SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For Quarter Ended:                                     Commission File Number:
March 31, 1998                                                 0 - 19957

                                  Quantech Ltd.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

      Minnesota                                             41-1709417
-------------------------------------- -----------------------------------------
 (State or other jurisdiction                            (I.R.S. Employer
 of incorporation or organization)                      identification No.)

                             1419 Energy Park Drive
                               St. Paul, MN 55108
--------------------------------------------------------------------------------
      (Address of principal executive offices)                    (Zip code)

                                 (612)-647-6370
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                       N/A
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                      YES     X                     NO ____

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock as of the latest practicable date:  51,302,319 shares of
Common Stock, no par value, outstanding as of May 13, 1998.

         Transitional Small Business Disclosure Format:  YES ___   NO  X

<PAGE>

                                      Index

PART I.    FINANCIAL INFORMATION                                      Page No.

   Item 1:    Financial Statements:

     Balance Sheets as of March 31, 1998 and June 30, 1997               3

     Statement of Operations for the Three Months and Nine Months 
     Ended March 31, 1998 and 1997 and from inception to
     March 31, 1998                                                      4

     Statement of Stockholders' Equity from inception                    6
        to March 31, 1998

     Statement  of Cash Flows for the Nine  Months  ended  
     March 31, 1998 and 1997 and from inception to
     March 31, 1998                                                      7

     Notes to Financial Statements                                       8

   Item 2:    Management's Discussion and Analysis or Plan 
              of Operation                                               9

   Item 3:    Quantitative and Qualitative Disclosure About 
              Market Risk                                               12

PART II.    OTHER INFORMATION                                           13



<PAGE>

                                  QUANTECH LTD.
                          (A Development Stage Company)
                                  BALANCE SHEET

<TABLE>
<CAPTION>

                                                                             (Unaudited)
                                                                              March 31,            June 30,
                                                                                1998                 1997
                                                                          ------------------   ------------------
<S>                                                                     <C>                   <C>   
ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                             $            15,665    $         718,893
  Deferred debt issue costs                                                          16,150               78,699
  Other current assets                                                               47,912               35,452
                                                                          ------------------   ------------------
Total Current Assets                                                                 79,727              833,044
                                                                          ------------------   ------------------
EQUIPMENT
  Equipment                                                                         361,111              329,780
  Leasehold Improvements                                                             15,000               15,000
                                                                          ------------------   ------------------
                                                                                    376,111              344,780
   Less accumulated depreciation                                                   (185,330)            (139,267)
                                                                          ------------------   ------------------
Total Equipment                                                                     190,781              205,513
                                                                          ------------------   ------------------
OTHER ASSETS
  License agreement, at cost, less amortization                                   2,817,465            2,096,558
  Patents, at cost, less amortization                                                 9,029                8,895
  Organization expenses, at cost, less amortization                                       -                  113
                                                                          ------------------   ------------------
Total Other Assets                                                                2,826,494            2,105,566
                                                                          ------------------   ------------------
TOTAL  ASSETS                                                           $         3,097,002 $          3,144,123
                                                                          ==================   ==================
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)

CURRENT LIABILITIES
  Short term debt                                                       $          2,557,00 $          1,070,000
  Accounts Payable                                                                  179,498              100,794
  Accrued Expenses:
    Spectrum Diagnostics Inc. obligations                                            22,953               36,509
    Minimum Royalty Commitment                                                       37,500              112,500
    Accrued Interest                                                                174,031               10,685
    Accrued Severance                                                                     -               77,265
    Accrued Bonus/Vacation                                                           65,238               54,226
    Other                                                                                 -                4,019
                                                                          ------------------   ------------------
Total Current Liabilities                                                         3,036,220            1,465,998
                                                                          ------------------   ------------------
STOCKHOLDERS EQUITY (DEFICIT)
  Common stock, no par value; authorized 200,000,000
   shares; issued and outstanding 51,302,319 shares at
   March 31, 1998; and 48,040,759 at June 30, 1997                               16,308,438              480,408
  Additional paid-in capital                                                        229,082           15,606,017
  Deficit accumulated during the development stage                              (16,476,738)         (14,408,300)
                                                                          ------------------   -----------------
Total Stockholders Equity                                                            60,782            1,678,125
                                                                          ------------------   ------------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                               $         3,097,002 $          3,144,123
                                                                          ==================   ==================
</TABLE>

<PAGE>


                                  QUANTECH LTD.
                          (A Development Stage Company)
                        STATEMENT OF OPERATIONS-UNAUDITED


<TABLE>
<CAPTION>


                                                                                                       Period From
                                                                                                      September 30,
                                                      Nine Months            Nine Months              1991 (Date of
                                                         Ended                  Ended                Inception), to
                                                       March 31,              March 31,                 March 31,
                                                         1998                   1997                      1998
                                                  --------------------   --------------------      --------------------
<S>                                                <C>                   <C>                       <C>   
Interest Income                                    $           10,491    $            75,887       $           181,272
                                                  --------------------   --------------------      --------------------

