SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                 FORM 10-KSB/A

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


          For the fiscal year ended:                Commission File No.:
               June 30, 1997                             000-28198

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

                  CONVERSION TECHNOLOGIES INTERNATIONAL, INC.
       (Exact name of Small Business Issuer as specified in its charter)

          Delaware                                       13-3754366
          (State or other jurisdiction of           (I.R.S. Employer
          incorporation or organization)               I.D. Number)


          3452 Lake Lynda Drive
          Orlando, Florida                               32817
          (Address of principal executive offices)  (Zip Code)

                                 (407) 207-5900
                 (Issuer's telephone number including area code)

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

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:

  Common Stock, Redeemable Class A Warrants and Redeemable Class B Warrants

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 (or for such shorter
period that the  registrant  was required to file such reports) and (2) has been
subject to such filing requirements for past 90 days.

                         Yes X        No                                        
                            -----       -----

<PAGE>


Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. 
                               -------

Issuer's revenues for the fiscal year ended June 30, 1997 were $1,429,008.

The aggregate market value of voting stock held by  non-affiliates of registrant
was  $11,941,310  as of September 19, 1997,  based on the average of the closing
bid and closing ask price of the Common Stock on the Nasdaq  SmallCap  Market on
such date,  and assuming the  conversion of all  outstanding  shares of Series A
Convertible  Preferred  Stock held by  non-affiliates  of registrant into Common
Stock.

As of September 19, 1997, the issuer had outstanding  5,539,745 shares of Common
Stock, $.00025 par value.

                                EXPLANATORY NOTE

Conversion Technologies International,  Inc. (the "Company") hereby amends Items
9, 10,  11 and 12 of Part III of its  Annual  Report on Form  10-KSB,  which was
filed with the  Securities  and Exchange  Commission  on September  29, 1997, by
including the disclosures set forth herein.

Item 9. Section 16(a) Beneficial Ownership Reporting Compliance
        -------------------------------------------------------

Section 16(a) of the Exchange Act requires the Company's  officers and directors
and persons who are  beneficial  owners of ten percent or more of the  Company's
Common  Stock to file  reports of  ownership  and  changes in  ownership  of the
Company's securities with the Securities and Exchange Commission. Such officers,
directors  and  beneficial  owners are  required by  applicable  regulations  to
provide to the Company copies of all forms they file under Section 16(a).

Based solely upon a review of the copies of forms furnished to the Company,  and
written  representations  from certain reporting  persons,  the Company believes
that  during  the  fiscal  year ended  June 30,  1997,  all filing  requirements
applicable to its officers,  directors  and ten percent  beneficial  owners were
complied  with  except  that Donald R.  Kendall,  Jr., a former  director of the
Company,  filed a Form 5 on August 25,  1997 which was  required  to be filed on
August 14, 1997.

Item 10. Executive Compensation
         ----------------------

The following table sets forth a summary of the  compensation  earned by Eckardt
C. Beck,  the Company's  Chairman who served as Acting Chief  Executive  Officer
from  June  1997  to  August  1997,   Harvey  Goldman,   the  Company's   former
Vice-Chairman,  President and Chief Executive Officer,  and Perry A. Pappas, the
Company's  former Vice President and General Counsel  (collectively,  the "Named
Executive Officers") for services rendered in all capacities to the


                                      -2-
<PAGE>

Company during the Company's fiscal years ended June 30, 1995, 1996 and 1997. No
other executive officer of the Company received salary and bonus compensation in
excess of  $100,000  during the  fiscal  year  ended  June 30,  1997  (sometimes
referred to herein as "Fiscal Year 1997"). William L. Amt, the Company's current
President  and Chief  Executive  Officer and Jack D. Hays,  Jr.,  the  Company's
current  Executive  Vice  President - Operations and Marketing and Secretary are
not included below because their employment began after Fiscal Year 1997.

<TABLE>
                           Summary Compensation Table
<CAPTION>

                                                                  Annual
                                                                Compensation              Long-Term Compensation
                                                                ------------              ----------------------

                                                                                      Restricted        Securities
                                                                                        Stock           Underlying
Name and Principal Position                                     Year    Salary($)      Awards($)       Options/SARs(#)
--------------------------------------------------------------  ----    ----------    ----------      ----------------

<S>                                                              <C>    <C>           <C>                <C>
Eckardt C. Beck ..............................................   1997   $ 48,000(1)                      10,121(2)
Chairman and Acting President and Chief Executive Officer from   1996   $ 12,000                          1,217
June 1997 to August 1997 .....................................   1995

Harvey Goldman ...............................................   1997   $168,750(3)   $260,000(4)        40,000(5)
Former Vice - Chairman, President and Chief Executive Officer    1996   $180,000                         50,000(6)
                                                                 1995   $180,000

Perry A. Pappas ..............................................   1997   $119,790      $ 32,500(7)        15,000(8)
Former Vice President, General Counsel and Secretary             1996   $104,167                         21,923
                                                                 1995

-----------
<FN>

(1)  Mr. Beck became  Chairman in February  1997 and served as Acting  President
     and Chief  Executive  Officer from June 1997 to August  1997.  Compensation
     represents  consulting  fees pursuant to his Consulting  Agreement with the
     Company.  See "Certain  Relationships and Related  Transactions."  Mr. Beck
     currently receives $8,000 per month under the Consulting Agreement.

(2)  Granted in July and October  1996  pursuant to the  Company's  Non-Employee
     Director Stock Option Plan. All options vest one year from grant date.

