U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

(MARK ONE)

    |X|  Quarterly Report Pursuant to Section 13 or 15(d) of Securities
         Exchange Act of 1934

              For the quarterly period ended September 30, 2000

    |_|  Transition report under Section 13 or 15(d) of the Securities  Exchange
         Act of 1934 (No Fee Required)

              For the transition period from _______ to _______.

                          Commission File No. 333-44393

                        EUROPEAN MICRO HOLDINGS, INC.
                        -----------------------------
               (Name of Registrant as Specified in Its Charter)

<TABLE>
<CAPTION>
<S>                                                                  <C>
NEVADA                                                               65-0803752
------                                                               ----------
(State or Other Jurisdiction of Incorporation                        (I.R.S. Employer Identification No.)
or Organization)

6073 N.W. 167TH STREET, UNIT C-25, MIAMI, FLORIDA                    33015
-------------------------------------------------                    -----
(Address of Principal Executive Offices)                             (Zip Code)

                                              (305) 825-2458
                                              --------------
                          (Issuer's Telephone Number, Including Area Code)
</TABLE>

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during  the past 12  months,  and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No |_|

There  were  4,933,900  shares  of Common  Stock,  par  value  $0.01 per  share,
outstanding as of November 17, 2000.


<PAGE>


PART I

FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.


Independent Auditors' Review Report..........................................3

Consolidated Condensed Balance Sheets as of September 30, 2000 and
June 30, 2000................................................................4

Consolidated Condensed Statements of Operations for the three
months ended September 30, 2000 and 1999.....................................5

Consolidated Statement of Changes in Shareholders' Equity

for the three months ended September 30, 2000................................6

Consolidated Condensed Statements of Cash Flows for the three months
ended September 30, 2000 and 1999............................................7

Notes to Consolidated Condensed Financial Statements.........................9






















                                                 2
<PAGE>

                      INDEPENDENT AUDITORS' REVIEW REPORT

The Board of Directors and Shareholders
European Micro Holdings, Inc.:

We have reviewed the  consolidated  condensed  balance  sheet of European  Micro
Holdings,  Inc. and  subsidiaries  (the "Company") as of September 30, 2000, and
the related  consolidated  condensed  statements  of  operations,  shareholders'
equity and cash flows for the  three-month  periods ended September 30, 2000 and
1999. These consolidated  condensed financial  statements are the responsibility
of the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the consolidated condensed financial statements referred to above for
them to be in conformity with generally accepted accounting principles.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards,  the consolidated balance sheet of European Micro Holdings,  Inc. and
subsidiaries  as of June 30, 2000,  and the related  consolidated  statements of
operations,  shareholders'  equity,  and cash flows for the year then ended (not
presented  herein);  and in our report dated August 24, 2000, except as to notes
3, 9, and 10,  which were as of October 5, 2000,  we  expressed  an  unqualified
opinion  on  those  consolidated  financial  statements.  In  our  opinion,  the
information set forth in the accompanying  condensed  consolidated balance sheet
as of June 30, 2000, is fairly stated, in all material respects,  in relation to
the consolidated balance sheet from which it has been derived.

Nashville, Tennessee
November 17, 2000










                                       3
<PAGE>


                                   EUROPEAN MICRO HOLDINGS, INC.

<TABLE>
                                CONSOLIDATED CONDENSED BALANCE SHEETS

                                         (In thousands, except share data)
                                             (Unaudited)

<CAPTION>
                                                                           SEPTEMBER 30, 2000          JUNE 30, 2000
                                                                       -----------------------------------------------------
<S>                                                                                  <C>                    <C>
                                ASSETS

CURRENT ASSETS:

     Cash                                                                               $582                  $1,222
     Restricted Cash                                                                     355                     364
     Trade receivables, net                                                           12,594                  13,160
     Inventories, net                                                                  7,471                   6,194
     Prepaid expenses                                                                    400                     322
     Income Taxes Receivable                                                             899                     909
     Other current assets                                                                682                     765
                                                                                     -------                --------
         TOTAL CURRENT ASSETS                                                         22,983                  22,936
     Property and equipment, net                                                       3,819                   3,927
     Goodwill, net                                                                     2,732                   2,808
     Investments in and advances to unconsolidated subsidiaries                            0                     252
     Other assets                                                                        284                     290
                                                                                     -------                --------
         TOTAL ASSETS                                                                $29,818                 $30,213
                                                                                     -------                --------


                 LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:

     Short-term borrowings                                                           $12,300                 $11,903
     Current portion of long-term borrowings                                             697                     678
     Trade payables                                                                    1,660                   2,256
     Accrued expenses and other current liabilities                                    1,608                   1,882
     Due to related parties                                                              293                      11
     Income taxes payable                                                                  -                       -
                                                                                     -------                --------
         TOTAL CURRENT LIABILITIES                                                    16,558                  16,730
     Long-term borrowings                                                              2,235                   2,373
     Other liabilities                                                                     -                       -
                                                                                     -------                --------
         TOTAL LIABILITIES                                                           $18,793                 $19,103
                                                                                     -------                --------
SHAREHOLDERS' EQUITY:

     Preferred stock $0.01 par value shares:  1,000,000 authorized, no
         shares issued and outstanding                                                     -                       -
     Common stock $0.01 par value shares:  20,000,000 authorized,
         Shares issued and outstanding 4,933,900                                          49                      49
     Additional paid-in capital                                                        9,512                   9,191
     Prepaid offering costs (Note 10)                                                  (208)                       -
     Accumulated other comprehensive income (loss)                                     (680)                   (550)
     Retained earnings                                                                 2,352                   2,420
                                                                                     -------                --------
         TOTAL SHAREHOLDERS' EQUITY                                                   11,025                  11,110
                                                                                     -------                --------

     COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENTS                                      -                       -

     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                      $29,818                 $30,213
                                                                                     =======                ========

See accompanying notes to consolidated condensed financial statements.

</TABLE>




                                                 4
<PAGE>

<TABLE>
                                   EUROPEAN MICRO HOLDINGS, INC.

                           CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

                                (In thousands, except per share data)

<CAPTION>
                                                                                         (UNAUDITED)
                                                                              THREE MONTHS ENDED SEPTEMBER 30,
                                                                         -------------------------------------------
                                                                                  2000                       1999
                                                                                  ----                       ----
<S>                                                                            <C>                        <C>
SALES:

     Net sales                                                                 $29,014                    $31,745
     Net sales to related parties                                                   54                      1,019
                                                                               -------                    -------
         Total net sales                                                        29,068                     32,764
                                                                               -------                    -------
COST OF GOODS SOLD:

     Cost of goods sold                                                        (25,858)                   (28,076)
     Cost of goods sold to related parties                                         (54)                      (991)
                                                                               -------                    -------
         Total cost of goods sold                                              (25,912)                   (29,067)
                                                                               -------                    -------
GROSS PROFIT                                                                     3,156                      3,697

OPERATING EXPENSES:

         Selling, general and administrative expenses                           (2,883)                    (3,066)
                                                                               -------                    -------
INCOME FROM OPERATIONS                                                             273                        631

         Interest income                                                            15                         39
         Interest expense                                                         (311)                      (219)
         Equity in net loss of unconsolidated subsidiaries                           -                         (2)
                                                                               -------                    -------
INCOME (LOSS) BEFORE INCOME TAXES                                                  (23)                       449

     Income tax expense                                                            (45)                      (242)
                                                                               -------                    -------
NET INCOME (loss)                                                                $(68)                      $207
                                                                               -------                    -------
         Net income (loss) per share - basic                                   $(0.01)                     $0.04
                                                                               -------                    -------
         Net income (loss) per share - diluted                                 $(0.01)                     $0.04
                                                                               -------                    -------

See accompanying notes to consolidated condensed financial statements.
</TABLE>




                                                 5
<PAGE>
                                   EUROPEAN MICRO HOLDINGS, INC.


<TABLE>
                           CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                  (In thousands, except share data)
                                             (Unaudited)

<CAPTION>
                                                                                       ACCUMULATED
                                                             ADDITIONAL    PREPAID        OTHER                         TOTAL
                                                              PAID-IN     OFFERING    COMPREHENSIVE    RETAINED     SHAREHOLDERS'
                                        COMMON STOCK          CAPITAL       COSTS     INCOME (LOSS)    EARNINGS         EQUITY
                                   -------------------------------------------------------------------------------------------------
                                       SHARES      AMOUNT

<S>                                 <C>               <C>        <C>                         <C>          <C>             <C>
Balance at June 30, 2000            4,933,900         $49        $9,191          -            $(550)      $2,420          $11,110

Comprehensive Income (loss):
     Net income (loss)                      -           -             -          -                -          (68)             (68)
     Other comprehensive income,
     foreign currency
     translation adjustment                 -           -             -          -             (130)           -             (130)
                                                                                     -----------------------------------------------
     Total comprehensive income (loss)      -           -             -          -             (130)         (68)            (198)
Prepaid offering costs-options issued       -           -           208       (208)               -            -                -
Compensation charge in relation
     to share options issued to
     non-employees                          -           -          (113)         -                -            -             (113)
                                   -------------------------------------------------------------------------------------------------
Balance at September 30, 2000       4,933,900         $49        $9,512     $ (208)           $(680)      $2,352          $11,025
                                   =================================================================================================


See accompanying notes to consolidated condensed financial statements.
</TABLE>




                                                 6
<PAGE>

<TABLE>
                           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                           (In thousands)

<CAPTION>
                                                                                            (UNAUDITED)
                                                                                 THREE MONTHS ENDED SEPTEMBER 30,

                                                                        ----------------------------------------------------
                                                                                     2000                           1999
                                                                                     ----                           ----
<S>                                                                                <C>                             <C>
OPERATING ACTIVITIES:

Net income (loss)                                                                    $(68)                          $207
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
     Depreciation and amortization                                                    160                            134
     Amortization of expense related to contingent earn-out provisions                  -                             47
     Deferred income taxes                                                            (23)                            (7)
     Equity in net loss of unconsolidated subsidiaries                                  -                              2
     Provision for Note Receivable impairment                                         252                              -
     Compensation charge for non-employee stock options                               113                             14
CHANGES IN ASSETS AND LIABILITIES

     Trade receivables                                                                566                          1,341
     Due from related parties                                                           -                          1,128
     Inventories                                                                   (1,277)                         1,740
     Prepaid expenses and other current assets                                         28                            157
     Income Tax Receivable                                                             10                              -
     Trade payables                                                                  (596)                           397
     Due to related parties                                                           282                            295
     Income taxes payable                                                               -                            294
     Accrued expenses and other current liabilities                                  (274)                          (622)
                                                                                   ------                          -----
NET CASH PROVIDED BY (USED IN ) OPERATING ACTIVITIES                                 (827)                         5,127
                                                                                   ------                          -----
INVESTING ACTIVITIES:

     Purchase of fixed assets                                                        (144)                        (2,998)
     Sale of fixed assets                                                              46                             21
     Payment for acquisition, net of cash acquired                                      -                         (1,220)
                                                                                   ------                          -----
NET CASH USED IN INVESTING ACTIVITIES                                                 (98)                        (4,197)
                                                                                   ------                          -----
FINANCING ACTIVITIES:

     Short-term borrowings, net                                                       397                         (1,073)
     Proceeds from long-term borrowings                                              (159)                         2,429
     Issuance of common stock, net                                                      -                              -
     Repayment of capital leases, net                                                   -                            (20)
                                                                                   ------                          -----
NET CASH PROVIDED BY FINANCING ACTIVITIES                                             238                          1,336
                                                                                   ------                          -----
     Exchange rate changes                                                             47                            241
                                                                                   ------                          -----
NET  INCREASE (DECREASE) IN CASH:                                                    (640)                         2,507
     Cash at beginning of period                                                    1,222                          3,168
                                                                                   ------                          -----
CASH AT END OF PERIOD                                                                $582                         $5,675
                                                                                   ------                          -----




                                                 7
<PAGE>
                                   EUROPEAN MICRO HOLDINGS, INC.


Non-cash investing and financing activities:

Fair value of assets acquired                                                         $ -                         $3,314
Goodwill                                                                                -                            804
Fair value of liabilities assumed                                                       -                         (2,817)
                                                                                   ------                          -----
Cash paid for acquisitions                                                              -                          1,301
Less cash acquired                                                                      -                            (81)
                                                                                   ------                          -----
Net cash paid for acquisitions                                                        $ -                         $1,220
                                                                                   ------                          -----
Interest paid                                                                        $311                           $219
                                                                                   ------                          -----
Taxes paid                                                                            $84                             $5
                                                                                   ------                          -----

See accompanying notes to consolidated condensed financial statements.
</TABLE>




                                                 8
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

           NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1     INTERIM FINANCIAL STATEMENTS

The  accompanying  unaudited  interim  financial  statements  have been prepared
pursuant to the rules and regulations  for reporting on Form 10-Q.  Accordingly,
certain   information  and  notes  required  by  generally  accepted  accounting
principles  for  complete  financial  statements  are not included  herein.  The
interim  statements  should be read in conjunction with the Company's  financial
statements  and notes thereto  included in the  Company's  2000 Annual Report on
Form 10-K.

In the Company's opinion,  all adjustments  necessary for a fair presentation of
these  interim  statements  have been included and are of a normal and recurring
nature.

2     LIQUIDITY

The Company  suffered  operating losses during fiscal year 2000 and in the first
quarter of 2001.  Ongoing legal costs associated with the litigation  related to
Big Blue Europe,  the costs  associated with the Company's  electronic  commerce
strategy,  increases in general overhead costs,  and increased  interest expense
due primarily to increased borrowings, coupled with decreasing sales volumes and
gross profit margins, have negatively impacted operating results.  These factors
may continue to impact the Company's operations.

