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 March 31, 2001

    |_|       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>
<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)
</TABLE>

                                           (305) 825-2458
                                           --------------
                            (Issuer's Telephone Number, Including Area Code)

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  5,029,667  shares  of Common  Stock,  par  value  $0.01 per  share,
outstanding as of May 15, 2001.






<PAGE>


                          EUROPEAN MICRO HOLDINGS, INC.

PART I

FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

               INDEX TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


Consolidated Condensed Balance Sheets as of March 31, 2001 (unaudited)
and June 30, 2000 .............................................................2

Consolidated Condensed Statements of Operations for the three and nine
months ended March 31, 2001 and 2000 (unaudited)...............................3

Consolidated Condensed Statements of Cash Flows for the nine months
ended March 31, 2001 and 2000 (unaudited)......................................4

Notes to Consolidated Condensed Financial Statements (unaudited)...............6

















                                        1
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

<TABLE>
<CAPTION>
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                        (In thousands, except share data)



                                                                                            MARCH 31, 2001         JUNE 30, 2000
                                                                                              (Unaudited)
                                                                                         -----------------------------------------
                                             ASSETS
<S>                                                                                           <C>                    <C>
CURRENT ASSETS:
      Cash                                                                                         $644                $1,222
      Restricted cash                                                                                --                   364
      Trade receivables, net                                                                      9,246                13,160
      Inventories, net                                                                            4,251                 6,194
      Prepaid expenses                                                                              270                   322
      Income taxes receivable                                                                       476                   909
      Other current assets                                                                        1,050                   765
                                                                                              ---------              --------
            TOTAL CURRENT ASSETS                                                                 15,937                22,936
      Property and equipment, net                                                                 3,565                 3,927
      Goodwill, net                                                                               4,409                 2,808
      Investments in and advances to unconsolidated subsidiaries                                     --                   252
      Other assets                                                                                   23                   290
                                                                                              ---------              --------
            TOTAL ASSETS                                                                        $23,934               $30,213
                                                                                              ---------              --------



                              LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
      Short-term borrowings                                                                      $9,651               $11,903
      Current portion of long-term borrowings                                                     2,579                   678
      Trade payables                                                                              1,181                 2,256
      Accrued expenses and other current liabilities                                              2,313                 1,882
      Due to related parties                                                                         --                    11
                                                                                              ---------              --------
            TOTAL CURRENT LIABILITIES                                                            15,724                16,730
      Long-term borrowings                                                                        --                    2,373
                                                                                              ---------              --------
            TOTAL LIABILITIES                                                                   $15,724               $19,103
                                                                                              ---------             ---------
COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENTS                                                     --                    --
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 5,029,667 at March 31, 2001 and
        4,933,900 at June 30, 2000                                                                   50                    49
      Additional paid-in capital                                                                  9,362                 9,191
      Accumulated other comprehensive loss                                                        (883)                 (550)
      Retained earnings (deficit)                                                                 (319)                 2,420
                                                                                              ---------              --------
            TOTAL SHAREHOLDERS' EQUITY                                                            8,210                11,110
                                                                                              ---------              --------

      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                $23,934               $30,213
                                                                                              =========              ========

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






                                 2
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

<TABLE>
<CAPTION>
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (UNAUDITED)

                                                    THREE MONTHS ENDED MARCH 31,               NINE MONTHS ENDED MARCH 31,
                                            --------------------------------------------- ------------------------------------------
                                                     2001               2000                      2001               2000
                                                     ----               ----                      ----               ----
<S>                                                <C>                <C>                        <C>                <C>
SALES:
      Net sales                                     $20,064           $23,917                    $75,735            $89,313
      Net sales to related parties                       51               437                        198              2,350
                                                    -------           -------                    -------            -------
            Total net sales                          20,115            24,354                     75,933             91,663
                                                    -------           -------                    -------            -------
COST OF GOODS SOLD:
      Cost of goods sold                            (19,236)          (22,050)                   (68,994)           (80,095)
      Cost of goods sold to related parties             (46)             (449)                      (189)            (2,311)
                                                    -------           -------                    -------            -------
            Total cost of goods sold                (19,282)          (22,499)                   (69,183)           (82,406)
                                                    -------           -------                    -------            -------
GROSS PROFIT                                            833             1,855                      6,750              9,257

OPERATING EXPENSES:
      Selling, general and
        administrative expenses                      (2,712)           (3,323)                    (8,191)            (9,747)
                                                    -------           -------                    -------            -------
LOSS FROM OPERATIONS                                 (1,879)           (1,468)                    (1,441)              (490)

      Interest income                                     6                10                         23                 70
      Interest expense                                 (285)             (148)                      (858)              (676)
      Equity in net income of unconsolidated
           subsidiaries                                  --                (3)                        --                 (3)
                                                    -------           -------                    -------            -------
LOSS BEFORE INCOME TAXES                             (2,158)           (1,609)                    (2,276)            (1,099)

      Income tax benefit (expense)                     (359)              301                       (463)                 9
                                                    -------           -------                    -------            -------
NET LOSS                                            $(2,517)          $(1,308)                   $(2,739)           $(1,090)
                                                    =======           =======                    =======             =======
      Net loss per share - basic                     $(0.50)           $(0.26)                    $(0.55)            ($0.22)
                                                    =======           =======                    =======             =======
      Net loss per share - diluted                   $(0.50)           $(0.26)                    $(0.55)            ($0.22)
                                                    =======           =======                    =======             =======

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





                                 3
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

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

                                                                                                     NINE MONTHS ENDED MARCH 31,
                                                                                      ----------------------------------------------
                                                                                                       2001              2000
                                                                                                       ----              ----
<S>                                                                                               <C>                <C>
OPERATING ACTIVITIES:
Net loss                                                                                            $(2,739)          $(1,090)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES
      Depreciation and amortization                                                                     481               435
      Amortization of expense related to contingent earn-out provisions                                  --                47
      Deferred income taxes                                                                              59               (13)
      Provision for note receivable impairment                                                          252                --
      Equity in net loss of unconsolidated subsidiaries                                                  --                 3
      Compensation charge for non-employee stock options                                                122                42
CHANGES IN ASSETS AND LIABILITIES
      Trade receivables                                                                               3,914             5,724
      Due from related parties                                                                           --             1,081
      Inventories                                                                                     1,943             1,329
      Prepaid expenses, other current assets and other assets                                           (34)              294
      Income tax receivable                                                                             433                --
      Trade payables                                                                                 (1,075)           (2,266)
      Due to related parties                                                                            (11)             (629)
      Income taxes payable                                                                               --              (149)
      Accrued expenses and other current liabilities                                                 (1,408)             (809)
                                                                                                    --------          --------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                                             1,937             3,999

                                                                                                    --------          --------
INVESTING ACTIVITIES:
      Purchase of fixed assets                                                                         (391)           (3,069)
      Sale of fixed assets                                                                              179                42
      Payment for acquisition, net of cash acquired                                                      --            (1,834)
       Advances to unconsolidated affiliate                                                              --               100

                                                                                                    --------          --------
NET CASH (USED IN) INVESTING ACTIVITIES                                                                (212)           (4,761)

                                                                                                    --------          --------
FINANCING ACTIVITIES:
      Short-term borrowings, net                                                                     (2,252)           (2,568)
      Proceeds (repayments) of long-term borrowings                                                    (477)            2,957
      Issuance of common stock, net                                                                      50                --
      Repayment of capital leases, net                                                                  129               (58)

                                                                                                    --------          --------
NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES                                                     (2,550)              331

                                                                                                    --------          --------
      Exchange rate changes                                                                             247               (11)

                                                                                                    --------          --------

NET DECREASE IN CASH:                                                                                  (578)             (442)
      Cash at beginning of period                                                                     1,222             3,168

                                                                                                    --------          --------

CASH AT END OF PERIOD                                                                                  $644            $2,726
                                                                                                    ========          ========

Non-cash investing and financing activities:
Fair value of assets acquired                                                                     $      --            $3,314
Goodwill                                                                                              1,839             1,418
Fair value of liabilities assumed                                                                        --            (2,817)
Notes issued for consideration                                                                       (1,839)               (0)
                                                                                                    --------          --------
</TABLE>




                                        4
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.
<TABLE>
<CAPTION>
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

                                                                                                     NINE MONTHS ENDED MARCH 31,
                                                                                      ---------------------------------------------
                                                                                                       2001              2000
                                                                                                       ----              ----

<S>                                                                                                 <C>               <C>
Cash paid for acquisitions                                                                               --             1,915
Less cash acquired                                                                                       --              (81)
                                                                                                    --------          --------

Net cash paid for acquisitions                                                                         $ --            $1,834

                                                                                                    ========          ========
Interest paid                                                                                          $858              $667

                                                                                                    ========          ========
Taxes paid                                                                                              $20              $182
                                                                                                    ========          ========

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


























                                        5
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

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 fiscal year
2001 to date.  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.  Management
has  initiated  certain  actions  intended to improve  liquidity  and  operating
results.  Such actions include,  among other things,  (i) modifying the terms of
certain  financial  covenants (ii)  canceling the Cap Gemini  contract to reduce
costs and internalize the activities related to its electronic commerce strategy
(see Note 8 to the Consolidated Condensed Financial Statements), (iii) obtaining
extensions and subordination of payment of contingent  earn-out amounts relating
to  calendar  year 2000  under  the  American  Micro  purchase  agreement,  (iv)
adjusting  staffing levels,  and (v)  implementing  steps to attempt to increase
sales volume and lower inventory  levels.  As of March 31, 2001, the Company was
not in compliance  with two of the financial  covenants in its loan  agreements.
Given the Company's current and expected  operating  results,  it is likely that
the Company will remain out of compliance with such covenant  requirements.  Due
to these  operating  results  and the  covenant  violations,  the  lender on the
American Micro and Nor'Easter  lines of credit and the European Micro  Holdings,
Inc. term loan has agreed in principle,  subject to documentation,  to waive the
covenant violations subject to the Nor'Easter line of credit being repaid before
June 15,  2001 and the  American  Micro  line of credit and the  European  Micro
Holdings  term loan being repaid by August 15,  2001.  These loans may be repaid
from the  Company's  working  capital  and new  borrowings.  The Company has had
discussions  with a lender about  providing new  borrowings  to the Company.  No
assurances  can be given that such  borrowings  will be  available  on favorable
terms,  or at all. The Company's  potential  inability to obtain new  borrowings
gives question to its ability to continue as a going concern.

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 4 and
5 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.  These factors  increase the  liquidity  risk to the
Company.





                                       6
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

3           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) was comprised of a guaranteed portion and two
contingent  earn-out  payments.  The guaranteed portion of the purchase price of
152,656 pounds sterling  ($216,000 at exchange rate on March 31, 2001),  and the
portion  of the  second  contingent  earn-out  payment  related  to  the  volume
purchases  from the Far-East of 129,758  pounds  sterling  ($184,000 at exchange
rate on March 31, 2001) has been paid by a cash payment in the amount of 112,966
pounds sterling  ($160,000 at exchange rate on March 31, 2001) to the former 40%
Sunbelt shareholder on November 20, 2000 and by the issuance of 37,754 shares of
the Company's common stock to the former 60% Sunbelt shareholder on December 12,
2000. At March 31, 2001,  all  contingent  consideration  related to the Sunbelt
acquisition has been paid.  Goodwill from this transaction is being amortized on
a straight-line basis over 20 years.

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.