(3)  Mr.  Goldman  ceased  being an officer of the  Company in June 1997.  He is
     currently a Consultant to the Company and receives  $10,000 per month under
     such Consulting Agreement through June 1998. See "Certain Relationships and
     Related Transactions."

(4)  Granted  in October  1996  pursuant  to the  Company's  Long-Term  Employee
     Incentive  Plan.  The shares vest in January 1998 and had a market value of
     $130,000 on June 30, 1997. The shares are entitled to receive  dividends if
     and when  declared  by the  Company.  Mr.  Goldman  does not hold any other
     restricted stock in the Company.

(5)  Incentive  Stock Options  granted in October 1996 pursuant to the Company's
     Employee Stock Option Plan. The options have terminated.

(6)  Non-qualified  stock  options  granted  in April  1996.  The  options  have
     terminated.

                                      -3-
<PAGE>

(7)  Granted  in October  1996  pursuant  to the  Company's  Long-Term  Employee
     Incentive  Plan.  The shares vest in January 1998 and had a market value of
     $16,250 on June 30, 1997.  The shares are entitled to receive  dividends if
     and when  declared  by the  Company.  Mr.  Pappas  does not hold any  other
     restricted stock in the Company.

(8)  Incentive  Stock Options  granted in October 1996 pursuant to the Company's
     Employee Stock Option Plan. The options have an exercise price of $4.40 per
     share and are fully vested.
</FN>
</TABLE>

Option Grants in Fiscal Year 1997
---------------------------------

The following table sets forth the number of individual stock option grants made
to each Named Executive Officer during Fiscal Year 1997.

<TABLE>
<CAPTION>
                            Number of    Percent of Total
                            Securities    Options/SARS
                            Underlying     Granted to       Exercise or
                           Options/SARs   Employees in      Base Price
          Name              Granted(#)    Fiscal Year(1)    ($/sh)       Expiration Date
-------------------------  ------------  ----------------   -----------  ---------------
<S>                        <C>           <C>                <C>          <C>

Eckardt C. Beck..........      121(2)          *            $4.40            7/1/06
                            10,000(3)         5.1%          $5.00           10/15/06
Harvey Goldman...........   40,000(4)        20.5%          $4.40
Perry A. Pappas..........   15,000(5)         7.7%          $4.40            7/23/03

-----------
<FN>

*    Less than one percent.

(1)  The Company  granted  options to purchase an aggregate of 155,347 shares of
     Common Stock during Fiscal Year 1997.

(2)  Granted on July 1, 1996  pursuant to the  Company's  Stock  Option Plan for
     Non-Employee Directors. These options vested on July 1, 1997.

(3)  Granted on October 15, 1996 pursuant to the Company's Stock Option Plan for
     Non-Employee Directors. These options vested on October 15, 1997.

(4)  Non-qualified  Options  granted  outside of the  Company's  Employee  Stock
     Option Plan. Mr. Goldman's options have terminated.

(5)  Incentive  Stock Options granted  pursuant to the Company's  Employee Stock
     Option Plan. All options were vested in July 1997.
</FN>
</TABLE>


Aggregated  Options/SAR Exercises in Last
Fiscal Year and Year End Option Values
-----------------------------------------

The following  table sets forth the aggregate  value of  unexercised  options to
acquire  shares of the Company's  Common Stock by the Named  Executive  Officers
exercised  during  Fiscal  Year  1997.  None  of the  Named  Executive  Officers
exercised options during Fiscal Year 1997.


                                      -4-
<PAGE>

<TABLE>
<CAPTION>
                                                      Number of
                                                      Unexercised           Value of Unexercised In-the
                                                     Options at FY-            Money Options at FY-
                                                       End(#)                       End($)(1)
                                                 -------------------       ----------------------------

                                                     Exercisable/                 Exercisable/
                    Name                            Unexercisable                Unexercisable
-----------------------------------------        -------------------       ----------------------------
<S>                                              <C>                       <C>

Eckardt C. Beck..........................            1,338/10,000                  $0/$0
Harvey Goldman...........................                0/0                       $0/$0
Perry A. Pappas..........................            7,308/29,615                  $0/$0

<FN>

(1)  Calculated based on the difference between the exercise price and the price
     of a share of the  Company's  Common Stock on June 30, 1997. As of June 30,
     1997,  the  exercise  prices  of each  of the  options  held  by the  Named
     Executive  Officers  exceeded the price of a share of the Company's  Common
     Stock.
</FN>
</TABLE>

Compensation of Directors
-------------------------

In Fiscal  Year 1997,  Directors  who were  full-time  employees  of the Company
received no cash  compensation for services  rendered as members of the Board of
Directors (the "Board") or committees thereof.  Directors who were not full-time
employees of the Company received  reimbursement  of out-of-pocket  expenses for
attendance  at Board  meetings.  The Company  maintains a Stock  Option Plan for
Non-Employee  Directors,  pursuant to which  options to purchase an aggregate of
50,847 shares of Common Stock were issued during Fiscal Year 1997.  Such options
vest one year  from the date of grant and  contain  exercise  prices of  between
$3.125  and  $5.00  per  share.   Non-Employee   directors   received  no  other
compensation for their services as directors for Fiscal Year 1997.

The Company  entered into a Consulting  Agreement  with Eckardt C. Beck in March
1995,  which was  amended in  February  1997 and August  1997.  Pursuant  to the
Consulting  Agreement,  Mr. Beck has agreed to, among other  things,  assist the
Company in strategic planning,  business development,  investor relations,  fund
raising and such other activities as shall be reasonably  requested by the Board
and  within Mr.  Beck's  areas of  expertise.  Mr.  Beck will  receive a monthly
consulting  fee  of  $8,000  pursuant  to the  Consulting  Agreement  until  its
expiration in August 2000.

