of that date.


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. and Sagamon Spring Water of Vermont, Inc.  will be
         amortized over 30 years and was calculated, in the aggregate, as 
         follows:

         Purchase Price                                              $1,706,564
         Acquisition Costs                                               81,169
         Fair Value of Tangible and Identifiable 
          Intangible Assets                                            (607,910)
         Liabilities Assumed                                            248,618
                                                                      ----------
         Total                                                       $1,418,441
                                                                      ==========
         In conjunction  with the  acquisition  during the quarter,  the Company
         entered into non-competition, employment and consulting agreements with
         the owner of Vermont Coffee Time,  Inc. The assets  acquired  consisted
         primarily of coolers, brewers, vehicles, and customer

                                        9

<PAGE>



         lists.

              In  conjunction  with the  acquisition  during  the  quarter,  the
            Company has entered into a non-competition agreement with the owners
            of Sagamon Spring Water of Vermont, Inc.

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.  The monthly  lease  payments  are  approximately  $7,500 per
         month. The Company has  subsequently  leased an additional 4,500 square
         feet from this landlord.

         B. Production Capacity - In order to increase production capacity,  the
         Company has leased new production  equipment.  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  $764,132  is being  financed  by an  operating  lease with  KeyCorp
         Leasing.  The lease is for seven  years with a market  value buy out of
         the equipment after that term.

8.       STOCK ISSUE

         In  conjunction  with  acquisitions  during the year the Company issued
         142,560 shares of its common stock valued at $578,053 with share prices
         ranging from $4.0 to $4.3125.

         On April 8, 1998, in connection  with the  financing  arrangement  with
         CoreStates  Bank, the Company  issued  warrants to the bank to purchase
         shares of its common  stock.  The exercise  price was below the stock's
         market price on the issuance  date. The Company will amortize the value
         of the warrants over the five year term of the agreement.

9.       STOCK OPTION PLAN

         On  April  2,  1998,  the  Company's  shareholders  approved  the  1998
         Incentive and Non-  Statutory  Stock Option Plan. The plan provides for
         issuance of up to 500,000  options to  purchase  the  Company's  common
         stock under the administration of the Board of Directors. The intent of
         the plan is to award  options to officers,  employees,  directors,  and
         other individuals  providing  services to the Company.  Through May 29,
         1998, no options had been issued under the plan.



                                       10

<PAGE>

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. Vermont Natural's - On May 15, 1998 the Company purchased the assets
         of Vermont Naturals based in Clifton  Park, New York. In addition to 
         customers, the Company acquired trucks, bottles, coolers   and product
         inventory. The approximate purchase price was $200,000


         B. Perrier Group of America - On May 29, 1998 the Company  acquired the
         Poland  Spring and Deer Park home and office  customers  in the Albany,
         New York  market  from the  Perrier  Group of  America.  In addition to
         customers,  the Company has acquired trucks, bottles,  coolers, product
         inventory and office furniture. The approximate purchase price was $2.6
         million.  The Company  borrowed $2.6 million from CoreStates  under its
         line of credit for the transaction.













                                       11

<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 25, 1997.

                           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 six months of fiscal year 1998 were $10,562,013,  an
increase of  $4,030,336 or 62% over sales of  $6,531,677  for the  corresponding
period  last  year.  Sales  for the  second  quarter  of  fiscal  year 1998 were
$6,154,927,  an increase of $1,938,665  or 46% over sales of $4,216,262  for the
corresponding period last year. Excluding sales attributable to the acquisitions
in the six and three months ending April 25, 1998, sales increased approximately
29% and 16%, respectively, over the corresponding periods last year.

Sales for retail-size products increased  $1,284,252,  or 28%, for the first six
months of fiscal  year 1998  compared  to the  corresponding  period a year ago.
Sales for these products increased  $446,170,  or 14%, for the second quarter 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.  Increased  promotional  expense was
incurred  to  enhance  brand  awareness.  This,  as  well  as  increased  market
penetration and development of new markets, were

                                       12

<PAGE>



responsible  for the sales growth.  Average selling prices for the six and three
months  ending  April  25,  1998  were  down 1% and 4%,  respectively  from  the
corresponding  period the previous year reflecting  increased  volume of private
and secondary labels.  The total 28% increase for the year to date was accounted
for in the following  distribution  channels:  15%  attributable to Vermont Pure
sizes,  7%  attributable  to secondary  labels,  and 6%  attributable to private
labels.  The Akva  brand  had no  material  impact on sales  for  either  period
reported.

Sales for the home and office division  increased  $2,723,905,  or 140%, for the
first six months of fiscal year 1998 compared to the corresponding period of the
prior year. Sales for the division increased $1,497,526, or 151%, for the second
quarter of fiscal year 1998  compared to the  corresponding  period of 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  11% and 15% for the first  half and
second quarter of fiscal 1998, respectively.