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 of  approximately
$1,839,000 is reflected in goodwill,  net and accrued expenses and other current
liabilities in the accompanying consolidated condensed financial statements. The
second earn-out  payment will be due in monthly  principal  payments of $50,000,
plus  interest  at 8%  commencing  on April 1,  2001,  subject  to the rights of
SouthTrust  Bank. This loan will be due and payable thirty days after no amounts
are due to SouthTrust  Bank. This amount is secured by a pledge of the shares of
common  stock of American  Micro held by the  Company.  This  security  has been
subordinated to SouthTrust Bank.

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

4           SHORT-TERM BORROWINGS

<TABLE>
<CAPTION>
Short-term borrowings consists of the following (in thousands):
                                                                        MARCH 31, 2001           JUNE 30, 2000
                                                                        --------------           -------------
<S>                                                                         <C>                     <C>
Bank line of credit
   European Micro UK Working Capital facility (a)                              $2,381                  $1,959
   Nor'Easter Micro facility (b)                                                  430                     975
   American Micro facility (b)                                                    993                     992
                                                                            ---------               ---------
Total bank lines of credit                                                      3,804                   3,926

Receivable financing (c)                                                        5,179                   7,303
Other short-term borrowings (d)                                                   668                     674
                                                                                  ---                     ---

Total short-term borrowings                                                    $9,651                 $11,903
                                                                               ======                 =======
</TABLE>
(a) European Micro UK has a bank line of credit (the "EUROPEAN  MICRO UK WORKING
CAPITAL  FACILITY") which is collateralized  by a mortgage  debenture on all the
assets of European Micro UK and is  subordinate to the receivable  financing and

                                       7
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

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  ($2.8 million at
exchange  rate on March  31,  2001).  Interest  is  charged  at  1.25%  over the
bank-borrowing rate of 5.75% at March 31, 2001 and 6% at June 30, 2000.

Until December 31, 2000, European Micro UK also had a revolving credit agreement
collateralized  against general corporate  assets.  This facility was terminated
effective December 31, 2000.

(b) 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,  collateralized  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.  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 of
8.0% at March 31, 2001.  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. 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 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 5 to the Consolidated Condensed Financial
Statements.

As of  March  31,  2001,  the  Company  was not in  compliance  with  two of the
financial covenants in the agreements.  Given the Company's current and expected
operating  results,  it is likely that the Company will remain out of compliance
with such covenant requirements. Due to these operating results and the covenant
violations,  the lender on the American Micro and Nor'Easter lines of credit and
the European  Micro  Holdings,  Inc.  term loan has agreed to waive the covenant
violations subject to the Nor'Easter line of credit being repaid before June 15,
2001 and the American  Micro line of credit and the European Micro Holdings term
loan being repaid by August 15, 2001.

(c)  Receivable  financing  represents   borrowings  secured  by  various  trade
receivables  of European  Micro UK totaling  $6.1  million at March 31, 2001 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 ($8.8 million at exchange rate on March 31, 2001).  Either party giving
three months'  notice can terminate  this  facility.  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 5.75%
at March 31, 2001, and 6% at June 30, 2000.

(d) 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%.

                                       8
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

5           LONG-TERM BORROWINGS

<TABLE>
<CAPTION>
Long-term borrowings consists of the following (in thousands):
                                                             MARCH 31, 2001          JUNE 30, 2000
                                                             --------------          -------------
<S>                                                                 <C>                    <C>
Mortgage loan note (a)                                              $1,651                 $1,877
Note payable (b)                                                       750                  1,125
Other long-term borrowings                                             178                     49
                                                                    ------                 ------
                                                                    $2,579                 $3,051
Less current maturities of long-term borrowings                     (2,579)                  (678)
                                                                    ------                 ------
Total long-term borrowings                                          $   --                 $2,373
                                                                    ======                 ======
</TABLE>
(a) European  Micro UK purchased the office  building in which it had previously
leased space for a purchase price of 1,705,000  pounds  sterling  ($2,412,000 at
exchange rate on March 31, 2001).  The purchase  price was financed in part by a
mortgage loan note in the amount of 1,312,000  pounds  sterling  ($1,856,000  at
exchange  rate on March 31, 2001).  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  ($22,000 at exchange rate on March 31,  2001),  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  of this
non-compliance  through  July 1, 2001.  Given  European  Micro UK's  current and
expected operating  results,  it is likely that European Micro UK will be out of
compliance with certain  covenant  requirements at June 30, 2001. The Company is
evaluating  options to address this potential  non-compliance at our fiscal year
end.  Therefore  the total amount  outstanding  under the mortgage  loan note is
reflected in current maturities of long term debt at March 31, 2001

(b) European Micro Holdings,  Inc.  obtained a 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
March 31, 2001 was 5.1%.  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.  Shields 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  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 SouthTrust Bank, as well as the Nor'Easter Micro
and  American  Micro  line  of  credit  facilities  discussed  in  Note 4 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.  However,  the  Company  was  not in
compliance  for the March 31,  2001  reporting  period.  Due to these  operating
results  and the  covenant  violations,  the  lender on the  American  Micro and
Nor'Easter  lines of credit and the European Micro Holdings,  Inc. term loan has
agreed in principle, subject to documentation.  to waive the covenant violations
subject to the  Nor'Easter  line of credit being repaid before June 15, 2001 and
the American  Micro line of credit and the  European  Micro  Holdings  term loan
being repaid by August 15, 2001.  Therefore,  the total amount outstanding under
the term loan agreement is reflected in current  maturities of long term debt at
March 31, 2001. 9
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

6           EARNINGS PER SHARE

<TABLE>
<CAPTION>
The calculation of earnings per share is detailed in the table below:

                                                                      THREE MONTHS ENDED                NINE MONTHS ENDED
                                                                           MARCH 31,                        MARCH 31,
                                                                     ----------------------------------------------------------
                                                                      2001             2000              2001           2000
                                                                      ----             ----              ----           ----
<S>                                                                <C>              <C>              <C>             <C>
EARNINGS
Net loss (in thousands)                                             $ (2,517)         $(1,308)         $(2,739)        $(1,090)
                                                                   ---------        ---------        ---------       ---------
WEIGHTED AVERAGE NUMBER OF SHARES
Outstanding common stock during the period                         5,003,639        4,933,900        4,959,882       4,933,900
Contingently issuable shares                                              --           24,392               --          74,504
                                                                   ---------        ---------        ---------       ---------
BASIC WEIGHTED AVERAGE NUMBER OF SHARES                            5,003,639        4,958,292        4,959,882       5,008,404
Effect of dilutive stock options and other contingent shares              --               --               --              --
                                                                   ---------        ---------        ---------       ---------
DILUTED WEIGHTED AVERAGE NUMBER OF SHARES                          5,003,639        4,958,292        4,959,882       5,008,404
                                                                   =========        =========        =========       =========
Basic earnings per share                                              $(0.50)          $(0.26)          $(0.55)         $(0.22)
                                                                   =========        =========        =========       =========
Diluted earning per share                                             $(0.50)          $(0.26)          $(0.55)         $(0.22)
                                                                   =========        =========        =========       =========
</TABLE>

During the  nine-month  period-ended  March 31, 2001,  the Company issued 95,767
shares of common  stock,  which  reflected  69,739 and 25,982  weighted  average
shares  for  the  three-month  and  nine-month  period  ended  March  31,  2001,
respectively.  During the three-month  period-ended  March 31, 2001, the Company
issued  options to purchase  174,000  shares of its common  stock at an exercise
price of $2.00. The above dilutive earnings per share  calculations  exclude the
effect of warrants and options to purchase  1,624,500  and  1,624,500  shares of
common stock for the  three-month  and nine-month  periods ended March 31, 2001,
respectively,  at exercise  prices  ranging  from $2.00 to $12.00  respectively,
because  they  were  anti-dilutive.   The  above  dilutive  earnings  per  share
calculations  exclude the effect of warrants and options to purchase 329,000 and
329,000 shares of common stock for the three-month and nine-month  periods ended
March 31, 2000,  respectively,  at exercise prices ranging from $10.00 to $12.00
respectively,  because  they  were  anti-dilutive.  Also,  see  Note  3  to  the
Consolidated  Condensed  Financial  Statements related to contingently  issuable
shares related to an acquisition. 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 such  amount was  recognized  with the
issuance of the notes payable to the former shareholders.

7           EQUITY LINE OF CREDIT

The Company  previously  entered into an Equity Line of Credit (the "EQUITY LINE
OF CREDIT")  pursuant to which an investor  agreed to purchase up to $20 million
of the  Company's  common  stock at a purchase  price equal to 88% of the market
price.  To date,  the Company  raised $50,000 by issuing 25.020 shares of common
stock under the Equity Line of Credit.  The Company and the  investor  agreed in
principle  subject to  documentation  to  terminate  the  Equity  Line of Credit
effective May 15, 2001. In connection  with such  termination,  all  outstanding
warrants held by the investor and the placement  agent will be  terminated.  The
Company agreed to issue the placement agent warrants to purchase  500,000 shares
of common stock at $5.00 per share,  which warrants become  exercisable  only if
the closing  bid price of such  common  stock is $4.00 per share or more for ten
consecutive trading days.

On May 15, 2001,  the Company also  terminated a consulting  agreement  that was
entered into in connection with the Equity Line of Credit.  Under the consulting
arrangement, the Company previously 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  Line of  Credit,  and as such,  has
offset such  amounts  against  additional  paid-in  capital in the  accompanying
Consolidated  Condensed Balance Sheet at March 31, 2001. The remaining  $105,000
option  value  attributed  to general  consulting  services  was expensed in the
quarter ended September 30, 2000.

                                       10
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

8           BUSINESS-TO-BUSINESS ELECTRONIC COMMERCE STRATEGY

The Company 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  hired Cap  Gemini,  a  European
management  consultancy and information  technology  services firm, to assist in
the  implementation  of this plan.  The Company has  incurred the sum of 755,000
pounds  sterling  ($1,068,000 at exchange rate on March 31, 2001) related to the
feasibility studies and business process design. The Company has capitalized the
sum of 229,000  pounds  sterling  ($324,000 at exchange  rate on March 31, 2001)
related to the actual software development. This amount is reflected in property
and equipment, net on the accompanying  consolidated condensed balance sheets at
March 31,  2001 and June 30,  2000.  During  May 2000,  the  Company  halted the
ongoing  development  being  performed by Cap Gemini until  specific  funding is
obtained to complete the project.  There can be no  assurances  that the Company
will be successful in obtaining funding for this project.  Since the project was
not continued by November 30, 2000,  the Company  incurred a termination  fee to
Cap Gemini of 150,000  pounds  sterling  ($212,000 at exchange rate on March 31,
2001).  This fee had the option to be credited  against  future  invoices of Cap
Gemini upon the continuation of the project.  However, since it is unlikely that
funding for the project will be obtained the termination fee was expensed in the
three-month  period  ended  March 31,  2001.  The Company is  re-evaluating  and
re-defining  the  current  project  based  on  changes  in the  market.  In this
connection,  the Company  decided to  internalize  the project and  continue the
business- to-business electronic strategy.

9           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 alleged  thirty-three  causes of action.  Plaintiffs  claimed,  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 sought
unspecified  compensatory  and punitive  damages,  as well as injunctive  relief
restraining defendants from acting in violation of the alleged agreements.

The  United  States  District  Court for the  Eastern  District  of New York has
dismissed 31 of the 33 claims  brought  against the Company on grounds of "forum
non  conveniens." The Court decided that it would be more appropriate that these
claims be adjudicated in The Netherlands, under Dutch Law. The Judge had granted
the Plaintiffs in the case (Jeffrey and Marie Alnwick and Big Blue Products) the
option to proceed with the remaining two  allegations in United States  District
Court;  Plaintiffs  have requested  that these two counts also be dismissed.  On
April 19, 2001, the Plaintiffs filed a notice of appeal.