Employment Contracts and Employment Termination Arrangements
------------------------------------------------------------

William  L.  Amt is  employed  with  the  Company  under a  one-year  employment
agreement, which provides for automatic one-year renewal options unless contrary
written  notice is given by  either  party.  Under  the terms of the  employment
agreement, which includes confidentiality and non-



                                      -5-
<PAGE>

competition provisions,  Mr. Amt receives an annual salary of $160,000,  subject
to increase at the  discretion of the Board.  Mr. Amt will not receive an annual
bonus or an incentive  bonus,  except as may be provided by the Board.  Both the
Company  and Mr.  Amt may  terminate  the  employment  agreement  at any time by
providing  written notice to the other party. If the termination is initiated by
the Company  without  cause,  Mr. Amt is entitled  to receive  severance  in the
amount of one years'  salary.  Mr.  Amt has also been  granted  incentive  stock
options to  purchase  300,000  shares of Common  Stock at an  exercise  price of
$1.375 per share.  Twenty percent (20%) of such options were vested  immediately
and twenty percent (20%) of such options will vest on the first,  second,  third
and fourth anniversary of the date of issuance.

Jack D. Hays,  Jr. is  employed  with the  Company  under a one-year  employment
agreement, which provides for automatic one-year renewal options unless contrary
written  notice is given by  either  party.  Under  the terms of the  employment
agreement,  which includes confidentiality and non-competition  provisions,  Mr.
Hays  receives  an  annual  salary  of  $125,000,  subject  to  increase  at the
discretion  of the  Board.  Mr.  Hays will not  receive  an  annual  bonus or an
incentive  bonus,  except as may be provided by the Board.  Both the Company and
Mr. Hays may terminate the employment agreement at any time by providing written
notice to the other  party.  If the  termination  is  initiated  by the  Company
without  cause,  Mr. Hays is entitled to receive  severance in the amount of one
years'  salary.  Mr.  Hays has also been  granted  incentive  stock  options  to
purchase  100,000  shares of  Common  Stock at an  exercise  price of $1 5/8 per
share. Twenty percent (20%) of such options were vested upon issuance and twenty
percent  (20%) of such  options  vest on the  first,  second,  third and  fourth
anniversary of the date of issuance.

Richard H.  Hughes is  employed  with the  Company  under a one-year  employment
agreement, which provides for automatic one-year renewal options unless contrary
written  notice is given by  either  party.  Under  the terms of the  employment
agreement,  which includes confidentiality and non-competition  provisions,  Mr.
Hughes  receives  an annual  salary  of  $90,000,  subject  to  increase  at the
discretion  of the Board.  Mr.  Hughes  will not  receive an annual  bonus or an
incentive  bonus,  except as may be provided by the Board.  Both the Company and
Mr.  Hughes may  terminate  the  employment  agreement  at any time by providing
written  notice to the other  party.  If the  termination  is  initiated  by the
Company without cause, Mr. Hughes is entitled to receive severance in the amount
of one years' salary.  Mr. Hays has also been granted incentive stock options to
purchase 75,000 shares of Common Stock at an exercise price of $1 5/8 per share.
Twenty  percent  (20%) of such  options  were  vested upon  issuance  and twenty
percent  (20%) of such  options  vest on the  first,  second,  third and  fourth
anniversary of the date of issuance.

In June 1997,  the  Company  entered  into a  Consulting  Agreement  with Harvey
Goldman,  former  Vice-Chairman,  President and Chief  Executive  Officer of the
Company,  which terminates his prior  employment  agreement with the Company and
contains mutual releases for any claims under such prior agreement.  Mr. Goldman
is  entitled  to receive a monthly  consulting  fee of $10,000  pursuant  to the
Consulting  Agreement  through June 1998. In the event that the Company fails to
pay the  consideration due under the Consulting  Agreement,  Mr. Goldman retains
all rights that he had under his prior agreement with respect to termination.


                                      -6-
<PAGE>


Item 11. Security Ownership of Certain Beneficial Owners and Management
         -------------------------------------------------------------

The  following  table  sets forth  information  with  respect to the  beneficial
ownership of the Company's Common Stock and Series A Convertible Preferred Stock
(the "Convertible  Preferred Stock") as of September 30, 1997 by (i) each person
known by the Company to own beneficially more than 5% of the outstanding  Common
Stock or Convertible  Preferred Stock of the Company, (ii) each of the Company's
directors,  (iii)  each  of the  Company's  Named  Executive  Officers  (defined
herein),  and (iv) all  directors  and  executive  officers  of the Company as a
group. Holders of the Convertible  Preferred Stock are entitled to the number of
votes  equal to the number of shares of Common  Stock into which such  shares of
Convertible  Preferred Stock are convertible,  and are entitled to vote together
with the holders of the Common Stock. Accordingly,  the information in the table
below  reflects  ownership  by the above  individuals  of each of the  Company's
Common  Stock  assuming  the  conversion  of  all  outstanding   shares  of  the
Convertible Preferred Stock and the Convertible  Preferred Stock separately.  At
September 30, 1997 each share of  Convertible  Preferred  Stock was  convertible
into eight shares of Common Stock.