Cost of Goods Sold - For the first six months of fiscal 1998, Cost of Goods Sold
was  $4,460,310  compared to $2,518,156  in fiscal year 1997  resulting in gross
profits  of  $6,101,703,  or 58% of  sales,  and  $3,442,380,  or 53% of  sales,
respectively.  For the second quarter, Cost of Goods Sold was $2,518,156 in 1998
compared to $1,858,402 in 1997 resulting in gross profits of $3,636,771,  or 59%
of sales, and $2,357,860, or 56% of sales,  respectively.  The increase in gross
profit for the  respective six and three month periods was due to a considerable
increase in sales volume which  resulted in a lower cost per unit.  In addition,
the  Company's  sales  continued,  through  acquisition,  to become more heavily
skewed toward higher margin home and office sales. Raw material pricing remained
stable  throughout  the first half of 1998.  However,  the Company's PETE 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 six months of fiscal  year 1998  compared to
the  corresponding  period in fiscal year 1997,  total  operating  expenses were
$6,114,334 and $3,895,230,  respectively,  an increase of $2,219,104 or 57%. For
the second  quarter,  operating  expenses  were  $3,335,631  in 1998 compared to
$2,202,489  in 1997,  an increase of 51%.  Selling,  general and  administrative
expenses increased by $1,823,676 or 72%, for the first six months of fiscal 1998
and  $1,044,062  or 80% for the second  quarter of fiscal 1998.  The increase in
these costs was primarily due to the addition of the operating costs of the  
acquired companies and the conversion  costs to integrate  these  companies. 
The Company anticipates that it will continue to pursue  acquisitions in the 
future and that a key part of this growth strategy will be maximizing the 
operating efficiencies of the acquired  companies.  However, no assurance can be
given that this effort will yield  savings and profit.  Advertising  expenses  
increased by $215,150 or 17%, and decreased $5,091 for the six and three month 
periods,  respectively, in 1998 compared to the corresponding period of fiscal 
1997.  The  decreased advertising expense for the quarter is reflective of no
slotting charges for the period coupled with characteristically low advertising 
expenses for the acquired businesses. The increase in advertising expenses for 
the year to date was due to higher  promotional  expenses in the first  quarter 
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

                                       13

<PAGE>



market  penetration.  For the first half and second  quarter of fiscal year 1998
amortization increased $180,278 and $94,171, respectively, from the same periods
a year ago as a result of increased goodwill from new acquisitions.


Profit/Loss  From  Operations - Loss from operations for the first six months of
fiscal 1998 was $12,631 as compared  to $452,850  for the  corresponding  period
last year, an  improvement  of $440,219.  Profit from  operations for the second
quarter  of  fiscal  1998  was   $301,140  as  compared  to  $155,371   for  the
corresponding  period last year,  an increase of $145,769.  The  improvement  is
attributable  to the increase in sales  combined with a decrease in raw material
costs and production and distribution 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  $193,909 or 128% and
$115,616  or 147%,  for the first six months and second  quarter of fiscal  year
1998,  respectively,  compared to the corresponding periods in fiscal year 1997.
The increase in interest expense was a result of increased  borrowing to finance
the recent acquisitions and fund operations through a bank line of credit.

Net Profit/Loss - The Company's net loss for the first six months of fiscal year
1998 was $356,887 compared to $602,585 for the  corresponding  period last year,
an  improvement  of $245,698 or 41%. The profit for the second quarter of fiscal
1998 was  $107,765  compared  to  $67,656  for the  same  quarter  in  1997,  an
improvement of $40,109,  or 59%. The decrease in loss and increase in profit for
the  first  half  and  second  quarter,   respectively  are  indicative  of  the
improvement in results of operations  more than  offsetting  increased  interest
changes to finance growth through acquisitions.


                         Liquidity and Capital Resources

Largely as a result of a reduction  of the net loss,  cash flow from  operations
showed an  improvement  for the first six months of fiscal year 1998 as compared
to the  corresponding  period in fiscal  year  1997.  The net cash  inflow  from
operations improved to $299,084 from $239,074,  for those respective periods, an
improvement of 25%. The Company's primary  requirements for cash continues 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
future net cash outflows on a seasonal basis.

As of April 25, 1998,  the Company had working  capital of  $1,477,191  compared
$257,371 on October 25, 1997,  the end of the last fiscal year.  The increase in
working  capital of  $1,219,820  reflects,  primarily,  the  refinancing  of the
Company's  operating  line  of  credit  with  CoreStates  bank.  Scheduled  debt
repayment  and to  finance  acquisitions  and  resulting  integration  costs and
capital expansion  continues to be a significant use of cash for the Company. As
of May 29, 1998 the Company had  borrowed  $1,752,000  from the working  capital
portion of its line of credit compared to a $238,021 balance at the beginning of
the fiscal year. The maximum  amount  available to borrow under this facility is
$2,000,000. The Company pays interest on any outstanding principal at the

                                       14

<PAGE>



London Interbank Offered Rate (LIBOR) plus 2.50%,  which was approximately  8.2%
per annum on May 29, 1998.  The loan  facility is secured by all the  inventory,
receivables and intangible assets of the Company and expires April 2003.

