================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

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

                                  FORM 10 - Q

(Mark One)

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

For the quarterly period ended June 30, 1997

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from ________________________ to _____________________

Commission File Number 333-26673

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

                                EUROTECH, LTD.
       (Exact name of small business issuer as specified in its charter)

            District of Columbia                      33-0662435
       (State or other jurisdiction of              (IRS Employer
        incorporation or organization)            Identification No.)

                             1200 Prospect Street
                                  Suite 425
                          LaJolla, California 92037
                   (address of principal executive offices)

                                (619) 551-6844
                          (Issuer's telephone number)
                     ------------------------------------

             (Former name, former address and former fiscal year
                        if changed since last report)

      Check whether the issuer (1) 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 |_|                          No   |X|

      State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 17,826,836 shares of Common
Stock, $0.00025 par value, were outstanding as of August 21, 1997.

      Transitional Small Business Disclosure Format (check one):

            Yes |_|                          No   |X|

================================================================================
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                                INDEX TO FORM 10Q

                                  JUNE 30, 1997


                                                                       Page Nos.
                                                                       ---------

PART  I - FINANCIAL INFORMATION:

   ITEM I - FINANCIAL STATEMENTS


   BALANCE SHEETS                                                        F-1
            At December 31, 1996 and June 30, 1997

   STATEMENTS OF OPERATIONS                                              F-2
            For the Three Months Ended June 30, 1996
            For the Three Months Ended June 30, 1997
            For the Period from Inception (May 26, 1995) to 
             June 30, 1997


   STATEMENTS OF OPERATIONS                                              F-3
            For the Six Months Ended June 30, 1996
            For the Six Months Ended June 30, 1997
            For the Period from Inception (May 26, 1995) to 
             June 30, 1997


   STATEMENTS OF STOCKHOLDERS' (DEFICIENCY) EQUITY                    F-4 - F-5
            For the Period from Inception (May 26, 1995) to 
             December 31, 1996
            For the Six Months Ended June 30, 1997


   STATEMENTS OF CASH FLOWS                                              F-6
            For the Six Months Ended June 30, 1996
            For the Six Months Ended June 30, 1997
            For the Period from Inception (May 26, 1995) 
             to June 30, 1997


   NOTES TO FINANCIAL STATEMENTS                                     F-7 - F-11


   ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL           12-15
              CONDITION AND RESULTS OF OPERATIONS


PART II - OTHER INFORMATION

<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                                 BALANCE SHEETS

                                     ASSETS
                                    (Note 2)
                                                           At            At
                                                      December 31,    June 30,
                                                          1996          1997
                                                      ------------  -----------
                                                                    (Unaudited)
CURRENT ASSETS:
  Cash                                                $   380,183   $     7,122
  Receivable from related parties                          89,918         5,917
  Prepaid expenses and other current assets                12,978        22,552
                                                      -----------   -----------

      TOTAL CURRENT ASSETS                                483,079        35,591

PROPERTY AND EQUIPMENT - net of accumulated
  depreciation                                             10,556        12,534

INVESTMENT IN JOINT VENTURE (Note 6)                           --        15,000

OTHER ASSETS:
  Organization and patent costs - net of accumulated
    amortization                                           25,402        24,522
  Deferred financing costs                                 20,304         9,228
  Deferred offering costs (Note 7)                         75,000            --
  Other assets                                              3,151         3,151
                                                      -----------   -----------

      TOTAL ASSETS                                    $   617,492   $   100,026
                                                      ===========   ===========


           LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
  Notes payable (Note 8)                              $ 2,000,000   $ 2,000,000
  Accrued liabilities                                     292,316       808,210
  Notes payable - shareholder (Note 3)                         --       241,500
                                                      -----------   -----------

      TOTAL CURRENT LIABILITIES                         2,292,316     3,049,710
                                                      -----------   -----------

COMMITMENTS AND OTHER MATTERS (Note 2, 7 and 8)

STOCKHOLDERS' EQUITY (DEFICIENCY):
  Preferred stock - $0.01 par value; 1,000,000 shares
    authorized; -0- shares issued and outstanding              --            --
  Common stock - $0.00025 par value; 50,000,000
    shares authorized; 17,223,036 and 17,826,836
    shares issued and outstanding at December 31,
    1996 and June 30, 1997, respectively                    4,306         4,456
  Additional paid-in capital                            4,804,298     7,901,697
  Unearned financing costs                             (2,493,219)   (3,858,283)
  Deficit accumulated during the development stage     (3,990,209)   (6,997,554)
                                                      -----------   -----------

      TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY)          (1,674,824)   (2,949,684)
                                                      -----------   -----------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
        (DEFICIENCY)                                  $   617,492   $   100,026
                                                      ===========   ===========


See notes to financial statements.