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 and nine-month period ended March 31, 2001, the Company has incurred
approximately $217,000 and $572,000 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  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. During the three-month period ended December 31,
2000, the Company and the Alnwicks entered into a liquidation agreement in which
Big Blue Europe would cease operations and liquidate all assets and liabilities.
As of December  31,  2000,  all  operations  have  ceased and a court  appointed
liquidator is handling the remaining liquidation. As part of the liquidation the
Company and the Alnwicks have both  advanced  $85,000 to the  liquidator.  As of
March 31, 2001,  the Company  believes the $85,000 that was advanced will not be
recovered and,  therefore,  a valuation  allowance has been  established for the
$85,000.

                                       11
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.

10          SUBSEQUENT EVENTS

On April 20,  2001,  the Company  received a Nasdaq Staff  Determination  Letter
stating that the  Company's  common  stock  failed to maintain a minimum  market
value of public float of $5.0 million.  As a result,  the Company's common stock
was  delisted  from the Nasdaq Stock  Market on April 27,  2001.  The  Company's
common stock is now quoted on the Over-the-Counter Bulletin Board.

During April 2001 the Company  consolidated  the  operations of Nor'Easter  with
that of American  Micro.  All  purchasing,  warehousing  and accounting  will be
handled by American Micro.  The remaining staff of Nor'Easter will function as a
remote sales office of American Micro.

11          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 March 31, 2001, the Company
did not have any open forward foreign exchange contracts. Foreign currency gains
and  losses,  net were a $294,000  loss and a $226,000  loss for the nine months
ended March 31, 2001 and 2000,  respectively.  The effect of the adoption of the
new Statements was immaterial.

















                                       12
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

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 AGREEMENTS.
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
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 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.  In  April  2001,  Nor'Easter's
operations were  consolidated with American Micro's  operations.  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,  and later changed its
name to Engenis, Ltd. on March 5, 2001. Engenis was formed under the laws of the
United Kingdom to serve as a  business-to-business  electronic  commerce trading
company.
                                       13
<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 are being 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.  As of December  31,  2000,  all
operations  have  ceased  and a  court  appointed  liquidator  is  handling  the
remaining liquidation.

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:

<TABLE>
<CAPTION>
                                                                     PERCENTAGE OF NET SALES

                                                                       THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                            MARCH 31,                    MARCH 31,
                                                           -------------------------------------------------------------------------
                                                                         2001         2000          2001           2000
                                                                         ----         ----          ----           ----
<S>                                                                   <C>          <C>            <C>             <C>
Net sales to third parties                                              99.7%        98.2%          99.7%           97.4%
Net sales to related parties                                             0.3%         1.8%           0.3%            2.6%
                                                                       -----         ----           ----            ----
Total net sales                                                        100.0%       100.0%         100.0%          100.0%
                                                                       -----         ----           ----            ----
Cost of goods sold to third parties                                    (95.6%)      (90.6%)        (90.9%)         (87.4%)
Cost of goods sold to related parties                                   (0.3%)       (1.8%)         (0.2%)          (2.5%)
                                                                       -----         ----           ----            ----
Total cost of goods sold                                               (95.9%)      (92.4%)        (91.1%)         (89.9%)
                                                                       -----         ----           ----            ----
Total gross profit                                                       4.1%         7.6%           8.9%           10.1%
Total operating expenses                                               (13.4%)      (13.6%)        (10.8%)         (10.6%)
                                                                       -----         ----           ----            ----
Operating profit                                                        (9.3%)       (6.0%)         (1.9%)          (0.5%)

Interest income                                                          0.0%         0.0%           0.0%            0.1%
Interest expense                                                        (1.4%)       (0.6%)         (1.1%)          (0.8%)
Equity in income of unconsolidated affiliate                             0.0%        (0.0%)          0.0%            0.0%
                                                                       -----         ----           ----            ----
Loss before income taxes                                               (10.7%)       (6.6%)         (3.0%)          (1.2%)
Income taxes                                                            (1.8%)        1.2%          (0.6%)          (0.0%)
                                                                       -----         ----           ----            ----
Net loss                                                               (12.5%)       (5.4%)         (3.6%)          (1.2%)
                                                                       =====         ====           ====            ====
</TABLE>

                                       14
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

THREE-MONTH PERIOD ENDED MARCH 31, 2001 AND 2000

TOTAL NET SALES.  Total net sales decreased $4.3 million,  or 17.4%,  from $24.4
million in the  three-month  period ended March 31, 2000 to $20.1 million in the
comparable  period in 2001.  Excluding net sales to related  parties,  net sales
decreased $3.8 million,  or 16.1%, from $23.9 million in the three-month  period
ended March 31, 2000 to $20.1  million in the  comparable  period in 2001.  This
decrease  was  attributable  to a decrease in sales of $1.0  million at European
Micro UK due to the a  significant  decrease  in the  exchange  rate from pounds
sterling to US dollars, a decrease in sales of $2.0 million at Colchester, and a
decrease in sales of $929,000 at American  Micro due to a general  softening  in
the market.

Net sales to related parties decreased $386,000,  or 88.1%, from $437,000 in the
three-month  period ended March 31, 2000, to $51,000 in the comparable period in
2001.  Sales to  Technology  Express  have  decreased  as  product  availability
decreased.

GROSS PROFIT.  Gross profit decreased $1.0 million,  or 55.1%, from $1.9 million
in the  three-month  period ended March 31, 2000, to $833,000 in the  comparable
period in 2001. Gross profit excluding related party transactions decreased $1.0
million,  or 55.7%, from $1.9 million in the three-month  period ended March 31,
2000 to $827,000 the comparable  period in 2001. This decrease was  attributable
to a decrease of $600,000 at European  Micro UK due to the decrease in sales and
a  write-down  of  inventory  causing a decrease  in gross  margin from 8.01% to
3.74%.  This decrease in gross margin was also related to poor market conditions
in  February,  as well as decreases  of $107,000 at  Colchester  and $343,000 at
Nor'Easter.  This  decrease  was  partially  offset by an increase of $25,000 at
American  Micro.  American  Micro's gross profit  increased  despite lower sales
volume with an increase  in gross  margin from 10.95% to 14.56% by changing  the
product mix from low margin components to higher margin complete systems.

Gross profit  attributable to related party sales increased $17,000,  or 150.7%,
from a negative  $12,000 in the  three-month  period  ended March 31,  2000,  to
$5,000 in the  comparable  period in 2001.  This  increase  is  attributable  to
Technology Express buying some overstock product in the three-month period ended
March 31, 2000 at a loss, compared to buying in demand product in the comparable
period in 2001.

Gross margins decreased by 3.5% from 7.6% in the three-month  period ended March
31,  2000 to 4.1% in the  comparable  period in 2001.  Excluding  related  party
transactions  gross margin  decreased 3.7% from 7.8% in the  three-month  period
ended March 31, 2000 to 4.1% in the  comparable  period in 2001.  This change is
related to the net of a decrease at European Micro UK, Nor'Easter and Colchester
and an increase at American Micro.

Foreign  exchange  gains and  losses,  net,  decreased  $21,000,  from a loss of
$145,000 in the three-month period ended March 31, 2000 to a loss of $124,000 in
the  comparable  period  in  2001.  This  movement  was  attributable  to  fewer
transactions  during the period  even though the Euro  weakened  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
decreased from 13.6% during the three-month period ended March 31, 2000 to 13.4%
in the comparable  period in 2001. This decrease was  attributable to a decrease
in operating  expenses as a percentage  of total net sales from 11.9% to 9.9% at
European  Micro  UK,  which  is due  to a  decrease  in  operating  expenses  of
approximately  $365,000 from $1.6 million in the three-month  period ended March
31, 2000 to $1.2  million in the  comparable  period in 2001.  This  decrease in
expenses  at   European   Micro  UK  is  due  to  large   expenditures   on  the
Business-to-Business Electronic Commerce project in the three-month period ended
March 31, 2000 and a reduction  in  personnel  and the  decrease in gross profit
reduced commission and bonus expense, which are a function of gross profit. This
decrease  was  partially  offset  by an  increase  in  operating  expenses  as a
percentage of total net sales from 3.98% to 5.81% at Nor'Easter, which is due to
an increase in operating expenses of approximately  $58,000 from $128,000 in the
three-month  period ended March 31, 2000 to $186,000 in the comparable period in
2001.  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  decrease  was  partially  offset also by an increase in
operating  expenses as a  percentage  of total net sales from 2.20% to 32.62% at
Colchester,  which is due to a large decrease in sales, while operating expenses
increased.  This decrease was also partially  offset by an increase in operating
expenses  as a  percentage  of total net sales from 8.99% to 10.81% at  American
Micro,  which is due to the  increase in labor  required to  configure  complete
systems, which is the current focus.

INTEREST  EXPENSE.  Interest  expense  increased  by $137,000  from  $148,000 in
three-month  period ended March 31, 2000 to $285,000 in the comparable period in
2001. This was attributable to a increased reliance on short-term  borrowings to
finance accounts receivable and inventory balances.

                                       15
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

INTEREST IN JOINT  VENTURE.  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  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.  During the  three-month
period  ended  December 31,  2000,  the Company and the Alnwicks  entered into a
liquidation  agreement  in which Big Blue  Europe  would  cease  operations  and
liquidate all assets and  liabilities.  As of December 31, 2000,  all operations
have  ceased  and  a  court  appointed  liquidator  is  handling  the  remaining
liquidation.  As part of the  liquidation the Company and the Alnwicks have both
advanced  $85,000 to the liquidator.  As of March 31, 2001, the Company believes
the $85,000 that was advanced will not be recovered and, therefore,  a valuation
allowance has been established for the $85,000.

INCOME TAXES. Income tax expense results from taxes on income earned by European
Micro UK. The  Company  has not  accrued a tax  expense or benefit  for the U.S.
operations.

NINE-MONTH PERIOD ENDED MARCH 31, 2001 AND 2000

TOTAL NET SALES.  Total net sales decreased $15.8 million,  or 17.2%, from $91.7
million in the  nine-month  period ended March 31, 2000 to $75.9  million in the
comparable  period in 2001.  Excluding net sales to related  parties,  net sales
decreased $13.6 million,  or 15.2%,  from $89.3 million in the nine-month period
ended March 31, 2000 to $75.7  million in the  comparable  period in 2001.  This
decrease was  attributable  to a decrease in sales of $14.0  million at European
Micro UK due to the  comparison  to the sales  run up  caused  by the  impending
millennium, and a significant decrease in the exchange rate from pounds sterling
to US dollars,  a decrease of  $776,000  at  Colchester,  and a decrease of $1.0
million at American Micro. This decrease of net sales was partially offset by an
increase in sales of $2.2 million at Nor'Easter.

Net sales to related parties decreased $2.2 million, or 91.5%, from $2.4 million
in the  nine-month  period ended March 31, 2000,  to $198,000 in the  comparable
period  in  2001.  Sales  to  Technology   Express  have  decreased  as  product
availability decreased.

GROSS PROFIT.  Gross profit decreased $2.5 million,  or 27.1%, from $9.3 million
in the nine-month period ended March 31, 2000, to $6.8 million in the comparable
period in 2001. Gross profit excluding related party transactions decreased $2.5
million,  or 26.9%,  from $9.2 million in the nine-month  period ended March 31,
2000 to $6.7  million  in the  comparable  period  in 2001.  This  decrease  was
attributable  to a decrease of $3.3 million at European  Micro UK. This decrease
in gross profit mainly resulted from the excellent  margins gained from the sale
of  memory  modules  during  October  1999 due to the  Taiwan  earthquake.  This
decrease was also  attributable  to a decrease of $178,000 at  Nor'Easter.  This
decrease  was  partially  offset by an increase  of $957,000 at American  Micro.
American Micro's gross profit increased despite lower sales volume by increasing
the gross  margin  from  10.46% to 18.73% by  changing  the product mix from low
margin components to higher margin complete systems.