Expenses:
  General and Administrative                                  836,653              1,147,680                 8,494,861
  Research and Development                                    994,624              1,648,359                 5,640,329
  Sales and Marketing                                               -                178,778                   282,380
  Minimum Royalty expense                                      75,000                 56,250                 1,037,500
  Losses resulting from transactions
   with Spectrum Diagnostics Inc.                                   -                      -                   556,150
  Net Exchange (gain)                                               -                      -                   (67,172)
  Financing                                                   172,652                  5,913                   671,367
                                                  --------------------   --------------------      --------------------
Total Expenses                                              2,078,929              3,036,980                16,615,415
                                                  --------------------   --------------------      --------------------

Loss before income taxes                                   (2,068,438)            (2,961,093)              (16,434,143)

Income Taxes                                                        -                      -                    42,595
                                                  --------------------   --------------------      --------------------

Net Loss                                           $       (2,068,438)  $         (2,961,093)     $        (16,476,738)
                                                  ====================   ====================      ====================

Basic and diluted loss per share                   $            (0.04)  $              (0.06)
Weighted average common shares
  outstanding                                              50,206,240             47,167,584


</TABLE>



<PAGE>





                                  QUANTECH LTD.
                          (A Development Stage Company)
                        STATEMENT OF OPERATIONS-UNAUDITED

<TABLE>
<CAPTION>
                                                   
                                                   
                                                     Three Months            Three Months
                                                         Ended                  Ended
                                                       March 31,              March 31,
                                                         1998                    1997
                                                  --------------------   ---------------------
<S>                                                <C>                   <C>    
Interest Income                                    $              584    $             14,655
                                                  --------------------   ---------------------

Expenses:
  General & Administrative                                    352,402                 423,016
  Research and development                                    399,275                 584,946
  Sales and Marketing                                               -                 108,354
  Minimum royalty expense                                      37,500                  18,750
  Losses resulting from transactions                                      
   with Spectrum Diagnostics Inc.                                   -                       -
  Net exchange (gain)                                               -                       -
  Financing                                                    72,831                   1,471
                                                  --------------------   ---------------------
Total Expenses                                                862,008               1,136,537
                                                  --------------------   ---------------------

Loss before income taxes                                     (861,424)             (1,121,882)

Income taxes                                                        -                       -
                                                  --------------------   ---------------------

Net loss                                           $         (861,424)   $         (1,121,882)
                                                  ====================   =====================

Basic and diluted loss per share                   $            (0.02)   $              (0.02)
Weighted average common shares                                            
  outstanding                                              51,098,822              47,488,759


</TABLE>




<PAGE>
                                  QUANTECH LTD
                          (A Development Stage Company)
                   STATEMENT OF STOCKHOLDERS' EQUITY-UNAUDITED
      Period From September 30, 1991 (date of Inception), to March 31, 1998
<TABLE>
<CAPTION>