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

In addition to the working  capital line of credit,  the Company  refinanced its
existing  acquisition  debt with  CoreStates  Bank. The total  acquisition  debt
refinanced  with  CoreStates  was about $5.2 million.  Subsequently,  on May 29,
1998,  the Company  borrowed an additional  $2.5 million for the  acquisition of
Perrier  customers in the Albany,  New York market  leaving  about $5.3 million,
subject to certain  acquisition  criteria,  available  under the  agreement  for
future acquisitions.

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








                                       15

<PAGE>



PART II - Other Information

Item 1 - Legal Proceedings

         None

Item 2 - Changes in Securities

(a)      None

(b)      None

(c)      In  conjunction  with the  CoreStates  Bank  line of  credit  agreement
         detailed in the Company's footnotes to the financial statements for the
         period ending April 25, 1998, it entered into a Warrant  Agreement with
         the bank on April 8, 1998. The agreement grants 23,773 warrants to 
         CoreStates Bank to purchase Vermont Pure Holdings, Ltd. common stock at
         an exercise price of $3.00 per share for a term of six years from the 
         date of the Agreement. The warrants  were issued in lieu of cash for
         bank fees as  consideration  for closing the agreement  with the bank 
         pursuant to Section 4(2) of the Securities Act of 1933 as transactions 
         by an issuer not involving a public offering.

Item 3 - Defaults upon Senior Securities

         None

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

         On April 2, 1998, the Company held its annual  shareholders  meeting at
         1:30 PM at the Sheraton Conference Center in South Burlington, Vermont.
         There were two matters of business requiring shareholder vote, election
         of directors and adoption of the 1998 Incentive and Non-Statutory Stock
         Option Plan.

         Concerning  the election of  directors,  a total of votes were cast and
         the  following  directors  were  elected  to one  year  terms  with the
         corresponding vote tally:

                                                        "For"         "Withheld"
                  Frank G. McDougall                 7,942,341          107,595
                  Timothy G. Fallon                  7,953,441           96,495
                  Robert C. Getchell                 8,025,610           24,326
                  David R. Preston                   8,025,610           24,326
                  Norman E. Rickard                  8,025,610           24,326
                  Beat Schlagenhauf                  8,025,610           24,326
                  Richard Worth                      8,025,610           24,326

         Concerning  the  approval  and  adoption  of  the  1998  Incentive  and
         Non-Statutory  Stock  Option Plan,  7,619,693  shares were voted "for",
         347,163 "against", and 83,080 abstained.


                                       16

<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 Sagamon
       Springs, Inc. relating to the purchase certain assets and liabilities 
       dated January 31, 1998.

10.2   Agreement and Collateral Assignment of Lease between Vermont Pure 
       Holding, Ltd. And Sagamon Springs, Inc. dated January 30, 1998.

10.3   Security Agreement between Vermont Pure Holding, Ltd. And Sagamon 
       Springs, Inc. dated January 6, 1998.

10.4   Term Note for $65,000 between Vermont Pure Holding, Ltd. And Sagamon
       Springs, Inc. dated January 6, 1998.

10.5   Non Compete Agreement of Fred Beauchamp and Jim Creed between Vermont 
       Pure Holding, Inc, and Sagamon Springs, Inc. dated January 6, 1998.

10.6   Loan and Security Agreement Between Vermont Pure Springs, Inc. and
       CoreStates Bank, N.A. dated April 8, 1998






                                       17

<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:            June 9, 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)


                                       18

<PAGE>



                                  EXHIBIT INDEX
 Exhibit #                  Description

10.1   Asset Purchase Agreement between Vermont Pure Holding, Ltd. and Sagamon
       Springs, Inc. relating to the purchase certain assets and liabilities 
       dated January 31, 1998.

10.2   Agreement and Collateral Assignment of Lease between Vermont Pure 
       Holding, Ltd. And Sagamon Springs, Inc. dated January 30, 1998.

10.3   Security Agreement between Vermont Pure Holding, Ltd. And Sagamon 
       Springs, Inc. dated January 6, 1998.

10.4   Term Note for $65,000 between Vermont Pure Holding, Ltd. And Sagamon
       Springs, Inc. dated January 6, 1998.

10.5   Non Compete Agreement of Fred Beauchamp and Jim Creed between Vermont 
       Pure Holding, Inc, and Sagamon Springs, Inc. dated January 6, 1998.

10.6   Loan and Security Agreement Between Vermont Pure Springs, Inc. and
       CoreStates Bank, N.A. dated April 8, 1998

        

                                       19