Gross profit  attributable to related party sales decreased  $30,000,  or 76.9%,
from $39,000 in the  nine-month  period  ended March 31, 2000,  to $9,000 in the
comparable  period in 2001. As discussed above, this decrease is attributable to
decreased sales due to a lack of product availability.

Gross margins  decreased by 1.2% from 10.1% in the nine-month period ended March
31,  2000 to 8.9% in the  comparable  period in 2001.  Excluding  related  party
transactions,  gross margin decreased from 10.3% in the nine-month  period ended
March 31, 2000 to 8.9% in the comparable  period in 2001. This change is related
to the net of a decrease at European Micro (UK) and Nor'Easter,  and an increase
at American Micro.

Foreign  exchange gains and losses,  net, changed from a loss of $226,000 in the
nine-month  period ended March 31, 2000, to a loss of $294,000 in the comparable
period in 2001. 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 10.6% for the nine-month  period ended March 31, 2000 to 10.8% in
the comparable period in 2001. This was attributable to an increase in operating
expenses  as a  percentage  of total  net sales  from 8.9% to 10.6% at  American
Micro,  which is due to a  decrease  in sales as  operating  expenses  increased
slightly.  Operating  expenses as a percentage of total net sales increased from
3.7% to 5.2% at Nor'Easter, which is due to an increase in operating expenses of
approximately  $274,000 from $415,000 in the  nine-month  period ended March 31,
2000 to $689,000 in the comparable  period in 2001. 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

                                       16
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

improvements.  Operating  expenses as a percentage of total net sales  increased
from  6.6% to 8.6% at  Colchester,  which  is due to a  decrease  in  sales,  as
operating expenses increased slightly. These were partially offset by a decrease
in operating  expenses as a  percentage  of total net sales from 9.4% to 8.2% at
European  Micro  UK,  which  is due  to a  decrease  in  operating  expenses  of
approximately  $1.9  million from $5.5  million in the  nine-month  period ended
March 31, 2000 to $3.6 million in the comparable  period in 2001.  This decrease
in expenses is due to large expenditures on the Business-to-Business  Electronic
Commerce project in the three-month  period ended March 31, 2000 and a reduction
in  personnel  and the  decrease in gross profit  reduced  commission  and bonus
expense, which are a function of gross profit.

INTEREST  EXPENSE.  Interest  expense  increased  by $182,000  from  $676,000 in
nine-month  period ended March 31, 2000 to $858,000 in the comparable  period in
2001. This was attributable to a increased reliance on short-term  borrowings to
finance accounts receivable and inventory balances.

INTEREST IN JOINT  VENTURE.  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  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.  During the  three-month
period  ended  December 31,  2000,  the Company and the Alnwicks  entered into a
liquidation  agreement  in which Big Blue  Europe  would  cease  operations  and
liquidate all assets and  liabilities.  As of December 31, 2000,  all operations
have  ceased  and  a  court  appointed  liquidator  is  handling  the  remaining
liquidation.  As part of the  liquidation the Company and the Alnwicks have both
advanced  $85,000 to the liquidator.  As of March 31, 2001, the Company believes
the $85,000 that was advanced will not be recovered and, therefore,  a valuation
allowance has been established for the $85,000.

INCOME TAXES. Income tax expense results from taxes on income earned by European
Micro UK. The  Company  has not  accrued a tax  expense or benefit  for the U.S.
operations.

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  operating  losses  during  fiscal year 2000 and
fiscal year 2001 to date. 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.

We were not in compliance with certain loan agreement financial covenants during
fiscal year 2000. While we have obtained waivers from these covenant  violations
existing  at June 30,  2000,  in most  instances  the waivers  only  address the
covenant-reporting  period ending  thereon.  Management  has  initiated  certain
actions  intended to improve  liquidity  and  operating  results.  Such  actions
include,  among  other  things,  (i)  modifying  the terms of certain  financial
covenants (ii) canceling the Cap Gemini contract to reduce costs and internalize
the  activities  related to its  electronic  commerce  strategy  until  specific
funding  can be obtained  (see Note 8 to the  Consolidated  Condensed  Financial
Statements),   (iii)  obtaining  extensions  and  subordination  of  payment  of
contingent  earn-out  amounts  relating to calendar year 2000 under the American
Micro purchase  agreement,  (iv) adjusting staffing levels, and (v) implementing
steps to attempt to increase  sales  volume and lower  inventory  levels.  As of
March 31, 2001, we were not in compliance with two of the financial covenants in
the agreements.  Given our current and expected operating results,  it is likely
that we will remain out of compliance  with such covenant  requirements.  Due to
these operating results and the covenant violations,  the lender on the American
Micro and Nor'Easter lines of credit and the European Micro Holdings,  Inc. term
loan has agreed in principle,  subject to  documentation,  to waive the covenant
violations subject to the Nor'Easter line of credit being repaid before June 15,
2001 and the American  Micro line of credit and the European Micro Holdings term
loan  being  repaid by  August  15,  2001.  These  loans may be repaid  from the
Company's  working capital and new  borrowings.  The Company has had discussions
with a lender about  providing new borrowings to the Company.  No assurances can
be given that such borrowings  will be available on favorable  terms, or at all.
The Company's potential inability to obtain new borrowings gives question to its
ability to continue as a going concern.


                                       17
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

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. These factors increase the liquidity risk to our company.

CASH  REQUIREMENTS.  Our primary cash  requirements are for operating  expenses,
funding  accounts  receivable,   purchasing  inventory,  acquisitions  and  debt
service.  We will also need to obtain  cash to repay the lines of credit and the
term  loan  to  SouthTrust  Bank.  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 ($2.8 million) at March
31, 2001. The accounts receivable financing provides for a borrowing base of 85%
of  accounts  receivable,  with a limit of 6.2  million  pounds  sterling  ($8.8
million  on March 31,  2001).  Either  party  giving  three  months'  notice can
terminate  this  facility.  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 5.75% at March 31, 2001.

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 8.0% at March 31, 2001.
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.  The new
facilities  also place certain  restrictions on our ability to pay dividends and
to make  capital  expenditures,  among  other  things,  and  include 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.

As of March  31,  2001,  we were  not in  compliance  with two of the  financial
covenants in the agreements.  Given our current and expected  operating results,
it is  likely  that  we  will  remain  out  of  compliance  with  such  covenant
requirements.  Due to these operating results and the covenant  violations,  the
lender on the  American  Micro and  Nor'Easter  lines of credit and the European
Micro   Holdings,   Inc.  term  loan  has  agreed  in   principle,   subject  to
documentation,  to waive the covenant  violations subject to the Nor'Easter line
of credit  being  repaid  before  June 15, 2001 and the  American  Micro line of
credit and the  European  Micro  Holdings  term loan being  repaid by August 15,
2001.  These  loans may be repaid  from the  Company's  working  capital and new
borrowings.  The Company has had  discussions  with a lender about providing new
borrowings to the Company.  No assurances can be given that such borrowings will
be available on favorable terms, or at all.

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.

                                       18
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

On October  28,  1999,  we  obtained  a $1.5  million  term loan.  The term loan
agreement is with the lender of 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 March 31,  2001 was 5.1%.  At March  31,  2001,  the
outstanding  balance on the term loan was $750,000.  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.  We were not in compliance  for the March 31,
2001  reporting  period.  Due  to  these  operating  results  and  the  covenant
violations,  the lender on the American Micro and Nor'Easter lines of credit and
the European Micro Holdings, Inc. term loan has agreed in principle,  subject to
documentation,  to waive the covenant  violations subject to the Nor'Easter line
of credit  being  repaid  before  June 15, 2001 and the  American  Micro line of
credit and the  European  Micro  Holdings  term loan being  repaid by August 15,
2001.  Therefore the total amount  outstanding  under the term loan agreement is
reflected in current maturities of long term debt at March 31, 2001.

On July 1, 1999, we acquired  American Micro for a purchase price of $1,131,000,
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 of
approximately  $1,839,000  was  funded  through  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 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,
subject  to the  rights of  SouthTrust  Bank.  The loan will be due and  payable
thirty days after no amounts are due to SouthTrust  Bank. This amount is secured
by a pledge of the shares of common stock of American Micro held by the Company.
This security has been subordinated to SouthTrust Bank.

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  ($2,412,000 at
March 31, 2001). The purchase price was financed in part by a loan in the amount
of 1,312,000 pounds sterling ($1,856,000 at March 31, 2001). This loan calls for
monthly  payments  of  principal  and  interest  in the amount of 15,588  pounds
sterling ($22,000 at March 31, 2001) 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.  Given  European Micro
UK's current and expected operating results, it is likely that European Micro UK
will be out of compliance with certain  covenant  requirements at June 30, 2001.
The Company is evaluating options to address this non-compliance.

The Company  previously  entered into an Equity Line of Credit (the "EQUITY LINE
OF CREDIT")  pursuant to which an investor  agreed to purchase up to $20 million
of the  Company's  common  stock at a purchase  price equal to 88% of the market
price.  To date,  the Company  raised $50,000 by issuing 25.020 shares of common
stock under the Equity Line of Credit.  Thee Company and the investor agreed, in
principle,  subject to  documentation,  to  terminate  the Equity Line of Credit
effective May 15, 2001. In connection  with such  termination,  all  outstanding
warrants held by the investor and the placement  agent will be  terminated.  The
Company agreed to issue the placement agent warrants to purchase  500,000 shares
of common stock at $5.00 per share,  which warrants become  exercisable  only if
the closing  bid price of such  common  stock is $4.00 per share or more for ten
consecutive trading days.

On May 15, 2001,  the Company also  terminated a consulting  agreement  that was
entered into in connection with the Equity Line of Credit.  Under the consulting
arrangement, the Company previously 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  Line of  Credit,  and as such,  has
offset such  amounts  against  additional  paid-in  capital in the  accompanying
Consolidated  Condensed Balance Sheet at March 31, 2001. The remaining  $105,000
option  value  attributed  to general  consulting  services  was expensed in the
quarter ended September 30, 2000.

                                       19
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

Net cash provided by operating  activities  during the  nine-month  period ended
March 31, 2001 amounted to $1.9 million. Significant factors providing cash were
a decrease  in trade  receivables  of $3.9 and a decrease in  inventory  of $1.9
million.  The amount of cash provided by the Company's  operations was partially
offset by a decrease in trade payables of $1.1 million and a decrease in accrued
expenses and other current liabilities of $1.4 million.

Cash used in investing activities amounted to $212,000. This primarily consisted
of purchases of fixed assets.

Cash used by  financing  activities  amounted to $2.6  million.  This  primarily
consisted  of $2.3 million paid down on  short-term  borrowings  and payments on
long-term debt of $477,000.

Overall,  the Company  experienced  a net  decrease in cash of $578,000  for the
nine-month period ended March 31, 2001.

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

                                       20
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

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.
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.

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 March 31, 2001,  the Company did not have any open forward  foreign  exchange
contracts.  Foreign currency gains and losses,  net were a $124,000 loss for the
three-months ended March 31, 2001, and a $145,000 loss for the comparable period
in 2000.  Foreign  currency  gains and losses,  net were a $294,000 loss for the
nine-months  ended March 31, 2001, and a $226,000 loss for the comparable period
in 2000.

RECENT ACCOUNTING PRONOUNCEMENTS

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 March 31, 2001, the Company
did not have any open forward foreign exchange contracts. Foreign currency gains
and  losses,  net were a $294,000  loss and a $226,000  loss for the nine months
ended March 31, 2001 and 2000,  respectively.  The effect of the adoption of the
new Statements was immaterial.












