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 July 26, 1997
                           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                                           September 5, 1997

Common Stock, $.001 Par Value                                   10,131,980



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                   VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARY

                                      INDEX
<TABLE>
<CAPTION>

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

         Item 1.           Financial Statements

                           Consolidated Balance Sheets as of
                           July 26, 1997 (unaudited) and
                           October 26, 1996                                                        4

                           Consolidated Statements of Operations
                           (unaudited) for the Three Months and Nine Months
                           ended July 26, 1997 and July 27, 1996                                   5

                           Consolidated Statements of Cash Flows
                           (unaudited) for the Nine Months ended
                           July 26, 1997 and July 27, 1996                                         6

                   Notes to Consolidated Financial Statements
                           (unaudited)                                                          7 - 9

         Item 2.           Management's Discussion and Analysis of
                           Financial Condition and Results of
                           Operation                                                          10 - 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
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<CAPTION>

                                                                                        Page Number
<S>                                                                                               <C>
Exhibit Index                                                                                     17
  

         Stock Purchase Agreement between Vermont Pure Springs, Inc. and
         Carolyn Howard relating to the capital stock of A.M. Fridays, 
         Inc. dated July 16, 1997.

         Loan agreement Between Vermont Pure Springs and Vermont Pure
         Holdings and Chittenden Bank effective June 20, 1997 regarding 
         an operating line of credit and acquisition line of credit.

         Promissory Note Between Vermont Pure Springs and Vermont Pure
         Holdings and Chittenden Bank dated July 17, 1997 regarding an
         acquisition line of credit.

         Commercial Security Agreement between Vermont Pure Springs and
         Vermont Pure Holdings and Chittenden Bank dated July 17, 1997
         regarding the acquisition line of credit.

         Financial data schedule
                                        3
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<TABLE>
<CAPTION>

                   VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

                                                                                       July 26,           October 26,
                                                                                         1997                  1996
                                                                                       ============        ============
                                                                                       (Unaudited)
                                                                                       ============

                                     ASSETS
<S>                                                                                  <C>                  <C>    

CURRENT ASSETS:
              Cash                                                                     $    247,854        $    783,081
              Accounts receivable                                                         2,579,712           1,159,806
              Inventory                                                                     550,109             783,156
              Other current assets                                                          140,562             159,145
                                                                                       ------------        ------------

                TOTAL CURRENT ASSETS                                                      3,518,237           2,885,188
                                                                                       ------------        ------------

PROPERTY AND EQUIPMENT - net of accumulated depreciation                                  6,326,488           5,536,185
                                                                                       ------------        ------------
OTHER ASSETS:
       Intangible assets - net of accumulated amortization                                2,291,299           1,317,082
       Other assets                                                                          21,918             232,939
                                                                                       ------------        ------------
        TOTAL OTHER ASSETS                                                                2,313,217           1,550,021
                                                                                       ------------        ------------
TOTAL ASSETS                                                                           $ 12,157,942        $  9,971,394
                                                                                       ============        ============
                                                                                       
                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
              Accounts payable                                                         $  1,368,362        $    879,669
              Customer deposits                                                             600,100             421,137
              Accrued expenses                                                            1,221,952             446,507
              Line of credit                                                                      0             441,811
              Current portion of long term debt                                             550,329             197,239
              Current portion of obligations under capital lease                             60,175             180,183
                                                                                       ------------        ------------

                TOTAL CURRENT LIABILITIES                                                 3,800,918           2,566,546
              
              

              Long term debt                                                              3,706,929           2,779,408
              Obligations under capital lease                                                66,169              98,945
                                                                                       ------------        ------------
                TOTAL LIABILITIES                                                         7,574,016           5,444,899
                                                                                       ------------        ------------

STOCKHOLDERS' EQUITY:

     Common stock -$.001 par value, 20,000,000 authorized 
       shares, 9,678,268 issued and outstanding shares at 
       October 26, 1996 and 9,716,363 issued and outstanding
       shares at July 26, 1997                                                                9,716               9,678
     Paid in capital                                                                     21,499,381          21,399,420
     Accumulated deficit                                                                (16,925,171)        (16,882,603)
                                                                                       ------------        ------------
                TOTAL STOCKHOLDERS' EQUITY                                                4,583,926           4,526,495
                                                                                       ------------        ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                             $ 12,157,942        $  9,971,394
                                                                                       ============        ============
                                                                                      