                                                                         Deficit
                                                                       Accumulated
                                                                         During
                                         Common Stock      Additional      the                 Paid for      Due     Cumulative
                                                             Paid-In   Development Subscriptions Not        From     Translation
                                      Shares     Amount      Capital      Stage    Receivable   Issued    Officers   Adjustment
                                     -------------------------------------------------------------------------------------------
<S>                                  <C>        <C>        <C>         <C>          <C>        <C>        <C>        <C>      
Balance at Inception
 Net Loss for 15 months                                                ($3,475,608) 
 Common stock transactions:
  Common stock issued, October 1991  3,200,000  $3,154,574
  Common stock issued, November 1991   600,000    $611,746  $1,788,254
  Common stock issuance costs                                ($889,849)
  Cumulative translation adjustment                                                                                    $387,754
  Common stock issued, September 1992  700,000    $699,033    $875,967               ($53,689)
  Common stock issuance costs                                ($312,755)
  Common stock to be issued                                                                     $120,000
  Cumulative translation adjustment                                                                                   ($209,099)
  Elimination of cumulative translation 
  adjustment                                                                                                          ($178,655)
 Officers advances, net                                                                                    ($27,433)
                                     -------------------------------------------------------------------------------------------
Balance, December 31, 1992           4,500,000  $4,465,353  $1,461,617 ($3,475,608)  ($53,689)  $120,000   ($27,433)         $0
 Net loss                                                                ($996,089)
 Common stock transactions:
  Common stock issued, January 1993    160,000      $1,600    $118,400                         ($120,000)
  Common stock issued, April 1993       30,000        $300     $11,700
  Change in common stock par
   value resulting from merger                 ($4,420,353) $4,420,353
 Repayments                                                                                                  $5,137
                                     -------------------------------------------------------------------------------------------
Balance,June 30, 1993                4,690,000     $46,900  $6,012,070 ($4,471,697)  ($53,689)        $0   ($22,296)         $0
 Net loss                                                              ($1,543,888)
 240,000 shares of common
 stock to be issued                                                                              $30,000
 Repayments                                                                           $53,689                $22,296
                                     -------------------------------------------------------------------------------------------
Balance, June 30, 1994               4,690,000     $46,900  $6,012,070 ($6,015,585)        $0    $30,000          $0         $0
 Net loss                                                              ($2,070,292)
 Common stock issued, June 1995      2,150,000     $21,500    $276,068               ($20,000)  ($30,000)
 Warrants issued for services                                  $40,200
                                     -------------------------------------------------------------------------------------------
Balance June 30, 1995                6,840,000     $68,400  $6,328,338 ($8,085,877)  ($20,000)        $0          $0         $0
 Net loss                                                              ($2,396,963)
 Common stock issued, net of
  issuance costs of $848,877:
     July, 1995                      6,160,000     $61,600  $1,304,450
     August, 1995                      717,600      $7,176    $161,460
     September, 1995                13,807,296    $138,073  $2,370,389
     November, 1995                  1,897,840     $18,978    $425,482
     December, 1995                 11,217,157    $112,172  $1,292,473
     May, 1996                       6,275,000     $62,750  $3,300,422
     June, 1996                          5,058         $51      $3,650
 Payments received on
  subscription receivable              (19,192)       (192)   ($14,808)               $20,000
 Compensation expense recorded
  on stock options                                            $125,000
                                     -------------------------------------------------------------------------------------------
Balance, June 30, 1996               46,900,759   $469,008 $15,296,856 ($10,482,840)       $0         $0          $0         $0

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

 <S>                                   <C>         <C>        <C>       <C>          <C>          <C>           <C>         <C>
 Net loss                                                               ($3,925,460)
 Stock offering costs                                         ($12,310)
 Common stock issued upon exercise of
 options and warrants
     September 1996                     10,000        $100      $2,400
     October 1996                      170,000      $1,700     $40,800
     November 1996                      15,000        $150      $3,600
     December 1996                     270,000      $2,700     $64,800               ($57,500)
     January 1997                       20,000        $200      $4,800
     February 1997                     150,000      $1,500     $17,250
     March 1997                        140,000      $1,400     $33,600
 Payments received on
  subscription receivable                                                             $57,500
 Compensation expense recorded
  on stock options                                             $48,000
 Common stock issued, June 1997        365,000      $3,650    $105,850
 Warrants issued with notes payable                               $371
                                     -------------------------------------------------------------------------------------------
Balance, June 30, 1997               48,040,759   $480,408 $15,606,017 ($14,408,300)       $0         $0          $0         $0
 Net Loss                                                               ($2,068,438)
 Conversion of common stock from par 
  value to no par value                        $15,392,446($15,392,446)
 Common stock issued, September 1997 3,000,000    $390,000
 Common stock issued, March 1998       261,560     $45,584
 Warrants issued, March 1998                                   $15,215
 Warrants issued with notes payable                               $296
                                     -------------------------------------------------------------------------------------------
Balance, March 31, 1998             51,302,319 $16,308,438    $229,082 ($16,476,738)       $0         $0          $0         $0
                                     ===========================================================================================

</TABLE>

<PAGE>


                                 6 QUANTECH LTD
                          (A Development Stage Company)
                        STATEMENT OF CASH FLOWS-UNAUDITED

