<PAGE>

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


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

                       For the Quarter Ended July 31, 2000
                           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 8, 2000
                  -----                                      -------------------

Common Stock, $.001 Par Value                                     10,294,758

<PAGE>

                  VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES

                                      INDEX

Part I - Financial Information                                       Page Number

Item 1.  Financial Statements

            Consolidated Balance Sheets as of
            July 31, 2000 (unaudited) and
            October 30, 1999                                             3

            Consolidated Statements of Operations (unaudited) for
            the Nine Months and Three Months ended July 31, 2000
            and July 31, 1999                                            4

            Consolidated Statements of Cash Flows
            (unaudited) for the Nine Months ended
            July 31, 2000 and July 31, 1999                              5

            Notes to Consolidated Financial Statements
            (unaudited)                                                6 - 8

Item 2.     Management's Discussion and Analysis of
            Financial Condition and Results of
            Operation                                                  9 - 12

Item 3.     Quantitive and Qualitative Disclosures about
            Market Risk                                                  13

Part II - Other Information                                            14 - 18

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                                                                19

                                       2

<PAGE>

                  VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                   July 31           October 30,
                                                     2000               1999
                                                  ------------       -----------
                                                  (unaudited)
                                     ASSETS
                                    --------
CURRENT ASSETS:
 Cash ($975,000 of the 2000
  balance is restricted)                       $   1,281,980      $     367,018
 Investments - Money Market Fund
  (restricted building                             1,735,029               -
 Accounts receivable                               4,607,922          3,525,238
 Notes Receivable                                       -               975,000
 Inventory                                         2,002,471          2,711,709
 Current portion of deferred tax asset               601,922            601,922
 Other current assets                              1,293,036            781,968
                                                  ----------         -----------
  TOTAL CURRENT ASSETS                            11,522,360          8,962,855
                                                  ----------         -----------
PROPERTY AND EQUIPMENT
 - net of accumulated depreciation                14,632,296         11,122,258
                                                  ----------         -----------
OTHER ASSETS:
 Intangible assets
  - net of accumulated amortization               10,935,643         10,443,207
 Deferred tax asset                                3,182,914          3,182,914
 Other assets                                        130,156            122,996
                                                  ----------         -----------
  TOTAL OTHER ASSETS                              14,248,712         13,749,117
                                                  ----------         -----------
TOTAL ASSETS                                   $  40,403,368      $  33,834,230
                                                  ==========         ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

CURRENT LIABILITIES:
 Accounts payable                              $   3,403,055      $   3,443,208
 Current portion of customer deposits                 45,616             45,033
 Accrued expenses                                  1,125,390            851,371
 Current portion of long term debt                 1,491,537          1,414,930
 Current portion of obligations
  under capital leases                               159,056            180,589
                                                  ----------         -----------
  TOTAL CURRENT LIABILITIES                        6,224,653          5,935,131
 Long term debt                                    5,492,221          1,663,893
 Long term obligations under capital leases          316,345            379,583
 Line of credit                                   14,249,000         11,689,792
 Long term portion of customer deposits              866,720            684,334
                                                  ----------         -----------
  TOTAL LIABILITIES                               27,148,939         20,352,733
                                                  ----------         -----------
STOCKHOLDERS' EQUITY:
 Preferred stock - $.001 par value, 500,000
 authorized shares, none issued and outstanding
 shares at July 31, 2000
 Common stock - $.001 par value, 50,000,000
 authorized shares, 10,344,758 issued and
 outstanding shares at July 31, 2000 and
 10,339,758 at October 30, 1999                       10,345             10,340

 Paid in capital                                  23,208,969         23,197,724
 Accumulated deficit                              (9,796,136)        (9,557,817)
 Treasury stock, at cost, 50,000 shares             (168,750)          (168,750)
                                                  ----------         -----------
TOTAL STOCKHOLDERS' EQUITY                        13,254,429         13,481,497
                                                  ----------         -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $  40,403,368      $  33,834,230
                                                  ==========         ===========


                 See notes to consolidated financial statements.
                                       3
<PAGE>
<TABLE>
<CAPTION>

                  VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                       Three months ended                 Nine Months Ended
                                    July 31,          July 31,         July 31,           July 31,
                                -------------     -------------     ------------      -------------
                                     2000              1999             2000               1999
                                -------------     -------------     ------------      -------------
                                  (unaudited)      (unaudited)       (unaudited)       (unaudited)

