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, 1998

|_|   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                (I.R.S. Employer
     incorporation or organization)               Identification No.)

                              1101 30th Street, NW
                                    Suite 500
                            Washington, DC 20007-3772
                    (Address of principal executive offices)

                                 (202) 625-4382
                           (Issuer's telephone number)

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

Check 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 |_|

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 19,614,836 shares of Common Stock,
$0.00025 par value, were outstanding as of June 30, 1998.

Transitional Small Business Disclosure Forms (check one):

                 Yes |_|                                No |X|
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)
                                INDEX TO FORM 10Q
                                  JUNE 30, 1998

                                                                    Page Nos.
                                                                    ---------
PART  I - FINANCIAL INFORMATION:

      ITEM I - FINANCIAL STATEMENTS

      BALANCE SHEETS                                                   F-1     
               At December 31, 1997 and June 30, 1998                          
                                                                               
      STATEMENTS OF OPERATIONS                                         F-2     
               For the Six Months Ended June 30, 1997                          
               For the Six Months Ended June 30, 1998                          
               For the Period from Inception (May 26, 1995) 
               to June 30, 1998              
                                                                               
      STATEMENTS OF OPERATIONS                                         F-3     
               For the Three Months Ended June 30, 1997                        
               For the Three Months Ended June 30, 1998                        
                                                                               
      STATEMENTS OF STOCKHOLDERS' (DEFICIENCY) EQUITY               F-4 - F-5  
               For the Period from Inception (May 26, 1995) 
               to December 31,               
               1997 For the Six Months Ended June 30, 1998                     
                                                                               
      STATEMENTS OF CASH FLOWS                                         F-6     
               For the Six Months Ended June 30, 1997                          
               For the Six Months Ended June 30, 1998                          
               For the Period from Inception (May 26, 1995) 
               to June 30, 1998              
                                                                               
      NOTES TO FINANCIAL STATEMENTS                                 F-7 - F-15 
                                                                               
      ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL    F-16-F-19  
                        CONDITION AND RESULTS OF OPERATIONS                    
                                                                               
PART  II - OTHER INFORMATION                                           F-20    
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                                 BALANCE SHEETS

                                     ASSETS
                                    (Note 2)

<TABLE>
<CAPTION>
                                                                   At December 31,  At June 30, 1998
                                                                         1997         (Unaudited)
                                                                     ------------    ------------
<S>                                                                  <C>             <C>         
CURRENT ASSETS:
  Cash                                                               $    617,756    $     56,941
  Receivable from related parties                                           5,918           5,918
  Prepaid expenses and other current assets                                21,539          26,992
                                                                     ------------    ------------

      TOTAL CURRENT ASSETS                                                645,213          89,851

PROPERTY AND EQUIPMENT - net of accumulated depreciation                   14,050          30,422

OTHER ASSETS:
  Organization and patent costs - net of accumulated amortization          28,651          27,619
  Deferred financing costs                                                261,178          69,194
  Other assets                                                              3,151           5,551
                                                                     ------------    ------------

      TOTAL ASSETS                                                   $    952,243    $    222,637
                                                                     ============    ============

                  LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
  Notes payable                                                      $  2,000,000    $         --
  Accrued liabilities                                                     576,966       1,324,720
  Deferred revenue                                                        225,000         225,000
                                                                     ------------    ------------

      TOTAL CURRENT LIABILITIES                                         2,801,966       1,549,720

CONVERTIBLE DEBENTURES                                                  3,000,000       6,000,000

CONTINGENCIES AND OTHER MATTERS (Notes 1, 2, 5 and 6)

STOCKHOLDERS' 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;
     18,928,836 and 19,614,836 shares issued and outstanding at
     December 31,1997 and June 30, 1998, respectively                       4,732           4,903
  Additional paid-in capital                                           12,892,313      14,850,262
  Unearned financing costs                                             (1,315,317)       (323,889)
  Deficit accumulated during the development stage                    (16,431,451)    (21,858,359)
                                                                     ------------    ------------

      TOTAL STOCKHOLDERS' DEFICIENCY                                   (4,849,723)     (7,327,083)
                                                                     ------------    ------------

      TOTAL LIABILITIES AND STOCKHOLDERS'
          DEFICIENCY                                                 $    952,243    $    222,637
                                                                     ============    ============
</TABLE>

See notes to financial statements.