<TABLE>
<CAPTION>
      
                                                                                               Period From
                                                                                                    September 30,
                                                               Nine Months        Nine Months       1991 (Date of
                                                                  Ended              Ended          Inception), to
                                                                March 31,          March 31,          March 31,
                                                                   1998               1997               1998
                                                             -----------------  -----------------  -----------------
<S>                                                          <C>                <C>               <C>    
Cash Flows From Operating Activities
 Net Loss                                                    $     (2,068,438)  $     (2,961,093)  $    (16,476,738)
 Adjustments to reconcile net loss to net cash used in
  operating activities:
  Elimination of cumulative translation adjustment                          -                  -           (178,655)
  Depreciation                                                         46,063             45,023            231,684
  Amortization                                                        292,323            172,357          1,648,940
  Noncash compensation, expense and interest                           47,466             24,000            584,716
  Losses resulting from transactions with
   Spectrum Diagnostics Inc.                                                -                  -            556,150
  Write down of investment                                                  -                  -             67,500
  Change in assets and  liabilities,  net of effects  
  from  purchase of Spectrum
  Diagnostics Inc.:
  (Increase) decrease in other current assets                         (12,460)           (12,364)            28,526
  Increase (decrease)in accounts payable                               78,704            149,707            177,943
  Increase (decrease) in accrued expenses                               4,518             50,883            573,846
                                                             -----------------  -----------------  -----------------
     Net cash used in operating activities                         (1,611,824)        (2,531,487)       (12,786,088)
                                                             -----------------  -----------------  -----------------
Cash Flows From Investing Activities
 Purchase of property and equipment (net of non-cash)                 (17,998)           (91,949)          (439,536)
 Proceeds on disposition of property                                        -                  -             37,375
 Organization expenses                                                      -                  -            (97,547)
 Patent spending                                                         (134)                 -             (9,029)
 Officer advances, net                                                      -                  -           (109,462)
 Purchase of investment                                                     -                  -           (225,000)
 Purchase of license agreement                                              -                  -         (1,950,000)
 Advances to Spectrum Diagnostics, Inc.                                     -                  -           (320,297)
 Prepaid securities issuance costs                                    (10,403)                 -           (112,046)
 Purchase of Spectrum Diagnostics, Inc., net of cash
  and cash equivalents acquired                                             -                  -         (1,204,500)
                                                             -----------------  -----------------  -----------------
   Net cash used in investing activities                              (28,535)           (91,949)        (4,430,042)
                                                             -----------------  -----------------  -----------------
Cash Flows From Financing Activities
 Net proceeds from the sale of common stock & warrants                    131            112,500         12,880,928
 Proceeds on debt obligations                                         937,000                  -          4,665,435
 Payments received on stock subscription receivables                        -             62,500              5,000
 Stock offering costs                                                       -            (12,310)                 -
 Payments on debt obligations                                               -            (24,455)          (522,810)
                                                             -----------------  -----------------  -----------------
  Net cash provided by financing activities                           937,131            138,235         17,028,553
                                                             -----------------  -----------------  -----------------
Effect of Exchange Rate Changes on Cash                                     -                  -            203,242
                                                             -----------------  -----------------  -----------------
   Net increase (decrease) in cash                                   (703,228)        (2,485,201)            15,665
Cash
 Beginning                                                            718,893          2,942,871                  -
                                                             -----------------  -----------------  -----------------
 Ending                                                      $         15,665   $        457,670   $         15,665
                                                             =================  =================  =================
Non-Cash Investing and Financing Activities
 Issuance of debt, common stock and warrants for
  sublicensing rights                                                 940,165                               940,165
 Issuance of common stock and warrants for goods
  and services                                                         60,799                                60,799
                                                             -----------------  -----------------  -----------------
 Total non-cash investing and financing activities           $      1,000,964   $              -   $      1,000,964
                                                             =================  =================  =================
</TABLE>


<PAGE>


                                  QUANTECH LTD.
                         ( A Development Stage Company )

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

Note 1. BASIS OF PRESENTATION

In the opinion of the  management  of the Company,  the  accompanying  unaudited
financial  statements  contain  all  adjustments  (consisting  of  only  normal,
recurring adjustments) necessary to present fairly the financial position of the
Company as of March 31,  1998 and the  results of  operations  for the three and
nine month periods and its cash flows for the nine month periods ended March 31,
1998 and  1997.  The  results  of  operations  for any  interim  period  are not
necessarily  indicative  of the results for the year.  These  interim  financial
statements  should be read in conjunction  with the Company's  annual  financial
statements  and related notes in the Company's  Annual Report on Form 10-KSB for
the year ended June 30, 1997.

Note 2. LICENSE AGREEMENT

The Company has a license  agreement,  as amended,  with Ares-Serono for certain
patents,   proprietary  information  and  associated  hardware  related  to  SPR
technology.  The  license  calls for an  ongoing  royalty  of 6  percent  on all
products  utilizing  the  SPR  technology  which  are  sold by the  Company.  In
addition,  if the Company  sublicenses  the  technology,  the Company will pay a
royalty  of 15  percent  of all  revenues  received  by the  Company  under  any
sublicense.  As of  December  31,  1997,  the  Company  had paid  $1,000,000  of
cumulative royalty payments. In order to maintain its exclusive rights under the
license agreement, the Company must make a $150,000 payment by December 31, 1998
and 1999.  The Company  intends to accrue  $150,000 by December  31,  1998,  and
continue  accruing for future payments until royalty  accruals based on revenues
exceed the minimum payment amounts.

Note 3. NET LOSS PER SHARE

The FASB has issued Statement No. 128, Earnings Per Share,  which supersedes APB
Opinion No. 15.  Statement  No. 128  requires the  presentation  of earnings per
share by all entities that have common stock or potential common stock,  such as
options,  warrants,  and  convertible  securities,  outstanding  that trade in a
public  market.  Those  entities  that have only common  stock  outstanding  are
required to present basic  earnings per share  amounts.  Basic per share amounts
are computed,  generally, by dividing net income or loss by the weighted average
number of common shares outstanding.  All other entities are required to present
basic and  diluted  per share  amounts.  Diluted  per share  amounts  assume the
conversion,  exercise,  or issuance of all  potential  common stock  instruments
unless the effect is  anti-dilutive  thereby reducing the loss or increasing the
income per common share.