<S>                             <C>               <C>               <C>               <C>
SALES                           $  10,158,368     $   9,432,119     $ 24,806,803      $  23,112,438
COST OF GOODS SOLD                  4,675,045         3,682,347       10,219,169          8,666,220
                                -------------     -------------     ------------      -------------
GROSS PROFIT                        5,483,323         5,749,772       14,587,633         14,446,218
                                -------------     -------------     ------------      -------------
OPERATING EXPENSES:
 Selling, general
  and administrative expenses       4,062,463         3,511,264       11,412,755          9,364,321
 Advertising expenses                 851,867           818,407        1,982,896          2,366,258
 Amortization                         185,073           146,773          526,409            450,199
                                -------------     -------------     ------------      -------------
TOTAL OPERATING EXPENSES            5,099,403         4,476,444       13,922,060         12,180,778
                                -------------     -------------     ------------      -------------
INCOME FROM OPERATIONS                383,920         1,273,328          665,574          2,265,440
                                -------------     -------------     ------------      -------------
OTHER INCOME (EXPENSE):
 Interest                            (442,505)         (272,436)      (1,176,779)          (753,752)
 Miscellaneous                           -               12,110          272,887             12,110
                                -------------     -------------     ------------      -------------
TOTAL OTHER EXPENSE                  (442,505)         (260,326)        (903,892)          (741,642)
                                -------------     -------------     ------------      -------------
NET INCOME (LOSS)               $     (58,585)   $    1,013,002    $    (238,319)    $    1,523,798
                                -------------     -------------     ------------      -------------
NET INCOME (LOSS)
 PER SHARE - BASIC              $       (0.01)   $         0.10    $       (0.02)    $         0.15
                                ==============   ==============    ==============    ==============

NET INCOME (LOSS)
 PER SHARE - DILUTED            $       (0.01)   $         0.09    $       (0.02)    $         0.14
                                ==============   ==============    ==============    ==============

Weighted Average
 Shares Used in
 Computation - Basic               10,290,591        10,259,758       10,290,036         10,255,917
                                =============    ===============   ==============    ==============
Weighted Average Shares
 Used in Computation -
 Basic/Diluted                     10,290,591        10,758,862       10,290,036         10,816,068
                                ==============   ===============   ==============    ==============

</TABLE>
                 See notes to consolidated financial statements.
                                       4
<PAGE>
<TABLE>
<CAPTION>


                  VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                   Nine Months Ended
                                                                            --------------------------------
                                                                               July 31,           July 31,
                                                                                 2000               1999
                                                                            -------------      -------------
                                                                              (unaudited)        (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                         <C>                <C>
 Net income/(loss)                                                          $   (238,319)      $  1,523,798
 Adjustments  to  reconcile  net income
  (loss) to net cash  provided  by
  operating activities:
  Depreciation                                                                 1,381,523          1,021,115
  Amortization                                                                   526,409            450,199
  (Gain) on settlement of note receivable                                       (295,000)                 -
  (Gain) loss on disposal of property and equipment                              (67,637)                 -
  Changes in assets and liabilities (net of effect of acquisitions):
   (Increase) Decrease in accounts receivable                                 (1,082,684)        (1,469,336)
   (Increase) Decrease in inventory                                              709,238            319,330
   (Increase) in other current assets                                           (511,068)          (296,577)
   (Increase) Decrease in other  assets                                       (1,026,005)           144,255
   (Decrease) in accounts payable                                                (40,153)          (638,892)
   Increase in customer deposits                                                 182,969            298,498
   (Decrease) Increase in accrued expenses                                       274,019            326,027
                                                                            -------------      -------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                             (186,707)         1,678,416
                                                                            -------------      -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property, plant and equipment                                  (2,261,856)        (1,839,615)
   Purchase of property, plant and equipment from Bond Financing              (2,390,395)                 -
   Purchase of Money Market Investment from Bond Financing                    (4,125,424)                 -
   Reduction of Money Market Investment Account                                2,390,395                  -
   Proceeds from sale of fixed assets                                             92,310                  -
   Collection of note receivable                                               1,270,000                  -
   Cash used for acquistions                                                    (263,983)          (339,665)
                                                                            -------------      -------------
NET CASH USED IN INVESTING ACTIVITIES                                         (5,288,952)        (2,179,280)
                                                                            -------------      -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds of line of credit                                                  2,559,208          1,966,642
   Proceeds from debt                                                          4,295,881            479,895
   Principal payment of debt                                                    (475,718)          (635,939)
   Sale of common stock                                                           11,250             37,720
                                                                            -------------      -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                      6,390,622          1,848,318
                                                                            -------------      -------------
NET INCREASE  IN CASH                                                            914,962          1,347,454
                                                                            -------------      -------------
CASH - Beginning of period                                                       367,018            161,271
                                                                            -------------      -------------
CASH  - End of period                                                      $   1,281,980      $   1,508,725
                                                                            =============      =============
Cash paid for interest                                                     $   1,046,747      $     753,752
                                                                            =============      =============
NON-CASH FINANCING AND INVESTING ACTIVITIES:
   Equipment acquired under capital leases                                 $     145,844      $     131,913
                                                                            ==============     ==============
</TABLE>
              See notes to consolidated financial statements.
                                       5

<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-Q  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-K for the year ended October 30, 1999.

         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-K and  Annual  Report  for the year  ended
         October 30, 1999.

2.       FISCAL YEAR/QUARTER END

         Since 1994,  the Company has used the "4-4-5"  method to determine  its
         fiscal months,  quarters and years.  Effective April 30, 2000, it began
         to use the regular  calendar to determine the  financial  cut-off times
         for these  periods.  The reason  for this  change is to  accommodate  a
         future significant  acquisition and to be more compatible with software
         used in the operation of the business.

3.       INVESTMENT - MONEY MARKET

         A money market account has been set up for  undisbursed  funds relating
         to the Vermont Economic  Development  Authority Bond issuance (see note
         4). The funds  have been  invested  in First  Union's  Evergreen  Money
         Market account and administered by First Union, the Bond trustee. These
         funds are  restricted for the  expenditures  related to the purchase of
         building and equipment.