                                       F-1

<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                                  For the Period
                                      For the Three Months Ended  from Inception
                                               June 30,           (May 26, 1995)
                                    ----------------------------        to
                                         1996          1997        June 30, 1997
                                    ------------    ------------  -------------

REVENUES                            $         --    $         --    $        --
                                    ------------    ------------    -----------

OPERATING EXPENSES:
  Research and development               241,050          11,883      1,653,458
  Consulting fees                        697,040         326,968      2,406,614
  Other general and
    administrative expenses              132,013         273,433      1,173,167
                                    ------------    ------------    -----------

    TOTAL OPERATING EXPENSES           1,070,103         612,284      5,233,239
                                    ------------    ------------    -----------

OPERATING LOSS                        (1,070,103)       (612,284)    (5,233,239)
                                    ------------    ------------    -----------

OTHER EXPENSES:
  Interest expense                            --          60,357        164,801
  Amortization of deferred
    and unearned financing
    costs                                     --         685,506      1,599,514
                                    ------------    ------------    -----------

    TOTAL OTHER EXPENSES                      --         745,863      1,764,315
                                    ------------    ------------    -----------

NET LOSS                            $ (1,070,103)   $ (1,358,147)   $(6,997,554)
                                    ============    ============    =========== 


NET LOSS PER COMMON SHARE           $       (.17)   $      (.08)
                                    ============    =========== 


WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES AND COMMON
  STOCK EQUIVALENTS
  OUTSTANDING                         11,031,300      17,307,000
                                    ============    =========== 

See notes to financial statements.


                                       F-2

<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                                  For the Period
                                      For the Six Months Ended    from Inception
                                               June 30,           (May 26, 1995)
                                    ---------------------------         to
                                         1996          1997        June 30, 1997
                                    ------------    ------------   ------------

REVENUES                            $         --    $         --    $        --
                                    ------------    ------------    -----------

OPERATING EXPENSES:
  Research and development               436,550         270,615      1,653,458
  Consulting fees                      1,259,540         652,884      2,406,614
  Other general and
    administrative expenses              142,499         591,455      1,173,167
                                    ------------    ------------    -----------

    TOTAL OPERATING EXPENSES           1,838,589       1,514,954      5,233,239
                                    ------------    ------------    -----------

OPERATING LOSS                        (1,838,589)     (1,514,954)    (5,233,239)
                                    ------------    ------------    -----------

OTHER EXPENSES:
  Interest expense                            --         121,379        164,801
  Amortization of deferred
    and unearned financing
    costs                                     --       1,371,012      1,599,514
                                    ------------    ------------    -----------

    TOTAL OTHER EXPENSES                      --       1,492,391      1,764,315
                                    ------------    ------------    -----------

NET LOSS                            $ (1,838,589)   $ (3,007,345)   $(6,997,554)
                                    ============    ============    =========== 

NET LOSS PER COMMON SHARE           $       (.17)   $       (.17)
                                    ============    ============    

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES AND COMMON
  STOCK EQUIVALENTS
  OUTSTANDING                         11,031,300      17,275,000
                                    ============    ============    

See notes to financial statements.


                                       F-3

<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                                   (UNAUDITED)

        FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 1996
                     AND THE SIX MONTHS ENDED JUNE 30, 1997

<TABLE>
<CAPTION>
                                                                                                                      
                                                                                                                      
                                                             Common Stock      Additional                  Unearned   
                                               Date of   -------------------     Paid-in      Due from     Financing  
Period Ended December 31, 1995:              Transaction   Shares    Amount      Capital    Stockholders     Costs    
------------------------------               ----------- ---------- --------  ------------  ------------  ----------- 
                                                              (1)
<S>                                          <C>         <C>        <C>       <C>           <C>           <C>         
Founder shares issued ($0.00025 per share)   05/26/95    4,380,800  $ 1,095   $    (1,095)  $        --   $        -- 
Issuance of stock for  offering  consulting
fees ($0.0625 per share)                     08/31/95      440,000      110        27,390            --            -- 
Issuance of stock ($0.0625 and $0.25
  per share)                                 Various     4,080,000    1,020       523,980        (3,000)           -- 
Issuance of stock for license ($0.0625 per
  share)                                     08/31/95      600,000      150        37,350            --            -- 
Issuance  of  stock  options  for  offering
legal and consulting fees                                       --       --        75,000            --            -- 
Offering expenses                                               --       --      (105,398)           --            -- 
Net loss                                                        --       --            --            --            -- 
                                                       -----------  -------   -----------   -----------   ----------- 
Balance - December 31, 1995                              9,500,800    2,375       557,227        (3,000)           -- 