                                       21
<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 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.

The  United  States  District  Court for the  Eastern  District  of New York has
dismissed 31 of the 33 claims  brought  against the Company on grounds of "forum
non  conveniens." The Court decided that it would be more appropriate that these
claims be adjudicated in The Netherlands, under Dutch Law. The Judge had granted
the Plaintiffs in the case (Jeffrey and Marie Alnwick and Big Blue Products) the
option to proceed with the remaining two  allegations in United States  District
Court;  Plaintiffs  have requested  that these two counts also be dismissed.  On
April 19, 2001, the Plaintiffs filed a notice of appeal.

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.

The  Company  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,  collateralized 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.  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 of
8.0% at March 31, 2001.  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. 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 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


                                       22
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

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 5 to the Consolidated Condensed Financial
Statements.

Each of the term loan and the two lines of credit 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.
As of March 31,  2001,  the  Company was not in  compliance  with the "Net Worth
Requirements" and "Fixed Charge Coverage Ratio"  Covenants.  Given the Company's
current and  expected  operating  results,  it is likely  that the Company  will
remain out of compliance with such covenant requirements. Due to these operating
results  and the  covenant  violations,  the  lender on the  American  Micro and
Nor'Easter  lines of credit and the European Micro Holdings,  Inc. term loan has
agreed in principle, subject to documentation,  to waive the covenant violations
subject to the  Nor'Easter  line of credit being repaid before June 15, 2001 and
the American  Micro line of credit and the  European  Micro  Holdings  term loan
being repaid by August 15, 2001.

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

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

ITEM 5.     OTHER INFORMATION.

On  April 12,  2001,  Barrett  Sutton  resigned  from the  Company's  Board of
Directors. The Company's Board of Directors has not filled this vacancy.

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

(a)         Exhibits.
















                                       23
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.

<TABLE>
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.

     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 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.



                                       24
<PAGE>
                          EUROPEAN MICRO HOLDINGS, INC.
EXHIBIT
NO.            DESCRIPTION                                         LOCATION
---            -----------                                         --------

    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.

    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.


                                       25
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.
EXHIBIT
NO.            DESCRIPTION                                         LOCATION
---            -----------                                         --------

    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.

    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.


                                       26
<PAGE>

                          EUROPEAN MICRO HOLDINGS, INC.
EXHIBIT
NO.            DESCRIPTION                                         LOCATION
---            -----------                                         --------

    10.34      Secured Promissory Note dated as of February 19,    Incorporated by reference to Exhibit 10.40
               2001, given by the Company in favor of John B.      to Registrant's Form 10-Q for the quarter
               Gallagher                                           ended December 31, 2000.

    10.35      Secured Promissory Note dated as of February 19,    Incorporated by reference to Exhibit 10.40
               2001, given by the Company in favor of John P.      to Registrant's Form 10-Q for the quarter
               Gallagher                                           ended December 31, 2000.

    10.36      Pledge and Security Agreement dated as of February  Incorporated by reference to Exhibit 10.40
               19, 2001, among the Company, John B. Gallagher and  to Registrant's Form 10-Q for the quarter
               John P. Gallagher                                   ended December 31, 2000.

    10.37      Termination Agreement dated as of May 15, 2001,     Provided herewith.
               between the Company and the May Davis Group, Inc.

    10.38      Termination Agreement dated as of May 15, 2001,     Provided herewith.
               between the Company and Spinneret Financial
               System, Ltd.

    10.39      Termination Agreement dated as of May 15, 2001,     Provided herewith.
               between the Company and Persia Consulting Group,
               Inc.

    10.40      Warrant dated as of May 15, 2001, given by the      Provided herewith.
               Company to the May Davis Group, Inc.

    11.01      Statement re: Computation of Earnings               Provided herewith.

    15.01      Letter re: Unaudited Financial Information          Not applicable.

    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.
</TABLE>


(b)         Reports on Form 8-K.

None.






                                       27
<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:      May 21, 2001                    EUROPEAN MICRO HOLDINGS, INC.

                                            By:  /s/ Harry D. Shields
                                               -----------------------------
                                                 Harry D. Shields, Co-President
























                                       28
<PAGE>

                                  EXHIBIT 10.37
                                  -------------

                              TERMINATION AGREEMENT
                              ---------------------

         THIS TERMINATION AGREEMENT (the "Agreement") is entered into on May 15,
2001,  by and  between  European  Micro  Holdings,  Inc.,  a Nevada  corporation
("EMCC") and the May Davis Group, Inc. ("May Davis").

         WHEREAS, on August 24, 2000, the parties entered into a Placement Agent
Agreement (the "Placement  Agent  Agreement")  pursuant to which May Davis would
act as EMCC's  exclusive  placement  agent in connection  with an Equity Line of
Credit Agreement; and

         WHEREAS,  in connection with the Placement Agent  Agreement,  on August
24, 2000,  EMCC granted to May Davis a Class A Warrant and a Class B Warrant and
the parties entered into a Registration  Rights  Agreement and Escrow  Agreement
(the Placement Agent Agreement,  the Class A Warrant,  the Class B Warrant,  the
Registration Rights Agreement and the Escrow Agreement are collectively referred
to as the "Transaction Documents"); and

         WHEREAS,  subsequent  to August 24,  2000,  the Class A Warrant and the
Class B Warrant were transferred to the persons and in the quantities identified
in Schedule A hereto; and

         WHEREAS,  the  parties  hereto  desire  to  terminate  the  Transaction
Documents in their entirety on the terms set forth herein.

         NOW THEREFORE,  in consideration of the mutual promises,  covenants and
conditions contained herein and for other good and valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereto
agree as follows:

         1.  TERMINATION.  Each of EMCC  and May  Davis  hereby  terminate  each
Transaction Document in its entirety,  including, without limitation, all of May
Davis'  right to any and all  warrants  to purchase  shares of capital  stock of
EMCC. As a result of this  provision,  neither EMCC nor May Davis shall have any
rights or obligations under or with respect to any Transaction Document. Each of
EMCC and May Davis  will sign and  deliver  to First  Union  National  Bank (the
"ESCROW AGENT"), as escrow agent under the Escrow Agreement, the notice attached
as Schedule B hereto  notifying  the Escrow Agent that the Escrow  Agreement has
been terminated.

         2. RETURN OF ORIGINAL CLASS A WARRANT AND CLASS B WARRANT.  On the date
hereof, May Davis shall deliver to EMCC originally  executed copies of the Class
A Warrant and the Class B Warrant,  which shall be marked  "cancelled." By their
signature  below,  each of Mark Angelo,  Hunter Singer,  Joseph Donahue,  Robert
Farrell and Persia Consulting  acknowledge and consent to the termination of the
Class A Warrant and the Class B Warrant previously assigned to them by May Davis
and that none of them  shall have  rights  whatsoever  under  either the Class A
Warrant or the Class B Warrant.

         3. WARRANTS. In consideration for May Davis' agreement to terminate the
Transaction  Documents,  EMCC shall grant to May Davis or its designees warrants

                                       1

<PAGE>

to  purchase  up to 500,000  shares of common  stock of EMCC at $5.00 per share,
provided that such warrants become  exercisable only if the closing bid price of
EMCC's common stock is $4.00 per share or more for ten (10) consecutive  trading
days.  The terms of the warrants  granted hereby shall be set forth in a Warrant
Agreement of even date herewith.

         IN  WITNESS  WHEREOF,   the  undersigned  parties  have  executed  this
Agreement as of the date first above written.

                         MAY DAVIS GROUP, INC.

                         By:
                            ----------------------------------------------------
                         Name:
                              --------------------------------------------------
                         Title:
                               -------------------------------------------------


                          EUROPEAN MICRO HOLDINGS, INC.

                          By:
                             --------------------------------------------------
                          Name:
                               ------------------------------------------------
                          Title:
                                -----------------------------------------------



                           ACKNOWLEDGEMENT AND CONSENT
                           ---------------------------

         Each of the undersigned persons hereby acknowledges and consents to the
terms of the foregoing Termination Agreement on the date first set forth above.


                           -----------------------------------------------------
                           Mark Angelo


                           -----------------------------------------------------
                           Hunter Singer


                           -----------------------------------------------------
                           Joseph Donahue


                           -----------------------------------------------------
                           Robert Farrell


                           PERSIA CONSULTING GROUP, INC.

                           By:
                              --------------------------------------------------
                           Name:
                                ------------------------------------------------
                           Title:
                                 -----------------------------------------------


                                       2
<PAGE>




                                   SCHEDULE A

                             TRANSFEREES OF WARRANTS


Class A Warrant

Name:                                                No. of Warrants:
----                                                 ---------------

Mark Angelo                                          113,000
Hunter Singer                                        113,000
Joseph Donahue                                       113,000
Robert Farrell                                       113,000
Persia Consulting Group, Inc.                        48,000


Class B Warrant

Name:                                                No. of Warrants:
----                                                 ---------------

Mark Angelo                                          113,000
Hunter Singer                                        113,000
Joseph Donahue                                       113,000
Robert Farrell                                       113,000
Persia Consulting Group, Inc.                        48,000


<PAGE>


                                   SCHEDULE B
                                   ----------

                       Notice to First Union National Bank


First Union National Bank
407 Main Street
Metuchen, New Jersey 08840
Attention:        Robert Mercado
                  Carmela Agugliaro

RE:   ESCROW  AGREEMENT (THE "ESCROW  AGREEMENT")  DATED AUGUST 24, 2000,  AMONG
      EUROPEAN MICRO HOLDINGS,  INC., THE MAY DAVIS GROUP,  INC. AND FIRST UNION
      NATIONAL BANK, AS ESCROW AGENT

Ladies and Gentlemen:

Please be advised that the undersigned  parties  terminated the Escrow Agreement
effective as of May ___, 2001. As a result,  in accordance  with Section 1(c) of
the Escrow Agreement, the Escrow Period terminated effective May ___, 2001.

Sincerely,

EUROPEAN MICRO HOLDINGS, INC.


By:
   --------------------------------------------------
Name:
     ------------------------------------------------
Title:
      -----------------------------------------------


MAY DAVIS GROUP, INC.


By:
   --------------------------------------------------
Name:
     ------------------------------------------------
Title:
      -----------------------------------------------



<PAGE>


                                  EXHIBIT 10.38
                                  -------------

                              TERMINATION AGREEMENT
                              ---------------------

         THIS TERMINATION AGREEMENT (the "AGREEMENT") is entered into on May 15,
2001,  by and  between  European  Micro  Holdings,  Inc.,  a Nevada  corporation
("EMCC") and Spinneret Financial System, Ltd. (the "INVESTOR").

         WHEREAS, on August 24, 2000, the parties entered into an Equity Line of
Credit Agreement (the "Equity Line of Credit Agreement")  pursuant to which EMCC
would issue and sell to the Investor,  from time to time, up to $20.0 million of
EMCC's common stock; and

         WHEREAS,  in connection  with the Equity Line of Credit  Agreement,  on
August 24,  2000,  EMCC  granted to the  Investor  certain  registration  rights
described  in a  Registration  Rights  Agreement  (the  Equity  Line  of  Credit
Agreement and the Registration Rights Agreements are collectively referred to as
the "Transaction Documents"); and

         WHEREAS,  the  parties  hereto  desire  to  terminate  the  Transaction
Documents in their entirety on the terms set forth herein.