                                       6
<PAGE>

4.       LONG TERM DEBT

          The Company  amended  and  restated  its  five-year  revolving  credit
          agreement  with  First  Union  National  Bank  and  KeyBank   National
          Association  on January 28, 2000.  The  facility was  increased to $25
          million  from $15  million  under  the  terms  and  conditions  of the
          agreement.  The Company and First Union modified the credit  agreement
          to  waive  non-compliance  by  the  Company  with a  single  financial
          covenant as of July 31,  2000.  The  interest  rate on funds  borrowed
          under the  agreement  is LIBOR plus  2.5%.  Pursuant  to the  proposed
          merger  agreement  as  discussed  in  Note 8 the  Company  executed  a
          commitment letter with another  institution  which, if consumated will
          replace the  existing  agreement  with First Union  National  Bank and
          KeyBank  National  Association.  As of the  end of  the  quarter,  the
          Company  had  fixed  the  rate  of  interest  on   $7,500,000  of  its
          outstanding  debt at 8.43%.  In  conjunction  with the  facility,  the
          Company  entered  into  a  Letter  of  Credit  with  First  Union  for
          $4,300,000  to secure  bonds issued for the same amount by the Vermont
          Economic  Development  Authority.  The Company pays a 2% annual fee of
          the Letter of Credit  amount.  As of July 31,  2000,  exclusive of the
          Letter of Credit,  the Company had  borrowed  $13,999,000  pursuant to
          this  agreement  and  $2,390,000  had  been  disbursed  from  the bond
          proceeds.  The Bonds were issued as two series  designated as Variable
          Rate  Demand/Fixed  Rate Revenue Bonds  (Vermont  Pure  Springs,  Inc.
          Project)  1999 Series A 20 year bonds and Variable  Rate  Demand/Fixed
          Rate Revenue Bonds  (Vermont Pure Springs,  Inc.  Project) 1999 Series
          A-T  (Taxable)  10 year  bonds.  The  Series A Bonds  were  issued for
          $3,195,000 and mature on January 1, 2020 and the Series A-T Bonds were
          issued for  $1,105,000  and mature on  January 1 2011.  The  "Floating
          Rate" is a variable  rate of  interest  equal to the  minimum  rate of
          interest  necessary,  in the sole  judgment of the  Remarketing  Agent
          (First Union Securities,  Inc.), to sell the Bonds on any Business Day
          at a price equal to the principal amount thereof, exclusive of accrued
          interest,  if any,  thereon.  Interest is determined on a weekly basis
          and is payable on the first of every month.

5.       LEGAL PROCEEDINGS

a)            In  connection  with  litigation  with its  largest  spring  water
              source,   Pristine  Mountain   Springs,   the  Company  reached  a
              settlement  on December 1, 1999.  As part of the  settlement,  the
              owner of the  spring  and its  affiliate  paid  $1,270,000  to the
              Company and  acknowledged  the Company's  rights under the amended
              water supply  contract and right of first  refusal to purchase the
              spring site. In order to obtain the rights to the supply contract,
              the Company had previously issued a $975,000  non-interest bearing
              convertible debenture to the original creditor of the owner of the
              spring and its affiliate.  Settlement of the transaction  resulted
              in miscellaneous income being recorded for the period.

                           Cash Settlement                          $ 1,270,000
                           Less: Debt Assumed                           975,000
                           Less: Legal Fees                              22,113
                                                                  --------------
                           Total Miscellaneous Income              $    272,887
                                                                    ============

b)            On July 27,  2000 the Company  filed a lawsuit in Vermont  Federal
              Court   against    Descartes    Systems/Endgame    Solutions   for
              non-performance of the professional services agreement between the
              two  companies.  In the suit  Vermont Pure alleges that the vendor
              did not  adequately  perform the services  rendered in  connection
              with approximately $500,000 of unpaid billings. To date, Descartes
              Systems/Endgame Solutions has not responded to the complaint.

                                       7
<PAGE>


6.       INTEREST RATE HEDGE

         On May 2, 2000, the Company signed a three-year  "swap"  agreement with
         the KeyBank National Association to fix the interest rate on $5,000,000
         of the  Company's  debt.  The agreement  fixes the variable  LIBOR rate
         portion of the debt at 7.13%.  As of July 31, 2000 the Company's  total
         interest rate spread was 2.5% over LIBOR.  Consequently,  the agreement
         currently fixes the portion of the debt at 9.63%.

7.       COMMITMENTS

         In March 1999,  Vermont Pure Holdings,  Ltd. entered into  distribution
         agreements  with  several  Snapple  distributors  in order to replace a
         major  customer.  Effective  March 1, 2000,  the Company  modified  its
         distribution agreements with three of these distributors. Consequently,
         Vermont  Pure  is the  exclusive  spring  water  brand  carried  by Mr.
         Natural,  Inc., Millrose  Distributors and Snapple of Long Island, Inc.
         The  distribution  area  served  by  these  businesses  is the  greater
         metropolitan New York City area.