The  Company  was  not in  compliance  with  certain  loan  agreement  financial
covenants  during fiscal year 2000.  While the Company has obtained waivers from
these  covenant  violations  existing at June 30, 2000,  in most  instances  the
waivers only address the  covenant-reporting  period ending  thereon.  Also, the
Company was not in compliance with certain loan agreement financial covenants at
September  30,  2000.  The  Company  has  obtained  waivers  of certain of these
covenant  violations  existing at September 30, 2000.  With the exception of the
European  Micro  UK  Inventory  Facility  discussed  below  and in Note 6 to the
Consolidated  Condensed  Financial  Statements,  management  believes  that  the
Company  will be able to  comply  with the  provisions  of its debt  agreements,
including financial covenants, during the remainder of the fiscal 2001. However,
compliance  with these  financial  covenants  during  fiscal  2001 will  require
improved  operating  results  compared to fiscal 2000.  Management has initiated
certain actions to increase the likelihood of attaining these improved operating
results.  Such actions include,  among other things,  (i) modifying the terms of
certain financial  covenants (ii) entering into the Equity Credit Line (See Note
10  to  the  Consolidated  Condensed  Financial  Statements),  (ii)  temporarily
suspending activities related to its electronic commerce strategy until specific
funding can be obtained  (see Note 11 to the  Consolidated  Condensed  Financial
Statements),  (iii)  obtaining  extensions  of the due date for any  payment  of
contingent  earn-out  amounts  relating to calendar year 2000 under the American
Micro purchase  agreement (see Note 5 to the  Consolidated  Condensed  Financial
Statements),  (iv) adjusting  staffing  levels,  and (v)  implementing  steps to
increase  sales volume and lower  inventory  levels.  No assurances can be given
that  management's  initiatives  will be  successful,  and that  loan  agreement
defaults  will not occur in the future.

Another factor that could negatively impact the Company's liquidity is the terms
of the borrowing  arrangements of European Micro UK. As disclosed in Notes 6 and
7 to the Consolidated Condensed Financial Statements,  certain of European Micro
UK's  borrowing  capacity  is subject to  termination  by the  borrower  at such
lender's sole discretion.  As disclosed in Note 6 to the Consolidated  Condensed
Financial  Statements,  European  Micro UK was not in  compliance  with  certain
financial  convenants of the European  Micro UK Inventory  Facility at September
30, 2000. As a result, European Micro UK will not be able to borrow against this
revolving  credit  agreement  until such time that it is in compliance with such
financial  covenants.  Further, the American Micro and Nor-Easter line of credit
and the European Micro Holdings,  Inc. term loan contain subjective acceleration
clauses.  These factors  increase the liquidity risk to the Company.  Management
believes that, based on the projected fiscal year 2001 operating  results of the
Company  and  its   relationship   with  the  creditors,   its  existing  credit
arrangements will remain effective during fiscal 2001.

3     INVENTORY

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                            SEPTEMBER 30, 2000             JUNE 30, 2000
                                                                            ------------------             -------------
<S>                                                                                     <C>                       <C>

Finished goods and goods for resale                                                     $7,606                    $6,818
Less: Allowance for inventory obsolescence                                                (135)                     (624)
                                                                                        ------                    ------
                                                                                        $7,471                    $6,194
                                                                                        ======                    ======
</TABLE>

A roll forward of allowance for obsolescence is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED         TWELVE MONTHS ENDED
                                                                            SEPTEMBER 30, 2000             JUNE 30, 2000
                                                                            ------------------             -------------

<S>                                                                                       <C>                       <C>
Balance at beginning of period                                                            $624                      $116
Foreign currency translation adjustment                                                    (15)                       (3)
</TABLE>


                                       9
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.
<TABLE>
<CAPTION>
           NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

<S>                                                                                       <C>                       <C>
Provision for obsolescence                                                                 137                       929
Amounts written off                                                                       (611)                     (418)
                                                                                        ------                    ------
Balance at end of period                                                                  $135                      $624
                                                                                        ======                    ======
</TABLE>


4     PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                            SEPTEMBER 30, 2000             JUNE 30, 2000
                                                                            ------------------             -------------
<S>                                                                                     <C>                       <C>

Buildings and leasehold improvements                                                    $2,628                    $2,694
Furniture, fixtures and equipment                                                        1,848                     1,866
Vehicles and other                                                                         454                       447
                                                                                        ------                    ------
                                                                                         4,930                     5,007
Less: accumulated depreciation                                                          (1,111)                   (1,080)
                                                                                        ------                    ------
        NET BOOK VALUE                                                                  $3,819                    $3,927
                                                                                        ======                    ======
</TABLE>





                                       10
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

           NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

On July 16, 1999,  European Micro Plc, a wholly-owned  subsidiary of the Company
("EUROPEAN MICRO UK"),  purchased the office building in which it had previously
leased space for a purchase price of 1,705,000  pounds  sterling  ($2,518,000 at
exchange rate on September 30, 2000). The purchase price was financed in part by
a mortgage loan note in the amount of 1,312,000  pounds sterling  ($1,937,000 at
exchange rate on September 30, 2000) (See Note 7, to the Consolidated  Condensed
Financial Statements).

At September 30, 2000 and June 30, 2000,  vehicles with a cost of  approximately
$219,000 and $212,000, and accumulated depreciation of approximately $70,000 and
$129,000, respectively, were held under capital leases.

Depreciation  expense was $120,000 and $101,000 for the periods ended  September
30, 2000 and 1999, respectively.

5     GOODWILL

On October 26, 1998, European Micro UK acquired all of the outstanding shares of
capital stock of Sunbelt (UK) Limited  ("SUNBELT").  The Sunbelt  purchase price
(to be settled in pounds sterling) is comprised of a guaranteed  portion and two
contingent  earn-out  payments.  The guaranteed  portion of the purchase  price,
which was based upon  Sunbelt's  net book value at closing and a multiple of its
fiscal year 1998 pre-tax  earnings,  was 940,000 pounds sterling  (approximately
$1,388,000 at exchange rate on September 30, 2000). Of this  guaranteed  amount,
approximately 360,000 pounds sterling  (approximately  $532,000 at exchange rate
on September  30, 2000) was paid in cash at closing.  The unpaid  balance of the
guaranteed  consideration  includes a note  payable  to the  former 40%  Sunbelt
shareholder in the amount of 240,163 pounds sterling  ($355,000 at exchange rate
on September 30, 2000) to be repaid in November 2005, subject to early repayment
at the  option of the note  holder at any time  after  June 1,  1999.  Such note
payable is secured by a cash account of equal amount at September 30, 2000.  The
note  payable  and  the  cash  balances  are   reflected  on  the   accompanying
consolidated  condensed balance sheet at September 30, 2000, in accrued expenses
and other current liabilities and restricted cash, respectively. The Company has
the option of paying future  amounts due to the former Sunbelt  shareholders  in
common stock.  If the Company elects to pay any portion of the purchase price in
shares of the Company's common stock,  then Sunbelt's  shareholders have fifteen
days to make  arrangements to sell such shares over the next forty trading days.
If the sale of such shares  results in net  proceeds  of less than the  purchase
price,   then  the  Company  will  pay  the  difference  in  cash  to  Sunbelt's
shareholders.  The Company also entered into employment  agreements with the two
former shareholders of Sunbelt. The Company discontinued  Sunbelt's Nova line of
products  effective  January  31,  2000.  With the  closure  of the Nova line of
products,  the  employment  agreement  with one of the former  shareholders  was
terminated.  Also, in July 2000 the  employment  agreement with the other former
shareholder was terminated.

During  November  1999,  purchase  accounting   adjustments  were  made  to  the
calculation of the guaranteed  portion and the two contingent  earn-out amounts.
These  adjustments  resulted from the  recalculation  of fiscal year 1998 pretax
earnings  of  Sunbelt,  resulting  in a  reduction  of 134,000  pounds  sterling
($198,000 at exchange rate on September 30, 2000) to the guaranteed  portion and
32,000 pounds  sterling  ($47,000 at exchange rate on September 30, 2000) to the
contingent consideration. The portion of the guaranteed consideration due at the
end of the first contingent earn-out period,  which ran from November 1, 1998 to
October  31,  1999,  was paid in  November  1999 in the amount of 53,708  pounds
sterling ($79,000 at exchange rate on September 30, 2000).  Also, the portion of
the first  contingent  earn-out  payment  related to employee  retention and the
volume of purchases from the Far East was paid in November 1999 in the amount of
190,820 pounds sterling ($282,000 at exchange rate on September 30, 2000).

The unpaid balance of the guaranteed  purchase price of 152,656 pounds  sterling
($225,000 at exchange rate on September 30, 2000), and the portion of the second
contingent earn-out payment related to the volume purchases from the Far-East of
129,758  pounds  sterling  ($192,000 at exchange  rate on September 30, 2000) is
reflected in goodwill, net and accrued expenses and other current liabilities on
the accompanying  consolidated  condensed balance sheet at September 30, 2000 as
the   contingency   has  been  met.  At  September  30,  2000,   all  contingent
consideration  related  to the  Sunbelt  acquisition  has  either  been  paid or
accrued.  Goodwill from this  transaction is being  amortized on a straight-line
basis over 20 years.

On November  12,  1998,  European  Micro UK  acquired  the assets of H&B Trading
International  BV  ("H&B").  The  acquisition  of  H&B  was  accounted  for as a
purchase.  The base purchase  price,  subject to  adjustment,  of  approximately
125,000 Dutch guilders ($50,000 at exchange rate on September 30, 2000) exceeded
the  estimated  value of net  assets  acquired  by  approximately  85,000  Dutch
guilders  ($34,000 at  exchange  rate on  September  30,  2000),  which is being
amortized on a straight-line basis over 20 years. The financial criteria for the
period ended September 30, 2000 and 1999 were not met, therefore, the additional
consideration was not accrued or paid.



                                       11
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

           NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

The Company acquired  American  Surgical Supply Corp. of Florida d/b/a/ American
Micro Computer Center ("AMCC"), in a merger on July 1, 1999. The transaction was
structured  as a merger  of AMCC with and into the newly  formed,  wholly  owned
subsidiary of the Company.  Upon  consummation of the merger,  the  subsidiary's
name was changed to American Micro Computer Center, Inc. ("AMERICAN MICRO"). The
purchase price for AMCC was equal to $1,131,000, plus an earn-out amount payable
in cash or shares of the Company's  common stock (at the  Company's  discretion)
equal to two times the  after-tax  earnings of American  Micro in calendar  year
1999 and two times the  after-tax  earnings of American  Micro in calendar  year
2000.  The portion of the purchase  price paid at closing was funded through the
Company's  working  capital.  In addition,  the Company  assumed all outstanding
indebtedness of AMCC,  including a shareholder loan in the approximate amount of
$289,000.  This loan was owed to the father of John B. Gallagher,  the Company's
Co-President,  Co-Chairman and significant shareholder.  This note was repaid in
full in November  1999. If the Company elects to pay any portion of the purchase
price in shares of the Company's common stock,  then AMCC's former  shareholders
have fifteen days to make  arrangements  to sell such shares over the next forty
trading  days.  If the sale of such shares  results in net proceeds of less than
the purchase  price,  then the Company will pay the difference in cash to AMCC's
shareholders.

The  acquisition  of AMCC was  accounted  for as a purchase.  The base  purchase
price, inclusive of transaction costs, of approximately  $1,315,000 exceeded the
estimated fair market value of net assets  acquired by  approximately  $817,000,
which constitutes goodwill and which is being amortized on a straight-line basis
over 20 years. The results of operations of American Micro,  since  acquisition,
have  been  included  in  the  accompanying   consolidated  condensed  financial
statements.  The contingent earn-out payment relating to two times the after tax
earnings for calendar year 1999 of approximately $600,000 was paid in March 2000
and is reflected in goodwill,  net. The contingent  earn-out payment relating to
two times the after tax earnings for calendar year 2000 has not been  recognized
in  the  accompanying   consolidated   condensed  financial  statements  as  the
calculation  of such  amounts are not  determinable  at this point in time.  The
second earn-out  payment will be due in monthly  principal  payments of $50,000,
plus  interest at 8% commencing  on March 1, 2001 and  continuing  until July 1,
2001 at which  time the  amount is due in full  subject  to  financial  covenant
restrictions.  Such  payment  will be offset by a $261,000  receivable  due from
AMCC's former shareholders.

The  results of  operations  of the above  entities  have been  included  in the
accompanying  consolidated  condensed  financial  statements from  the  dates of
acquisition.