         NOW THEREFORE,  in consideration of the mutual promises,  covenants and
conditions contained herein and for other good and valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereto
agree as follows:

         Termination.  Each  of EMCC  and the  Investor  hereby  terminate  each
Transaction Document in its entirety,  including, without limitation, all of the
Investor's  right to purchase  shares of capital  stock of EMCC.  As a result of
this  provision,  neither  EMCC  nor the  Investor  shall  have  any  rights  or
obligations under or with respect to any Transaction Document.

         IN  WITNESS  WHEREOF,   the  undersigned  parties  have  executed  this
Agreement as of the date first above written.

                        SPINNERET FINANCIAL SYSTEM, LTD.

                        By:
                           --------------------------------------------------
                        Name:
                             ------------------------------------------------
                        Title:
                              -----------------------------------------------


                        EUROPEAN MICRO HOLDINGS, INC.

                        By:
                           --------------------------------------------------
                        Name:
                             ------------------------------------------------
                        Title:
                              -----------------------------------------------

<PAGE>


                                  EXHIBIT 10.39
                                  -------------

                              TERMINATION AGREEMENT
                              ---------------------

         THIS TERMINATION AGREEMENT (the "Agreement") is entered into on May 15,
2001,  by and  between  European  Micro  Holdings,  Inc.,  a Nevada  corporation
("EMCC") and Persian Consulting Group, Inc. (the "Consultant").


         WHEREAS,  on August 24, 2000,  the parties  entered into an Amended and
Restated Consulting Agreement (the "Consulting Agreement") pursuant to which the
Consultant would provide certain consulting services to EMCC; and

         WHEREAS,   the  parties  hereto  desire  to  terminate  the  Consulting
Agreement in its entirety on the terms set forth herein.

         NOW THEREFORE,  in consideration of the mutual promises,  covenants and
conditions contained herein and for other good and valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereto
agree as follows:

         Termination.  Each of EMCC and the  Consultant  hereby  terminate  each
Consulting  Agreement in its entirety.  As a result of this  provision,  neither
EMCC nor the  Consultant  shall  have any  rights or  obligations  under or with
respect to the Consulting Agreement.

         IN  WITNESS  WHEREOF,   the  undersigned  parties  have  executed  this
Agreement as of the date first above written.

                          PERSIA CONSULTING GROUP, INC.

                          By:
                             --------------------------------------------------
                          Name:
                               ------------------------------------------------
                          Title:
                                -----------------------------------------------



                          EUROPEAN MICRO HOLDINGS, INC.

                          By:
                             --------------------------------------------------
                          Name:
                               ------------------------------------------------
                          Title:
                                -----------------------------------------------

<PAGE>
                                  EXHIBIT 10.40

THE SECURITIES  REPRESENTED BY THIS WARRANT HAVE NOT BEEN  REGISTERED  UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,  OR APPLICABLE  STATE  SECURITIES  LAWS. THE
SECURITIES  HAVE BEEN ACQUIRED FOR  INVESTMENT  AND MAY NOT BE OFFERED FOR SALE,
SOLD,  TRANSFERRED  OR  ASSIGNED  IN THE  ABSENCE OF AN  EFFECTIVE  REGISTRATION
STATEMENT FOR THE SECURITIES  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED,  OR
APPLICABLE  STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY  TO THE ISSUER THAT  REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE  STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.  NOTWITHSTANDING  THE FOREGOING,  THIS WARRANT MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT.

                          EUROPEAN MICRO HOLDINGS, INC.

                        WARRANT TO PURCHASE COMMON STOCK

Warrant No.: R-001                                     Number of Shares: 500,000
Date of Issuance: May 15, 2001


European Micro Holdings,  Inc., a Nevada  corporation  (the  "Company"),  hereby
certifies  that,  for Ten  United  States  Dollars  ($10.00)  and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  May  Davis  Group,  Inc.,  the  registered  holder  hereof or its
permitted  assigns,  is  entitled,  subject  to the terms set  forth  below,  to
purchase from the Company upon  surrender of this Warrant,  at any time or times
on or after  the date  hereof,  but not after  11:59  P.M.  Eastern  Time on the
Expiration Date (as defined herein) Five Hundred  Thousand  (500,000) fully paid
and nonassessable shares of Common Stock (as defined herein) of the Company (the
"WARRANT  SHARES") at the Warrant Exercise Price provided in Section 1(b) below;
PROVIDED,  HOWEVER,  that (a) this Warrant shall become  exercisable only if the
Closing Bid Price of the  Company's  Common Stock is $4.00 per share or more for
ten (10)  consecutive  trading  days and (b) in no event  shall  the  holder  be
entitled to exercise  this  Warrant for a number of Warrant  Shares in excess of
that number of Warrant Shares which, upon giving effect to such exercise,  would
cause the aggregate number of shares of Common Stock  beneficially  owned by the
holder  and its  affiliates  to exceed  4.99% of the  outstanding  shares of the
Common Stock  following such  exercise,  except within 60 days of the Expiration
Date. For purposes of the foregoing  proviso,  the aggregate number of shares of
Common Stock  beneficially  owned by the holder and its affiliates shall include
the number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the  determination  of such  proviso is being  made,  but shall
exclude  shares of Common Stock which would be issuable upon (i) exercise of the
remaining,  unexercised  Warrants  beneficially  owned  by the  holder  and  its
affiliates  and (ii) exercise or conversion of the  unexercised  or  unconverted
portion of any other securities of the Company  beneficially owned by the holder
and its affiliates  (including,  without  limitation,  any convertible  notes or
preferred stock) subject to a limitation on conversion or exercise  analogous to

<PAGE>

the limitation contained herein.  Except as set forth in the preceding sentence,
for purposes of this  paragraph,  beneficial  ownership  shall be  calculated in
accordance  with  Section  13(d) of the  Securities  Exchange  Act of  1934,  as
amended.  For purposes of this Warrant, in determining the number of outstanding
shares of Common Stock a holder may rely on the number of outstanding  shares of
Common  Stock as reflected  in (1) the  Company's  most recent Form 10-Q or Form
10-K, as the case may be, (2) a more recent public  announcement  by the Company
or (3) any other notice by the Company or its transfer  agent  setting forth the
number of shares of Common Stock  outstanding.  Upon the written  request of any
holder, the Company shall promptly,  but in no event later than one (1) Business
Day following the receipt of such notice,  confirm in writing to any such holder
the number of shares of Common Stock then  outstanding.  In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to
the  exercise of Warrants (as defined  below) by such holder and its  affiliates
since the date as of which such number of outstanding shares of Common Stock was
reported.

         Section 1.

                  (a) TERMINATION AGREEMENT. This Warrant (the "WARRANT") issued
pursuant  to the Termination Agreement of even date herewith between the Company
and the May Davis Group, Inc.

                  (b) DEFINITIONS. The following words and terms as used in this
Warrant shall have the following meanings:

                           (i) "BUSINESS DAY" means any day other than Saturday,
Sunday  or  other  day on  which  commercial  banks  in the City of New York are
authorized or required by law to remain closed.

                           (ii)  "CLOSING BID PRICE" means the closing bid price
of Common  Stock as quoted on the  Principal  Market (as  reported by  Bloomberg
Financial Markets ("BLOOMBERG") through its "Volume at Price" function).

                           (iii) "COMMON  STOCK" means (i) the Company's  common
stock,  par value $0.01 per share,  and (ii) any  capital  stock into which such
Common  Stock shall have been  changed or any  capital  stock  resulting  from a
reclassification of such Common Stock.

                           (iv)  "EXPIRATION  DATE" means August 23, 2005 or, if
such date falls on a Saturday,  Sunday or other day on which banks are  required
or  authorized  to be closed in the City of New York or the State of New York or
on which  trading  does not take place on the  Principal  Exchange or  automated
quotation  system on which the Common  Stock is traded (a  "HOLIDAY"),  the next
date that is not a Holiday.

                           (v) "OPTIONS"  means any rights,  warrants or options
to subscribe for or purchase Common Stock or Convertible Securities.



                                       2
<PAGE>

                           (vi)  "PERSON"   means  an   individual,   a  limited
liability  company, a partnership,  a joint venture, a corporation,  a trust, an
unincorporated  organization  and a  government  or  any  department  or  agency
thereof.

                           (vii)  "PRINCIPAL  MARKET"  means the New York  Stock
Exchange,  the American Stock Exchange,  the Nasdaq National Market,  the Nasdaq
SmallCap  Market,  whichever is at the time the  principal  trading  exchange or
market  for such  security,  or the  over-the-counter  market on the  electronic
bulletin  board for such security as reported by BLOOMBERG or, if no bid or sale
information is reported for such security by BLOOMBERG,  then the average of the
bid prices of each of the market  makers for such  security  as  reported in the
"pink sheets" by the National Quotation Bureau, Inc.

                           (viii)  "SECURITIES  ACT" means the Securities Act of
1933, as amended.

                           (ix)  "WARRANT"  means this  Warrant and all Warrants
issued in exchange, transfer or replacement thereof.

                           (x) "WARRANT EXERCISE PRICE" shall be $5.00.

                           (xi)  "WARRANT  SHARES"  means  the  shares of Common
Stock issuable at any time upon exercise of this Warrant.

                   (c)      OTHER DEFINITIONAL PROVISIONS.

                           (i)  Except  as  otherwise   specified  herein,   all
references  herein (A) to the Company  shall be deemed to include the  Company's
successors  and (B) to any applicable law defined or referred to herein shall be
deemed  references  to such  applicable  law as the same may have been or may be
amended or supplemented from time to time.

                           (ii) When used in this Warrant,  the words  "HEREIN",
"HEREOF",  and  "HEREUNDER"  and words of similar  import,  shall  refer to this
Warrant  as a whole  and not to any  provision  of this  Warrant,  and the words
"SECTION",  "SCHEDULE",  and "EXHIBIT" shall refer to Sections of, and Schedules
and Exhibits to, this Warrant unless otherwise specified.

                           (iii)  Whenever the context so  requires,  the neuter
gender includes the masculine or feminine,  and the singular number includes the
plural, and vice versa.

          Section 2.        EXERCISE OF WARRANT.