8.       PROPOSED MERGER

         On May 5, 2000 Vermont Pure  Holdings,  Ltd.  entered into an Agreement
         and Plan of Merger and  Contribution  with  Crystal  Rock Spring  Water
         Company.  Crystal  Rock is a  privately  held  company.  The  agreement
         provides for the formation of a new publicly held holding company, also
         to be known as  Vermont  Pure  Holdings,  Ltd.,  that  will own the two
         businesses. Existing shareholders of Vermont Pure will receive stock of
         the new holding company on a 1-for-1 basis.

         The consideration to be paid is approximately $64.9 million, consisting
         of not less than $9.5 million in cash,  stock of Vermont Pure valued at
         $31.1 million for purposes of the transaction,  12% subordinated  notes
         due 2007 of  Vermont  Pure in the  original  principal  amount of $22.6
         million,  and the  assumption  by Vermont Pure of $1.7 million in debt.
         The stock  price of Vermont  Pure for  purposes  of the merger  will be
         determined  prior to the closing but  according to the  agreement,  can
         range from $2.80 per share to $3.15 per share. As a result,  the number
         of shares that will be issued will be from  approximately  11.1 million
         to approximately 9.9 million shares, depending on the price.

         The  transaction  requires the approval of the  stockholders of Vermont
         Pure and is subject to bank financing.  In conjunction  with the merger
         agreement,  the Company executed a commitment  letter with Webster Bank
         of  Waterbury,  Connecticut  that  provides  for up to $36  million  in
         financing for the cash portion of the purchase price,  consolidation of
         the existing debt of both companies  (including $1.7 million of Crystal
         Rock indebtedness), and post-merger working capital.

         In  connection  with the merger,  the Company will hold a  shareholders
         meeting on October 5, 2000 for  shareholders of record on August 30. If
         the  shareholders  approve  the  merger,  it is  expected  to be closed
         concurrently with the bank financing shortly thereafter.

                                      8
<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-K for
the year ended October 30, 1999.

                           Forward-Looking Statements

When  used in the Form  10-Q  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
speaks 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 2000 were $24,807,000, an
increase of $1,695,000 or 8% over the sales of $23,112,000 for the corresponding
period  last  year.  Sales  for the  third  quarter  of  fiscal  year  2000 were
$10,158,000,  an increase of  $726,000  or 8% over sales of  $9,432,000  for the
corresponding period last year. In total,  14,034,000 gallons of water were sold
at an  average  price  $1.34 per gallon  compared  to  12,721,000  gallons at an
average  price  of  $1.46  for  the  corresponding  period  a year  ago.  Net of
acquisitions,  sales  increased  5% for the  nine-month  period  compared to the
corresponding period a year ago.

Sales for retail-size  products decreased $1,139,000 or 11%, for the nine months
of fiscal  year 2000  compared  to the  corresponding  period a year ago.  Sales
increased  $23,000 or 1%, for the third  quarter of fiscal 2000  compared to the
corresponding period a year ago. In the category, 6,486,000 gallons were sold at
an average price of $1.69 per gallon  compared to 6,416,229  gallons at 1.87 per
gallon for the comparable period a year ago. For the first three quarters of the
year, the Vermont Pure brand sales were down 32% while Hidden Spring and Private
Label brands were up 47% and 10%  respectively.  The decline in the Vermont Pure
brand reflects the major changes in the Company's  distribution  system for that
brand while the channels for the other categories  remained  largely  unchanged.
The  decrease in sales can be  attributable  to lower  selling  prices to secure
competitive distribution channels to replace a major distributor relationship in
April of 1999.  In addition,  an  unseasonably  cool,  rainy  summer  negatively
impacted overall beverage sales in the Northeastern United States.  Decreases in
average selling prices were partially  offset by lower  promotional  spending as
described in further detail below.

                                       9

<PAGE>

Sales for the home and office  category  increased  $2,947,290  or 27%,  for the
first nine months of fiscal year 2000  compared to the  corresponding  period of
the prior year.  Net of  acquisitions,  sales  increased 20% for the  nine-month
period compared to the corresponding period a year ago. Sales increased $874,397
or 21%, for the third quarter of fiscal year 2000 compared to the  corresponding
period of the prior year.  In  gallonage,  sales  increased  for the  comparable
nine-month  periods from 6,304,000  gallons to 7,548,000 from 1999 to 2000 while
the average price per gallon  remained the same at $1.05.  The respective  sales
increases in this  category for the first nine months and third  quarter of 2000
were attributable to market growth and expansion and  acquisitions.  The Company
has continued its acquisition  strategy during the period.  Acquisitions made in
the  last  twelve  months  have  been  relatively  small  in  sales  volume  but
geographically important.