The  Company  initially applied Statement No. 128 for the periods ended December
31,  1997  and,  as  required  by the  Statement,  has  restated  all per  share
information for the prior years to conform to the Statement. Because the Company
has incurred a loss in all periods presented,  the inclusion of potential common
shares in the  calculation of diluted loss per share would have an  antidilutive
effect. Therefore, Basic and Diluted loss per share amounts are the same in each
period presented.



<PAGE>


ITEM 2

            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

History

         Quantech Ltd. ("Quantech" or the "Company") is a Minnesota  corporation
originally founded in 1991. Quantech is completing development of a near patient
("NP")  medical  diagnostic  testing  system  which is based  upon its  patented
Surface Plasmon Resonance ("SPR")  technology.  Quantech's  critical care system
will  have the  ability  to  perform a  complete  range of  clinically  related,
quantitative  whole blood tests on a single instrument near the patient in 10 to
20 minutes.  The system will be marketed to hospital  Critical Care Units,  with
the initial focus being  Emergency  Departments.  Hospital  Critical Care Units,
such as the  Emergency  Department,  are best able to  recognize  the  immediate
positive  impact   Quantech's   system  will  have  on  patient   treatment  and
satisfaction,   determination  of  appropriate   clinical  care  path  and  cost
containment.

         Quantech's  system will consist of an easy to use bench top  instrument
and test  disposables.  Each  disposable  will  contain one test,  or a panel of
clinically related tests, which will define the particular tests to be conducted
by the instrument.  The Company has filed a pre-market notification,  known as a
510(k),  with the FDA on its first test for the detection and  quantification of
the cardiac marker Myoglobin. This cardiac marker is an aid to physicians in the
diagnosis of an early stage heart attack.  Further tests,  including the cardiac
markers CK-MB and troponin and the pregnancy  marker hCG, are being developed to
provide the Quantech system with a full range of testing capabilities along with
multiple tests per disposable.

         Quantech and The Perkin-Elmer Corporation  ("Perkin-Elmer"),  a leading
supplier of life science  systems and analytical  instruments,  are parties to a
technology and development agreement.  Such agreement provides Perkin-Elmer with
exclusive licenses to certain Quantech  technology for use outside of Quantech's
core area of  non-nucleic  medical  diagnostics.  Perkin-Elmer,  pursuant to the
agreement,   provides   technical   assistance  related  to  Quantech's  medical
diagnostic  system and possible future royalty  payments if  Perkin-Elmer  sells
products using Quantech's technology.

         Quantech is a development  stage company which has suffered losses from
operations and will require additional financing to complete development, obtain
FDA approval and  commercialize  its  diagnostic  system.  Additional  tests and
system  development must be completed,  FDA approval  obtained on these multiple
tests and the system, Quantech's diagnostic system introduced to the market, and
ultimately,  Quantech will need to successfully  attain  profitable  operations.
These factors raise substantial doubt about the Company's ability to continue as
a going concern.

Results of Operations

         The Company has incurred a net loss of  $16,476,738  from September 30,
1991 (date of  inception)  through  March 31,  1998 due to  expenses  related to
formation and operation of its predecessor, continuing costs of raising capital,
normal expenses of operating over an extended  period of time,  funds applied to
research and development,  minimum royalty  payments on the SPR technology,  and
interest on borrowed  funds.  In addition,  an investment of $3,356,629 was made
when Quantech purchased the exclusive rights to the SPR technology.

         For the three and nine  months  ended  March 31,  1998 the  Company had
interest  income of $584 and  $10,491  respectively,  compared  to  $14,655  and
$75,887 for the same periods in 1997. These decreases were a result of less cash
on hand as proceeds  obtained from Quantech's  private  placements of securities
have been used for operations and research and development.

         General and administration  expenses decreased to $352,402 and $836,653
for the three  months and nine months  ended March 31, 1998  respectively,  from
$423,016 and  $1,147,680  for the same periods in 1997.  There were no sales and
marketing  expenses during the three months and nine months ended March 31, 1998
compared to $108,354  and  $178,778  for the three  months and nine months ended
March 31,  1997.  The  decreases  in general  and  administrative  and sales and
marketing spending resulted from the restructuring that the Company  implemented
in the second half of 1997. The restructuring was aimed at reducing expenses and

<PAGE>

focusing the Company's  resources on completing  development  of its  diagnostic
system.  Changes  that were made  included  reducing  the  number of  employees,
consultants and outside services  employed in the  administrative  and marketing
functions.   The  Company   anticipates   that  these   expenses  will  increase
significantly in the future as the Company  completes  development of its system
and begins to manufacture and distribute its products.