A roll forward of goodwill is as follows (in thousands):

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED       TWELVE MONTHS ENDED
                                                            SEPTEMBER 30, 2000             JUNE 30, 2000
<S>                                                                    <C>                        <C>

Balance at beginning of period                                         $2,808                     $1,675
Foreign currency translation adjustment                                   (42)                       (84)
Purchase accounting adjustments                                             -                       (251)
Additions                                                                   -                      1,616
Amortization                                                              (34)                      (148)
                                                                       ------                     ------
Balance at end of period                                               $2,732                     $2,808
                                                                       ======                     ======
</TABLE>




                                       12
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

           NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


6     SHORT-TERM BORROWINGS

Short-term borrowings consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                            SEPTEMBER 30, 2000             JUNE 30, 2000
                                                            ------------------             -------------
<S>                                                                    <C>                       <C>

Bank line of credit
          European Micro UK Working Capital facility                   $2,366                     $1,959
          Nor'Easter Micro facility                                     1,325                        975
          American Micro facility                                       1,064                        992
                                                                       ------                    -------
Total bank lines of credit                                              4,755                      3,926

Receivable financing                                                    6,874                      7,303
Other short-term borrowings                                               671                        674
                                                                       ------                    -------
Total short-term borrowings                                           $12,300                    $11,903
                                                                      =======                    =======
</TABLE>


European  Micro UK has a bank line of credit  (the  "EUROPEAN  MICRO UK  WORKING
CAPITAL FACILITY") which is secured by a mortgage debenture on all the assets of
European Micro UK and is subordinate to the receivable financing and the capital
leases.  The  facility,  which is subject to review in July each year,  has been
extended to  September  2001 and is due on demand.  Maximum  borrowing  capacity
under this  facility is 2.0 million  pounds  sterling  ($3.0 million at exchange
rate  on  September   30,   2000).   Interest  is  charged  at  1.25%  over  the
bank-borrowing rate of 6% at September 30, 2000 and 6% at June 30, 2000.

European Micro UK also has a revolving  credit agreement (the "EUROPEAN MICRO UK
INVENTORY  FACILITY") secured against "general  corporate assets".  The facility
allowed  European  Micro UK to borrow up to 2.0 million  pounds  sterling  ($3.0
million at exchange  rate on  September  30,  2000) to assist in the purchase of
inventory.  The bank has agreed to extend this credit agreement to July 1, 2001.
From June 30, 2000 to September 30, 2000, no amounts were outstanding  under the
agreement.  The agreement includes various financial covenants. At September 30,
2000,  European Micro UK was not in compliance with certain financial  covenants
of the European Micro UK Inventory Facility. As a result, European Micro UK will
not be able to borrow against this  revolving  credit  agreement  until it is in
compliance with such financial covenants.

Total combined  borrowings  under the European Micro UK Working Capital Facility
and the European  Micro UK Inventory  Facility  cannot exceed 2.0 million pounds
sterling at any date.

The Company also  obtained  two lines of credit on October 28, 1999,  to finance
operations  based in the  United  States.  American  Micro and  Nor'Easter  each
obtained a line of credit, secured by accounts receivable and inventory. Amounts
available  under each of the line of credit  agreements  are based upon eligible
accounts  receivable and  inventory,  up to a maximum  borrowing  amount of $1.5
million  for each  agreement.  Each of these  lines of  credit  was to mature on
October 28, 2000.  Interest accrued at 0.5% over the bank-borrowing rate of 9.5%
at September 30, 2000. As partial  security for these loans,  Messrs.  Gallagher
and Shields  pledged to the lender a portion of their  shares of common stock of
the  Company.  In the event the Company  defaults on one or more of these loans,
the lender may foreclose on all or a portion of the pledged securities.  Such an
event may cause a change of control in the Company because Messrs. Gallagher and
Shields together own 71% of the Company's outstanding common stock. The lines of
credit  agreements  include certain  financial and  non-financial  covenants and
restrictions.  The  agreements  also contain a provision  whereby the lender can
declare a default based on subjective criteria.

On October 5, 2000,  the Company  received a waiver of the  covenant  violations
existing  at the  June  30,  2000  reporting  date for the  American  Micro  and
Nor'Easter  lines of credit.  The Company and the bank  terminated  the existing
lines of credit and entered  into a new  borrowing  arrangement  whereby each of
American Micro and Nor'Easter have a working capital line of credit equal to the
lesser  of (i)  $1.5  million  or  (ii)  the  sum of  85% of  eligible  accounts
receivable,  plus the lesser of 50% of eligible inventory or $750,000.  Interest
will be paid monthly at a floating  rate of 0.5% over the bank's base rate.  The
term of the new  arrangements  is for one year from the  closing  date.  The new
facilities  also require the  companies to maintain  depository  accounts at the
bank, whose daily receipts will be applied against outstanding  borrowings under
the lines of credit.  As a result,  the  borrowings  are  classified  as current
liabilities on the Company's  consolidated  condensed balance sheet at September
30, 2000. The new facilities  also place certain  restrictions on the companies'
ability to pay dividends and to make capital  expenditures,  among other things,
and also include


                                       13
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

           NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

a  provision  whereby  the  lender  can  declare a default  based on  subjective
criteria.  Collateral  under the new credit line facilities  consists of a first
priority lien on all assets of American Micro and Nor'Easter.  Messrs. Gallagher
and Shields guaranteed the obligations under these arrangements. Mr. Shields has
pledged  personal  assets as  additional  collateral  and has further  agreed to
maintain certain personal financial statement liquidity levels. These borrowings
are  cross-collateralized  and  cross-defaulted  with borrowings  under the $1.5
million term loan to European Micro  Holdings,  Inc.  discussed in Note 7 to the
Consolidated  Condensed  Financial  Statements.  As of September  30, 2000,  the
Company  was not in  compliance  with  certain  of the  revised  loan  agreement
financial  covenants.  The  Company has  obtained  waivers  from these  covenant
violations existing at September 30, 2000.

Receivable financing represents  borrowings secured by various trade receivables
of  European  Micro UK  totaling  $8.1  million at  September  30, 2000 and $8.6
million at June 30,  2000.  The  accounts  receivable  financing  provides for a
borrowing base of 85% of accounts receivable, with a limit of 6.2 million pounds
sterling  ($9.2 million at exchange  rate on September 30, 2000).  This facility
can be  terminated  by either  party giving three  months'  notice.  The finance
company which  provides the receivable  financing  facility has full recourse to
European Micro UK with respect to any doubtful or unrecovered amounts.  Interest
is charged on the receivable financing balance at 1.25% above the bank borrowing
rate of 6% at September 30, 2000, and 6% at June 30, 2000.

Other  short-term  borrowings  represent  various  unsecured  notes  payable  of
American Micro. The maturity dates of the notes range from on demand to June 30,
2001. The interest rates range from 11% to 12%.

7     LONG-TERM BORROWINGS

Long-term borrowings consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                            SEPTEMBER 30, 2000             JUNE 30, 2000
                                                            ------------------             -------------
<S>                                                                    <C>                       <C>

Mortgage loan note                                                     $1,796                    $1,877
Note payable                                                            1,000                     1,125
Other long-term borrowings                                                136                        49
                                                                       ------                    ------
                                                                       $2,932                    $3,051
Less current maturities of long-term borrowings                         (697)                      (678)
                                                                       ------                    ------
Total long-term borrowings                                             $2,235                    $2,373
                                                                       ======                    ======
</TABLE>


European  Micro UK  purchased  the office  building  in which it had  previously
leased space for a purchase price of 1,705,000  pounds  sterling  ($2,518,000 at
exchange rate on September 30, 2000). The purchase price was financed in part by
a mortgage loan note in the amount of 1,312,000  pounds sterling  ($1,937,000 at
exchange rate on September 30, 2000).  This mortgage loan note bears interest at
a fixed rate of 7.6%, with monthly  payments of principal and interest of 15,588
pounds sterling ($23,000 at exchange rate on September 30, 2000), and matures in
July 2009. The mortgage loan note includes certain  financial and  non-financial
covenants and restrictions.  The agreement also contains a provision whereby the
lender  can  declare a  default  based on  subjective  criteria.  The  financial
covenants are measured  using the financial  results of European  Micro UK as of
each fiscal year end.  Based upon European  Micro UK's fiscal year end operating
results,  European  Micro UK was out of compliance  with certain of the covenant
requirements at June 30, 2000. The Company has obtained a waiver through July 1,
2001 of this non-compliance.

European Micro Holdings, Inc. obtained the term loan on October 28, 1999, in the
amount of $1,500,000.  The term loan is to be repaid with quarterly  payments of
$125,000 over three years.  The term loan bears interest at the one-month  LIBOR
plus two and one-quarter percentage points (2.25%). One-month LIBOR at September
30, 2000 was 6.6%. The term loan is secured by  substantially  all of the assets
of the Company. As partial security for this loan, Messrs. Gallagher and Shields
pledged to the lender a portion of their  shares of common stock of the Company.
Messrs. Gallagher and Shields guaranteed the obligations under the term loan. In
addition,  Mr. Shield has pledged  personal assets as additional  collateral and
has further agreed to maintain certain personal  financial  statement  liquidity
levels. In the event the Company defaults on this loan, the lender may foreclose


                                       14
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

           NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

on all or a portion of the pledged securities.  Such an event may cause a change
of control in the Company because Messrs. Gallagher and Shields together own 71%
of the Company's outstanding common stock.

The term loan  agreement  is with the same  lender as the  Nor'Easter  Micro and
American Micro line of credit facilities discussed in Note 6 to the Consolidated
Condensed Financial Statements.  The agreement also contains a provision whereby
the lender can declare a default based on subjective criteria. Further, the term
loan  credit  agreement  contains  similar  loan  covenant  requirements  and is
cross-collateralized and cross-defaulted with the line of credit facilities.  As
such, the Company was not in compliance for the June 30, 2000 reporting  period.
On October 5, 2000, the Company received a waiver of the non-compliance with the
financial  covenants as of June 30, 2000,  and also entered into an amendment to
the term loan agreement that, among other things,  established revised financial
covenants.  As of September  30, 2000,  the Company was not in  compliance  with
certain of the  revised  loan  agreement  financial  covenants.  The Company has
obtained waivers from these covenant violations existing at September 30, 2000.

8     EARNINGS PER SHARE

The calculation of earnings per share is detailed in the table below:

<TABLE>
<CAPTION>
                                                                                THREE MONTHS ENDED
                                                                                  SEPTEMBER 30,
                                                                        -----------------------------------
                                                                                  2000             1999
                                                                                  ----             ----
<S>                                                                         <C>               <C>
EARNINGS
Net income (loss) (in thousands)                                                  (68)              $207
                                                                            ---------         ---------
WEIGHTED AVERAGE NUMBER OF SHARES

Outstanding common stock during the period                                  4,933,900         4,933,900
Contingently issuable shares                                                   68,054            85,107
                                                                            ---------         ---------
BASIC WEIGHTED AVERAGE NUMBER OF SHARES                                     5,001,954         5,019,007
Effect of dilutive stock options and other contingent shares                        -               995
                                                                            ---------         ---------
DILUTED WEIGHTED AVERAGE NUMBER OF SHARES                                   5,001,954         5,020,002
                                                                            =========         =========
Basic earnings per share                                                       ($0.01)           $0.04
                                                                            =========         =========
Diluted earning per share                                                      ($0.01)            $0.04
                                                                            =========         =========
</TABLE>

During the  three-month  period-ended  September  30, 2000,  the Company  issued
warrants  and  options  to  purchase  1,185,000  shares of its  common  stock at
exercise  prices ranging from $4.55 to $10.00.  The above dilutive  earnings per
share  calculations  exclude  the effect of  warrants  and  options to  purchase
1,185,000 and 339,000  shares of common stock for the  three-month  period ended
September 30, 2000 and 1999, respectively, at exercise prices ranging from $4.55
to $12.00 and $9.1875 to $12.00, respectively,  because they were anti-dilutive.
Also, see Note 5 to the Consolidated  Condensed Financial  Statements related to
contingently issuable shares related to an acquisition. The effect of contingent
shares related to the guaranteed  earn-out amount not paid at the closing of the
Sunbelt  acquisition  and the effect of  satisfactory  completion of part of the
second  contingent  earn-out has been  included in the above basic  earnings per
share  calculations.  The  effect  of  contingent  shares  related  to the first
earn-out of American Micro is not included,  as such payment was paid in cash in
March  2000.  The effect of  contingent  shares  related to second  earn-out  of
American Micro is not included,  as the amount of such  contingent  shares to be
issued is unable to be determined. Also see Notes 10 and 13.

9     RELATED PARTY TRANSACTIONS

Until July 1, 1999, European Micro Holdings, Inc. belonged to a group of related
companies (the  "GROUP").  The Group was comprised of Technology  Express,  Inc.
located in Nashville, Tennessee ("TECHNOLOGY EXPRESS"), and, until July 1, 1999,
AMCC which was  purchased  by European  Micro  Holdings,  Inc. See Note 5 to the
Consolidated  Condensed  Financial  Statements.  Technology Express is owned and
controlled by Harry D.  Shields,  who is  Co-President  and  Co-Chairman  of the
Company. Prior to its acquisition on July 1, 1999, AMCC was owned 50% by John B.
Gallagher, who is a Co-President and Co-Chairman of the Company.



                                       15
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

           NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

The rates  charged  on  related  party  sales are  lower  than they  would be in
arms-length  transactions.  The Company has an oral bulk buying arrangement with
the remaining  related party,  Technology  Express,  which gives the Company the
benefit  of buying  large  job-lots  at more  competitive  prices  than it would
otherwise  be possible to do and then  immediately  sell part of the purchase to
the related party.