                                                                     Percentage
                                        Number of                       of
                                          Shares                     Convertible
                                       Beneficially  Percentage of   Preferred
Name of Beneficial Owner (1)              Owned(2)   Voting Power(3) Stock(4) 
----------------------------           ------------  --------------- -----------


Eckardt C. Beck (5)....................   165,171           1.9           2.4
William L. Amt (6).....................    60,000             *             -
Peter H. Gardner (7)...................   747,486           8.2           7.6
Alexander P. Haig (8)..................     9,992             *             -
Scott A. Katzmann (9)..................    50,950             *             -
Douglas M. Costle .....................         -             *             -
Stephen D. Fish........................   160,000           1.8           4.8
Irwin M. Rosenthal (10)................     5,121             *             -
Jack D. Hays, Jr. (11).................    20,000             *             -
Richard H. Hughes (12).................    15,000             *             -
Technology Funding Venture Partners
  V, An Aggressive Growth Fund,
  L.P. (13)............................   747,486           8.2           7.6
All officers and directors as a
  group(11 persons) (14)............... 1,244,785          13.4          14.8
Harvey Goldman (15)....................   185,964           2.1             -
Perry A. Pappas (16)...................    66,923             *             -
The Aries Trust .......................   528,000           6.0          15.9
Aries Domestic Fund, L.P. .............   272,000           3.1           8.2
Porter Partners, L.P. .................   320,000           3.6           9.7
P.A.W. Offshore Fund, Ltd. ............   400,000           4.5          12.1
J.F. Shea Co., Inc. a Nominee 1977-44..   240,000           2.7           7.2
Pequot Scot Fund, LP ..................   180,000           2.0           5.4


                                      -7-
<PAGE>

-----------

*    Less than one percent.

(1)  Unless  otherwise  indicated and subject to applicable  community  property
     laws, each stockholder has sole voting and investment power with respect to
     all shares of Common Stock beneficially  owned by such stockholder.  Unless
     otherwise  indicated,  the address of each  stockholder  is c/o  Conversion
     Technologies  International,  Inc.,  3452  Lake  Lynda  Drive,  Suite  280,
     Orlando, Florida 32817.

(2)  The number of shares  beneficially  owned by each person named in the table
     consists  of the  number  of  shares  held  by each  individual  of (i) the
     Company's  Common Stock;  (ii) the Company's  Preferred Stock, as converted
     into Common  Stock;  and (iii) Common Stock  subject to options or warrants
     that are presently  exercisable or exercisable  within 60 days of September
     30, 1997.

(3)  Applicable  percentage of voting power is based on the 8,855,745  shares of
     Common Stock  entitled to vote at the Meeting.  That number is comprised of
     5,539,745 outstanding shares of Common Stock and 3,316,000 shares of Common
     Stock issuable upon conversion of 414,500 outstanding shares of Convertible
     Preferred  Stock.  Shares of  Common  Stock  subject  to  options  that are
     presently  exercisable  or  exercisable  within  60 days are  deemed  to be
     beneficially  owned by the person  holding  such options for the purpose of
     computing the percentage of ownership of such person but are not treated as
     outstanding  for the  purpose  of  computing  the  percentage  of any other
     person.

(4)  Applicable  percentage of ownership is based on 3,316,000  shares of Common
     Stock  issuable  upon  conversion  of the  414,500  shares  of  Convertible
     Preferred Stock outstanding as of September 30, 1997.

(5)  Includes currently  exercisable options to purchase 61,338 shares of Common
     Stock.  Also  includes  options to purchase  10,000  shares of Common Stock
     which are exercisable within 60 days.  Excludes options to purchase 240,000
     shares  of  Common  Stock  which are not  exercisable  within 60 days.  The
     address of such  stockholder is 6345 NW 26th Terrace,  Boca Raton,  Florida
     33496.

(6)  Includes currently  exercisable options to purchase 60,000 shares of Common
     Stock.  Excludes  options to purchase  240,000 shares of Common Stock which
     are not exercisable within 60 days.

(7)  Includes securities  beneficially owned by Technology Funding Partners III,
     L.P. ("TFP III") and Technology  Funding  Partners V, An Aggressive  Growth
     Fund,  L.P.  ("TFVP V") (as  detailed in footnote  13 to this  table).  Mr.
     Gardner is an Investment  Officer at Technology  Funding,  Inc. ("TFI") and
     the Managing General Partner of TFP III and TFVP V.


                                      -8-
<PAGE>

     Mr. Gardner disclaims beneficial ownership of all securities of the Company
     owned by TFP III and TFVP V.  Includes  currently  exercisable  options  to
     purchase 11,338 shares of Common Stock.  Also includes  options to purchase
     4,000 shares of Common Stock which are exercisable within 60 days. Excludes
     options to purchase 16,000 shares of Common Stock which are not exercisable
     within 60 days. The address of such  stockholder is c/o Technology  Funding
     Inc., 2000 Alameda de las Pulgas, San Mateo, California 94403.

(8)  Includes  currently  exercisable  options to purchase  121 shares of Common
     Stock. Also includes options to purchase 5,000 shares of Common Stock which
     are exercisable within 60 days.

(9)  Includes  currently  exercisable  options and  warrants to purchase  24,771
     shares of Common Stock and 12,179 Escrow Shares beneficially owned by Scott
     A.  Katzmann.  Also  includes  options to purchase  14,000 shares of Common
     Stock which are exercisable  within 60 days.  Excludes  options to purchase
     16,000 shares of Common Stock which are not exercisable within 60 days.