Year Ended December 31, 1996:
-----------------------------

Issuance of stock ($0.25 per share)          Various     1,278,000      320       319,180            --            -- 
Exercise of stock options                    01/18/96      600,000      150            --            --            -- 
Issuance of stock for consulting fees
  ($0.34375 per share)                       03/22/96      160,000       40        54,960            --            -- 
Issuance of stock for consulting fees
  ($0.0625 per share)                        05/15/96    2,628,000      657       163,593            --            -- 
Issuance of stock for consulting fees
  ($0.590625 per share)                      06/19/96    1,500,000      375       885,563         3,000            -- 
Issuance of stock for consulting fees
  ($1.82 per share)                          11/12/96       57,036       14       104,275            --            -- 
Issuance of stock pursuant to bridge
  financing ($1.81325 per share)             12/96       1,500,000      375     2,719,500            --    (2,719,875)
Amortization of unearned financing costs                        --       --            --            --       226,656 
Repayment by stockholders                                       --       --            --         3,000            -- 
Net loss                                                        --       --            --            --            -- 
                                                       -----------  -------   -----------   -----------   ----------- 
Balance - December 31, 1996                             17,223,836  $ 4,306   $ 4,804,298   $        --   $(2,493,219)
                                                       ===========  =======   ===========   ===========   =========== 

<CAPTION>
                                                 Deficit
                                               Accumulated
                                               During the
                                               Development
Period Ended December 31, 1995:                    Stage        Total
------------------------------                 ------------  -----------
                                             
<S>                                            <C>           <C>        
Founder shares issued ($0.00025 per share)     $        --   $        --
Issuance of stock for  offering  consulting
fees ($0.0625 per share)                                --        27,500
Issuance of stock ($0.0625 and $0.25
  per share)                                            --       522,000
Issuance of stock for license ($0.0625 per
  share)                                                --        37,500
Issuance  of  stock  options  for  offering
legal and consulting fees                               --        75,000
Offering expenses                                       --      (105,398)
Net loss                                          (513,226)     (513,226)
                                               -----------   -----------
Balance - December 31, 1995                       (513,226)       43,376

Year Ended December 31, 1996:
-----------------------------

Issuance of stock ($0.25 per share)                     --       319,500
Exercise of stock options                               --           150
Issuance of stock for consulting fees
  ($0.34375 per share)                                  --        55,000
Issuance of stock for consulting fees
  ($0.0625 per share)                                   --       164,250
Issuance of stock for consulting fees
  ($0.590625 per share)                                 --       885,938
Issuance of stock for consulting fees
  ($1.82 per share)                                     --       104,289
Issuance of stock pursuant to bridge
  financing ($1.81325 per share)                        --            -- 
Amortization of unearned financing costs                --       226,656
Repayment by stockholders                               --         3,000
Net loss                                        (3,476,983)   (3,476,983)
                                               -----------   -----------
Balance - December 31, 1996                    $(3,990,209)  $(1,674,824)
                                               ===========   =========== 
</TABLE>

(1) Share amounts have been restated to reflect the 4 for 1 stock split on June
    1, 1996.


See notes to financial statements.


                                       F-4

<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                                   (UNAUDITED)

        FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 1996
                     AND THE SIX MONTHS ENDED JUNE 30, 1997

<TABLE>
<CAPTION>
                                                                                                            Deficit
                                                                                                          Accumulated
                                                     Common Stock    Additional               Unearned     During the
                                        Date of   ------------------   Paid-in   Due from     Financing   Development
Period Ended June 30, 1997:           Transaction   Shares    Amount   Capital  Stockholders    Costs        Stage          Total
--------------------------            ----------- ---------- -------- --------- ------------ -----------  ------------  ------------
                                                     (1)
<S>                                      <C>     <C>         <C>     <C>         <C>        <C>           <C>           <C>         
Balance - December 31, 1996                      17,223,836  $4,306  $4,804,298  $      --  $(2,493,219)  $(3,990,209)  $(1,674,824)

Issuance of stock for consulting fees
  ($2.50 per share)                      03/97       64,000      16     159,984         --           --            --       160,000
Issuance of stock for consulting fees
  ($5.45 per share)                      06/97       39,000       9     212,540         --           --            --       212,549
Amortization of unearned financing costs                 --      --          --         --    1,359,936            --     1,359,936
Issuance of penalty stock 
  ($5.45 per share)                      06/97      500,000     125   2,724,875         --   (2,725,000)           --            --
Net loss                                                 --      --          --         --           --    (3,007,345)   (3,007,345)
                                                 ----------  ------  ----------  ---------  -----------   -----------   -----------

Balance - June 30, 1997                          17,826,836  $4,456  $7,901,697  $      --  $ 3,858,283   $(6,997,554)  $ 2,949,684
                                                 ==========  ======  ==========  =========  ===========   ===========   ===========

</TABLE>
(1) Share amounts have been restated to reflect the 4 for 1 stock split on June
    1, 1996.