Related party transactions are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                THREE MONTHS ENDED
                                                                                  SEPTEMBER 30,

                                                                        -----------------------------------
                                                                               2000                1999
                                                                               ----                ----
<S>                                                                          <C>                 <C>
 SALES TO:
 Technology Express                                                             $54              $1,019
                                                                             ======              ======

 PURCHASES FROM:
 Technology Express                                                          $1,564              $1,768
                                                                             ======              ======
</TABLE>



Due to related parties comprised of following balances (in thousands):

<TABLE>
<CAPTION>
                                                                             SEPTEMBER 30, 2000             JUNE 30, 2000
                                                                             ------------------             -------------
<S>                                                                                        <C>                        <C>

 Technology Express                                                                        $293                       $11
                                                                                           ====                       ===
</TABLE>


The entity listed above is related to the Company in the following manner:

TECHNOLOGY EXPRESS

Until  1996,  Technology  Express  was a full  service  authorized  reseller  of
computers and related products based in Nashville,  Tennessee, selling primarily
to  end-users.  Technology  Express  was  sold  to  Inacom  Computers  in  1996.
Concurrently  with the sale, Mr. Shields founded a new computer company with the
name Technology Express.  This company is a distributor of computer products and
does not sell to end-users. Harry D. Shields, who is Co-Chairman,  Co-President,
a Director and shareholder  (owning 32% of the  outstanding  shares) of European
Micro  Holdings,  Inc., is president of Technology  Express and owns 100% of the
outstanding  shares of capital  stock of that  company.  Jay Nash,  who is Chief
Financial Officer, Treasurer and Secretary of European Micro Holdings, Inc., has
been an employee of Technology Express since 1992.

FACILITIES AND EQUIPMENT

The Company utilizes  approximately  350 square feet of office space and certain
equipment owned by Technology Express for which it is not charged a fee.

EMPLOYMENT AGREEMENTS

The Company has entered into various employment agreements with certain officers
of the Company.



                                       16
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

           NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

10    EQUITY LINE OF CREDIT

On August 24, 2000, European Micro Holdings, Inc. entered into an Equity Line of
Credit (the  "EQUITY  CREDIT  LINE").  Pursuant to the Equity  Credit  Line,  an
institutional  investor  agreed to  acquire up to $20  million of the  Company's
common stock at a purchase price equal to 88% of the market price of such stock,
as defined in the agreement. The timing of each sale and the number of shares to
be sold is at the  discretion  of the  Company,  subject to various  conditions,
including  an  effective  registration  of the shares.  Dollar  amounts that the
Company can request under any individual  sale is subject to the average trading
volume of the Company's  common stock for the preceding  25-day trading  period.
The  maximum  term of the Equity  Credit  Line is 30 months from the date of the
agreement.  The  agreement  contains  various  representations,  warranties  and
covenants by the Company, including limitations on the Company's ability to sell
common stock or common stock equivalents, sell assets, merge, etc. In connection
with  entering  into the Equity  Credit  Line,  the Company  also entered into a
Placement Agent Agreement.  Under the Placement Agent Agreement,  the agent will
receive a commission  equal to 7% of the gross  proceeds from each advance under
the Equity Credit Line.

The Company has issued to the  placement  agent two warrants to purchase a total
of 1,000,000  shares of the Company's  common stock.  The Class A Warrant allows
the holder to purchase  500,000  shares of common stock at an exercise  price of
$7.00 (subject to certain anti-dilution  adjustments)  commencing with the first
advance under the Equity  Credit Line. If the warrant  shares are not covered by
an effective  registration  statement for the resale of the warrant shares,  the
holder can elect a cash-less  exercise.  The warrants expire five years from the
issuance date.  The Company can force  conversion of the warrants if the closing
price of its common stock is $10.00 or higher for ten consecutive  trading days.
The Class B Warrant allows the holder to purchase 500,000 shares of common stock
at an exercise price of $10.00 (subject to similar  anti-dilution  adjustments).
The other  terms of the  Class B Warrant  are  similar  to the Class A  Warrant,
except that the Class B Warrants  are  exercisable  pro-rata to the ratio of the
advances  drawn under the Equity  Credit  Line,  and except that the Company can
force  conversion  of the  warrants if the closing  price of its common stock is
$15.00 or higher for ten consecutive trading days.

The Company has granted the Equity Credit Line investor and the placement  agent
certain registration rights. Pursuant to the registration rights agreements, the
Company is obligated to, among other things,  register the sale of the investors
shares sold to such investor under the Equity Credit Line and the sale of shares
of common stock underlying the warrants.  On October 27, 2000, the Company filed
a registration statement with the Securities and Exchange Commission to register
all such shares.

On August 8, 2000,  in  connection  with the Equity  Credit  Line,  the  Company
entered  into a  consulting  arrangement  with a third party  whereby such party
would provide certain financing and capital market  consultation.  In connection
with  the  arrangement,  the  Company  paid to the  consultant  $10,000  in cash
compensation.  The  Company  also issued to the  consultant  options to purchase
100,000 shares of its common stock at an exercise price of $4.55. Management has
attributed  $208,000 of the value of these options as incremental costs directly
attributable  to the  signing  of the  Equity  Credit  Line,  and as  such,  has
reflected  such  amounts  as  prepaid   offering   costs  in  the   accompanying
Consolidated  Condensed  Balance  Sheet at  September  30, 2000.  The  remaining
$105,000  option  value  attributed  to  general  consulting  services  has been
expensed in the quarter ended September 30, 2000. In addition,  the Company will
pay to the  consultant  cash payments and warrants to purchase  common shares of
the Company.  Each cash and warrant payment will equal 1% of the dollars amounts
drawn by the Company under the Equity Credit Line.

11    BUSINESS-TO-BUSINESS ELECTRONIC COMMERCE STRATEGY

The Company has initiated a  business-to-business  electronic commerce strategy,
which is  focused  on  creating a global,  value-added,  information  technology
equipment and service  trading  community.  The company has hired Cap Gemini,  a
leading  European  management  consultancy and information  technology  services
firm, to assist it in the  implementation of this plan. The Company has incurred
the sum of 755,000 pounds sterling ($1,115,000 at exchange rate on September 30,
2000)  related to the  feasibility  studies and business  process  design.  This
amount was  reflected  in selling,  general and  administrative  expenses on the
accompanying  consolidated  statements of operations for the year ended June 30,
2000. The Company has capitalized  the sum of 229,000 pounds sterling  ($338,000
at  exchange  rate  on  September  30,  2000)  related  to the  actual  software
development.  This amount is  reflected in property  and  equipment,  net on the
accompanying  consolidated  condensed  balance  sheets at September 30, 2000 and
June 30,  2000.  During May 2000,  the  Company  temporarily  halted the ongoing
development  being performed by Cap Gemini until specific funding is obtained to
complete the project. No further expenses have been incurred in the three months
ended  September 30, 2000.  There can be no assurances  that the Company will be
successful in obtaining  funding for this  project.  In the event the project is
not continued by November 30, 2000, the Company will incur a termination  fee to
Cap Gemini of 150,000  pounds  sterling  ($221,500 at exchange rate on September
30, 2000).  If paid,  this fee would be credited  against future invoices of Cap
Gemini upon the  continuation of the project.  By December 31, 2000, the Company
intends to re-evaluate  and re-define  where  necessary the current  assumptions
based on changes in the market  over the last few  months.  This  planning  will
include detailing the project based on the Company's ability to fund the project
from current working capital, if other funding is still not available.

                                       17
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

           NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

12    COMMITMENTS AND CONTINGENCIES

On November 12, 1999,  Jeffrey and Marie Alnwick (the "ALNWICKS") and a New York
corporation,   Big  Blue  Products,   commenced  an  action   individually   and
derivatively for the Dutch company, Big Blue Europe, against our company and our
founders and officers,  John B.  Gallagher  and Harry D. Shields,  in the United
States District Court,  Eastern District of New York,  Jeffrey Alnwick and Marie
Alnwick v. European Micro Holdings,  Inc.,  Eastern District of New York, Docket
No. 99 CV 7380 (the "ALNWICK LITIGATION").

The  complaint  alleges  thirty-three  causes of action.  Plaintiffs  claim,  in
substance,  that defendants breached oral and written agreements relating to the
management,  operation and funding of Big Blue Europe. Specifically,  plaintiffs
alleged that defendants  breached the joint venture  agreement by which Big Blue
Europe was formed, a licensing  agreement for use of the "Big Blue" service mark
in Europe, a non-competition agreement allegedly preventing Big Blue Europe from
operating  in the United  States and several  capital  contribution  agreements.
Plaintiffs also claimed that defendants  breached their fiduciary  duties to the
Alnwicks,  engaged in fraudulent  acts,  aided and abetted breaches of fiduciary
duties  by  others,  misappropriated  trade  secrets  and  interfered  with  the
employment contract of Big Blue Europe's managing director.  The complaint seeks
unspecified  compensatory  and punitive  damages,  as well as injunctive  relief
restraining defendants from acting in violation of the alleged agreements.

Defendants have moved to dismiss the complaint principally on the basis of forum
non-conveniens in favor of existing proceedings in the Netherlands (commenced by
European Micro UK), where a Dutch court has appointed an independent director to
oversee the operations of the company. Defendants argue that any dispute between
the  stockholders and directors of Big Blue Europe,  which operates  pursuant to
Dutch law, should be resolved by a Dutch court.

Defendants intend to contest the claims in the Alnwicks  Litigation  vigorously,
whether  asserted in the United  States or in the  Netherlands  courts.  For the
three-month   period  ended   September  30,  2000,  the  Company  has  incurred
approximately  $119,000 in costs  related to such lawsuit.  Management  does not
believe that the ultimate  outcome of this  litigation will result in a material
liability to the Company.

Due to the continued  uncertainty of the outcome of the pending  lawsuit and the
difficulties of managing  operations of Big Blue Europe during the dispute,  the
Company has recorded during the  three-month  period ended September 30, 2000 an
additional  $252,000  provision  for  doubtful  accounts  related  to the  notes
receivable owed to the Company. At September 30, 2000, valuation allowances have
been established for all amounts due from Big Blue Europe.














                                       18
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

(13)  SUBSEQUENT EVENTS

On October 11, 2000, the Company entered into a consulting agreement for general
consulting  services  and advice  with  respect to  capital  markets,  corporate
finance,  acquisitions and financing. The Company will pay the consultant $5,000
per month for four  months,  subject to extension at the  Company's  option.  In
addition,  the Company  granted to the  consultant  warrants  to acquire  50,000
shares of the  Company's  common  stock at $4.00 per share.  Warrants to acquire
25,000  common  shares  become  exercisable  when the  closing  bid price of the
Company's  common  stock is $10.00 or higher  per share for  twelve  consecutive
trading days in the eight month period after the effective date of the Company's
Registration  Statement on Form S-1 in  connection  with the Equity  Credit Line
discussed  in  Note  10 to  the  Consolidated  Condensed  Financial  Statements.
Warrants to acquire the other 25,000 common shares become  exercisable  upon the
later occurrence of the successful  consummation of (a) a financing  transaction
or (b) an  acquisition,  each as defined in the  agreement.  The agreement  also
calls for additional cash  consideration  to be paid by the Company in the event
of a successful financing transaction related to the acquisition.

(14) OTHER ACCOUNTING MATTERS

Effective July 1, 2000, the Company  adopted  Statement of Financial  Accounting
Standards ("SFAS") No. 133, Accounting for Derivative and Hedging Activities, as
amended  by  SFAS  No.  138.  The  Statement  requires  the  recognition  of all
derivatives on the balance sheet at fair value.  The Company's  derivatives  are
primarily  forward foreign  exchange  contracts.  The Company's  forward foreign
exchange  contracts have been designated as economic hedges of anticipated sales
and purchase  transactions.  In addition,  the Company enters  utilizes  forward
foreign exchange  contracts as an economic hedge against foreign currency market
exposures of underlying assets liabilities and other  obligations.  Effective in
the  first  quarter  of  fiscal  2001,  changes  in  the  fair  value  of  these
derivatives,  have been recorded  through  earnings.  At September 30, 2000, the
Company  did not have any open  forward  foreign  exchange  contracts  . Foreign
currency  losses,  net were  $151,000  and  $242,000  for the three months ended
September 30, 2000 and 1999, respectively. The effect of the adoption of the new
Statements was immaterial.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin 101, "Revenue Recognition in Financial  Statements." The effective date
has been deferred  with respect to the Company to the fourth  fiscal  quarter of
2001  pending  additional  interpretive  guidance.  The  Company  is not able to
quantify  the  impact of SAB 101 at this  time.  However,  there is at least one
issue that could have a material impact on the Company's  consolidated condensed
financial  statements.  For  European  Micro  UK  the  standard  practice  is to
recognize  revenue on shipment.  However,  title to the goods is retained  until
full payment is received from the customer to perfect the Company's  interest in
the goods. Under possible  interpretations,  European Micro UK would not be able
to recognize  revenue until full payment is received.  In the  transition  year,
revenues  would be lower as all sales on the net terms not collected by year-end
would not be recognized.

ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND
         RESULTS OF OPERATIONS.