</TABLE>
       
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<TABLE>
<CAPTION>

                   VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS




                                                              Nine months ended                              Three months ended
                                               ============================================    =====================================
                                                         July 26,              July 27,             July 26,               July 27,
                                                          1997                   1996                 1997                   1996   
                                                       ===========             =========            =========             =========
                                                       (Unaudited)            (Unaudited)          (Unaudited)           (Unaudited)
<S>                                           <C>                   <C>                  <C>                   <C>
                                                       ===========             =========            =========             =========
SALES                                          $        12,255,738   $         8,410,563  $         5,724,061   $         4,825,442
COST OF GOODS SOLD                                       5,361,124             4,421,337            2,271,827             2,303,620
                                                       -----------             ---------            ---------             ---------
GROSS PROFIT                                             6,894,614             3,989,226            3,452,234             2,521,822
                                                       -----------             ---------            ---------             ---------
OPERATING EXPENSES:
     Selling,general and                                 
       administrative expense                            4,176,986             2,990,499            1,629,189             1,344,757
     Advertising expenses                                2,410,552             1,685,576            1,145,522               744,275
     Amortization                                          136,659               105,819               54,256                60,117
                                                        ----------             ---------            ---------             ---------

TOTAL OPERATING EXPENSES                                 6,724,197             4,781,894            2,828,967             2,149,149
                                                        ----------             ---------            ---------             ---------
PROFIT (LOSS)FROM OPERATIONS                               170,417              (792,668)             623,267               372,673
                                                        ----------             ---------            ---------             ---------

OTHER INCOME (EXPENSE):
              Interest - net                              (230,939)             (119,572)             (79,068)              (65,725)
              Miscellaneous                                 17,954                 1,939               15,818                (1,261)
                                                         ---------             ---------            ---------             ---------
TOTAL OTHER INCOME (EXPENSE)                              (212,985)             (117,633)             (63,250)              (66,986)
                                                         ---------             ---------            ---------             ---------
NET PROFIT (LOSS)                               $          (42,568)   $         (910,301) $           560,017    $          305,687
                                                         =========             =========            =========             =========
NET PROFIT (LOSS) 
     PER SHARE                                  $            (0.00)   $            (0.09) $              0.06    $             0.03
                                                         =========             =========            =========             =========
Weighted Average Shares                                  
     Used in Computation                                 9,697,316             9,678,268            9,716,363             9,678,268
                                                         =========             =========            =========             =========
                                                         







</TABLE>







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<TABLE>
<CAPTION>


                   VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                           Nine months ended
                                                              =========================================
                                                                   July 26,               July 27,
                                                                     1997                   1996       
                                                              ==================      =================
                                                                      (Unaudited)           (Unaudited)   
<S>                                                          <C>                     <C>    
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                   $         (42,568)      $       (910,301)
   Adjustments to reconcile net loss 
    to net cash from operating activities:
       Depreciation                                                     552,046                448,590
       Amortization                                                     136,659                105,819
       (Gain) loss on disposal of property and equipment                (14,440)                 2,366 

   Changes in assets and liabilities
     (net of effects of acquisitions):
    (Increase)Decrease in accounts receivable                        (1,237,659)              (947,393)
    (Increase)Decrease in inventory                                     270,534                 68,416
    (Increase)Decrease in other current assets                           18,583                (44,914)
    (Increase)Decrease in other  assets                                 191,020                 48,114
    (Decrease)Increase in accounts payable                              345,462                272,511
    (Decrease)Increase in customer deposits                              68,319                243,569
    (Decrease)Increase in accrued expenses                              765,446                227,169
                                                             ------------------      -----------------
CASH PROVIDED BY OPERATING ACTIVITIES                                 1,053,402               (486,054)
                                                             ------------------      -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property,plant and equipment                           (638,030)              (318,281)
    Proceeds from sale of fixed assets                                   40,500                 42,116
    Cash used in acquistions                                           (769,903)            (1,240,677)
                                                             ------------------      -----------------
CASH USED IN INVESTING ACTIVITIES                                    (1,367,433)            (1,516,842)
                                                             ------------------      -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from (repayment of)line of credit                         (441,811)               530,304
    Proceeds from debt                                                  808,468              1,290,000
    Principal payments of debt                                         (587,853)              (553,123)
                                                             ------------------      -----------------
CASH PROVIDED BY FINANCING ACTIVITIES                                  (221,196)             1,267,181
                                                             ------------------      -----------------
              