See notes to financial statements.


                                       F-5

<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              
                                                    For the Six Months Ended  For the Period
                                                           June 30,           from Inception
                                                   ------------------------- (May 26, 1995) to
                                                       1996          1997     June 30, 1997
                                                   -----------   -----------  ----------------
<S>                                                <C>           <C>           <C>         
CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss                                       $(1,838,589)  $(3,007,345)  $(6,997,554)
    Adjustments  to reconcile  net loss
      to net cash used in operating
      activities:                                 
        Depreciation and amortization                      185         2,293         3,484
        Amortization of deferred and              
          unearned financing costs                          --     1,371,012     1,599,514
        Accrued interest                                    --       121,379       156,674
        Stock issued for license                            --            --        37,500
        Consulting fees satisfied by 
          stock issuances                            1,105,188       372,550     1,582,027
        Write-off of deferred offering costs                --        75,000        75,000

        Cash provided by (used in) the
          change in assets and
          liabilities:                             
            Advances to related parties                     --        84,000        (5,918)
            (Increase) decrease in                 
              prepaid expenses                             900        (9,574)      (22,552)
            Increase in other assets                        --            --        (3,151)
            Increase in accrued liabilities            331,024       394,515       651,536
                                                   -----------   -----------   -----------

           NET CASH USED IN OPERATING ACTIVITIES      (401,292)     (596,170)   (2,923,440)
                                                   -----------   -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES               
    Organization and patent costs                           --            --       (26,196)
    Investment in joint venture                             --       (15,000)      (15,000)
    Capital expenditures                                (1,778)       (3,391)      (14,344)
                                                   -----------   -----------   -----------
           NET CASH USED IN INVESTING ACTIVITIES        (1,778)      (18,391)      (55,540)
                                                   -----------   -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from exercise of stock options                150            --           150
    Proceeds from issuance of common stock             319,500            --       841,500
    Offering costs                                          --            --       (77,898)
    Repayment by stockholders                            2,000            --         3,000
    Net proceeds from notes payable                    128,300       241,500     2,241,500
    Deferred financing costs                                --            --       (22,150)
                                                   -----------   -----------   -----------
         NET CASH PROVIDED BY FINANCING ACTIVITIES     449,950       241,500     2,986,102
                                                   -----------   -----------   -----------
INCREASE (DECREASE) IN CASH                             46,880      (373,061)        7,122

CASH - BEGINNING                                        54,001       380,183            --
                                                   -----------   -----------   -----------
CASH - ENDING                                      $   100,881   $     7,122   $     7,122
                                                   ===========   ===========   ===========

Supplemental Disclosure of Cash Flow Information:
  Cash paid during the period for:
    Interest                                       $        --   $        --   $     8,127
                                                   ===========   ===========   ===========

    Income taxes                                   $        --   $        --   $        --
                                                   ===========   ===========   ===========
</TABLE>


See notes to financial statements.

                                       F-6

<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1997

NOTE  1 -         BASIS OF PRESENTATION

                  The accompanying financial statements are unaudited. These
                  statements have been prepared in accordance with the rules and
                  regulations of the Securities and Exchange Commission ( the
                  "SEC"). Certain information and footnote disclosures normally
                  included in the financial statements prepared in accordance
                  with generally accepted accounting principles have been
                  condensed or omitted pursuant to such rules and regulations.
                  In the opinion of management, the financial statements reflect
                  all adjustments (which include only normal recurring
                  adjustments) necessary to state fairly the financial position
                  and results of operations as of and for the periods indicated.
                  These financial statements should be read in conjunction with
                  the Company's financial statements and notes thereto for year
                  ended December 31, 1996, included in the Company's Form S-1 as
                  filed with the Securities and Exchange Commission.

                  The preparation of financial statements in conformity with
                  general accepted accounting principles requires management to
                  make estimates and assumptions that affect the reported
                  amounts of assets and liabilities and disclosure of contingent
                  assets and liabilities at the date of the financial statement
                  and the reported amounts of revenues and expenses during the
                  reporting period. Actual results could differ from those
                  estimates.