INTRODUCTORY STATEMENTS

FORWARD-LOOKING  STATEMENTS AND ASSOCIATED RISKS. THIS QUARTERLY REPORT CONTAINS
FORWARD-LOOKING STATEMENTS,  INCLUDING STATEMENTS REGARDING, AMONG OTHER THINGS,
(A)  EUROPEAN  MICRO  HOLDINGS,  INC.'S  ("EUROPEAN  MICRO"  OR  THE  "COMPANY")
PROJECTED SALES AND  PROFITABILITY,  (B) THE COMPANY'S  GROWTH  STRATEGIES,  (C)
ANTICIPATED TRENDS IN THE COMPANY'S INDUSTRY, (D) THE COMPANY'S FUTURE FINANCING
PLANS,  AND (E) THE  COMPANY'S  ANTICIPATED  NEEDS FOR  WORKING  CAPITAL AND ITS
ABILITY TO COMPLY WITH THE FINANCIAL  COVENANTS IN THE COMPANY'S LOAN AGREEMENT.
IN  ADDITION,  WHEN  USED  IN  THIS  QUARTERLY  REPORT,  THE  WORDS  "BELIEVES,"
"ANTICIPATES," "INTENDS," "IN ANTICIPATION OF," "EXPECTS," AND SIMILAR WORDS ARE
INTENDED TO IDENTIFY CERTAIN FORWARD-LOOKING  STATEMENTS.  THESE FORWARD-LOOKING
STATEMENTS ARE BASED LARGELY ON THE COMPANY'S  EXPECTATIONS AND ARE SUBJECT TO A
NUMBER  OF RISKS  AND  UNCERTAINTIES,  MANY OF WHICH ARE  BEYOND  THE  COMPANY'S
CONTROL.  ACTUAL  RESULTS  COULD DIFFER  MATERIALLY  FROM THESE  FORWARD-LOOKING
STATEMENTS  AS A RESULT OF CHANGES IN TRENDS IN THE  ECONOMY  AND THE  COMPANY'S
INDUSTRY,  REDUCTIONS  IN THE  AVAILABILITY  OF FINANCING  AND  AVAILABILITY  OF


                                       19
<PAGE>

COMPUTER  PRODUCTS ON TERMS AS FAVORABLE AS  EXPERIENCED BY THE COMPANY IN PRIOR
PERIODS AND OTHER FACTORS. IN LIGHT OF THESE RISKS AND UNCERTAINTIES,  THERE CAN
BE NO ASSURANCE THAT THE FORWARD-LOOKING  STATEMENTS CONTAINED IN THIS QUARTERLY
REPORT WILL IN FACT OCCUR.  THE COMPANY DOES NOT  UNDERTAKE  ANY  OBLIGATION  TO
PUBLICLY  RELEASE  THE  RESULTS  OF  ANY  REVISIONS  TO  THESE   FORWARD-LOOKING
STATEMENTS TO REFLECT ANY FUTURE EVENTS OR CIRCUMSTANCES.

UNLESS  THE  CONTEXT  OTHERWISE  REQUIRES  AND  EXCEPT AS  OTHERWISE  SPECIFIED,
REFERENCES  HEREIN TO "EUROPEAN  MICRO" OR THE "COMPANY"  INCLUDE EUROPEAN MICRO
HOLDINGS,  INC. AND ITS FIVE  WHOLLY-OWNED  SUBSIDIARIES,  EUROPEAN MICRO PLC, A
COMPANY  ORGANIZED UNDER THE LAWS OF THE UNITED KINGDOM  ("EUROPEAN  MICRO UK"),
NOR'EASTER  MICRO,  INC.,  A  NEVADA  CORPORATION   ("NOR'EASTER"),   COLCHESTER
ENTERPRISE   PTE.  LTD.  A  COMPANY   ORGANIZED  UNDER  THE  LAWS  OF  SINGAPORE
("COLCHESTER"),  AMERICAN  MICRO  COMPUTER  CENTER,  INC. A FLORIDA  CORPORATION
("AMERICAN MICRO"),  AND ENGENIS.COM LTD., A COMPANY ORGANIZED UNDER THE LAWS OF
THE  UNITED   KINGDOM   ("ENGENIS"),   (COLLECTIVELY,   THE  FIVE   WHOLLY-OWNED
SUBSIDIARIES ARE REFERRED TO AS THE "SUBSIDIARIES").

OVERVIEW

We are an independent distributor of microcomputer products,  including personal
computers,  memory modules,  disc drives and networking  products,  to customers
mainly in Western  Europe and the United States.  Our customers  consist of more
than 770 value-added resellers, corporate resellers, retailers, direct marketers
and  distributors.  We generally do not sell to end-users.  Substantially all of
the products sold by us are manufactured by well-recognized manufacturers,  such
as IBM,  Compaq and  Hewlett-Packard,  although we  generally  do not obtain our
inventory  directly from such  manufacturers.  We monitor the geographic pricing
strategies  related  to  such  products,   currency   fluctuations  and  product
availability  in an attempt to obtain  inventory at favorable  prices from other
distributors, resellers and wholesalers.

We consider  ourselves  to be a focused  distributor,  as opposed to a broadline
distributor,  dealing with a limited and select group of products from a limited
and select  group of  leading  manufacturers.  We  believe  that being a focused
distributor enables us to respond more quickly to customer requests and gives us
greater  availability of products,  access to products and improved pricing.  We
believe  that as a focused  distributor  we have been  able to  develop  greater
expertise in the products that we sell. Our company places significant  emphasis
on market awareness and planning and shares this knowledge with our customers to
enhance  business  relations.  We strive to monitor and react  quickly to market
trends in order to enable our  multilingual  sales team to maintain  the highest
levels of customer service.

European  Micro  Holdings,  Inc.  was  organized  under the laws of the State of
Nevada in  December  1997 and is the parent of  European  Micro UK,  Nor'Easter,
Colchester,  American Micro and Engenis.  European Micro UK was organized  under
the laws of the United Kingdom in 1991 to serve as an independent distributor of
microcomputer  products  to  customers  mainly in Western  Europe and to related
parties in the United  States.  Nor'Easter  was organized  under the laws of the
State of Nevada on December 26, 1997 to serve as an  independent  distributor of
microcomputer products in the United States.  Colchester was organized under the
laws of Singapore in November  1998 to serve as an  independent  distributor  of
microcomputer  products in Asia.  American Micro was organized under the laws of
the State of  Florida  on June 24,  1999 to  acquire  AMCC and now  serves as an
independent  distributor of microcomputer products in the United States. Premier
Pages,  Ltd.  was  formed on  January  28,  2000 and later  changed  its name to
Engenis.com,  Ltd. on June 23,  2000.  Engenis was formed  under the laws of the
United Kingdom to serve as a  business-to-business  electronic  commerce trading
company.



                                       20
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

European  Micro  UK is the  parent  of  European  Micro  GmbH  ("EUROPEAN  MICRO
GERMANY"),  Sunbelt and European Micro B.V. ("EUROPEAN MICRO HOLLAND") and has a
50% joint  venture  interest  in Big Blue  Europe,  B.V.  ("BIG  BLUE  EUROPE").
European Micro Germany was organized under the laws of Germany in 1993 and until
August 2000 operated as a sales office in Dusseldorf,  Germany.  In August 2000,
we closed the office and  consolidated  the sales  operations of European  Micro
Germany.  Customers of European Micro Germany will be handled  through  European
Micro UK. All products sold by European  Micro Germany were procured and shipped
from the  facilities of European  Micro UK.  Sunbelt is a company  registered in
England  and Wales,  which was  established  in 1992 and is based in  Wimbledon,
England. Sunbelt operated as a distributor of microcomputer products to dealers,
value-added  resellers and mass merchants throughout Western Europe.  Except for
the  distribution of our Nova brand products (which was  discontinued in January
2000),  Sunbelt's  distribution  operations  were  integrated  with and into the
operations of European Micro UK.  European Micro Holland was organized under the
laws of Holland in 1995, and operates as a sales office near Amsterdam, Holland.
Big Blue Europe was organized under the laws of Holland in January 1997 and is a
computer parts distributor with offices located near Amsterdam, Holland, selling
primarily to computer maintenance companies.

European  Micro  Holding's  headquarters  are located at 6073 N.W. 167th Street,
Unit C-25, Miami, Florida 33015, and our telephone number is (305) 825-2458.

RESULTS OF OPERATIONS

The following table sets forth, for the periods presented, the percentage of net
sales  represented  by certain  items in the  Company's  Consolidated  Condensed
Statements of Operations:

                             PERCENTAGE OF NET SALES

                                             THREE MONTHS ENDED
                                                SEPTEMBER 30,
                                           ------------------------
                                                2000       1999

             Net sales to third parties        99.8%       96.9%
             Net sales to related parties       0.2%        3.1%
                                              ------      ------

             Total net sales                  100.0%      100.0%
                                              ------      ------

             Cost of goods sold to third      (89.0%)     (85.7%)
             parties

             Cost of goods sold to             (0.2%)      (3.0%)
             related parties                  ------      ------

             Total cost of goods sold         (89.2%)     (88.7%)
                                              ------      ------

             Total gross profit                10.9%       11.3%

             Total operating expenses          (9.9%)      (9.4%)
                                              ------      ------

             Operating profit                   1.0%        1.9%

             Interest income                    0.1%        0.1%
             Interest expense                  (1.1%)      (0.7%)
             Equity in loss of                     -           -
             unconsolidated affiliate         ------      ------

             Income before income taxes         0.0%        1.3%
             Income taxes                      (0.2%)      (0.7%)
                                              ------      ------

             Net income (loss)                 (0.2%)       0.6%
                                              ======      ======





                                       21
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2000 AND 1999

TOTAL NET SALES.  Total net sales decreased $3.7 million,  or 11.3%,  from $32.8
million in the  three-month  period ended September 30, 1999 to $29.1 million in
the comparable period in 2000. Excluding net sales to related parties, net sales
decreased $2.7 million,  or 8.6%, from $31.7 million in the  three-month  period
ended September 30, 1999 to $29.0 million in the comparable period in 2000. This
decrease  was  attributable  to a decrease in sales of $5.4  million at European
Micro UK due to the  comparison  to the sales  run up  caused  by the  impending
millennium,  and a decrease of  $800,000  at American  Micro due to a shift from
selling server options and other computer parts and concentrating on configuring
and selling complete systems. This decrease of net sales was partially offset by
an increase in sales of $700,000 at Nor'Easter  and $2.8 million at  Colchester.
This increase at Colchester is due to Colchester selling within the Asian region
as compared to being mainly a supplier for other Subsidiaries in 1999.

Net sales to related parties decreased $965,000,  or 94.7%, from $1.0 million in
the  three-month  period ended  September 30, 1999, to $54,000 in the comparable
period  in  2000.  Sales  to  Technology   Express  have  decreased  as  product
availability decreased.

GROSS PROFIT.  Gross profit decreased  $541,000,  or 14.6%, from $3.7 million in
the  three-month  period  ended  September  30,  1999,  to $3.2  million  in the
comparable  period in 2000.  Gross profit excluding  related party  transactions
decreased $513,000,  or 14.0%, from $3.7 million in the three-month period ended
September 30, 1999 to $3.2 million the comparable  period in 2000. This decrease
was  attributable  to a decrease of $1.3 million at European Micro UK due to the
decrease in sales in addition to a decrease in gross margin from 12.3% to 10.1%.
This  decrease in gross  margin  mainly  resulted  from the  devaluation  of the
British  pound  sterling and the Euro against the U.S.  dollar.  The majority of
purchases  during the quarter ended September 30, 2000 were  denominated in U.S.
dollar.  This  decrease  was  partially  offset by an  increase  of  $160,000 at
Nor'Easter,  $200,000 at Colchester and $400,000 at American Micro. Nor'Easter's
gross  profit  increased  due to higher  sales  volume and an  increase in gross
margin from 5.0% to 7.8%.  Colchester's  gross  profit  increased  due to higher
sales  volume and in addition to an increase in gross  margin from 3.9% to 5.8%.
American  Micro's  gross  profit  increased  even  with  lower  sales  volume by
increasing the gross margin from 10.1% to 21.5% by changing the product mix from
low margin components to higher margin complete systems.

Gross profit  attributable  to related party sales decreased  $28,000,  or 100%,
from $28,000 in the three-month  period ended September 30, 1999, to zero in the
comparable  period in 2000. As discussed above, this decrease is attributable to
decreased sales due to a lack of product availability.

Gross  margins  decreased  by 0.4% from 11.3% in the  three-month  period  ended
September 30, 1999 to 10.9% in the comparable period in 2000.  Excluding related
party transactions,  gross margin decreased from 11.6% in the three-month period
ended September 30, 1999 to 10.9% in the comparable  period in 2000. This change
is related to the normal  fluctuations  in  purchasing  opportunities  and sales
demand from quarter to quarter.

Foreign  exchange gains and losses,  net, changed from a loss of $242,000 in the
three-month  period  ended  September  30,  1999,  to a loss of  $151,000 in the
comparable  period  in 2000.  This  adverse  movement  was  attributable  to the
weakening  of the  Euro  relative  to the  British  pound  sterling,  causing  a
devaluation of sales made in European  currencies,  and the strengthening of the
U.S.  dollar  relative  to the  Euro  and the  British  pound  sterling,  making
purchases denominated in U.S. dollars more expensive.

OPERATING  EXPENSES.  Operating  expenses  as a  percentage  of total  net sales
increased from 9.4% in the  three-month  period ended September 30, 1999 to 9.9%
in the comparable  period in 2000.  This increase was partially  attributable to
expensing  $105,000 related to the value of the Persia stock options  attributed
to general  consulting  services.  This  increase  was also  attributable  to an
increase in operating  expenses as a percentage  of total net sales from 8.7% to
10.6% at  American  Micro,  which  is due to a  decrease  in sales as  operating
expenses remain constant.  Operating expenses as a percentage of total net sales
increase  from  3.1% to 5.1%  at  Nor'Easter,  which  is due to an  increase  in
operating  expenses of  approximately  $111,000 from $125,000 in the three-month
period ended  September 30, 1999 to $236,000 in the  comparable  period in 2000.
This  increase in expenses is due to moving their  operations to a new building,
which has higher monthly rent, an increase in  depreciation  expense  related to
new  equipment  and  leasehold  improvements  and an  increase  in gross  profit
therefore increasing commission and bonus expense, which are a function of gross
profit.  This increase was partially offset by a decrease in operating  expenses
as a percentage of total net sales from 8.7% to 7.8% at European Micro UK, which
is due to a decrease in operating  expenses of approximately  $650,000 from $2.0
million in the  three-month  period ended  September 30, 1999 to $1.3 million in
the comparable  period in 2000.  This decrease in expenses is due to the closure
of Sunbelt's operations in January 2000 and the decrease in gross profit reduced
commission and bonus expense,  which are a function of gross profit.  Also, this
decrease was attributable to a decrease in operating expenses as a percentage of


                                       22
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

total  net  sales  from  23.8%  to 4.2% at  Colchester,  which is due to a large
increase in sales, as operating expenses remain constant.