(10) Includes  currently  exercisable  options to purchase  121 shares of Common
     Stock. Also includes options to purchase 5,000 shares of Common Stock which
     are exercisable within 60 days.

(11) Includes currently  exercisable options to purchase 20,000 shares of Common
     Stock. Excludes options to purchase 80,000 shares of Common Stock which are
     not exercisable within 60 days.

(12) Includes currently  exercisable options to purchase 15,000 shares of Common
     Stock. Excludes options to purchase 60,000 shares of Common Stock which are
     not exercisable within 60 days.

(13) Includes  (i)  207,547  shares  of  Common  Stock,  (ii)  7,875  shares  of
     Convertible Preferred Stock, (iii) warrants, exercisable within 60 days, to
     purchase 84,027 shares of Common Stock,  (iv) 69,180 shares of Common Stock
     and 23,625 shares of  Convertible  Preferred  Stock held by TFP III and (v)
     warrants,  exercisable within 60 days, to purchase 119,384 shares of Common
     Stock held by TFP III.  Includes  currently  exercisable  options issued to
     Peter  Gardner to purchase  11,338  shares of Common  Stock.  Also includes
     options to purchase  4,000  shares of Common  Stock  which are  exercisable
     within 60 days. Excludes options issued to Peter Gardner to purchase 16,000
     shares of Common Stock which are not exercisable  within 60 days.  Excludes
     warrants to purchase  (i) 2,104  shares of Common  Stock held by TFVP V and
     (ii) 680 shares of Common  Stock held by TFP III,  in each case,  which are
     not exercisable within 60 days.

(14) Calculation  does not include  securities held by Mr. Goldman or Mr. Pappas
     who are no longer directors or officers of the Company.


                                      -9-
<PAGE>

(15) Includes currently  exercisable warrants to purchase 5,239 shares of Common
     Stock. Mr. Goldman is no longer an officer or director of the Company. (See
     "Certain Relationships and Related Transactions Consulting Agreements").

(16) Includes currently  exercisable options to purchase 56,923 shares of Common
     Stock. Mr. Pappas is no longer an officer of the Company.


Item 12. Certain Relationships and Related Transactions
         ----------------------------------------------

Employment Agreements
---------------------

The Company has entered  into  employment  agreements  with  William L. Amt, who
became President and Chief Executive  Officer in August 1997, Jack D, Hays, Jr.,
who became  Executive Vice President - Operations and Marketing and Secretary of
the Company in July 1997, and Richard H. Hughes,  who also became Vice President
- Sales and Marketing of the Company in July 1997. See "Executive Compensation -
Employment Contracts and Employment Termination Arrangements."

Consulting Agreements
---------------------

In March 1995, the Company  entered into a Consulting  Agreement with Eckardt C.
Beck. The Consulting Agreement was amended in February and August 1997. Pursuant
to the Consulting Agreement,  Mr. Beck has agreed to, among other things, assist
the Company in strategic  planning,  business  development,  investor relations,
fund raising and such other  activities as shall be reasonably  requested by the
Board and within Mr. Beck's areas of expertise.  Mr. Beck will receive a monthly
consulting  fee  of  $8,000  pursuant  to the  Consulting  Agreement  until  its
expiration in August 2000.

In May 1995,  the Company  entered into a consulting  agreement with TFP III and
TFP  V  (the  "TFI  Consulting  Agreement").  Pursuant  to  the  TFI  Consulting
Agreement,  the consultants agreed to, among other things, introduce the Company
to strategic  partners and  potential  customers,  provide  strategic  marketing
advice,  identify  complementary  technologies  with  strategic  synergies,  and
identify and assist in procuring  appropriate  media  channels for the Company's
products. As compensation for their services,  the consultants received warrants
which were amended in May 1996 to become  warrants to purchase  69,177 shares of
the Company's  common stock,  at an exercise price of $5.28 per share.  Peter H.
Gardner,  a director  of the  Company,  is an  Investment  Officer  at TFI,  the
Managing  General Partner of TFP III and TFVP V, and serves as TFI's designee on
the Board.

In  July  1995,  the  Company  entered  into a  Project  Development  Assistance
Agreement  with  TFI  (the  "TFI  Assistance  Agreement").  Pursuant  to the TFI
Assistance  Agreement,  certain  designated  principals of TFI will, among other
things,  assist the Company in project  development  efforts  both in the United
States and abroad by identifying potential strategic partners, assisting in



                                      -10-
<PAGE>

obtaining  regulatory  approvals and providing regulatory guidance and otherwise
facilitating project development activities.  The Company will pay to TFI or its
designees a success fee of $75,000 for completed projects and a fee of 7% on any
funds invested in the Company by a strategic partner introduced by TFI (together
with  warrants to purchase  that number of shares of Common Stock of the Company
as is equal to 5% of the  amount  invested  divided by the  Common  Stock  share
purchase price, at an exercise price equal to 110% of such purchase price).  The
term of the TFI Assistance Agreement is one year, subject to renewal, cancelable
by either party upon 30 days' prior written notice.

In June 1997,  the  Company  entered  into a  Consulting  Agreement  with Harvey
Goldman,  former  Vice-Chairman,  President and Chief  Executive  Officer of the
Company,  which terminates his prior  employment  agreement with the Company and
contains mutual releases for claims under such prior agreement.  Pursuant to the
Consulting Agreement,  Mr. Goldman has agreed to, among other things, assist the
Company in project development,  strategic planning and such other activities as
shall be reasonably requested by the Board of Directors and within Mr. Goldman's
areas of expertise.  Mr. Goldman is entitled to receive a monthly consulting fee
of $10,000 per month for nine months  terminating  with the final payment due in
June 1998.