                  (a) Subject to the terms and conditions  hereof,  this Warrant
may be  exercised  by the  holder  hereof  then  registered  on the books of the
Company, pro rata as hereinafter provided, at any time after the date hereof and
prior to 11:59 P.M.  Eastern Time on the  Expiration  Date, by (i) delivery of a
written  notice,  in the form of the  subscription  notice attached as EXHIBIT A
hereto (the  "EXERCISE  NOTICE"),  of such  holder's  election to exercise  this
Warrant,  which  notice  shall  specify  the  number  of  Warrant  Shares  to be
purchased,  (ii)  payment  to the  Company  of an  amount  equal to the  Warrant
Exercise Price(s) applicable to the Warrant Shares being purchased, multiplied


                                       3
<PAGE>

by the number of Warrant Shares (at the applicable Warrant Exercise Price) as to
which this Warrant is being  exercised  (plus any  applicable  issue or transfer
taxes) (the "AGGREGATE  EXERCISE Price") in cash or wire transfer of immediately
available funds. In the event of any exercise of the rights  represented by this
Warrant in compliance  with this Section  2(a),  the Company shall on the second
Business Day following the date of receipt of the Exercise Notice, the Aggregate
Exercise Price and this Warrant (or an indemnification  undertaking with respect
to this Warrant in the case of its loss,  theft or destruction)  and the receipt
of the representations of the holder specified in Section 6 hereof, if requested
by the Company (the "EXERCISE DELIVERY DOCUMENTS"), credit such aggregate number
of shares of Common  Stock to which the holder shall be entitled to the holder's
or its designee's  balance account with The Depository Trust Company;  provided,
however,  if the holder who submitted  the Exercise  Notice  requested  physical
delivery of any or all of the Warrant  Shares,  then the  Company  shall,  on or
before the second  Business  Day  following  receipt  of the  Exercise  Delivery
Documents, issue and surrender to a common carrier for overnight delivery to the
address specified in the Exercise Notice, a certificate,  registered in the name
of the  holder,  for the  number of shares of Common  Stock to which the  holder
shall be entitled pursuant to such request. Upon delivery of the Exercise Notice
and Aggregate Exercise Price referred to above, the holder of this Warrant shall
be deemed for all corporate  purposes to have become the holder of record of the
Warrant  Shares with  respect to which this Warrant has been  exercised.  In the
case of a dispute as to the  determination  of the Warrant  Exercise Price,  the
Closing  Bid Price or the  arithmetic  calculation  of the Warrant  Shares,  the
Company shall  promptly issue to the holder the number of Warrant Shares that is
not  disputed  and  shall  submit  the  disputed  determinations  or  arithmetic
calculations to the holder via facsimile  within one (1) Business Day of receipt
of the  holder's  Exercise  Notice.  If the holder and the Company are unable to
agree  upon the  determination  of the  Warrant  Exercise  Price  or  arithmetic
calculation  of  the  Warrant  Shares  within  one  (1)  day  of  such  disputed
determination or arithmetic  calculation being submitted to the holder, then the
Company shall immediately submit via facsimile (i) the disputed determination of
the Warrant Exercise Price or the Closing Bid Price to an independent, reputable
investment  banking  firm or (ii) the  disputed  arithmetic  calculation  of the
Warrant Shares to its  independent,  outside  accountant The Company shall cause
the investment  banking firm or the  accountant,  as the case may be, to perform
the  determinations or calculations and notify the Company and the holder of the
results no later than  forty-eight  (48)  hours  from the time it  receives  the
disputed  determinations  or  calculations.  Such  investment  banking firm's or
accountant's  determination or calculation,  as the case may be, shall be deemed
conclusive absent manifest error.

                  (b) Unless the rights  represented  by this Warrant shall have
expired  or shall have been  fully  exercised,  the  Company  shall,  as soon as
practicable and in no event later than five (5) Business Days after any exercise
and at its own  expense,  issue a new Warrant  identical in all respects to this
Warrant  exercised  except it shall  represent  rights to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under this Warrant
exercised,  less the number of Warrant Shares with respect to which such Warrant
is exercised.

                  (c) No fractional Warrant Shares are to be issued upon any pro
rata  exercise of this Warrant,  but rather the number of Warrant  Shares issued
upon such  exercise of this  Warrant  shall be rounded up or down to the nearest
whole number.



                                       4
<PAGE>

                  (d) If the  Company or its  Transfer  Agent shall fail for any
reason or for no reason to issue to the holder  within ten (10) Business Days of
receipt of the Exercise  Delivery  Documents,  a  certificate  for the number of
Warrant Shares to which the holder is entitled or to credit the holder's balance
account with The  Depository  Trust Company for such number of Warrant Shares to
which the holder is entitled  upon the holder's  exercise of this  Warrant,  the
Company  shall,  in addition  to any other  remedies  under this  Warrant or the
Placement  Agent  Agreement  or  otherwise  available  to  such  holder,  pay as
additional  damages  in cash to such  holder  on each day the  issuance  of such
certificate for Warrant Shares is not timely effected an amount equal to 0.5% of
the  product of (A) the sum of the  number of  Warrant  Shares not issued to the
holder  on a timely  basis  and to which the  holder  is  entitled,  and (B) the
Closing Bid Price of the Common Stock for the trading day immediately  preceding
the last  possible date which the Company could have issued such Common Stock to
the holder without violating this Section 2.

                  (e) If within  ten (10)  Business  Days  after  the  Company's
receipt of the Exercise Delivery  Documents,  the Company fails to deliver a new
Warrant to the holder for the number of Warrant  Shares to which such  holder is
entitled  pursuant  to Section  2(b)  hereof,  then,  in  addition  to any other
available  remedies  under this Warrant or the  Placement  Agent  Agreement,  or
otherwise  available to such holder, the Company shall pay as additional damages
in cash to such  holder on each day after such tenth  (10th)  Business  Day that
such  delivery of such new Warrant is not timely  effected in an amount equal to
0.25% of the  product  of (A) the number of Warrant  Shares  represented  by the
portion of this  Warrant  which is not being  exercised  and (B) the Closing Bid
Price of the Common  Stock for the trading day  immediately  preceding  the last
possible  date which the Company  could have  issued such  Warrant to the holder
without violating this Section 2.

         Section 3. COVENANTS AS TO COMMON STOCK.  The Company hereby  covenants
and agrees as follows:

                  (a) This Warrant is, and any Warrants  issued in  substitution
for or  replacement  of this Warrant will upon issuance be, duly  authorized and
validly issued.

                  (b) All Warrant  Shares  which may be issued upon the exercise
of the rights  represented  by this  Warrant  will,  upon  issuance,  be validly
issued,  fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issue thereof.

                  (c) During the period within which the rights  represented  by
this Warrant may be exercised, the Company will at all times have authorized and
reserved at least 100% of the number of shares of Common Stock needed to provide
for the  exercise of the rights  then  represented  by this  Warrant and the par
value of said shares  will at all times be less than or equal to the  applicable
Warrant Exercise Price.

                  (d) The Company will not, by amendment of its  Certificate  of
Incorporation or through any reorganization,  transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the  observance or  performance of any of the terms to be
observed  or  performed  by it  hereunder,  but will at all times in good  faith
assist in the  carrying  out of all the  provisions  of this  Warrant and in the
taking of all such action as may  reasonably  be requested by the holder of this


                                       5
<PAGE>

Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other  impairment,  consistent with the tenor and purpose of
this  Warrant.  The  Company  will not  increase  the par value of any shares of
Common Stock  receivable  upon the  exercise of this  Warrant  above the Warrant
Exercise  Price  then in effect,  and (ii) will take all such  actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and  nonassessable  shares of Common  Stock upon the exercise of this
Warrant.

                  (e) This Warrant will be binding upon any entity succeeding to
the Company by merger,  consolidation or acquisition of all or substantially all
of the Company's assets.

         Section 4. TAXES.  The Company shall pay any and all taxes,  except any
applicable  withholding,  which may be payable  with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant.

         Section 5. WARRANT HOLDER NOT DEEMED A Stockholder. Except as otherwise
specifically  provided  herein,  no holder,  as such,  of this Warrant  shall be
entitled to vote or receive  dividends  or be deemed the holder of shares of the
Company  for any  purpose,  nor shall  anything  contained  in this  Warrant  be
construed  to confer  upon the holder  hereof,  as such,  any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization,  issue of stock,  reclassification
of stock,  consolidation,  merger,  conveyance or otherwise),  receive notice of
meetings,  receive dividends or subscription rights, or otherwise,  prior to the
issuance to the holder of this Warrant of the Warrant  Shares which he or she is
then  entitled to receive  upon the due exercise of this  Warrant.  In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities
on such holder to purchase  any  securities  (upon  exercise of this  Warrant or
otherwise)  or as a stockholder  of the Company,  whether such  liabilities  are
asserted by the Company or by  creditors of the  Company.  Notwithstanding  this
Section 5, the Company  will  provide the holder of this  Warrant with copies of
the same notices and other  information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the stockholders.

         Section 6.  REPRESENTATIONS OF HOLDER.  The holder of this Warrant,  by
the  acceptance  hereof,  represents  that it is acquiring  this Warrant and the
Warrant  Shares  for its own  account  for  investment  only and not with a view
towards,  or for resale in connection  with, the public sale or  distribution of
this  Warrant or the Warrant  Shares,  except  pursuant to sales  registered  or
exempted  under the  Securities  Act;  provided,  however,  that by  making  the
representations herein, the holder does not agree to hold this Warrant or any of
the Warrant Shares for any minimum or other specific term and reserves the right
to dispose of this Warrant and the Warrant Shares at any time in accordance with
or pursuant to a  registration  statement or an exemption  under the  Securities
Act. The holder of this Warrant further represents,  by acceptance hereof, that,
as of this date, such holder is an "accredited investor" as such term is defined
in Rule  501(a)(1) of Regulation D promulgated  by the  Securities  and Exchange
Commission under the Securities Act (an "ACCREDITED INVESTOR"). Upon exercise of
this Warrant, the holder shall, if requested by the Company, confirm in writing,
in a form satisfactory to the Company,  that the Warrant Shares so purchased are
being acquired  solely for the holder's own account and not as a nominee for any
other party, for investment,  and not with a view toward  distribution or resale
and that such holder is an Accredited Investor.  If such holder cannot make such


                                       6
<PAGE>

representations  because  they  would  be  factually  incorrect,  it  shall be a
condition to such holder's  exercise of this Warrant,  that the Company  receive
such other  representations  as the Company  considers  reasonably  necessary to
assure the Company that the  issuance of its  securities  upon  exercise of this
Warrant shall not violate any United States or state securities laws.

         Section 7.  OWNERSHIP AND TRANSFER.  The Company shall  maintain at its
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof),  a register for this Warrant,  in
which the Company  shall record the name and address of the person in whose name
this  Warrant  has  been  issued,  as  well  as the  name  and  address  of each
transferee.  The  Company  may treat the  person in whose  name any  Warrant  is
registered  on the  register as the owner and holder  thereof for all  purposes,
notwithstanding  any notice to the contrary,  but in all events  recognizing any
transfers made in accordance with the terms of this Warrant.

         Section 8.  ADJUSTMENT OF WARRANT  EXERCISE PRICE AND NUMBER OF SHARES.
The Warrant  Exercise  Price and the number of shares of Common  Stock  issuable
upon exercise of this Warrant shall be adjusted from time to time as follows:

                  (a) ADJUSTMENT OF WARRANT  EXERCISE PRICE UPON  SUBDIVISION OR
COMBINATION  OF  COMMON  STOCK.  If the  Company  at any time  after the date of
issuance  of this  Warrant  subdivides  (by any  stock  split,  stock  dividend,
recapitalization  or otherwise) one or more classes of its outstanding shares of
Common  Stock into a greater  number of shares,  any Warrant  Exercise  Price in
effect immediately prior to such subdivision will be proportionately reduced and
the number of shares of Common Stock  obtainable  upon  exercise of this Warrant
will be proportionately  increased. If the Company at any time after the date of
issuance  of this  Warrant  combines  (by  combination,  reverse  stock split or
otherwise) one or more classes of its outstanding  shares of Common Stock into a
smaller number of shares, any Warrant Exercise Price in effect immediately prior
to such combination will be proportionately  increased and the number of Warrant
Shares issuable upon exercise of this Warrant will be proportionately decreased.
Any  adjustment  under this Section 8(a) shall become  effective at the close of
business on the date the subdivision or combination becomes effective.