INTEREST  EXPENSE.  Interest  expense  increased  by $92,000  from  $219,000  in
three-month period ended September 30, 1999 to $311,000 in the comparable period
in 2000. This was attributable to an increased reliance on short-term borrowings
to finance accounts receivable and inventory balances.

INTEREST IN JOINT VENTURE.  During the year ended June 30, 2000,  European Micro
UK made an  unsecured  loan to Big Blue Europe in the amount of  $150,000.  This
loan is due on  demand  and  has an  annual  interest  rate  of  9.25%,  payable
quarterly.  During the year ended June 30,  1999,  the Company made an unsecured
loan to Big Blue  Europe in the amount of  $350,000.  This loan is due on demand
and  has an  annual  interest  rate  of  9.25%,  payable  quarterly.  Due to the
continued  uncertainties  with the Big Blue  Europe  lawsuit,  and the  possible
liquidation  of Big Blue  Europe,  the  Company  recorded an  allowance  for the
remaining  balance of the loans to Big Blue Europe of $252,000.  The  associated
charge to  operations  is  included  in  Company's  operating  expenses  for the
three-months  ended  September 30, 2000. At September 30, 2000,  the Company has
provided an allowance for all advances to Big Blue Europe.

INCOME TAXES.  Income taxes as a percentage of income (loss) before income taxes
increased  from 53.9% in the  three-month  period  ended  September  30, 1999 to
195.6% in the  comparable  period in 2000.  For both periods the Company has not
accrued a tax expense or benefit for the U.S.  operations.  The lower percentage
for the  three-month  period ended  September 30, 2000 reflects the effects of a
net operating loss for the U.S. operations being greater than the taxable income
at European Micro UK.

SEASONALITY

We typically  experience  variations  in our total net sales and net income on a
quarterly basis as a result of many factors.  These include seasonal  variations
in demand for our products and services,  the  introduction  of new hardware and
software technologies and products offering improved features and functionality,
the  introduction  of new products and services by us and our  competitors,  the
loss or  consolidation  of a  significant  supplier or customer,  changes in the
level of operating expenses, inventory adjustments,  product supply constraints,
pricing,  interest  rate  fluctuations,  the  impact of  acquisitions,  currency
fluctuations and general economic conditions.  Historical operating results have
included a reduction in demand in Europe during the summer months.

LIQUIDITY AND CAPITAL RESOURCES

GENERAL.  Our company  suffered an  operating  loss in fiscal 2000 and the first
quarter of fiscal 2001. Our operating  results have been  adversely  impacted by
ongoing legal costs related to Big Blue Europe,  the costs  associated  with our
electronic  commerce strategy,  increases in general overhead costs and interest
expense  and a decrease  in sales.  These  factors  may  continue  to impact our
operations in fiscal 2001.

We were not in compliance with certain financial covenants contained in our loan
documents  during fiscal 2000. The lenders waived any  noncompliance  with these
financial covenants that existed on June 30, 2000. In most cases, however, these
waivers do not relate to any future reporting period.  Also, the Company was not
in compliance with certain loan agreement  financial  covenants at September 30,
2000. The Company has obtained  waivers of certain of these covenant  violations
existing at September  30, 2000.  The Loan  agreement for which a waiver was not
obtained  did not have an  outstanding  balance due.  With the  exception of the
European  Micro  UK  Inventory  Facility  discussed  below  and in Note 6 to the
Consolidated  Condensed  Financial  Statements,  management  believes  that  the
Company  will be able to  comply  with the  provisions  of its debt  agreements,
including financial covenants, during the remainder of the fiscal 2001. However,
compliance  with these  financial  covenants  during  Fiscal  2001 will  require
improved  operating  results  compared to Fiscal 2000.  Management has initiated
certain actions to increase the likelihood of attaining these improved operating
results.  Such actions include,  among other things,  (i) modifying the terms of
certain financial covenants, (ii) entering into the equity line of credit, (iii)
temporarily  suspending  activities related to our electronic  commerce strategy
until specific  funding can be obtained,  (iv)  obtaining  extensions of the due
date for payment of contingent  earn-out  amounts relating to calendar year 2000
under the American Micro purchase agreement,  (v) adjusting staffing levels, and
(vi)  implementing  steps to  increase  sales and  lower  inventory  levels.  No
assurances can be given that management's initiatives will be successful or that
loan agreement defaults will not occur in the future.

Another  factor that could  negatively  impact on our liquidity  position is the
terms of the borrowing  arrangements  of European  Micro UK. Certain of European
Micro UK's  borrowing  capacity are subject to  termination by the lender at its
sole discretion.  As disclosed in Note 6 to the Consolidated Condensed Financial
Statements,  European  Micro UK was not in  compliance  with  certain  financial
covenants of the European Micro UK Inventory Facility at September 30, 2000. The
balance at September 30, 2000 was 0. As a result,  European Micro UK will not be
able to borrow against this revolving  credit  agreement until such time that it
is in compliance with such financial covenants.  Further, the American Micro and
Nor-Easter line of credit facilities and the European Micro Holdings,  Inc. term
loan  contain  subjective  acceleration  clauses.  These  factors  increase  the
liquidity risk to our Company.  Management believes that, based on the projected
fiscal year 2001 operating  results of our Company and our relationship with the
creditors,  our existing credit arrangements will remain effective during fiscal
2001.



                                       23
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

CASH  REQUIREMENTS.  Our primary cash  requirements are for operating  expenses,
funding  accounts  receivable,   purchasing  inventory,  acquisitions  and  debt
service.  We  have  historically  funded  these  cash  requirements   through  a
combination of loans, internally generated cash flow and the net proceeds of our
initial public offering.

WORKING CAPITAL. Working capital requirements of European Micro UK are funded by
a combination of line of credit  facilities,  together with accounts  receivable
financing.  In both  cases,  the  amounts  drawn  down  accrue  the same rate of
interest based on a markup over the  bank-borrowing  rate in the United Kingdom.
The bank line of credit  was 2.0  million  pounds  sterling  ($3.0  million)  at
September 30, 2000. The accounts  receivable  financing provides for a borrowing
base of 85% of accounts receivable,  with a limit of 6.2 million pounds sterling
($9.2 million on September 30, 2000).  This facility can be terminated by either
party  giving  three  months'  notice.  The finance  company  that  provides the
receivable  financing  facility  has full  recourse  to  European  Micro UK with
respect to any  doubtful  or  unrecovered  amounts.  Interest  is charged on the
receivable  financing  balance at 1.25% above the  bank-borrowing  rate of 6% at
September  30, 2000.  European  Micro UK also had a revolving  credit  agreement
secured against  inventory.  The facility allowed European Micro UK to borrow up
to 3.5 million pounds sterling ($5.2 million at September 30, 2000) to assist in
the purchase of inventory.  This revolving  credit  agreement  expired in August
2000 and was renewed,  through July 1, 2001,  by European  Micro UK in September
2000 to allow for borrowings up to 2.0 million pounds  sterling ($3.0 million at
September 30, 2000) that are secured by the general corporate assets of European
Micro  UK.  Borrowings  under  the bank  line of  credit  and  revolving  credit
agreement  are capped at a maximum of 2.0 million  pounds  sterling  outstanding
under the  combined  facilities  at any point in time.  At  September  30, 2000,
European Micro UK was not in compliance with certain financial covenants of this
revolving credit agreement. Due to the non-compliance European Micro UK will not
be able to  borrow  against  this  revolving  credit  agreement  until  it is in
compliance with such financial covenants.

Working capital  requirements of our U.S.  operations are funded by two lines of
credit. On October 28, 1999,  American Micro and Nor'Easter each obtained a line
of credit secured by accounts receivable and inventory.  Amounts available under
each of the  line  of  credit  agreements  were  based  upon  eligible  accounts
receivable and inventory,  up to a maximum  borrowing amount of $1.5 million for
each agreement. Each of these lines of credit was to mature on October 28, 2000.
Interest accrued at 0.5% over the  bank-borrowing  rate of 9.5% at September 30,
2000. As partial security for these loans, Messrs. Gallagher and Shields pledged
to the lender a portion of their shares of common  stock of our company.  In the
event that we  defaulted  on one or more of these  loans,  the lender could have
foreclosed  on all or a portion of the pledged  securities.  Such an event could
have caused a change of control in our company  because  Messrs.  Gallagher  and
Shields  together own 71% of our outstanding  common stock.  The lines of credit
agreements   included  certain   financial  and   non-financial   covenants  and
restrictions. The agreements also contained a provision whereby the lender could
have declared a default based on  subjective  criteria.  As of June 30, 2000, we
were  not  in  compliance  with  certain  of  the  financial  covenants  in  the
agreements.

On October 5, 2000, we received a waiver of the covenant  violations existing at
the June 30, 2000 reporting date for the American Micro and Nor'Easter  lines of
credit.  Our company and the bank  terminated  the existing  lines of credit and
entered into a new  borrowing  arrangement  whereby  each of American  Micro and
Nor'Easter have a working capital line of credit equal to the lesser of (i) $1.5
million or (ii) the sum of 85% of eligible accounts receivable,  plus the lesser
of 50% of eligible  inventory  or $750,000.  Interest  will be paid monthly at a
floating rate of .5% over the bank's base rate. The term of the new arrangements
is for one year from the  closing  date.  The new  facilities  also  require the
companies to maintain depository accounts at the bank, whose daily receipts will
be  applied  against  outstanding  borrowings  under the lines of  credit.  As a
result, the borrowings are classified as current liabilities on our consolidated
condensed  balance sheet at September 30, 2000.  The new  facilities  also place
certain  restrictions  on our  ability  to pay  dividends  and to  make  capital
expenditures,  among other things,  and includes a provision  whereby the lender
can declare a default based on  subjective  criteria.  Collateral  under the new
credit  line  facilities  consists  of a first  priority  lien on all  assets of
American  Micro and  Nor'Easter.  Messrs.  Gallagher and Shields  guaranteed the
borrowings under these arrangements.  Mr. Shields has pledged personal assets as
additional  collateral  and has  further  agreed to  maintain  certain  personal
financial statement liquidity levels. These borrowings are  cross-collateralized
and cross-defaulted with borrowings under the $1.5 million term loan to European
Micro  Holdings,  Inc. We were not in  compliance  with certain  loan  agreement
financial covenants at September 30, 2000. The Company has obtained waivers from
these covenant violations existing at September 30, 2000.

LONG-TERM  CAPITAL.  Our long-term capital needs have historically been met from
the sales of securities and long-term borrowings. In June 1998, we received $9.3
million in gross proceeds from our initial public  offering of 933,900 shares of
common  stock.  Our  company  incurred  total  expenses in  connection  with the
offering of $2.2 million.  These proceeds have been used to acquire  Sunbelt and
American Micro and to fund operations.

                                       24
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

On October  28,  1999,  we  obtained  a $1.5  million  term loan.  The term loan
agreement is with the same lender as the  Nor'easter  Micro and  American  Micro
line of credit  facilities  discussed  above.  Further,  the term loan  contains
similar loan covenants. The term loan is to be repaid with quarterly payments of
$125,000 over three years.  The term loan bears interest at the one-month LIBOR,
plus 2.25%.  One-month  LIBOR at September 30, 2000 was 6.62%.  At September 30,
2000, the outstanding balance on the term loan was $1,000,000.  The term loan is
secured by substantially  all of the assets of our company.  As partial security
for this loan, Messrs.  Gallagher and Shields pledged to the lender a portion of
their  shares of common  stock of our  company.  In  addition,  Mr.  Shields has
pledged  personal  assets as  additional  collateral  and has further  agreed to
maintain certain personal financial  statement liquidity levels. In the event we
default  on this  loan,  the  lender  may  foreclose  on all or a portion of the
pledged  securities.  Such an event may cause a change of control in our company
because Messrs. Gallagher and Shields together own 71% of our outstanding common
stock.  The term loan agreement  includes  certain  financial and  non-financial
covenants and restrictions.  The agreement also contains a provision whereby the
lender can declare a default based on subjective  criteria.  As described above,
we were not in compliance  with the loan  covenants on June 30, 2000. The lender
waived this  non-compliance in October 2000 and amended the term loan agreement,
including  revising the financial  covenants.  As of September 30, 2000, we were
not  in  compliance  with  certain  of  the  revised  loan  agreement  financial
covenants.  Our company has  obtained  waivers  from these  covenant  violations
existing at September 30, 2000.

On July 1, 1999, we acquired  American  Micro for a purchase price of $1,131,00,
plus an earn-out.  The portion of the purchase  price paid at closing was funded
through our working  capital.  The contingent  earn-out  payment relating to two
times the after tax earnings for calendar  year 1999 of  approximately  $600,000
was paid in March 2000.  The remaining  earn-out  portion of the purchase  price
relating to two times the after tax earnings for calendar  year 2000 is expected
to be funded  through  our  working  capital  and a note  payable  to the former
stockholders of American Micro.  Pursuant to the original merger agreement,  the
remaining  earn-out  portion was to be due no later than May 1, 2001. The former
stockholders  of  American  Micro  have  agreed  that,  until  July 1,  2001 and
thereafter  for so long as the  repayment of the earn-out is limited by the loan
covenants with SouthTrust Bank, we will pay the stockholders  $50,000 per month,
plus 8% interest, commencing April 1, 2001. The remaining unpaid earn-out amount
will be payable July 1, 2001 to the extent not limited by such covenants.