         Research and  development  costs  decreased to $399,275 and $994,624 in
the three and nine months ended March 31, 1998 from  $584,946 and  $1,648,359 in
the same  periods  of  1997.  The  decreases  were  due to the  above  mentioned
restructuring,  with cost  reductions  resulting  primarily from reduced outside
contract development work as the Company focused its resources on completing the
system development with a reconfigured internal development team.  Approximately
25% of the R&D spending  during the quarter  ended March 31, 1998 was related to
the  preparation  of a  510(k)  submission  to the FDA for  the  cardiac  marker
Myoglobin.   Research   and   development   spending  is  expected  to  increase
significantly during the rest of calendar 1998 as Quantech completes development
of its instrument and additional disposable tests, conducts additional FDA work,
and begins to establish higher volume manufacturing capabilities.

         The minimum  royalty  expense  recorded  for the three  months and nine
months  ended March 31, 1998  increased  to $37,500 and $75,000 from $18,750 and
$56,250 in the same periods of 1997. The increase was due to higher accruals for
minimum  payments  scheduled  for December 1998 and 1999 (see Notes to Financial
Statements, Note 2 License Agreement).

         Financing  expenses  increased  to $72,831 and  $172,652  for the three
months and nine months  ended  March 31, 1998  compared to $1,471 and $5,913 for
the same  periods  in 1997  primarily  due to  increased  debt  from the sale of
convertible promissory notes to fund operations. Financing expenses are expected
to increase  during the quarter  ending June 30, 1998 as a result of the sale of
additional  convertible  promissory  notes,  interest on such notes, and further
funding.  The extent of such  financing  expenses  will  depend  upon the future
capital  structure of the Company and the timing of any  repayment or conversion
of the notes into shares of Common Stock.

         For the three months and nine months ended March 31, 1998  Quantech had
a loss of $861,424 and $2,068,438,  respectively,  as compared to $1,121,882 and
$2,961,093 for the same periods in 1997. The decreased losses were the result of
lower operating expenses partially offset by lower interest income.

         During December 1997 the Company entered into a License  Agreement with
The  Perkin-Elmer  Corporation  ("Perkin-Elmer"),  a  leading  supplier  of life
science systems and analytical  instruments.  The Agreement  provides  technical
assistance to Quantech for the  completion of its medical  diagnostic  system in
exchange  for  Perkin-Elmer  receiving  exclusive  licenses to certain  Quantech
technology for use outside of Quantech's core medical markets.  Quantech will be
entitled to royalty  payments on products  sold by  Perkin-Elmer  which  include
Quantech's  technology.  The  royalty  rate on these  sales  will be  reduced as
Perkin-Elmer   assists  Quantech  in  achieving   certain  product   development
milestones  or phases.  In  addition,  the Company has  granted  Perkin-Elmer  a
warrant to purchase Quantech common stock under certain conditions.

         The collaboration between Quantech and Perkin-Elmer has resulted in the
achievement of several milestones including submission in April 1998 of a 510(k)
to the FDA for a test for the cardiac marker  Myoglobin.  Quantech is continuing
development  of further  tests and receiving  assistance  from  Perkin-Elmer  in
completing  additional  phases under the License  Agreement.  Product  launch of
Quantech's   system  is  anticipated  in  the  first  quarter  of  1999,   which
introduction is expected to include at least three tests for the system.

         The  Company  is also in  discussions  with other  potential  strategic
partners  regarding  research  and  development  collaborations  for medical and
industrial  applications  of  Quantech's  technology,  and  distribution  of its
system,  once  developed,  and in  manufacturing.  The timetable for  submitting
additional tests to the FDA and introduction of Quantech's  system to the market
will be influenced by the Company's  ability to obtain  further  funding,  enter
into strategic  relationships,  complete commercial prototype development of its
system and develop  further  tests,  and delays it may encounter with the FDA in
its review of Quantech's  tests and system.  There can be no assurance  that the
Company will be able to obtain the required  funding,  enter into any  strategic
agreements or ultimately complete its commercial system.

<PAGE>

Liquidity and Capital Resources

         From  inception  to March 31, 1998,  Quantech has raised  approximately
$17,000,000 through a combination of public stock sales, private stock sales and
debt  obligations,   including  a  $500,000  bank  loan  guaranteed  by  Company
directors.  In April  1998,  the  Company  completed  an  offering of notes (the
"Notes") and warrants (the "Warrants"). The Notes are due and payable on June 1,
1998, or earlier upon Quantech  completing a transaction that provides it with a
minimum of $5,000,000  (the  "Additional  Funding").  Interest is the prime rate
plus  five  percent,  and the  Notes  are  secured  by all of the  assets of the
Company.  The Notes are convertible into shares of Common Stock at a price equal
to  the  lower  of (a)  $0.17625  per  share;  or (b)  80% of the  price  of the
Additional  Funding or, if the Additional Funding has not occurred prior to June
1, 1998, the lower of 80% of the market price of the Company's  Common Stock for
the 20  consecutive  trading  days prior to the issuance of the Notes or June 1,
1998.