Cost of Goods Sold - For the first  nine  months of fiscal  2000,  Cost of Goods
Sold was  $10,219,000  compared to $8,666,000 for the same period in fiscal year
1999.   Resulting  gross  profits  were  $14,588,000,   or  59%  of  sales,  and
$14,446,000,  or 63% of sales,  for the two  respective  periods.  For the third
quarter of 2000,  Cost of Goods Sold was  $4,675,000  compared to $3,682,000 for
the same period in fiscal 1999 resulting in gross profits of $5,483,000,  or 54%
of sales,  and  $5,750,000  or 61% of sales.  The  increase in gross  profit for
nine-month period was due to the increase in sales. The increase in sales can be
attributed solely to the delivery of home and office products, which in general,
is the Company's highest margin line. The decrease in gross profit for the third
quarter can be  attributed  to lower then  expected  sales from the retail sized
products.  The decrease in gross profit as a percentage  of sales is a result of
lower  average  sales prices  combined  with higher raw material  pricing of the
retail-size  product.  Raw  material  pricing,  particularly  for the  Company's
retail-size  line of  products,  has  fluctuated  since  mid-1999 as a result of
commodity  pricing.  Over  this  period,  the  Company  has been  successful  at
mitigating these increases by modifying its packaging and increasing  production
efficiencies  but average cost per case has still  increased  about 3%. However,
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 2000  compared to
the  corresponding  period in fiscal year 1999,  total  operating  expenses were
$13,922,000  and  $12,181,000,  an increase of  $1,741,000 or 15%. For the third
quarter,  operating  expenses were  $5,099,000 in 2000 compared to $4,476,000 in
1999,  an increase of  $623,000,  or 14%.  Selling,  general and  administrative
expenses  increased  by  $2,048,000  or 22%, for the first nine months of fiscal
2000 and  $551,000 or 16% for the third  quarter of fiscal 2000  compared to the
corresponding  periods a year ago. The increase in these costs was primarily due
to the  addition  of the  operating  costs to grow the home and office  delivery
business and build  inventory for the  retail-size  products to supply  customer
demand  throughout  the peak summer sales  season.  Specifically,  non-recurring
operating costs related to the home and office category growth are:

o        Costs  associated  with  integrating PET sales into the home and office
         distribution  network  in the  geographic  areas  that were  previously
         covered by outside distributors.

                                       10
<PAGE>


o        In anticipation of the Crystal Rock  transaction,  the consolidation of
         sales and distribution  systems  resulting from  acquisitions have been
         delayed.  This includes the cost of warehouses,  route operations,  and
         personnel.  As a  consequence,  the  benefits  of cost  reduction  from
         consolidation have not yet been achieved.

o        Increased administration of implementing a new software system.

Costs to build inventory are outside  warehouse rent and handling fees,  freight
to the outside location,  and the freight cost inefficiencies of double handling
product between the bottling plant and the customer. Advertising and promotional
expense decreased  $383,000,  or 17%, and increased  $33,000,  or 4%, during the
nine-month  and third  quarter  periods of 2000,  respectively,  compared to the
corresponding  periods last year.  The  Company's  advertising  and promotion is
predominantly  associated  with  the  sales  of  the  retail-size  packages.  As
mentioned  above,  the pricing  environment  for these products has changed such
that the Company's  distributors seek price discounts instead of advertising and
promotion  support.  During  the  nine  months  and  third  quarter  of 2000 the
Company's  aggregate per case expense  decreased  $.26 and $.03 per case for the
comparable  periods  in the prior  year.  Nevertheless,  due to the  competitive
nature of the industry,  the Company  anticipates that it will continue to spend
significant  amounts in the future for advertising and promotion as it continues
to develop brand  recognition  and increase  market  penetration but can give no
assurances that increases in spending will result in higher sales. For the first
nine  months and third  quarter  of fiscal  year  2000,  amortization  increased
$76,000 and $38,000  respectively,  from the same periods a year ago as a result
of increased goodwill from new acquisitions.

Income From  Operations  - Profit from  operations  for the first nine months of
fiscal 2000 was $666,000 as compared to $2,265,000 for the corresponding  period
last year,  a decrease  of  $1,599,000.  Income  from  operations  for the third
quarter of fiscal 2000 was $384,000 compared to $1,273,000 for the corresponding
period last year, a decrease of $889,000.  The decrease is attributable to lower
sales in the  retail-size  category  combined  with an increase in raw  material
costs and logistics costs of storing  product.  The Company plans to continue to
create  brand  awareness  and to find  alternate  distribution  channels for its
retail-size  product and expand its less seasonal  home and office  distribution
business.

Other  Income/Expense  - Net  interest  expense  increased  $423,000  or 57% and
$170,000 or 63% for the first nine months and third quarter of fiscal year 2000,
respectively,  compared to the  corresponding  periods in fiscal year 1999.  The
increase  in  interest  expense  was a result  of  increased  borrowing  to fund
operations as a result of lower operating  profits,  to build inventory,  to add
additional  plant and equipment,  to finance  acquisitions,  and higher interest
rates.  Miscellaneous  income  reflects  the  cash  settlement  in the  Pristine
Mountain Springs litigation, less the related assumed debt and the related legal
costs. For more information, see Note 5 to the enclosed financial statements.

Net Income/Loss- The Company's net loss for the first nine months of fiscal year
2000 was $238,000  compared to a net profit of $1,524,000 for the  corresponding
period last year.  The net loss for the third quarter of fiscal 2000 was $59,000
compared to a net profit of  $1,013,000  for the same  quarter in 1999.  The net
loss for the quarter and the year to date are  attributable  to lower  operating
results combined with higher interest costs.

                                       11
<PAGE>


                         Liquidity and Capital Resources

The net  decrease in cash for the nine months ended July 31, 2000 was largely to
fund operating losses and payment of debt. A significant amount of cash has been
expended  for  capital  improvements.  $4,652,000  has been used  primarily  for
expansion of the building that houses the Company's main bottling facility,  new
production  equipment,  and hardware and software to support the home and office
delivery system.