NOTE  2 -         BUSINESS AND CONTINUED OPERATIONS

                  Eurotech, Ltd. (the "Company") was incorporated under the laws
                  of the District of Columbia on May 26, 1995. The Company is a
                  technology transfer, holding and management company, formed to
                  commercialize new, existing, but previously unrecognized and
                  previously "classified" technologies, with a particular
                  emphasis on those developed by prominent research institutes
                  and individual researchers in the former Soviet Union, and to
                  license Western technologies for business and other commercial
                  applications in Central Europe, Eastern Europe, Ukraine and
                  Russia. The Company acquires rights to selected technologies
                  by purchase, assignments and licensing arrangements. The
                  Company operates its business by licensing its technologies to
                  end-users and through development and operating joint ventures
                  and strategic alliances.

                  The Company commenced operations in May 1995. The Company is
                  in the development stage and its efforts have been principally
                  devoted to the research and development activities and
                  organizational efforts, including the identification, review
                  and acquisition of the rights to various technologies,
                  recruiting its scientific and management personnel and
                  alliances and raising capital.


                                       F-7

<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1997

NOTE  2 -         BUSINESS AND CONTINUED OPERATIONS (Continued)

                  The accompanying financial statements have been prepared in
                  conformity with generally accepted accounting principles,
                  which contemplate continuation of the Company as a going
                  concern. However, as shown in the accompanying financial
                  statements, the Company has incurred losses from operations
                  from inception. As of June 30, 1997, the Company has a
                  stockholders' deficiency of $2,950,000, a working capital
                  deficiency of $3,014,000 and has an accumulated deficit since
                  inception of $6,998,000. The Company requires additional funds
                  to continue research and development efforts and complete the
                  necessary work to commercialize its technologies. Until
                  completion of the development of a technology and the
                  commencement of sales, the Company will have no operating
                  revenues, but will continue to incur substantial expenses and
                  operating losses. No assurances can be given that the Company
                  can complete development of any technology or that, if any
                  technology is fully developed, it can be manufactured on a
                  large scale basis or at a feasible cost. Further, no assurance
                  can be given that any technology will receive market
                  acceptance. Being a start-up stage entity, the Company is
                  subject to all the risks inherent in the establishment of a
                  new enterprise and the marketing and manufacturing of a new
                  product, many of which risks are beyond the control of the
                  Company. These factors raise substantial doubt about the
                  Company's ability to continue as a going concern.

                  Since inception, the Company has financed its operations
                  through sale of its securities, shareholder loans and a bridge
                  financing totalling $2,000,000. To support its operations
                  during 1997, the Company is exploring additional sources of
                  working capital, which include a private offering of common
                  stock, private borrowings and joint ventures.

                  While no assurance can be given, management believes the
                  Company can raise adequate capital to keep the Company
                  functioning during 1997. No assurance can be given that the
                  Company can successfully obtain any working capital or
                  complete any proposed offerings or, if obtained, that such
                  funding will not cause substantial dilution to shareholders of
                  the Company. Further, no assurance can be given as to the
                  completion of research and development and the successful
                  marketing of the technologies.

                  These financial statements do not include any adjustments
                  relating to the recoverability of recorded asset amounts that
                  might be necessary as a result of the above uncertainty.

NOTE  3  -        BORROWINGS UNDER NOTES PAYABLE

                  During 1997, the Company has borrowed $241,500 from three
                  shareholders of the Company. The loans are due on demand and
                  provide for interest at the rate of 10% per annum.


                                       F-8

<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1997

NOTE  4  -        TECHNOLOGY TRANSFER AGREEMENT

                  On January 28, 1997, the Company entered into a technology
                  transfer consulting arrangement with American Autopark, Ltd.
                  ("Arbat") to license its technology, designs, renderings,
                  blueprints and plans for the construction and operation of
                  vertical parking structures. The Company is to receive a fee
                  equal to $1,250 per parking space in each garage erected by
                  Arbat or any of its affiliates based upon the technology
                  transferred to Arbat by the Company. Certain shareholders of
                  the Company are shareholders of Arbat.

                  The Company intends to recognize revenue under this agreement
                  during the period under which each facility is constructed.