Series A Convertible Preferred Stock
------------------------------------

On  September  5, 1997,  the  Company  closed on the second  tranch of a private
placement  of  the  Company's  Convertible  Preferred  Stock  (the  "Convertible
Preferred Stock Private Placement"). The placement agent (the "Placement Agent")
for the Convertible  Preferred Stock Private Placement has received an aggregate
placement fee to date of $373,050,  which  represents 9% of the aggregate  gross
proceeds,  and an expense  allowance  of  $165,800  which  represents  4% of the
aggregate  gross  proceeds.  In  addition,  upon the closing of the  Convertible
Preferred  Stock  Private  Placement,  the Company  will grant to the  Placement
Agent, and/or its designees,  warrants to purchase  Convertible  Preferred Stock
equal to 10% of the total number of shares of Convertible  Preferred  Stock sold
in the Convertible  Preferred Stock Private Placement at an exercise price equal
to 110% of the offering price of the Convertible Preferred Stock. The warrant(s)
to be  issued  upon the  closing  of the  Convertible  Preferred  Stock  Private
Placement are  exercisable  for ten years  commencing  six months from the final
closing of the  Convertible  Preferred  Stock  Private  Placement.  The warrants
contain  certain  antidilution  and  registration  rights  provisions.  Scott A.
Katzmann,  a director of the Company,  is a Managing  Director of the  Placement
Agent.

Prior Preferred Stock Placement
-------------------------------

Between August 1994 and May 1995, Paramount Capital, Inc. ("Paramount") acted as
placement  agent in connection  with the private  placement of a prior series of
Preferred Stock (the "Old Preferred  Shares").  Paramount  received  $632,250 in
commissions and a non-accountable expense allowance of $281,000 in consideration
of its  services  as  placement  agent.  In  addition,  designees  of  Paramount
received,  as  additional  compensation,  warrants to purchase an  aggregate  of
281,000  Old  Preferred  Shares,  at an  exercise  price  of  $2.75  per  share,
exercisable for a period



                                      -11-
<PAGE>

of 10 years  following the closing of the  offering.  Such warrants were amended
and  restated in May 1996 to be warrants  to  purchase  97,185  shares of Common
Stock at an exercise price of $4.84 per share.  In connection  with this private
placement, until November 1997, Paramountwill be entitled to receive a placement
fee of 9%,  plus a 4% expense  allowance,  on any  investments  received  by the
Company  from  investors  or  corporate  partners   (excluding  project  finance
investors) that were introduced to the Company by Paramount.  Scott A. Katzmann,
a director of the Company, is a Managing Director of Paramount.

Lindsay A. Rosenwald, M.D., is the President, Chairman and sole stockholder, and
Peter Kash is a Managing Director, of Paramount.  In connection with the private
placement of Old Series A Shares,  Dr. Rosenwald and Mr. Kash received  warrants
to purchase shares of Old Series A Shares, which currently represent warrants to
purchase 34,353 and 4,788 shares of Common Stock, respectively.

Bridge Loans
------------

In connection with a bridge financing in 1994 (the "1994 Financing"),  designees
of  Paramount  received  warrants to purchase an  aggregate  of 7,307  shares of
Common  Stock with an initial per share  exercise  price  equal to $13.55.  Such
warrants were amended and restated in May 1996 to become  exercisable for 20,750
shares of Common Stock at an exercise  price of $4.77 per share.  Such  warrants
include  warrants  to  purchase  10,374  shares  of Common  Stock  issued to Dr.
Rosenwald  and  warrants to purchase  4,671 shares of Common Stock issued to Mr.
Kash.

In September,  October and November 1995,  the Company  borrowed an aggregate of
$650,000  from  stockholders  of the  Company or their  affiliates  for  working
capital.  Of such  amount,  an aggregate of $250,000 was provided by TFP III and
TFVP V, and an aggregate of $200,000 was provided by Aries Domestic  Fund,  L.P.
and The Aries  Trust  (collectively,  the  "Aries  Funds"),  two funds for which
Paramount Capital Asset  Management,  Inc. is the general partner and investment
manager,  respectively.  Dr.  Rosenwald is the President and sole stockholder of
Paramount Capital Asset Management,  Inc. The principal amount of such loans was
exchanged  in  December  1995 for  $650,000  principal  amount  of new notes and
warrants  to  purchase  325,000  shares of Common  Stock  (which  warrants  were
exchanged  automatically on the closing of the Company's initial public offering
("IPO") for  Redeemable  Class A Warrants to purchase  325,000  shares of Common
Stock).  The notes received by such  stockholders  were repaid at the closing of
the IPO.

In March  1996,  the  Company  borrowed an  aggregate  of  $200,000  pursuant to
promissory  notes bearing interest at the rate of 10% per annum. Of such amount,
Dr. Rosenwald provided $150,000,  Scott A. Katzmann and Peter Kash each provided
$18,750  and Harvey  Goldman  provided  $12,500.  Such notes were  repaid at the
closing of the IPO.

In May 1996,  the  Company  borrowed  $200,000  from Dr.  Rosenwald  pursuant to
promissory  notes  bearing  interest  at the rate of 10% per  annum,  which were
repaid at the closing of the IPO.