NET INCREASE (DECREASE) IN CASH                                        (535,227)              (735,715)


CASH - Beginning of period                                              783,081              1,543,260
                                                             ------------------      -----------------
CASH - End of period                                         $          247,854      $         807,545
                                                             ==================      =================
                                                             
Cash paid for interest                                       $          266,201      $         188,055
                                                             ==================      =================
</TABLE>
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                   VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARY

                   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 26, 1996.

         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 26, 1996.

2.       ADVERTISING EXPENSES

         The Company expenses advertising costs at the time that the advertising
         begins to run.

3.       INCOME (LOSS) PER SHARE

         Income  (loss)  per share is based on the  weighted  average  number of
         common shares and dilutive common share equivalents  outstanding during
         the period.  Common share equivalents are not included for loss periods
         as such inclusion would be anti-dilutive.

4.       LINE OF CREDIT

         On June 20, 1997 the Company  executed loan  agreements  for two credit
         facilities  with the  Chittenden  Bank.  One,  for a term of two years,
         provides  operating  capital  of up to  $1,500,000  based on a  formula
         derived from inventory and  receivables.  The second provides funds for
         acquisitions,  subject to the banks approval, of up to $2,500,000. Both
         loans are secured by substantially all of the Company's assets.

5.       ACQUISITION

         On July 16, 1997, the Company completed the purchase of all of the 
         stock of A.M. Fridays,

                                        7

<PAGE>



         Inc. a company  operating  distribution  routes for water and coffee to
         homes and offices and  commercial  vending  services  primarily  in the
         greater Manchester, New Hampshire area. The purchase price of the stock
         was $650,000.  Chittenden  Bank financed  $350,000 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 Carolyn  Howard,  the seller of the stock, of
         $300,000,  for  eight  years,  at 8.5%  interest  due in equal  monthly
         installments  over the term of the note.  An  additional  amount is due
         contingent on the future performance of the acquired company.

6.       INTANGIBLE ASSETS

         Goodwill  that  resulted  from the  acquisition  of AMF  stock  will be
         amortized over 30 years and was calculated as follows:

                  Purchase Price                                      $ 650,000
                  Acquisition Costs                                      41,713
                  Fair Value of Tangible and Identifiable 
                    Intangible Assets                                  (738,985)
                  Liabilities Assumed                                   518,474
                                                                        --------
                  Total                                               $ 471,202
                                                                        ========
         In conjunction  with the  acquisition  during the quarter,  the Company
         entered into non-competition, employment and consulting agreements with
         the  majority  stockholder  of AMF,  pursuant  to which the owners will
         receive payments totaling an aggregate of $175,000 over five years. The
         assets acquired consisted primarily of bottles, coolers,  vehicles, and
         customer lists.

7.         LONG TERM DEBT

         The principal  balance of the Company's  original  acquisition note for
         the  acquisition  of western New York assets was  $1,474,882 as of July
         26,  1997.  It  matures  on May 1,  1999  when a lump  sum  payment  of
         approximately  $1,160,000  is due and payable to  Chittenden  Bank.  In
         conjunction  with the approval of the new  acquisition  line of credit,
         Chittenden  Bank lowered the interest rate on the note from 1.5% to .5%
         over the prime rate. The Company borrowed $350,000 from the acquisition
         line of credit related to the acquisition of the stock of A.M. Fridays.
         This  loan  matures  on  July  1,  2001  when a  lump  sum  payment  of
         approximately $245,000 is due.

8.       STOCK ISSUE

         As part of the  agreement  to  purchase  the stock of AMF,  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  Company  has  agreed to issue a number of its  unregistered
         common shares,  valued at the closing price of its registered shares on
         December 31, 1997,

                                        8

<PAGE>



         equal to the sales dollars exceeding the stated amount.