         Net  proceeds of $590,000  were raised after March 31, 1998 through the
Company's offering of Notes and Warrants. The Company anticipates that this will
fund current operations through June 1998. Additional funds will be needed after
that date to continue operations. Notes Payable, which include the Notes, in the
amount of  $2,695,150  plus  interest  are due on June 1, 1998.  The  Company is
currently  working  to  complete  a capital  restructuring  which it  expects to
include  negotiating  an extension  of its June 1, 1998 Notes to  September  30,
1998,  raising  additional  funds  through  the  issuance  of up to  $500,000 in
principal  amount of  additional  September  30, 1998 Notes and a reverse  stock
split which would  position the Company for future equity  capital,  elevate its
trading  above that of  penny-stock  classification  and attract  interest  from
investment  analysts.  The September 30, 1998 Notes will have a conversion price
equal to the lower of $0.17625,  80% of the price of the Additional  Funding or,
if the  Additional  Funding has not occurred prior to September 30, 1998, 80% of
the average  market price of the Company's  Common Stock for the 20  consecutive
trading days prior to September  30, 1998.  Warrants for the purchase of Company
Common Stock will be granted for the extension of the June 1, 1998 Notes and the
purchase of new Notes with exercise  prices similar to the  conversion  price of
the new notes.

         Funds of at least $7.5  million  will be needed to repay the new Notes,
develop and submit to the FDA additional tests,  complete clinical evaluation of
the Quantech system,  establish  manufacturing  capabilities,  and introduce the
system to  market.  Funding  needs  would be  reduced by the amount of any Notes
converted  into shares of Common Stock.  The Company  expects that a substantial
portion of the new Notes would be converted if  additional  funding is obtained.
Quantech is currently  reviewing  multiple avenues of future funding including a
private sale of equity or arrangements with strategic partners. The Company does
not have any  commitments  for any such  financing and there can be no assurance
that the Company will obtain additional capital when needed or that the funds to
be raised  through the new Notes or additional  capital will not have a dilutive
effect on current shareholders.  If the Company is unable to extend the due date
of the Notes  Payable or pay the Notes  Payable when due, the Company will be in
default  and may  have to  liquidate  its  assets.  See  "Cautionary  Statements
Immediate and Future Capital Needs."  Although the Company has a limited lending
arrangement with its bank, it does not anticipate receiving  significant funding
from commercial lenders.

         Quantech  incurred  capital  expenditures  of $31,331 in the nine month
period  ended  March 31,  1998.  The  Company  anticipates  significant  capital
expenditures  in the near future for  laboratory  and  production  equipment and
office  expansion  as the Company  nears  product  introduction.  The timing and
amount of such  expenditures  will be governed by the Company's  development and
market  introduction  schedules  which are  subject to change due to a number of
factors including  development  delays,  FDA approval and availability of future
financing.

         The  Company  currently  has  outstanding  51,302,319  shares of Common
Stock.  It also has options and warrants  outstanding  to purchase an additional
58,067,107  shares at exercise  prices from $0.12 to $0.72 per share,  and notes
convertible into 15,291,631 shares.


<PAGE>

Cautionary Statements

         The Company wishes to caution  investors  that the following  important
factors,  among  others,  in some cases have  affected,  and in the future could
affect,  the Company's  actual  results of operations  and cause such results to
differ materially from those anticipated in  forward-looking  statements made in
this document and elsewhere by or on behalf of the Company.

No History of Operations; Development Stage Company; Going Concern Uncertainty

         To date,  the  Company  does not have a product  ready to be brought to
market and its proposed operations are subject to all of the risks inherent in a
new business enterprise,  including completion of commercial development and FDA
approval of its tests and instrument within reasonable time frames and financial
constraints,  lack of marketing  experience and lack of production history.  The
likelihood  of the success of the  Company  must be  considered  in light of the
expenses,  difficulties and delays frequently encountered in connection with the
start-up of new businesses,  and specifically those historically  encountered by
Quantech,  the development of a new product and the  competitive  environment in
which the Company will operate.  The report of the  independent  auditors on the
Company's  financial  statements for the period ended June 30, 1997, includes an
explanatory  paragraph  relating to the uncertainty of the Company's  ability to
continue as a going  concern.  The Company is a development  stage company which
has  suffered  losses  from  operations,   requires  additional  financing,  and
ultimately needs to successfully  attain  profitable  operations.  These factors
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  There can be no  assurance  that the Company will be able to develop a
commercially viable product or marketing system or attain profitable operations.