NOTE  5  -        MEMORANDUM OF INTENT

                  The Chernobyl Nuclear Power Station (an industrial
                  amalgamation of the State Committee of Ukraine on Atomic
                  Energy) ("ChNPP"), Kurchatov, the Ukrainian State Construction
                  Corporation ("Ukrstroj") and the Company have entered into a
                  Memorandum of Intent (the "Chernobyl Memorandum of Intent")
                  which sets forth the intention of ChNPP to enter into a
                  "co-operation agreement" with the Company pursuant to which
                  the Company will provide the financing for the development of
                  an on-site demonstration of the EKOR foam, in conjunction with
                  ChNPP, Ukrstroj and Kurchatov, which will provide the test
                  sites, foam application equipment and technical support,
                  respectively. In furtherance of the foregoing, Ukrstroj and
                  ChNPP have entered into an agreement (the "Ukrstroj"-ChNPP
                  Agreement") to conduct such on-site demonstration testing of
                  the EKOR foam as in necessary to ascertain the specification
                  requirements for its application to the containment of
                  Chernobyl Reactor 4. The Ukrstroj-ChNPP Agreement provides for
                  the Company's participation in and financing of the EKOR
                  demonstration test. The Company estimates that total financing
                  costs for the demonstration test will not exceed $100,000.


                                       F-9

<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1997

NOTE  6  -        TECHNION ISRAEL INSTITUTE OF TECHNOLOGY AGREEMENT

                  In April of 1997, the Company has agreed in principle with the
                  Technion Israel Institute of Technology ("Technion") to
                  participate in certain technology research and development
                  projects sponsored by the Technion Entrepreneurial Incubator,
                  Ltd. ("TEI"), an Israeli corporation controlled by Technion,
                  whereby the Company will provide 15%-20% of the financing
                  required for, and will receive a 20% equity interest in,
                  research and development projects selected by the Company. In
                  furtherance of this venture, the Company has opened an office
                  at the premises of TEI in Haifa, Israel, has identified three
                  present and six potential technology development projects for
                  possible investment, and has agreed to invest in a fourth such
                  project, involving certain polyurethane technology with
                  potential use in paints and coatings. Pursuant to that
                  agreement, the Company will invest $60,000 in Chemonol, Ltd.
                  ("Chemonol"), an Israeli corporation established to own and
                  develop that technology, in exchange for 20% of Chemonol's
                  voting equity. As of June 30, 1997, the Company has made its
                  first payment of $15,000 to Chemonol. The last scheduled
                  payment of $15,000 is scheduled to be made no later than
                  November 1, 1998. The Company has also entered into agreements
                  with the holder of 50% of Chemonol's outstanding voting equity
                  (the "Principal Shareholder") granting to the Company an
                  option to acquire from the Principal Shareholder an additional
                  31% of Chemonol's voting equity for $93,000, and the present
                  right to direct the voting of the Principal Shareholder's
                  voting equity. The Company expects to provide approximately
                  $310,000 in financing for all such projects in fiscal year
                  1997. There can be no assurance that these or any other
                  development projects will result in useful technologies or
                  that the same will be commercially saleable or profitable.

                  Due to the Company's voting control over Chemonol, the Company
                  expects to consolidate the results of Chemonol with its
                  financial results commencing with the consummation of the
                  initial investment.

NOTE  7 -         ABORTED PROPOSED PUBLIC OFFERING

                  On June 23, 1997, the Company decided not to proceed with a
                  proposed preferred stock offering. Accordingly, the deferred
                  offering costs of $75,000 has been charged to operations
                  during the second quarter of 1997.

                  The Company is considering alternative financing arrangements
                  and there is no assurance that the Company will complete any
                  offering.


                                      F-10

<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1997

NOTE  8  -        BRIDGE FINANCING PENALTY

                  In December 1996, the Company completed a private placement of
                  40 units, consisting of $2,000,000 in one year promissory
                  notes and 1,000,000 shares of common stock. Under this
                  agreement, if a registration statement, which includes the
                  common shares issued pursuant to this agreement is not
                  declared effective by the Securities and Exchange Commission
                  ("SEC") by April 1, 1997, then an additional 500,000 shares
                  are to be issued to the holders of such shares, and if same is
                  not declared effective by the SEC by July 1, 1997, then an
                  additional 500,000 shares are to be issued to the holders of
                  such shares.

                  The Company has not met either filing deadline and
                  accordingly, the Company has issued the additional penalty
                  shares to such holders during May of 1997 and August of 1997.

                  During the second half of 1997, the Company will recognize as
                  a non-cash charge to financing costs $3.9 million related to
                  the common shares issued under this bridge financing.


                                      F-11

<PAGE>

ITEM 2.            MANAGEMENT'S DISCUSSION AND ANALYSIS
                           AND PLAN OF OPERATION

General

The following discussion contains certain forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from those discussed herein.