9.       CONTINGENCIES

         A. Former Distributor
         In August 1994, an action was brought by a former distributor  alleging
         that  the  Company  breached  an  oral   distribution   arrangement  by
         terminating  its  relationship,  refusing to continue to supply it with
         the Company's products and by allowing another  distributor to sell the
         Company's products within its alleged territory.

         On July 25, 1997 the Company reached a settlement with the distributor.
         The settlement had no material financial impact to the Company and both
         parties agreed to release their claims against each other.

         B. 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 EVENT

         On August 27, 1997,  the Company  completed  the purchase of all of the
         stock of  Excelsior  Spring  Water,  of Saratoga,  New York.  Excelsior
         distributes  water and coffee to home and  commercial  accounts  in the
         southern Vermont,  upstate New York, and western  Massachusetts and had
         sales totaling $2.2 million in 1996 and $2.3 million for the first nine
         months of 1997.  The assets  acquired  consisted  primarily of bottles,
         coolers,  vehicles,  and  customer  lists.  The  purchase  price of the
         acquisition, which was approximately $3.1 million, was financed 
         primarily through the acquisition  line of credit provided by the 
         Chittenden Bank and issuance of the Company's common stock.


                                        9

<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 nine months of fiscal year 1997 were $12,255,738, an
increase of $3,845,175 or 46% over the $8,410,563 reported for the corresponding
period last year. Sales for the quarter ending July 26, 1997 were $5,724,061, an
increase  of  $898,619  or 19% over the  third  quarter  of fiscal  year  1996.
Excluding sales  attributable to the western New York division that was acquired
on May 1, 1996,  sales in the first nine months of fiscal 1997 were 27% over the
corresponding period last year. Total sales for the new division were $1,594,510
for the nine months ending July 26, 1997.

Sales for retail-size products increased $2,316,739,  or 26%, for the first nine
months of fiscal year 1997 and $576,795, or 15%, for the third quarter of fiscal
year 1997, compared to the respective periods a year ago. These increases were a
result of volume  increases  related to the continued growth of both the Vermont
Pure brand and secondary labels. Sales growth is a result of increased

                                       10

<PAGE>



market penetration,  development of new markets,  and new product sizes. Average
selling  price for the first nine  months of fiscal year 1997 was up 2% from the
previous year. The total increase in sales,  by respective  percentages  for the
nine month and three month periods,  was made up of the following  factors:  69%
and 30%  attributable to Vermont Pure sizes, 16% and 30 % attributable to Hidden
Spring, and 15% and 40% attributable to private labels.

Sales for the home and office  division  increased  $1,533,654  or 91%,  for the
first  nine  months of  fiscal  year 1997 and  $355,493,  or 27%,  for the third
quarter of fiscal  year 1997  compared to the  respective  periods for the prior
year. A  substantial  portion of the increase in sales for this  division can be
attributed to acquisitions.  Exclusive of acquisitions,  sales increased 13% for
the nine months and 3% for the third quarter of fiscal year 1997.