As of July 31, 2000, the Company had working  capital of $5,298,000  compared to
$3,028,000  on October 30, 1999.  The increase in working  capital of $2,270,000
reflects,  primarily, an increase in cash of $2,710,000 for specified restricted
uses. Of this total,  $1,735,000 is being held as proceeds from the bonds issued
for new building and equipment  and $975,000 is being held as  collateral  for a
mandatory convertible debenture scheduled for conversion by September,  2001. As
of July 31, 2000, the Company had disbursed  $2,390,000 of the total  $4,300,000
in bond proceeds and borrowed  $14,249,000 under its credit agreement with First
Union and Key Banks  compared to $844,000  of the line at the  beginning  of the
fiscal year. As of October 30, 1999, $11,690,000 was outstanding under the First
Union agreement. Proceeds from the increased debt were used for new building and
equipment,  acquisitions,  seasonal  inventory build,  and working capital.  The
maximum amount available to borrow under the First Union facility is $25,000,000
subject to certain  conditions and covenants.  The facility is secured by all of
the assets of the Company and expires  January 2004. The Company and First Union
modified  the credit  agreement  to waive  non-compliance  by the Company with a
single financial covenant as of July 31, 2000.

The Company has  increased  its debt  significantly  in the  current  year.  The
purpose has  largely  been to put  infrastructure  in place to  accommodate  its
future growth - building, equipment, and computer hardware and software systems.
The Company has also been  transforming  its  distribution  channels and, in the
process, required more working capital to fund operations. While past trends and
future  expectations  warrant these  investments and efforts no assurance can be
given that future growth will occur. In this case, the Company may be restricted
to its access to working  capital by covenants  and  conditions in the agreement
with its primary lender and no assurance can be given that other  financing will
be available.

On May 5, 2000,  Vermont Pure Holdings,  Ltd. entered into an Agreement and Plan
of Merger and Contribution  with Crystal Rock Spring Water Company of Watertown,
Connecticut. More details are provided in footnote 8 to the financial statements
included herewith. In conjunction with the potential merger the Company signed a
letter of intent with Webster Bank of  Waterbury,  Connecticut.  The  commitment
provides for up to $36 million of financing for the cash portion of the purchase
price,  to  consolidate  the existing debt of both  companies,  and  post-merger
working capital.

                                       12

<PAGE>

PART I - Item 3

            QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to the Company's  operations result primarily from changes
in interest rates and commodity prices related to packaging materials.

Interest Rate Risks - On July 31, 2000, the Company had $14,500,000  outstanding
on its credit  facility with First Union and Key Banks at LIBOR plus 2.5%. As of
July 31, 2000,  LIBOR was 6.63%. The Company pays a stepped fixed interest rate,
subject to changes in the LIBOR spread pursuant to the agreement,  on $7,500,000
of the facility.  This interest rate was 8.63% on August 2, 2000. On May 2, 2000
the  Company  entered  into an  agreement  to fix  $5,000,000  of debt at 9.63%,
subject to changes in the LIBOR  spread,  for three years.  In addition,  it had
committed  to  repay   $4,300,000  of  bonds  issued  by  the  Vermont  Economic
Development Authority at variable rates for taxable and non-taxable issues. Bond
interest  rates are variable based on weekly rates  established  for the taxable
and non-taxable issues which on August 2, 2000 were 6.7% and 4.3%, respectively.
The Company pays an annual  letter of credit fee of 2% to secure the bonds.  The
company  also has  miscellaneous  loans  totaling  at variable  interest  rates.
Consequently,   after  considering  the  Company's  fixed  rate  instruments,  a
hypothetical   100  basis  point  increase  in  market  rates  would  result  in
approximately $70,000 of interest expense on an annualized basis.

Commodity  Price  Risks - Although  the Company  has yearly  contracts  with its
vendors  that set the  purchase  price of its PET  bottles  used to  bottle  its
retail-size product, the vendors are entitled to pass on increases in the market
price of the resin used as the raw material  for the  bottles.  These prices are
related to supply and demand market  factors for PET and, to a lesser extent the
price of  petroleum,  from which PET is  derived.  A  hypothetical  resin  price
increase of $.05 per pound would  result in an  approximate  price  increase per
bottle of $.005. During the 2000 fiscal year pricing has increased.  To a lesser
extent  the  Company  is  similarly  dependant  on resin  for caps and paper for
corrugated boxes and labels.  The potential  impact is not material  compared to
bottles.

The  Company is  planning to  mitigate  the effect of these  commodity  risks by
working with  suppliers to reduce the amount of material that it uses to package
its products while maintaining and improving quality


                                       13
<PAGE>


PART II - Other Information

Item 1 - Legal Proceedings

         In March of 1999, the Company  contracted with Descartes Systems Group,
Inc.  ("Descartes"),  an Ontario corporation,  to provide professional  services
related to the design,  installation,  maintenance,  operation  and training for
computer hardware and software.  The computer hardware and software was marketed
to the Company as a product that would  provide  computerized  management of the
Company's  direct  distribution  through its delivery  network,  and  associated
billing and accounting.