                  (b)  DISTRIBUTION  OF ASSETS.  If the Company shall declare or
make any dividend or other  distribution of its assets (or rights to acquire its
assets)  to holders of Common  Stock,  by way of return of capital or  otherwise
(including,  without  limitation,  any  distribution  of  cash,  stock  or other
securities,   property   or   options   by  way  of  a   dividend,   spin   off,
reclassification,  corporate  rearrangement  or other  similar  transaction)  (a
"DISTRIBUTION"),  at any time after the issuance of this Warrant,  then, in each
such case:

                           (i) any Warrant Exercise Price in effect  immediately
prior to the close of business on the record date fixed for the determination of
holders of Common Stock entitled to receive the  Distribution  shall be reduced,
effective as of the close of business on such record date, to a price determined
by  multiplying  such  Warrant  Exercise  Price by a  fraction  of which (A) the
numerator shall be the Closing Sale Price of the Common Stock on the trading day
immediately  preceding such record date minus the value of the  Distribution (as
determined in good faith by the Company's Board of Directors)  applicable to one


                                       7
<PAGE>

share of Common Stock,  and (B) the denominator  shall be the Closing Sale Price
of the Common Stock on the trading day  immediately  preceding such record date;
and

                           (ii)   either  (A)  the  number  of  Warrant   Shares
obtainable  upon  exercise of this  Warrant  shall be  increased  to a number of
shares  equal to the  number of shares of Common  Stock  obtainable  immediately
prior to the close of business on the record date fixed for the determination of
holders of Common Stock entitled to receive the  Distribution  multiplied by the
reciprocal of the fraction set forth in the immediately preceding clause (i), or
(B) in the event that the  Distribution  is of common  stock of a company  whose
common stock is traded on a national securities exchange or a national automated
quotation  system,  then the holder of this Warrant  shall receive an additional
warrant to purchase Common Stock, the terms of which shall be identical to those
of this Warrant,  except that such warrant shall be exercisable  into the amount
of the  assets  that  would  have been  payable  to the  holder of this  Warrant
pursuant to the Distribution  had the holder exercised this Warrant  immediately
prior to such  record  date and with an  exercise  price  equal to the amount by
which the  exercise  price of this  Warrant was  decreased  with  respect to the
Distribution pursuant to the terms of the immediately preceding clause (i).

                  (c)      NOTICES.

                           (i)  Immediately  upon any  adjustment of the Warrant
Exercise  Price,  the Company will give written  notice thereof to the holder of
this  Warrant,   setting  forth  in  reasonable  detail,  and  certifying,   the
calculation of such adjustment.

                           (ii) The  Company  will  give  written  notice to the
holder of this  Warrant  at least  ten (10) days  prior to the date on which the
Company  closes its books or takes a record (A) with  respect to any dividend or
distribution   upon  the  Common  Stock,  (B)  with  respect  to  any  pro  rata
subscription  offer to holders of Common Stock or (C) for determining  rights to
vote with  respect to any Organic  Change (as  defined  below),  dissolution  or
liquidation,  provided that such  information  shall be made known to the public
prior to or in conjunction with such notice being provided to such holder.

                           (iii) The Company  will also give  written  notice to
the holder of this Warrant at least ten (10) days prior to the date on which any
Organic Change,  dissolution or liquidation will take place,  provided that such
information  shall be made known to the public prior to or in  conjunction  with
such notice being provided to such holder.

         Section   9.   PURCHASE   RIGHTS;   REORGANIZATION,   RECLASSIFICATION,
                        CONSOLIDATION, MERGER OR SALE.

                  (a) In  addition  to any  adjustments  pursuant  to  Section 8
above,  if at any  time  the  Company  grants,  issues  or  sells  any  Options,
Convertible  Securities  or rights to purchase  stock,  warrants,  securities or
other  property pro rata to the record holders of any class of Common Stock (the
"PURCHASE Rights"), then the holder of this Warrant will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which such  holder  could have  acquired  if such  holder had held the number of
shares of  Common  Stock  acquirable  upon  complete  exercise  of this  Warrant


                                       8
<PAGE>

immediately  before the date on which a record is taken for the grant,  issuance
or sale of such Purchase Rights,  or, if no such record is taken, the date as of
which the record  holders of Common  Stock are to be  determined  for the grant,
issue or sale of such Purchase Rights.

                   (b) Any recapitalization,  reorganization,  reclassification,
consolidation,  merger, sale of all or substantially all of the Company's assets
to another Person or other  transaction in each case which is effected in such a
way that  holders of Common Stock are  entitled to receive  (either  directly or
upon subsequent  liquidation) stock,  securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "ORGANIC CHANGE". Prior to
the  consummation of any (i) sale of all or  substantially  all of the Company's
assets to an acquiring  Person or (ii) other Organic Change  following which the
Company is not a  surviving  entity,  the  Company  will  secure from the Person
purchasing  such assets or the successor  resulting from such Organic Change (in
each case,  the "ACQUIRING  ENTITY") a written  agreement (in form and substance
satisfactory to the holders of Warrants  representing at least two-thirds of the
Warrant  Shares  issuable  upon exercise of the Warrants  then  outstanding)  to
deliver to each holder of Warrants in exchange for such Warrants,  a security of
the Acquiring Entity evidenced by a written instrument  substantially similar in
form and  substance  to this  Warrant  and  satisfactory  to the  holders of the
Warrants  (including an adjusted  warrant  exercise price equal to the value for
the Common Stock reflected by the terms of such  consolidation,  merger or sale,
and exercisable for a corresponding  number of shares of Common Stock acquirable
and receivable  upon exercise of the Warrants  without regard to any limitations
on  exercise,  if the value so  reflected  is less than any  Applicable  Warrant
Exercise Price immediately prior to such  consolidation,  merger or sale). Prior
to the  consummation  of any  other  Organic  Change,  the  Company  shall  make
appropriate  provision  (in form and  substance  satisfactory  to the holders of
Warrants representing a majority of the Warrant Shares issuable upon exercise of
the  Warrants  then  outstanding)  to  insure  that each of the  holders  of the
Warrants will  thereafter have the right to acquire and receive in lieu of or in
addition  to (as the case may be) the  Warrant  Shares  immediately  theretofore
issuable and  receivable  upon the exercise of such holder's  Warrants  (without
regard to any  limitations  on  exercise),  such shares of stock,  securities or
assets  that would  have been  issued or payable  in such  Organic  Change  with
respect to or in exchange for the number of Warrant Shares which would have been
issuable and  receivable  upon the exercise of such  holder's  Warrant as of the
date of such Organic  Change  (without  taking into account any  limitations  or
restrictions on the exercisability of this Warrant).

         Section 11.  LOST,  STOLEN,  MUTILATED OR  DESTROYED  WARRANT.  If this
Warrant is lost, stolen,  mutilated or destroyed, the Company shall promptly, on
receipt  of an  indemnification  undertaking  (or,  in the  case of a  mutilated
Warrant,  the Warrant),  issue a new Warrant of like  denomination  and tenor as
this Warrant so lost, stolen, mutilated or destroyed.

         Section  12.   NOTICE.   Any  notices,   consents,   waivers  or  other
communications required or permitted to be given under the terms of this Warrant
must be in writing and will be deemed to have been delivered:  (i) upon receipt,
when delivered  personally;  (ii) upon receipt, when sent by facsimile (provided
confirmation  of  receipt is  received  by the  sending  party  transmission  is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with a nationally  recognized  overnight


                                       9
<PAGE>

delivery  service,  in each case properly  addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:

         If to the Holder:
                  May Davis Group, Inc.
                  1 World Trade Center, Suite 8735
                  New York, NY 10048
                  Telephone: (212) 775-7400
                  Facsimile: (212) 775-8166
                  Attention: Michael Jacobs

         With Copy to:
                  Butler Gonzalez LLP
                  1000 Stuyvesant Avenue
                  Suite # 6
                  Union, NJ  07083
                  Telephone: (908) 810-8588
                  Facsimile: (908) 810-0873
                  Attention: David Gonzalez, Esq.

         If to the Company:
                  European Micro Holdings, Inc.
                  6073 N.W. 167th Street
                  Unit C-25
                  Miami, Fl 33015

                  Telephone: (305) 825-2458
                  Facsimile:   (305) 362-4854
                  Attention: John B. Gallagher, Co-President

         With a copy to:
                  Kirkpatrick & Lockhart
                  201 Biscayne Blvd.
                  Suite 2000
                  Miami, Fl  33131
                  Attention: Clayton Parker, Esq.
                  Telephone:        (305) 539-3306
                  Facsimile:        (305) 358-7095

Each party shall provide five days' prior  written  notice to the other party of
any change in address or facsimile number.  Written  confirmation of receipt (A)
given by the  recipient  of such  notice,  consent,  facsimile,  waiver or other
communication,  (or (B) provided by a nationally  recognized  overnight delivery
service shall be rebuttable  evidence of personal service,  receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.



                                       10
<PAGE>

         Section  13.  DATE.  The date of this  Warrant is May ___,  2001.  This
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date.

         Section 14. AMENDMENT AND WAIVER.  Except as otherwise provided herein,
the  provisions  of the  Warrants  may be amended  and the  Company may take any
action  herein  prohibited,  or omit to perform  any act herein  required  to be
performed  by it, only if the Company has  obtained  the written  consent of the
holders of Warrants  representing  at least  two-thirds  of the  Warrant  Shares
issuable upon exercise of the Warrants then  outstanding;  provided that no such
action may increase the Warrant  Exercise Price or decrease the number of shares
or class of stock  obtainable  upon exercise of any Warrant  without the written
consent of the holder of such Warrant.

         Section  15.  DESCRIPTIVE  HEADINGS;  GOVERNING  LAW.  The  descriptive
headings of the several sections and paragraphs of this Warrant are inserted for
convenience  only and do not  constitute a part of this  Warrant.  The corporate
laws of the State of Nevada  shall  govern all issues  concerning  the  relative
rights of the Company and its stockholders.  All other questions  concerning the
construction,  validity, enforcement and interpretation of this Warrant shall be
governed by the internal laws of the State of New York, without giving effect to
any choice of law or conflict of law  provision or rule (whether of the State of
New York, or any other  jurisdiction)  that would cause the  application  of the
laws of any jurisdiction other than the State of New York.


                            [SIGNATURE PAGE FOLLOWS]










                                       11
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
John B. Gallagher, its Co-President, as of May ___, 2001.


                                  EUROPEAN MICRO HOLDINGS, INC.

                                  By:
                                      ------------------------------
                                      Name: John B. Gallagher
                                      Title: Co-President

<PAGE>


                              EXHIBIT A TO WARRANT

                                SUBSCRIPTION FORM

            TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
                      WARRANT EUROPEAN MICRO HOLDINGS, INC.

         The  undersigned   holder  hereby   exercises  the  right  to  purchase
_________________  of the shares of Common Stock ("WARRANT  SHARES") of European
Micro Holdings,  Inc., a Nevada  corporation (the  "COMPANY"),  evidenced by the
attached  Warrant  (the  "Warrant").  Capitalized  terms  used  herein  and  not
otherwise defined shall have the respective meanings set forth in the Warrant.

         1. Form of Warrant  Exercise Price.  The Holder intends that payment of
the Warrant Exercise Price shall be made as:

          ____________       a "CASH  EXERCISE" with respect to ________________
                             Warrant Shares.

         2. Payment of Warrant  Exercise Price. In the event that the holder has
elected a Cash Exercise with respect to some or all of the Warrant  Shares to be
issued pursuant hereto, the holder shall pay the sum of  $___________________ to
the Company in accordance with the terms of the Warrant.

         3. Delivery of Warrant Shares.  The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.

Date: _______________ __, ______



   Name of Registered Holder


By:
         -----------------------------------
         Name:
         Title:


<PAGE>


                             EXHIBIT B TO WARRANT

                            FORM OF WARRANT POWER


         FOR VALUE RECEIVED,  the undersigned does hereby assign and transfer to
________________,  Federal Identification No. __________,  a warrant to purchase
____________  shares of the capital stock of European  Micro  Holdings,  Inc., a
Nevada corporation,  represented by warrant  certificate no. _____,  standing in
the name of the  undersigned on the books of said  corporation.  The undersigned
does  hereby  irrevocably  constitute  and appoint  ______________,  attorney to
transfer the warrants of said  corporation,  with full power of  substitution in
the premises.


         Dated:  _________, ____





                                            ------------------------------------

                                            By:
                                                --------------------------------
                                            Its:
                                                --------------------------------