Cost of  Goods  Sold - For the  first  nine  months,  Cost of  Goods  Sold  were
$5,361,124  for fiscal  year 1997  compared  to  $4,421,337  in fiscal year 1996
resulting in gross profits of $6,894,614,  or 56% of sales, for fiscal year 1997
and  $3,989,226,  or 47% of sales,  for fiscal year 1996. For the third quarter,
Cost of Goods  Sold were  $2,271,827  in  fiscal  year  1997,  a  decrease  from
$2,303,620 in fiscal year 1996 resulting in gross profits of $3,452,234,  or 60%
of sales, for fiscal year 1997 and $2,521,822,  or 52% of sales, for fiscal year
1996. The increase in gross profit for the nine months and third quarter was due
to a  considerable  increase  in sales  volume  and a decrease  in raw  material
pricing.  During  the first  half of the  fiscal  year,  the  Company  completed
installation  of a new bottle  receiving  process and  implemented  a new bottle
supply  agreement  resulting in a significant  material savings per case for the
quarter over the  comparable  period last year.  However,  the Company's  bottle
prices are  dependant on the market costs of resin,  and therefore 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 nine months of fiscal year 1997  compared to
the  corresponding  period in fiscal year 1996,  total  operating  expenses were
$6,724,197 and $4,781,894,  respectively,  an increase of $1,942,303 or 41%. For
the third  quarter of fiscal  year 1997  compared  to the third  quarter of 1996
operating expenses were $2,828,967 and $2,149,149,  respectively, an increase of
$679,818,  or 32%. Selling,  general and  administrative  expenses  increased by
$1,186,487,  or 40%,  for the first nine months and  $284,432,  or 21%,  for the
third quarter of fiscal year 1997. The increase in these costs was primarily 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 over the next six months.  Total selling,
general,  and  administrative  expenses  associated with new  acquisitions  were
approximately  $1,035,000  for the first nine months and  $373,000 for the third
quarter of fiscal  1997.  Exclusive  of these  amounts,  selling,  general,  and
administrative  expenses  increased  6% for the nine month period and stayed the
same for the three month period.  Advertising expenses increased by $724,976, or
43%, for the nine month period and $401,247,  or 54%, for the three month period
compared to the respective corresponding periods of fiscal 1996. The increase in
advertising  expenses was due to higher  promotional  expenses  associated  with
increased  market penetration and introduction  of new product sizes. Given the

                                       11

<PAGE>



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.


Profit/Loss  From  Operations - Profit from operations for the first nine months
of fiscal  year 1997 was  $170,417  as  compared  to a loss from  operations  of
$792,668 for the same period last year, an improvement of $963,085.  Profit from
operations  for the  quarter  ending  July 26,  1997 was  $623,267  compared  to
$372,673 for the  corresponding  period of the prior fiscal year, an increase in
profit of  $250,594.  The  improvement  for the nine  months and the  quarter is
attributable  to the  increase in sales  coupled  with a decrease  in  packaging
costs. 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 was $230,939 and $79,068 for the
nine  months and third  quarter of fiscal year 1997,  respectively,  compared to
$119,572  and  $65,725  for the  respective  periods in fiscal  year  1996.  The
increase  in  interest  expense  was a result  of  increased  borrowing  to fund
operations through a bank line of credit and finance the recent acquisitions.

Net  Profit/Loss  - The  Company's  net loss for the first nine months of fiscal
year 1997 was $42,568  compared to $910,301  for the  corresponding  period last
year, an  improvement  of $867,733 or 95%. Net profit for the third  quarter of
fiscal year 1997 was $560,017  compared to $305,687 for the third quarter of the
previous year.


                         Liquidity and Capital Resources

 Largely as a result of  reduction  of the net loss,  cash flow from  operations
showed an improvement for the nine month period as compared to the corresponding
period in fiscal  year 1996.  The net cash inflow  from  operations  improved to
$1,053,402  from an outflow  of  $486,054,  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 July 26,  1997,  the  Company  had a working  capital  deficit of $282,681
compared to positive  working  capital of $318,642 at the end of its fiscal year
on October  26,  1996.  The  decrease in working  capital of $601,323  reflects,
primarily,  the use of cash to purchase equipment,  for scheduled debt repayment
and to finance acquisitions and resulting integration costs. As of July 26, 1997
the  Company  had not  borrowed  on its line of credit  compared  to a  $441,811
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

                                       12

<PAGE>



September  5,  1997.  The  loan  facility  is  secured  by  all  the  inventory,
receivables  and  intangible  assets of the Company and expires June 1, 1999. In
addition,  Chittenden Bank's commitment  included  availability of $2,500,000 to
finance acquisitions under the same terms and interest rate.


The Company  borrowed  $675,000  during the fiscal year from  Chittenden Bank in
connection  with the  acquisition  of  stock  and  assets  of A.M.  Fridays  and
Greatwater  Refreshment  Services.  In addition to the note,  the Company issued
note  payables  to the  former  owners  of the  acquired  companies  aggregating
$375,000,  payable over the next five years, at the Company's  current borrowing
rate.