On July 27, 2000, the Company filed a lawsuit against Descartes and an affiliate
of Descartes  entitled Vermont Pure Holdings,  Ltd. v. Descartes  Systems Group,
Inc. and Endgame Systems,  Inc. f/k/a DSD Solutions,  Inc., in the United States
District  Court for the  District  of  Vermont.  The action is docketed as Civil
Action  No.  2:00-CV-269.  The  Company  has  sought  monetary  damages  against
Descartes and Endgame in an amount  exceeding  $100,000 for the Company's losses
associated with failures of the systems and services provided by the defendants.
In addition,  the Company has sought a  Declaratory  Judgment  invalidating  the
defendant's demand for payments in the amount of $411,841.10.

         As of the date of this disclosure, the defendants have not yet answered
the Company's lawsuit.  The Company intends to vigorously prosecute the lawsuit.
The Company has made alternative  arrangements for performing the functions that
were associated with the services of the defendants.

Item 2 - Changes in Securities

(a)      None

(b)      None

(c)      None

Item 3 - Defaults upon Senior Securities

         None

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

On May 2, 2000 the Company held its annual  shareholders  meeting a 1:30 p.m. at
the Radisson  Hotel,  in Burlington,  Vermont.  There was one matter of business
requiring shareholder vote, election of directors.

A total of 8,548,438 votes were cast and the following directors were elected to
one year terms with the corresponding vote tally:


                                       14

<PAGE>

                               "For"         "Withheld"
 Frank G. McDougall           8,501,998        46,440
 Timothy G. Fallon            8,501,998        46,440
 Robert C. Getchell           8,501,998        46,440
 David R. Preston             8,501,998        46,440
 Norman E. Rickard            8,501,998        46,440
 Beat Schlagenhauf            8,501,998        46,440
 Richard S. Worth             8,501,998        46,440
 Phillip Davidowitz           8,501,998        46,440

Item 5 - Other Information

         None

Item 6 - Exhibits and Reports on Form 8-K

(a)   Exhibit
      Number               Description

2.1       Agreement and Plan of Merger and Contribution  dated as of May 5, 2000
          among the Registrant,  VP Merger Parent,  Inc., VP Acquisition  Corp.,
          Crystal Rock Spring Water Company and its stockholders.

          Exhibits to the merger  agreement,  appear as Exhibits to the form S-4
          Registration  Statement,  filed by VP Merger Parent, Inc., file number
          333-45226, on September 6, 2000.

3.1       Amended and Restated  Certificate of Incorporation of Registrant dated
          January 12, 1994.  (Incorporated by reference from exhibit 3.3 of Form
          10-KSB for fiscal year ended October 30, 1993- File No. 1-11254.)

3.2       Amendment of Certificate of Incorporation of Registrant dated June 15,
          1999.

3.3       By-Laws of Registrant.  (Incorporated by reference from Exhibit 3.4 of
          Registration Statement 33-46382)

3.4       Amendment   to  By-Laws  of   Registrant   Adopted   March  26,  1997.
          (Incorporated  by reference from exhibit 3.3 of Form 10-KSB for fiscal
          year ended October 25, 1997-File No. 1-11254)

10.1*     Employment  Agreement  between  the  Registrant  and Timothy G. Fallon
          dated as of November 1, 996.  (Incorporated  by reference from exhibit
          10.1 of  form10-KSB  for fiscal year ended  October 25,  1997-File No.
          1-11254.)
                                       15

<PAGE>

10.2*     Amendment to the  November 1, 1996  Employment  Agreement  between the
          Registrant and Timothy G. Fallon dated November 1, 1999.

10.3*     Employment  Agreement  between the  Registrant  and Bruce S. MacDonald
          dated as of November 1, 1997.  (Incorporated from Exhibit 10.2 of form
          10-KSB for fiscal year ended October 25,1999-File No. 1-11254)

10.4*     Stock  Option   Agreement   between   Registrant   and  Mr  .  Fallon.
          (Incorporated  by reference  from Exhibit 10.7 of form 10-K for fiscal
          year ended October 28, 1994, File No. 1-11254.)

10.5      1993 Performance Equity Plan.  (Incorporated by reference from Exhibit
          10.9 of Registration Statement 33-72940.)

10.6      Stock  Purchase  Agreement  between the  Registrant and Carolyn Howard
          relating to the acquisition of A.M. Fridays, Inc. dated July 16, 1997.
          (Incorporated by reference from Exhibit 10.1 of the report on Form 8-K
          dated September 11, 1997.)

10.7      Stock Purchase  Agreement  between the Registrant and David Eger dated
          August 27, 1997 relating to Excelsior  Spring Water  Co.("Excelsior").
          (Incorporated by reference from exhibit 10.1 of the report on from 8-K
          dated September 1, 1997.)

10.8      Promissory  Note  from the  Registrant  to Mr.  Eger in the  principal
          amount of $503,000.  (Incorporated  by reference  form Exhibit 10.2 of
          the report on Form 8-K dated September 11, 1997.)

10.9      Form of Note Purchase  Agreement  between the  Registrant  and certain
          note  holders of  Excelsior  dated August  27,1997.  (Incorporated  by
          reference from Exhibit 10.4 of the Report on form 8-K dated  September
          11, 1997.)