Immediate and Future Capital Needs

         The Company does not have sufficient  funds to complete  development of
its commercial system or additional tests for such system,  submit its system to
the FDA or commence  commercial  production and sales. The Company's  ability to
continue as a going concern,  complete its system,  submit its system to the FDA
and commence  sales will depend upon the  continued  availability  of investment
capital,  funding made by strategic  partner(s)  or  licensing  revenues,  until
revenues  from the sale of  instruments  and  associated  test  disposables  are
sufficient  to  maintain  operations.  Additional  funds  may have to be  raised
through equity or debt financing.  There can be no assurance that any additional
financing  can be  obtained  on  favorable  terms,  if at all.  Such  additional
financing may result in dilution to Company  shareholders and/or additional debt
to the Company.  If funding is not available  immediately and in the future when
needed,  the Company may be forced to cease operations and abandon its business.
In such event,  Company  shareholders  could lose their entire  investment.  The
Company is negotiating the extension of $2,695,150, including interest, of Notes
Payable  which are June 1, 1998. If the Company does not pay these Notes Payable
when due, it may be forced to liquidate its assets to pay such Notes Payable.

Other Factors

         As described in the  Company's  Form 10-KSB for the year ended June 30,
1997 under Cautionary  Statements,  there are additional  factors concerning the
Company that should be considered including: uncertainty of market acceptance of
Quantech's product once introduced,  inability or delay in obtaining FDA product
approval, , effects of government regulation on Quantech's product and its sale,
ability to manufacture  its product,  exposure to the risk of product  liability
and the limited market for the Company's shares.


ITEM 3

            QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not Applicable.

<PAGE>

PART II
                                OTHER INFORMATION

Item 1. Legal Proceedings
        Not Applicable

Item 2. Changes in Securities
        In March 1998 the Company  sold  261,560  shares of its Common Stock and
        warrants  to  purchase  21,560  shares of  Common  Stock to  persons  in
        exchange for services.  The shares were sold pursuant to Section 4(2) of
        the Securities Act of 1933, as amended (the "1933 Act").  The purchasers
        of such Common Stock  acquired  these  securities for their own accounts
        and not with a view to any distribution thereof to the public.

        Also in March 1998 the Company issued warrants to purchase 1,200,000 and
        300,000  shares of its  Common  Stock to James F.  Lyons  and  Edward E.
        Strickland  respectively,  directors of the Company, as compensation for
        the  guarantee  of a bank loan to the  Company.  The sales  were made in
        reliance upon exemptions from  registration  provided under Section 4(2)
        of the 1933 Act and Rule 506 of Regulation D. The warrants were acquired
        for these parties' own accounts and not with a view to any  distribution
        thereof to the public.

        In January,  February, March and April 1998 the Company sold Convertible
        Secured  Promissory  Notes  in  the  principal  amount  of  $868,150  to
        accredited investors and issued warrants in connection with the sales of
        such notes to the  investors  for the  purchase of  2,604,450  shares of
        Common  Stock.  The sales were made in  reliance  upon  exemptions  from
        registration provided under Section 4(2) of the 1933 Act and Rule 506 of
        Regulation D. The Company paid  commissions and accountable  expenses in
        the  aggregate  amount of $58,652 to a  registered  investment  bank for
        acting as  selling  agent and issued  the  investment  bank a warrant to
        purchase   up  to  175,956   shares  of  Common   Stock  as   additional
        compensation. Such warrant was sold pursuant to Section 4(2) of the 1933
        Act. The purchasers of these notes and warrants  acquired the securities
        for their own accounts and not with a view to any  distribution  thereof
        to the public.

Item 3. Defaults upon Senior Securities
        Not Applicable

Item 4. Submission of Matters to a Vote of Security Holders
        Not Applicable

Item 5. Other Information
        Not Applicable

Item 6. Exhibits and Reports on 8-K
        a.   Exhibits -
             10.1   Employment Agreement with Gregory Freitag
             10.2   Employment Agreement with Robert Case
             27. Financial Data Schedule (filed in electronic  format only)
        b.   Reports on 8-K - None




<PAGE>



                                   Signatures

Pursuant  to the  requirements  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.

                                             QUANTECH LTD

                                             /s/ Robert Case
                                             Robert Case
                                             Chief Executive Officer

                                             /s/ Gregory G. Freitag
                                             Gregory G. Freitag
                                             Chief Operating Officer and
Date: May 13, 1998                           Chief Financial Officer


<PAGE>


                                  EXHIBIT INDEX
                                  QUANTECH LTD.
                          FORM 10-QSB for Quarter Ended
                                 March 31, 1998


   Exhibit Number    Description

       10.1        Employment agreement with Gregory Freitag
       10.2        Employment agreement with Robert Case
       27          Financial Data Schedule (filed in electronic format only)