                                      -12-
<PAGE>

In July and August 1997, the Company  borrowed an aggregate of $500,000 from the
Aries Funds pursuant to a line of credit agreement (the "1997 Bridge Loan"). The
1997 Bridge  Loan bears  interest at the rate of 12% per annum and was repaid in
August 1997. In connection  with the1997  Bridge Loan, the Company issued to the
Aries Funds  warrants to purchase an aggregate of 100,000 shares of Common Stock
at a per share  exercise price equal to $1 5/16.  Such warrants  expire July 21,
2002 and contain certain  antidilution and registration  rights  provisions.  In
connection with the Convertible  Preferred Stock Private  Placeement,  in August
1997, the Aries Funds  purchased  100,000 shares of Convertible  Preferred Stock
for $1,000,000.

Issuances of Securities to Executive Officers and Directors
-----------------------------------------------------------

From the period from inception to December 1995, the Company  granted options to
purchase an aggregate of 48,891 shares of Common Stock to executive officers and
directors of the Company with exercise prices ranging from $ 13.55 to $20.53 per
share. Such options were repriced in May 1996 to $4.40 per share.

In April 1996, the Company  issued  non-qualified  stock options  outside of the
Employee Stock Option Plan, all of which are Escrow Options (defined herein), to
Mr.  Goldman,  to purchase  50,000 shares of Common Stock.  Such options have an
exercise price of $4.40 per share and vest ratably over three years on an annual
basis.  Mr. Goldman was also granted options to purchase 40,000 shares of Common
Stock in  October  1996 at an  exercise  price of  $4.40.  All of Mr.  Goldman's
options have terminated.

On July 1, 1996,  each  director  received an option to  purchase  121 shares of
Common Stock  pursuant to an automatic  grant under the  Company's  Stock Option
Plan for  Non-Employee  Directors.  Such options have an exercise price of $5.00
per share and are fully vested.

On October 11, 1996,  Mr.  Goldman and Mr.  Pappas  purchased  80,000 and 10,000
shares, respectively, of Common Stock for a purchase price of $.00025 per share,
pursuant to  restricted  stock grant  awards under the 1996  Employee  Incentive
Plan. Such shares vest in January 1998.

On October 15, 1996, the Board of Directors  granted options to its non-employee
directors  pursuant  to the Stock  Option  Plan for  Non-Employee  Directors  to
purchase an aggregate  of 50,000  shares of Common  Stock.  Such options have an
exercise price of $3.125 per share and are fully vested.

On July 1, 1997, Messrs. Hays and Hughes were granted incentive stock options to
purchase 100,000 and 75,000 shares of Common Stock,  respectively.  Messrs. Hays
and Hughes'  stock  options have an exercise  price of $1.675 per share.  Twenty
percent (20%) of such options vested upon issuance and twenty percent (20%) vest
on the first, second, third and fourth anniversary of the date of issuance.

On July 22,  1997,  Messrs.  Beck and Pappas were  granted  non-qualified  stock
options to purchase 300,000 and 20,000 shares, respectively,  of Common Stock at
an exercise  price of $1.375.  Mr. Beck's  options vest twenty  percent (20%) at
issuance  and  twenty  percent  (20%) on the  first,  second,  third and  fourth
anniversary  of the date of  issuance.  Mr.  Pappas'  options  were  vested upon
issuance.


                                      -13-
<PAGE>


On August 1, 1997, Mr. Amt was granted a non-qualified  stock option to purchase
300,000 shares of Common Stock at an exercise price of $1.375. Mr. Amt's options
vest twenty  percent  (20%) at issuance and twenty  percent  (20%) on the first,
second, third and fourth anniversary of the date of issuance.

On August 6, 1997, Messrs.  Gardner and Katzmann were each granted stock options
to purchase  20,000 shares of Common Stock at an exercise  price of $1.875 under
the Stock Option Plan for Non-Employee  Directors.  Twenty percent (20%) of such
options vested upon issuance and twenty percent (20%) vest on the first, second,
third and fourth anniversary of the date of issuance.

In connection with the Convertible Preferred Stock Private Placement,  on August
29, 1997, Mr. Fish purchased  20,000 shares of Convertible  Preferred  Stock for
$200,000,  and on  September  5,  1997,  Mr.  Beck  purchased  10,000  shares of
Convertible Preferred Stock for $100,000.

Board Designee and Other TFI Covenants
--------------------------------------

The Company, TFP III and TFVP V entered into a Series A Preferred Stock Purchase
Agreement in May 1995 with respect to the Old Preferred  Shares.  The agreement,
as amended in December  1995,  provides  that the Company  will (i) use its best
efforts to  nominate a designee of TFI to the Board of  Directors  and (ii) sell
shares  of stock  and  grant  options  to  employees,  officers,  directors  and
consultants  only pursuant to Board  approved  plans and  agreements  containing
three-year vesting provisions (except in the case of sales of stock or grants of
options to new employees where the Board determines otherwise for valid business
reasons). Such covenants terminate upon the earlier of (a) May 1999 and (b) such
time as TFP III and TFVP V cease to hold  approximately  18,270 shares of Common
Stock in the  aggregate.  At September 30, 1997, TFP III and TFVP V collectively
hold 276,727 shares of Common Stock, 31,500 shares of Convertible  Preferred and
warrants to purchase an additional 69,171 shares of Common Stock.