On July 16, 1999,  European  Micro UK purchased the office  building in which it
had previously been leasing space for 1,705,000  pounds sterling  ($2,518,000 at
September  30, 2000).  The purchase  price was financed in part by a loan in the
amount of 1,312,000  pounds  sterling  ($1,937,000 at September 30, 2000).  This
loan calls for  monthly  payments  of  principal  and  interest in the amount of
15,588 pounds sterling ($23,019 at September 30, 2000) and matures in July 2009.
The mortgage  loan bears  interest at a fixed rate of 7.6%.  The  mortgage  loan
includes certain  financial and non-financial  covenants and  restrictions.  The
agreement  also  contains a  provision  whereby the lender can declare a default
based on subjective  criteria.  The financial  covenants are measured  using the
financial  results of European  Micro UK as of each fiscal year end.  Based upon
European Micro UK's fiscal year end operating results, European Micro UK was out
of compliance  with certain of the covenant  requirements  at June 30, 2000. The
lender waived this non-compliance through July 1, 2001.

On August 24, 2000, European Micro Holdings, Inc. entered into an equity line of
credit with  Spinneret  Financial  System,  Ltd.  Pursuant to the equity line of
credit,  Spinneret  Financial  agreed to acquire up to $20 million of our common
stock at a purchase  price equal to 88% of the market  price of such stock.  The
timing  of each sale and the  number of shares to be sold is at our  discretion,
subject  to various  conditions,  including  an  effective  registration  of the
shares. The dollar amount that our company can request under any individual sale
is subject to the average  trading  volume of our common stock for the preceding
25-day  trading  period.  The  maximum  term of the equity  line of credit is 30
months  from  the  date  of  the  agreement.   The  agreement  contains  various
representations,  warranties and covenants by us,  including  limitations on our
ability to sell common stock or common stock equivalents, sell assets, merge, or
enter into certain other transactions.

Net cash used by operating activities during the three-month period to September
30, 2000  amounted to $827,000.  Significant  factors in the use of cash were an
increase in inventory of $1.3 million, a decrease in trade payables of $596,000,
and a decrease in accrued  expenses and other current  liabilities  of $274,000.
The amount of cash used by the Company's  operations  was partially  offset by a
net income before non-cash  expenses in the period of $434,000 and a decrease in
trade receivables of $566,000.

Cash used in investing activities amounted to $98,000.  This primarily consisted
of  expenditures  on fixed assets of  $144,000,  net the sale of fixed assets of
$46,000.

Cash  provided by  financing  activities  amounted to $238,000.  This  primarily
consisted  of  $397,000  provided  by  short-term  borrowings  and  payments  on
long-term debt of $159,000.



                                       25
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

Overall,  the Company  experienced  a net  decrease in cash of $640,000  for the
three-month period ended September 30, 2000.

ASSET MANAGEMENT

INVENTORY.  Our goal is to  achieve  high  inventory  turns and  maintain  a low
inventory  level and  thereby  reduce  our  working  capital  requirements.  Our
strategy to achieve  this goal is to  effectively  manage our  inventory  and to
achieve high order fill rates.  Inventory levels may vary from period to period,
due to factors including increases or decreases in sales levels, our practice of
making large-volume purchases when it deems such purchases to be attractive, new
products and changes in our product mix.

ACCOUNTS  RECEIVABLE.  We sell  products and services to a customer base of more
than 770  value-added  resellers,  corporate  resellers,  retailers  and  direct
marketers.  We offer credit  terms to  qualifying  customers  and also sell on a
pre-pay and cash-on-delivery  basis. With respect to credit sales, we attempt to
control our bad debt exposure by  monitoring  customers'  creditworthiness  and,
where  practicable,  through  participation in credit  associations that provide
customer credit rating information for certain accounts. Also, substantially all
of European Micro UK's accounts receivables are insured. Nor'Easter,  Colchester
and American Micro generally do not insure their accounts receivable.

CURRENCY RISK MANAGEMENT

REPORTING CURRENCY. European Micro Holding's,  Nor'Easter's and American Micro's
reporting  and  functional  currency,  as  defined  by  Statement  of  Financial
Accounting  Standards No. 52, is the U.S.  dollar.  The  functional  currency of
European  Micro UK is the U.K.  pound  sterling and  Colchester is the Singapore
dollar.  European Micro UK and Colchester  translate into the reporting currency
by measuring  assets and  liabilities  using the exchange rates in effect at the
balance sheet date and results of operations  using the average  exchange  rates
prevailing during the period.

HEDGING AND  CURRENCY  MANAGEMENT  ACTIVITIES.  We  occasionally  hedge to guard
against  currency  fluctuations  between the U.K.  pound  sterling  and the U.S.
dollar.  Because  the  functional  currency  of  our  company's  main  operating
subsidiary, European Micro UK, is the U.K. pound sterling, currency fluctuations
of the U.K.  pound  sterling  relative  to the U.S.  dollar  may have a material
adverse effect on our business,  financial  condition and results of operations.
We may engage in hedging activities in the future, although no assurances can be
given  that  it  will  engage  in  such  activities  and if we do so  that  such
activities will be successful.

Generally,  our policy is not to hedge  specifically  against  individual  daily
transactions.  Instead,  the exposure to a currency is  determined  every two to
three days.  This is done by  comparing  the bank  account  balances and account
receivables  with  accounts  payable,  all in the  same  currency  to  create  a
"natural" hedge.  Thereafter,  to the extent that a bank balance and the account
receivable are not totally offset by the accounts payable, there would be a need
to cover the residual credit balance with a forward currency  contract.  We tend
to concentrate our currency  management into seven currencies:  Euro, U.K. pound
sterling,  U.S. dollar,  Dutch guilder,  Canadian  dollar,  Singapore dollar and
German Mark.  We normally  deem the exposure in other  currencies to be minimal.
However,  when we buy products in other currencies,  we may, in conjunction with
current  market  advice,  book a  forward  contract  to cover  current  and some
anticipated future purchases.

ECONOMIC AND MONETARY  UNION.  On January 1, 1999,  eleven of the fifteen member
countries of the European Union established fixed conversion rates between their
existing  sovereign  currencies  and a new  currency  called the  "Euro."  These
countries adopted the Euro as their common legal currency on that date. The Euro
is trading on currency  exchanges  and is available  for non-cash  transactions.
Until  January 1, 2002,  the  existing  sovereign  currencies  will remain legal
tender in these countries.  On January 1, 2002, the Euro is scheduled to replace
the sovereign  legal  currencies of these  countries.  Through the operations of
European Micro UK, we have  significant  operations  within the European  Union,
including  many of the countries  that adopted the Euro. We continue to evaluate
the impact that the Euro will have on our continuing  business operations and no
assurances can be given that the Euro will not have a material adverse effect on
our business, financial condition and results of operations.  However, we do not
expect  the Euro to have a  material  effect on our  competitive  position  as a
result of price transparency within the European Union because we do not rely on
currency  imbalances in purchasing  inventory from within the European Union. In
the first seven  quarters  of trading,  the Euro  devalued  against  sterling by
19.1%,  adversely  affecting the value of our trade  receivables  denominated in
Euros. Going forward, we cannot accurately predict the impact the Euro will have
on currency  exchange  rates or our currency  exchange  rate risk.  The Internal
Revenue Service  ("IRS") has requested  comments on various tax issues raised by
the Euro  conversion.  The IRS is expected to publish  guidelines  on this issue
and, until such time, we cannot predict whether the IRS guidelines will have any
tax consequences on us.



                                       26
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We utilize  derivative  financial  instruments  in the form of  forward  foreign
exchange  contracts for the purpose of economic  hedges of anticipated  sale and
purchase  transactions.  In  addition,  we enter  into  economic  hedges for the
purposes of hedging  foreign  currency  market  exposures of underlying  assets,
liabilities  and other  obligations  that exist as part of its ongoing  business
operations.

Where the foreign  currency  exposure is covered by a forward  foreign  exchange
contract the asset,  liability or other obligation is recorded at the contracted
rate each  month end and the  resultant  mark-to-market  gains  and  losses  are
recognized as cost of sales in the current period, generally consistent with the
period in which the gain or loss of the  underlying  transaction  is recognized.
Cash  flows  associated  with  derivative  transactions  are  classified  in the
statement of cash flows in a manner  consistent with those of the exposure being
hedged.

EXCHANGE RATE SENSITIVITY

On  September  30,  2000,  the  Company  did not have any open  forward  foreign
exchange contracts. Foreign currency losses, net were $151,000 "for the 3 months
ended" September 30, 2000, and $242,000 for the comparable period in 1999.


















                                       27
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

PART II

ITEM 1.     LEGAL PROCEEDINGS.

On November 12, 1999,  Jeffrey and Marie Alnwick (the "ALNWICKS") and a New York
corporation,   Big  Blue  Products,   commenced  an  action   individually   and
derivatively for the Dutch company, Big Blue Europe, against our company and our
founders  and  officers,  John B.  Gallagher  and Harry D. Shields in the United
States District Court,  Eastern District of New York,  Jeffrey Alnwick and Marie
Alnwick v. European Micro Holdings,  Inc.,  Eastern District of New York, Docket
No. 99 CV 7380 (the "ALNWICK LITIGATION").

The  complaint  alleges  thirty-three  causes of action.  Plaintiffs  claim,  in
substance,  that defendants breached oral and written agreements relating to the
management,  operation and funding of Big Blue Europe. Specifically,  plaintiffs
alleged that defendants  breached the joint venture  agreement by which Big Blue
Europe was formed, a licensing  agreement for use of the "Big Blue" service mark
in Europe, a non-competition agreement preventing Big Blue Europe from operating
in the United States and several  capital  contribution  agreements.  Plaintiffs
also claimed that defendants  breached their  fiduciary  duties to the Alnwicks,
engaged in fraudulent  acts,  aided and abetted  breaches of fiduciary duties by
others,  misappropriated  trade  secrets  and  interfered  with  the  employment
contract of Big Blue Europe's managing director. The complaint seeks unspecified
compensatory  and punitive  damages,  as well as injunctive  relief  restraining
defendants from acting in violation of the alleged agreements.

Defendants have moved to dismiss the complaint principally on the basis of forum
non-conveniens in favor of existing proceedings in the Netherlands (commenced by
European Micro UK), where a Dutch court has appointed an independent director to
oversee the operations of the company. Defendants argue that any dispute between
the  stockholders  and directors of the Dutch  company,  Big Blue Europe,  which
operates pursuant to Dutch law, should be resolved by a Dutch court.

Our company and our  affiliated  defendants  intend to contest the claims in the
Alnwick Litigation  vigorously,  whether asserted in the United States or in the
Netherlands courts.

ITEM 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS.

(a), (b), (c) and (d).  None.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES.

At September  30, 2000,  European  Micro UK was not in  compliance  with certain
financial covenants contained in the European Micro UK Inventory Facility.  From
June 30, 2000 to September  30,  2000,  no amounts  were  outstanding  under the
agreement.  As a result of this  non-compliance,  European  Micro UK will not be
able to borrow against this revolving credit agreement until it is in compliance
with  such  financial  covenants.  See  Note  6 to  the  Consolidated  Condensed
Financial Statements.

As of  September  30,  2000,  the Company  was not in  compliance  with  certain
financial  covenants  contained in the  Nor-Easter  and American  Micro lines of
credit.  In addition,  the Company was not in compliance with certain  financial
covenants  contained in the European Micro  Holdings' term loan. The Company has
obtained waivers from these covenant  violations existing at September 30, 2000.
See Notes 6 and 7 to the Consolidated Condensed Financial Statements.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

(a) The Company  held its 2000  Annual  Meeting of  Stockholders  on October 30,
2000.

(b) At the annual meeting,  the stockholders  re-elected the Class III directors
named  in the  following  table  by the  vote  set  forth  in such  table  for a
three-year  term to expire in 2003.  The names of the  directors  whose terms of
office as directors  continued  after the meeting  were:  Barrett  Sutton,  Kyle
Saxon, and Laurence Gilbert.

       NAME:                   FOR:         AGAINST:      WITHHELD:
       -----                   ----         --------      ---------

       Harry D. Shields        3,506,246    0             26,950
       John B. Gallagher, Jr.  3,506,246    0             26,950




                                       28
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

 (c) The only other matter voted upon at the Annual Meeting of Stockholders  was
to approve the issuance of shares of the Company's  common stock  pursuant to an
Equity Line of Credit Agreement (the "EQUITY LINE OF CREDIT") dated as of August
24, 2000, between the Company and Spinneret  Financial System,  Ltd., as well as
the issuance of shares of the Company's common stock pursuant to the exercise of
warrants issued in connection with the Equity Line of Credit.

The following table sets forth the number of votes for, against or withheld.

FOR:           ABSTAIN:

3,505,946      27,250


(d)   None.

The foregoing  matters are described in detail in the Company's  Proxy Statement
dated October 19, 2000 for the 2000 Annual Meeting of Stockholders.

ITEM 5.     OTHER INFORMATION.

None

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K.

(a)   Exhibits.