Plan of Operation

Eurotech, Ltd. (the "Company") is a technology transfer, holding and management
company formed to commercialize new, existing but previously unrecognized, and
previously "classified" technologies, with a particular emphasis on those
developed by prominent research institutes and individual researchers in the
former Soviet Union, and to license those and other Western technologies for
business and other commercial applications in Central Europe, Eastern Europe,
Ukraine, Russia and North America. Through the technology management expertise
of its senior executives, the Company identifies, monitors, reviews and assesses
technologies for their commercial applicability and potential, and acquires
selected technologies by purchase, assignments, and licensing arrangements. The
Company operates its business by licensing its technologies to end-users and
through development and operating joint ventures and strategic alliances.

The Company was organized and commenced operation in May of 1995. The Company is
in the development stage and its efforts have been principally devoted to the
research and development activities and organizational efforts, including the
identification, review and acquisition of various technologies, recruiting its
scientific and management personnel and alliances and raising capital.

The Company has not been profitable since inception and expects to incur
substantial operating losses over the next twelve months. For the period from
inception to June 30, 1997, the Company incurred a cumulative net loss of
approximately $6,998,000. The Company expects that it will generate losses until
at least such time as it can commercialize its technologies, if ever. No
assurances can be given that the Company can complete development of any
technology or that, if any technology is fully developed, it can be manufactured
on a large scale basis or at a feasible cost. Further, no assurance can be given
that any technology will receive market acceptance. Being a start-up stage
entity, the Company is subject to all the risks inherent in the establishment of
a new enterprise and the marketing and manufacturing of a new product, many of
which risks are beyond the control of the Company.


                                       12

<PAGE>

The Company's plan of operation for the next twelve months will consist of
activities aimed at:

-     Identification, evaluation and acquisition of technologies which were
      developed by a prominent research institute and individual researchers in
      the former Soviet Union, and other developed in Germany, Israel and the
      United States.

-     Funding development for on-site demonstration testing of its proprietary
      silicon-organic (EKOR) compound technology for possibly remediating the
      severe radioactive contamination problems that persist in Chernobyl,
      Ukraine and three sites in Russia.

-     Introduction of its waste-to-energy technology in the city of Cherkassy,
      Ukraine.

-     Introduction of its automated parking technology in Moscow, Russia.

-     Continued funding of the development of silicon carbide "wafer" technology
      in conjunction with I.V. Kurchatov Institute in Moscow and Euro-Asian
      Physical Society.

-     Funding of the Technion Israel Institute Technology Agreement for the
      Chemonol Project.

-     Seeking to establish further strategic partnerships and joint ventures for
      the development, marketing, sales, license and manufacturing of the
      Company's existing and proposed technologies.

Results of Operation

For the Six Months Ended June 30, 1997 Vs. the Six Months Ended June 30, 1996:

The Company commenced operations on May 26, 1995. The Company had no revenues
for the aforementioned periods. Consulting and other general and administrative
expenses decreased from $1,402,000 for the six months ended June 30, 1996 to
$1,244,000 for the six months ended June 30, 1997 as a result of a decrease in
compensatory stock issuances to consultants from $1,105,000 in 1996 to $373,000
in 1997.

Research and development expenses decreased in the six months ended June 30,
1997 to $271,000 from $437,000 for the six months ended June 30, 1996 as the
Company completed the research and development related to the EKOR Project and
advanced it to the commercialization stage.

For the six months ended June 30, 1997 and the six months ended June 30, 1996,
the Company incurred operating losses of $1,515,000 and $1,839,000,
respectively. The losses are principally due to expenses incurred in the
development of the technologies, including administrative expenses and
consulting expenses.


                                       13

<PAGE>

Interest expense and amortization of deferred and unearned finance costs
increased from $-0- in 1996 to $1,492,000 for the six months ended June 30,
1997. This increase was attributable to financing costs related to promissory
notes of $341,000 and a bridge loan of $2,000,000.

The Company will record an additional charge against income of approximately
$3,900,000 during the second half of fiscal 1997 related to shares of common
stock issued in connection with the bridge financing completed in December of
1996. The Company intends to invest significantly in research and development of
its technologies. As a result, there can be no assurance that the Company will
be profitable on a quarterly or annual basis.