10.10     Form of  Stock  Purchase  Agreement  between  Registrant  and  certain
          Stockholders  of Excelsior  dated August 27,  1997.  (Incorporated  by
          reference from Exhibit 10.4 of the Report on Form 8-K dated  September
          11, 1997.)

10.11     Schedule of Stock and Note Purchase Agreement information dated August
          27, 1997 regarding the Excelsior purchase.  (Incorporated by reference
          from Exhibit 10.7 of the Report on Form 8-K dated September 1, 1997.)

                                       16
<PAGE>


10.12     Consulting  Agreement  between the Registrant and Corporate  Investors
          Network, Inc. dated December 1, 1996.  (Incorporated by reference from
          Exhibit  10.1 of the  report  on Form  10-QSB  for the  quarter  ended
          January 25, 1997.)

10.13     1998 Incentive and  Non-Statutory  Stock Option Plan  (Incorporated by
          reference to Appendix A of the Registrant's 1998 Proxy Statement)

10.14     Asset  Purchase  Agreement  between the  Registrant and Vermont Coffee
          Time,  Inc.  relating to the purchase  certain assets and  Liabilities
          dated December 19, 1997.  (Incorporated by reference from Exhibit 10.1
          of the report on Form 10-QSB for the quarter ended January 24, 1998.)

10.15     Promissory Note from the Registrant to Vermont Coffee Time, Inc. dated
          January 5, 1998.  (Incorporated  by reference from Exhibit 10.3 of the
          Report of Form 10-QSB for the quarter ended January 24, 1998.)

10.16     Security  Agreement  between the  Registrant  and Vermont Coffee Time,
          Inc.  dated January 5, 1998.  (Incorporated  by reference from Exhibit
          10.3 of the report of Form  10-QSB for the quarter  ended  January 24,
          1998.)

10.17     Consulting  Agreement  between  Amy  Berger and the  Registrant  dated
          January 5, 1998.  (Incorporated  by the reference form Exhibit 10.4 of
          the report on form 10-QSB for the quarter ended January 24, 1998.)

10.18     Non Compete  Agreement  of Fred  Beauchamp  and Jim Creed  between the
          Registrant   and  Sagamon   Springs,   Inc.   dated  January  6  1998.
          (Incorporated by the reference form Exhibit 10.5 of the report on form
          10-QSB for the quarter ended April 25, 1998.)

10.19     1999 Employee  Stock Purchase Plan  (Incorporated  by reference to the
          Exhibit A of the Registrant's 1999 Proxy Statement)

10.20     Stock Purchase  Agreement between  Registrant,  Paul Hayes and Michael
          Hayes date July 27, 1999 relating to Adirondack  Coffee Service,  Inc.
          (Incorporated  by reference from Exhibit 10.23 of form 10-K for fiscal
          year ended October 30, 1999, File No.1-11254).

10.21     Promissory Note dated July 27,1999 from the registrant to the Hayes in
          the  Principal  amount of $303,734.  (Incorporated  by reference  from
          Exhibit  10.24 of form 10-K for fiscal year ended  October  30,  1999,
          File No.1-11254).

10.22     Loan  Purchase  Agreement  to spring  source dated  September  30,1999
          between the Registrant and Marcon Capital  Corporation.  (Incorporated
          by  reference  from  Exhibit  10.26 of form 10-K for fiscal year ended
          October 30, 1999, File No.1-11254).

                                       17

<PAGE>



10.23     Convertible  Debenture  Agreement dated September  30,1999 between the
          Registrant and Marcon  Capital  Corporation in the amount of $975,000.
          (Incorporated  by reference from Exhibit 10.27 of form 10-K for fiscal
          year ended October 30, 1999, File No.1-11254).

10.24     Amended and Restated Security  Agreement between  Registrant and First
          Union Bank dated  January 28, 2000.  (Incorporated  by reference  from
          Exhibit  10.27 of the report on form 10Q fourth  quarter ended January
          29, 2000).

10.25     Loan Agreement  between  Registrant and Vermont  Economic  Development
          Authority  dated  December 1, 1999.  (Incorporated  by reference  from
          Exhibit  10.28 of the report on form 10Q fourth  quarter ended January
          29, 2000).

10.26     Trust Indenture  Between  Registrant and Vermont Economic  Development
          authority and First Union National Bank, as trustee,  dated December1,
          1999.  (Incorporated  by reference from Exhibit 10.29 of the report on
          form 10Q fourth quarter ended January 29, 2000).

10.27     Settlement Agreement between Registrant and Pristine Mountain Springs,
          Amsource LLC,  Barton Lord and Ronald  Colton dated  December 1, 1999.
          (Incorporated  by reference  from Exhibit  10.31 of the report on form
          10Q fourth quarter ended January 29, 2000).

10.28     Amended and Restated Spring Water License and Supply Agreement between
          Registrant and Mountain Springs,  Amsource LLC, Barton Lord and Ronald
          Colton dated December 5, 1999. (Incorporated by reference from Exhibit
          10.31 of the  report on form 10Q  fourth  quarter  ended  January  29,
          2000).

27.1     Financial Data Schedule

(b)      No reports on Form 8-K were filed for the quarter ended July 31, 2000.

              * Relates to Compensation

                                       18
<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 14, 2000
                  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)

                                       19