Escrow Securities
-----------------

In connection with the IPO, 740,559 shares of Common Stock (the "Escrow Shares")
and options to  purchase  an  aggregate  of 71,923  shares of Common  Stock (the
"Escrow  Options"),  of which options to purchase  50,000 shares of Common Stock
have been  canceled,  were  deposited  into escrow by the holders  thereof.  The
Escrow  Shares  include  shares held by Harvey  Goldman  (100,725)  and Scott A.
Katzmann  (12,179  shares).   The  Escrow   Securities  are  not  assignable  or
transferable. The holders thereof have the power to vote the Escrow Shares while
such shares are held in escrow.  Holders of any  options in escrow may  exercise
their options prior to their release from escrow;  however,  the shares issuable
upon any such exercise will continue to be held in escrow as Escrow Shares.  The
Escrow  Securities  will be released from escrow,  on a pro rata basis,  if, and
only if, one or more of the following  conditions  is/are met: (a) the Company's
net income before provision for income taxes and exclusive of any  extraordinary
earnings or charges which would result from the release of the Escrow Securities
(all as audited by the Company's  independent public  accountants) (the "Minimum
Pretax Income") amounts to at least $4.7 million for the fiscal year ending June
30, 1998; (b) the Minimum Pretax Income amounts to at least $7.0 million for the
fiscal year ending June 30, 1999; (c) the Minimum Pretax Income



                                      -14-
<PAGE>

amounts to at least $9.3 million for the fiscal year ending June 30,  2000;  (d)
the Closing Price (as defined) of the Company Common Stock averages in excess of
$11.25 per share for 60  consecutive  business  days during the 18-month  period
commencing on May 16, 1996;  (e) the Closing  Price of the Company  Common Stock
averages in excess of $15.00 per share for 60  consecutive  business days during
the 18-month  period  commencing  18 months from May 16, 1996; or (f) during the
periods specified in (d) or (e) above, the Company is acquired by or merged into
another   entity  in  a  transaction  in  which  the  value  of  the  per  share
consideration  received by the  stockholders  of the Company on the date of such
transaction or at any time during the applicable period set forth in (d) or (e),
respectively,  equals or exceeds the applicable  levels set forth in (d) or (e),
respectively.

The  Minimum  Pretax  Income  amounts  set  forth  above  are  those  originally
established  at the time of the IPO. Such Minimum  Pretax Income amounts will be
increased as a result of the issuance of the Preferred Stock offered hereby.

The Minimum  Pretax  Income  amounts  shall (i) be  calculated  exclusive of any
extraordinary  earnings or any charges to income  resulting  from release of the
Escrow   Securities  and  (ii)  be  increased   proportionately,   with  certain
limitations,  in the event  additional  shares of the Common Stock or securities
convertible  into,  exchangeable  for or  exercisable  into the Common Stock are
issued.  The Closing  Price amounts set forth above are subject to adjustment in
the event of any stock splits, reverse stock splits or other similar events.

Any money,  securities,  rights or property distributed in respect of the Escrow
Securities,  including any property  distributed as dividends or pursuant to any
stock  split,  merger,   recapitalization,   dissolution  or  total  or  partial
liquidation of the Company,  shall be held in escrow until release of the Escrow
Securities.  If none of the  applicable  Minimum  Pretax Income or Closing Price
levels set forth above have been met by October 15, 2000, the Escrow Securities,
as well as any dividends or other distributions made with respect thereto,  will
be canceled and  contributed to the capital of the Company.  The Company expects
that the release of any Escrow Securities to officers, directors,  employees and
consultants of the Company will be deemed  compensatory and,  accordingly,  will
result in a charge to  reportable  earnings,  which  would equal the fair market
value of such shares on the date of release. Such charge could increase the loss
or reduce or eliminate the Company's net income for financial reporting purposes
for the  period(s)  during  which such shares are, or become  probable of being,
released from escrow.  Although the amount of compensation expense recognized by
the Company will not affect the Company's  total  stockholders'  equity,  it may
have a negative effect on the market price of the Company's securities.

The  Minimum  Pretax  Income  and  Closing  Price  levels  set forth  above were
determined by negotiation  between the Company and D.H. Blair Investment Banking
Corp.,  the  underwriter  of the IPO,  and should not be  construed  to imply or
predict any future  earnings by the Company or any  increase in the market price
of its securities.


                                      -15-
<PAGE>


                                   SIGNATURES

Pursuant to the  requirement of Section 13 or 15 of the Securities  Exchange Act
of 1934,  the  Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                                     CONVERSION TECHNOLOGIES INTERNATIONAL, INC.


Dated: October 28, 1997              /s/ William L. Amt
                                     -----------------------------
                                     William L. Amt
                                     President and Chief Executive Officer


                                      -16-
<PAGE>


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.

      SIGNATURE                          TITLE                       DATE
      ---------                          -----                       ----


/s/ William L. Amt              President, Chief Executive      October 28, 1997
---------------------------     Officer and Director
William L. Amt                  (principal executive officer)


/s/ John G. Murchie             Controller(principal            October 28, 1997
---------------------------     accounting officer)
John G. Murchie                 


                                Chairman of the Board           October __, 1997
---------------------------
Eckardt C. Beck


/s/ Peter H. Gardner            Director                        October 28, 1997
---------------------------
Peter H. Gardner


/s/ Alexander P. Haig           Director                        October 28, 1997
---------------------------
Alexander P. Haig


/s/ Scott A. Katzmann           Director                        October 28, 1997
---------------------------
Scott A. Katzmann


/s/Irwin M. Rosenthal           Director                        October 28, 1997
---------------------------
Irwin M. Rosenthal


/s/Douglas M. Costle            Director                        October 28, 1997
---------------------------
Douglas M. Costle


                                Director                        October __, 1997
---------------------------
Stephen D. Fish
                                      -17-