Liquidity and Capital Resources

The Company's principal sources of working capital have been net proceeds of
approximately $842,000 from the offering of common stock under Rule 504 of
Regulation D, shareholder advances aggregating $583,000 and from the bridge
financing discussed below, completed in December of 1996 of $2,000,000. Of the
shareholder advances, promissory notes evidencing approximately $200,000 of
shareholder indebtedness were exchanged for units in the bridge financing and
$141,000 was repaid from the proceeds of the bridge financing. The net proceeds
of the bridge financing reflect the cancellation of the notes referred to above
and are being used for repayment of accrued liabilities and funding the
development of certain technologies and for other working capital purposes.

In December 1996, the Company entered into a purchase agreement for an offering
of up to an aggregate of 40 units to certain accredited investors as defined
pursuant to Rule 501 of the Securities Act of 1933 (as amended) (the "Act")
pursuant to Rule 506 of Regulation D under the Act (the "Bridge Financing").
Each unit consists of one promissory note issued by the Company in the principal
amount of $50,000 bearing interest at the rate of 12% per annum and 25,000
shares of the Company's Common Stock. Under the agreement, the notes are due one
year from the issuance date. Gross proceeds received under this offering were
$2,000,000. Holders of the shares of common stock issued pursuant to this
agreement have, among other things, demand and mandatory registration rights,
including penalties, which could require the Company to issue to the unit
holders up to 1,000,000 additional shares of common stock if shares are not
registered within the specified time frame. As of December 31, 1996, the Company
has recorded an additional 500,000 shares of Common Stock to be issued under the
offering based on the Company's belief that it would not meet one of the filing
deadlines. To date, the Company has not met either filing deadline and,
accordingly, the Company has issued the additional penalty shares to such
holders during May of 1997 and August of 1997.

The Company had a working capital deficiency and stockholders' deficiency of
$3,014,000 and $2,950,000, respectively, as of June 30, 1997.


                                       14

<PAGE>

The report of the Company's independent certified public accountants for the
year ended December 31, 1996 contains an explanatory paragraph relating to the
Company's ability to continue as a going concern.

The Company has agreed to fund the commercialization of certain technologies
developed in the former Soviet Union by scientists and researchers at the I.V.
Kurchatov Institute ("Kurchatov"), other institutes associated therewith, and
the Euro-Asian Physical Society ("EAPS"), collectively the "Scientists".
Kurchatov will provide the materials, facilities and personnel to complete the
necessary work to commercialize such technologies. In addition, the Company
expects to fund during 1997 development and commercialization expenses related
to other technologies developed by scientists and researchers in Germany,
Russia, Israel and the United States. Total planned expenditures under these
programs, including related general and administrative expenses, are expected to
approximate $1,500,000 during 1997. The Company's principal sources of funding
these expenditures include remaining cash from the bridge financing as of
December 31, 1996 ($380,000), anticipated proceeds of $450,000 from the exercise
of warrants and additional loans from shareholders. As the development of each
technology is completed and the technology's commercial applications are
identified, the Company will seek joint venture partners to fund any further
capital expenditures, including the project financing.

As discussed above, the Company will require additional financing to continue to
fund research and development efforts, operating costs and complete necessary
work to commercialize its technologies. No assurance can be given that
additional financing can be obtained, or if obtainable, that the terms will be
satisfactory to the Company.

The Company is exploring additional sources of working capital including private
sales of securities, joint ventures and licensing of technologies and an
offering of its common stock. In September 1996, the Company received a letter
of intent from an underwriter pursuant to which the firm has agreed in principle
to underwrite, on a firm commitment basis, 5,000,000 shares of cumulative
convertible preferred stock (not including an underwriter's over-allotment
option equal to up to 75,000 shares) at an initial public offering price of
$10.00 per share. In connection therewith, the Company has incurred offering
costs aggregating $75,000, which if the offering is not consummated, will be
charged to expense. On June 23, 1997, the Company decided not to proceed with
this offering and, accordingly, the deferred offering costs of $75,000 was
charged to operations during the second quarter of 1997. The Company is
considering alternative financing arrangements, and there is no assurance that
the Company will complete that or any other offering.

While no assurance can be given, management believes the Company can raise
adequate capital to keep the Company functioning during 1997. No assurance can
be given that the Company can successfully obtain any working capital or
complete any proposed offerings or, if obtained, that such funding will not
cause a dilution to shareholders of the Company. Further, no assurance can be
given as to the completion of research and development and the successful
marketing of the technologies.


                                       15


<PAGE>

PART II. OTHER INFORMATION

      None.
<PAGE>

      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.


                                          EUROTECH, LTD.


                                          /s/ Randolph A. Graves, Jr.
                                          -------------------------------------
Dated: August 26, 1997                    By: Randolph A. Graves, Jr.
                                               Chairman, Chief Executive Officer
                                               and Chief Financial Officer