The  Company  has  reduced  its  cash  usage  over the last  year.  The  Company
anticipates  that its working  capital  position will improve in future quarters
and is adequate to fund operations though it may become necessary for it to draw
down its available line of credit or seek additional  sources of working capital
in the future.  If the later is the case,  no  assurances  can be given that the
Company will find a source to provide  additional  working  capital  under terms
acceptable to the Company.

                                       13

<PAGE>



PART II - Other Information

Item 1 - Legal Proceedings

         An action entitled,  S&S Beverage Distributors v. Vermont Pure Springs,
         Inc.,  was commenced by the plaintiff,  S&S  Distributors  ("S&S"),  in
         August  1994 in the  Supreme  Court of the State of New  York,  Suffolk
         County,  Index No. : 94-20978 (the "S&S Action").  S&S alleges that the
         Company  breached an oral  distribution  arrangement by terminating its
         relationship  with S&S,  refusing  to  continue  to supply S&S with the
         Company's  products  and by allowing  another  distributor  to sell the
         Company's product within its alleged territory. 

         On July 25,  1997 the  Company  reached  a  settlement  with  S&S.  The
         settlement  resulted in no material financial impact to the Company and
         both parties agreed to release their claims against each other.

Item 2 - Changes in Securities

(a)      None

(b)      None

(c)      As part of the  agreement  to  purchase  the stock of AMF,  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 Company has agreed to issue a number of the its  unregistered
         common shares,  valued at the closing price of its registered shares on
         December  31, 1997,  equal to the sales  dollars  exceeding  the stated
         amount.

Item 3 - Defaults upon Senior Securities

         None








                                       14

<PAGE>



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

         On June 11, 1997 the  Company  held its annual shareholders  meeting at
         1:30 P.M. at Vermont Technical College in Randolph,  Vermont.  The only
         matter of business was the election of directors.  A total of 8,163,738
         votes  were  cast and the  following  directors  were  elected  and the
         respective vote tally:

                           Director                     "For"           Against
                           Frank McDougall             8,128,768        34,970
                           Tim Fallon                  8,152,018        11,720
                           Robert Getchell             8,152,018        11,720
                           David Preston               8,152,018        11,720
                           Norman Rickard              8,152,018        11,720
                           Beat Schlagenhauf           8,152,018        11,720
                           Richard Worth               8,152,018        11,720

Item 5 - Other Information

         None

Item 6 - Exhibits and Reports on Form 8-K

         Exhibit #                                            Description

            10.1  Stock Purchase Agreement between Vermont Pure Springs, Inc.and
                  Carolyn Howard relating to the capital stock of A.M. Fridays, 
                  Inc. dated July 16, 1997.


            10.2  Loan agreement Between Vermont Pure Springs and Vermont Pure
                  Holdings and Chittenden Bank effective June 20, 1997 regarding
                  an operating line of credit and acquisition line of credit.


            10.3  Promissory Note Between Vermont Pure Springs and Vermont Pure
                  Holdings and Chittenden Bank dated July 17, 1997 regarding an
                  acquisition line of credit.

            10.4  Commercial Security Agreement between Vermont Pure Springs and
                  Vermont Pure Holdings and Chittenden Bank dated July 17, 1997
                  regarding the acquisition line of credit.

            27.1  Financial data schedule
                                       15

<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:            September 5, 1997
                  Randolph, Vermont




                                                  VERMONT PURE HOLDINGS, LTD.




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


                                       16

<PAGE>


                                  EXHIBIT INDEX


         Exhibit #                                            Description

            10.1  Stock Purchase Agreement between Vermont Pure Springs, Inc.and
                  Carolyn Howard relating to the capital stock of A.M. Fridays, 
                  Inc. dated July 16, 1997.


            10.2  Loan agreement Between Vermont Pure Springs and Vermont Pure
                  Holdings and Chittenden Bank effective June 20, 1997 regarding
                  an operating line of credit and acquisition line of credit.


            10.3  Promissory Note Between Vermont Pure Springs and Vermont Pure
                  Holdings and Chittenden Bank dated July 17, 1997 regarding an
                  acquisition line of credit.

            10.4  Commercial Security Agreement between Vermont Pure Springs and
                  Vermont Pure Holdings and Chittenden Bank dated July 17, 1997
                  regarding the acquisition line of credit.

            27.1  Financial data schedule
                                       17