<TABLE>
<CAPTION>

EXHIBIT
NO.            DESCRIPTION                                         LOCATION
---            -----------                                         --------

<S>            <C>                                                 <C>
     2.01      Agreement for the  Acquisition of Sunbelt (UK)      Incorporated  by reference to Exhibit 2.01
               Limited by European  Micro Plc dated October 26,    to  Registrant's  Form 10-Q for the quarter
               1998                                                ended September 30, 1998.

     2.02      Merger Agreement re: AMCC dated June 29, 1999       Incorporated by reference to Exhibit 2.02
                                                                   to Registrant's From 10-K for the year
                                                                   ended June 30, 1999.

     2.03      Plan of 1999 Merger re: AMCC dated June 29, 1999    Incorporated by reference to Exhibit 2.03
                                                                   to Registrant's From 10-K for the year
                                                                   ended June 30, 1999.

     2.04      Articles of Merger re: AMCC dated June 29, 1999     Incorporated by reference to Exhibit 2.04
                                                                   to Registrant's Form 10-K for the year
                                                                   ended June 30, 1999.

     2.05      Amendment to Merger Agreement re: AMCC dated        Incorporated by reference to Exhibit 2.05
               October                                             2,    2000    to     Registrant's
                                                                   Registration  Statement  on  Form
                                                                   S-1 filed on October 27, 2000.

     3.01      Articles of Incorporation                           Incorporated by reference to Exhibit No.
                                                                   3.01 to Registrant's Registration
                                                                   Statement (the "Registration Statement")
                                                                   on Form S-1 (Registration Number
                                                                   333-44393).

     3.02      Certificate of Amendment of Articles of             Incorporated by reference to Exhibit 3.02
               Incorporation                                       to Registrant's Form 10-Q for the quarter
                                                                   ended March 31, 1998.



                                       29
<PAGE>
EXHIBIT
NO.            DESCRIPTION                                         LOCATION
---            -----------                                         --------

<S>            <C>                                                 <C>
     3.03      Bylaws                                              Incorporated by reference to Exhibit No.
                                                                   3.02 to the Registration Statement.

     4.01      Form of Stock Certificate                           Incorporated by reference to Exhibit No.
                                                                   4.01 to the Registration Statement.

     4.02      1998 Stock Incentive Plan                           Incorporated by reference to Exhibit No.
                                                                   4.02 to the Registration Statement.

     4.03      1998 Stock Employee Stock Purchase Plan             Incorporated by reference to Exhibit No.
                                                                   4.03 to the Registration Statement.
     4.04      Form of Lock-up Agreement                           Incorporated by reference to Exhibit No.
                                                                   4.04 to the Registration Statement.

    10.01      Form of Advice of Borrowing Terms with National     Incorporated by reference to Exhibit No.
               Westminster Bank Plc                                10.01 to the Registration Statement.

    10.02      Invoice Discounting Agreement with Lombard NatWest  Incorporated by reference to Exhibit No.
               Discounting Limited, dated November 21, 1996        10.02 to the Registration Statement.

    10.03      Commercial Credit Insurance, policy number 60322,   Incorporated by reference to Exhibit No.
               with Hermes Kreditversicherungs-AG dated August 1,  10.03 to the Registration Statement.
               1995

    10.04      Commercial Credit Insurance, policy number 82692,   Incorporated by reference to Exhibit No.
               with Hermes Kreditversicherungs-AG dated August 1,  10.04 to the Registration Statement.
               1995

    10.05      Consignment Agreement with European Micro Computer  Incorporated by reference to Exhibit No.
               B.V., dated January 1996                            10.05 to the Registration Statement.

    10.06      Stockholders' Cross-Purchase Agreement by and       Incorporated by reference to Exhibit No.
               between Jeffrey Gerard Alnwick, Marie Alnwick,      10.07 to the Registration Statement.
               European Micro Plc and Big Blue Europe, B.V. dated
               August 21, 1997

    10.07      Trusteed Stockholders Cross-Purchase Agreement by   Incorporated by reference to Exhibit No.
               and between John B. Gallagher, Harry D. Shields,    10.08 to the Registration Statement.
               Thomas H. Minkoff, Trustee of the Gallagher Family
               Trust, Robert H. True and Stuart S. Southard,
               Trustees of the Henry Daniel Shields 1997
               Irrevocable Educational Trust, European Micro
               Holdings, Inc. and SunTrust Bank, Nashville, N.A.,
               as Trustee dated January 31, 1998

    10.08      Executive Employment Agreement between John B.      Incorporated by reference to Exhibit No.
               Gallagher and European Micro Holdings, Inc.         10.09 to the Registration Statement.
               effective as of January 1, 1998

    10.09      Executive Employment Agreement between Harry D.     Incorporated by reference to Exhibit No.
               Shields and European Micro Holdings, Inc.           10.10 to the Registration Statement.
               effective as of January 1, 1998

    10.10      Contract of Employment Agreement between Laurence   Incorporated by reference to Exhibit No.
               Gilbert and European Micro UK dated March 14, 1998  10.11 to the Registration Statement.


                                       30
<PAGE>

EXHIBIT
NO.            DESCRIPTION                                         LOCATION
---            -----------                                         --------

    10.11      Subscription Agreement by and between John B.       Incorporated by reference to Exhibit No.
               Gallagher, Harry D. Shields, Thomas H. Minkoff,     10.13 to the Registration Statement.
               Trustee of the Gallagher Family Trust, Robert H.
               True and Stuart S. Southard, Trustees of the Henry
               Daniel Shields 1997 Irrevocable Educational Trust,
               European Micro Holdings, Inc. effective as of
               January 31, 1998

    10.12      Administrative Services Contract by and between     Incorporated by reference to Exhibit No.
               European Micro Holdings, Inc. and European Micro    10.14 to the Registration Statement.
               Plc effective as of January 1, 1998

    10.13      Escrow Agreement between European Micro Holdings,   Incorporated by reference to Exhibit No.
               Inc., Tarpon Scurry Investments, Inc. and The       10.15 to the Registration Statement.
               Chase Manhattan dated as of March 24, 1998

    10.14      Form of Indemnification Agreements with officers    Incorporated by reference to Exhibit No.
               and directors                                       10.16 to the Registration Statement.

    10.15      Form of Transfer Agent Agreement with Chase Mellon  Incorporated by reference to Exhibit No.
               Stockholder Services, L.L.C.                        10.17 to the Registration Statement.

    10.16      Form of Credit Agreement by and between European    Incorporated by reference to Exhibit No.
               Micro UK and National Westminster Bank Plc          10.17 to the Annual Report on Form 10-K
                                                                   for the  fiscal  year  ended June
                                                                   30,    1998    filed   with   the
                                                                   Commission on September 28, 1998.

    10.17      Consulting Contract dated September 10, 1998 by     Incorporated by reference to Exhibit 10.19
               and between European Micro Holdings, Inc. and The   to Registrant's Form 10-Q for the quarter
               Equity Group                                        ended September 30, 1998.

    10.18      Employment Agreement dated July 1, 1999 between     Incorporated by reference to Exhibit 10.21
               John B. Gallagher and American Micro                to Registrant's Form 10-K for the year
                                                                   ended June 30, 1999.

    10.19      Revolving Loan Agreement dated October 5, 2000      Incorporated by reference to Exhibit 10.19
               between American Micro and SouthTrust Bank re:      to Registrant's Form 10-K for the year
               Line of Credit to American Micro                    ended June 30, 2000.

    10.20      First Amendment to Loan Agreement dated October 5,  Incorporated by reference to Exhibit 10.20
               2000 among the Company, American Micro, Nor'Easter  to Registrant's Form 10-K for the year
               and SouthTrust Bank, N.A. re: Term Loan to the      ended June 30, 2000.
               Company

    10.21      Revolving Loan Agreement dated October 5, 2000      Incorporated by reference to Exhibit 10.21
               between Nor'Easter and SouthTrust Bank re: Line of  to  Registrant's  Form 10-K for the year
               Credit to Nor'Easter                                ended June 30, 2000.

    10.22      Loan Agreement dated October 28, 1999 among the     Incorporated by reference to Exhibit 10.23
               Company, American Micro, Nor'Easter and SouthTrust  to Registrant's Form 10-Q for the quarter
               Bank, N.A. re: Term Loan to the Company             ended September 30, 1999.

    10.23      Security Agreement dated October 5, 2000 between    Incorporated by reference to Exhibit 10.23
               Nor'Easter and SouthTrust Bank                      to Registrant's Form 10-K for the year
                                                                   ended June 30, 2000.

    10.24      Security Agreement dated October 5, 2000 between    Incorporated by reference to Exhibit 10.24
               American Micro and SouthTrust Bank                  to Registrant's Form 10-K for the year
                                                                   ended June 30, 2000.
    10.25      Line of Credit Note given by Nor'Easter to          Incorporated by reference to Exhibit 10.25
               SouthTrust Bank                                     to Registrant's Form 10-K for the year
                                                                   ended June 30, 2000.


                                       31
<PAGE>

EXHIBIT
NO.            DESCRIPTION                                         LOCATION
---            -----------                                         --------

    10.26      Line of Credit Note given by American Micro to      Incorporated by reference to Exhibit 10.26
               SouthTrust Bank                                     to Registrant's Form 10-K for the year
                                                                   ended June 30, 2000.

    10.27      Unconditional Guaranty given by Harry Shields to    Incorporated by reference to Exhibit 10.27
               SouthTrust Bank Re: American Micro                  to Registrant's Form 10-K for the year
                                                                   ended June 30, 2000.

    10.28      Unconditional Guaranty given by John Gallagher to   Incorporated by reference to Exhibit 10.28
               SouthTrust Bank Re: American Micro                  to Registrant's Form 10-K for the year
                                                                   ended June 30, 2000.

    10.29      Amended and Restated Unlimited Guaranty Agreement   Incorporated  by  reference to Exhibit 10.29
               dated October 5, 2000 between Harry Shields and to  Registrant's  Form 10-K for the year
               SouthTrust Bank                                     ended June 30, 2000.

    10.30      Amended and Restated Unlimited Guaranty Agreement   Incorporated  by  reference to Exhibit 10.30
               dated October 5, 2000 between John Gallagher and    to  Registrant's  Form 10-K for the year
               SouthTrust Bank                                     ended June 30, 2000.

    10.31      Unconditional Guaranty given by John Gallagher to   Incorporated by reference to Exhibit 10.31
               SouthTrust Bank Re: Nor'Easter                      to Registrant's Form 10-K for the year
                                                                   ended June 30, 2000.

    10.32      Unconditional Guaranty given by Harry Shields to    Incorporated by reference to Exhibit 10.32
               SouthTrust Bank Re: Nor'Easter                      to Registrant's Form 10-K for the year
                                                                   ended June 30, 2000.

    10.33      Specific Agreement for the Provision of             Incorporated by reference to Exhibit 10.25
               Professional Services dated as of March 17, 2000    to Registrant's Form 10-Q for the quarter
               between the Company and Cap Gemini UK Plc           ended March 31, 2000.

    10.34      Equity Line of Credit Agreement dated as of August  Incorporated by reference to Exhibit 10.34
               24, 2000, between the Company and Spinneret         to Registrant's Form 10-K for the year
               Financial System, Ltd.                              ended June 30, 2000.

    10.35      Registration Rights Agreement dated as of August    Incorporated by reference to Exhibit 10.35
               24, 2000, between the Company and Spinneret         to Registrant's Form 10-K for the year
               Financial System, Ltd.                              ended June 30, 2000.

    10.36      Warrant to Purchase Common Stock dated as of        Incorporated by reference to Exhibit 10.36
               August 24, 2000, given by the Company to Spinneret  to Registrant's Form 10-K for the year
               Financial System, Ltd.                              ended June 30, 2000.

    10.37      Warrant to Purchase Common Stock dated as of        Incorporated by reference to Exhibit 10.37
               August 24, 2000, given by the Company to the May    to Registrant's Form 10-K for the year
               Davis Group, Inc.                                   ended June 30, 2000.

    10.38      Registration Rights Agreement dated as of August    Incorporated by reference to Exhibit 10.38
               24, 2000, between the Company and the May Davis     to Registrant's Form 10-K for the year
               Group, Inc.                                         ended June 30, 2000.

    10.39      Placement Agent Agreement dated as of August 24,    Incorporated by reference to Exhibit 10.39
               2000, between the Company and the May Davis Group,  to  Registrant's  Form 10-K for the year
               Inc.                                                ended June 30, 2000.

    11.01      Statement re: Computation of Earnings               Provided herewith.

    15.01      Letter re: Unaudited Financial Information          Not applicable.



                                       32
<PAGE>

EXHIBIT
NO.            DESCRIPTION                                         LOCATION
---            -----------                                         --------

    18.01      Letter re Change in Accounting Principles           Not applicable.

    19.01      Report Furnished to Security Holders                Not applicable.

    21.01      Subsidiaries of the Registrant                      Not applicable.

    22.01      Published Report Regarding Matters Submitted to     Not applicable.
               Vote of Security Holders

    23.01      Consent of Experts                                  Not applicable.

    24.01      Power of Attorney                                   Not applicable.

    27.01      Financial Data Schedule                             Provided herewith.
</TABLE>

(b)      Reports on Form 8-K.

None.



                                       33
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

                                   SIGNATURES

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

Dated:      November 20, 2000              EUROPEAN MICRO HOLDINGS, INC.

                                           By:   /s/ John B. Gallagher
                                              ------------------------
                                                 John B. Gallagher, Co-President





































                                       34