                                       F-1
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                 For the Six Months Ended June 30,    For the Period   
                                                 ---------------------------------    from Inception   
                                                     1997              1998         (May 26, 1995) to 
                                                 ------------       ------------       June 30, 1998    
                                                                                       ------------    
<S>                                              <C>                <C>                <C>         
REVENUES                                         $         --       $         --       $         --
                                                 ------------       ------------       ------------

OPERATING EXPENSES:
  Research and development                            270,615            560,511          2,951,025
  Consulting fees                                     652,884            505,347          3,651,922
  Other general and administrative expenses           591,455            881,669          2,725,448
                                                 ------------       ------------       ------------

    TOTAL OPERATING EXPENSES                        1,514,954          1,947,527          9,328,395
                                                 ------------       ------------       ------------

OPERATING LOSS                                     (1,514,954)        (1,947,527)        (9,328,395)
                                                 ------------       ------------       ------------

OTHER EXPENSES:
  Interest expense                                    121,379            429,720            743,882
  Amortization of deferred and unearned
      financing costs                               1,371,012          3,049,661         11,786,082
                                                 ------------       ------------       ------------

    TOTAL OTHER EXPENSES                            1,492,391          3,479,381         12,529,964
                                                 ------------       ------------       ------------

NET LOSS                                         $ (3,007,345)      $ (5,426,908)      $(21,858,359)
                                                 ============       ============       ============

NET LOSS PER COMMON SHARE                        $       (.17)      $       (.28)
                                                 ============       ============

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING                        17,275,000         19,248,919
                                                 ============       ============
</TABLE>

See notes to financial statements.


                                       F-2
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                       For the Three Months Ended June 30,
                                                       -----------------------------------
                                                             1997           1998
                                                         ------------   ------------
<S>                                                      <C>            <C>         
REVENUES                                                 $         --   $         --
                                                         ------------   ------------

OPERATING EXPENSES:                                      
  Research and development                                     11,883        252,840 
  Consulting fees                                             326,968        284,365 
  Other general and administrative expenses                   273,433        322,288 
                                                         ------------   ------------ 
                                                                                     
    TOTAL OPERATING EXPENSES                                  612,284        859,493 
                                                         ------------   ------------ 
                                                                                     
OPERATING LOSS                                               (612,284)      (859,493)
                                                         ------------   ------------ 
OTHER EXPENSES:                                                                      
  Interest expense                                             60,357        299,095  
  Amortization of deferred and unearned financing costs       685,506      1,803,433  
                                                         ------------   ------------  

    TOTAL OTHER EXPENSES                                      745,863      2,102,528
                                                         ------------   ------------   
                                                                                       
NET LOSS                                                 $ (1,358,147)  $ (2,962,021)  
                                                         ============   ============   
                                                                                       
NET LOSS PER COMMON SHARE                                $       (.08)  $       (.15)  
                                                         ============   ============   
                                                                                       
WEIGHTED AVERAGE NUMBER OF COMMON SHARES                                               
    OUTSTANDING                                            17,307,000     19,554,670   
                                                         ============   ============   
</TABLE>

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, 1997
                     AND THE SIX MONTHS ENDED JUNE 30, 1998

<TABLE>
<CAPTION>
                                                                    Common Stock      Additional                  Unearned      
                                                   Date of        -----------------    Paid-in       Due from     Financing     
Period Ended December 31, 1998:                  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        -             -       
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) 
                                                                ==========  ========  ==========    =========    ===========  
</TABLE>

                                                    Deficit           
                                                  Accumulated         
                                                  During the     
                                                  Development     
Period Ended December 31, 1995:                      Stage        Total      
-------------------------------                  ------------  -----------  
                                                                             
                                                                             
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)  
                                                ===========    ===========   
                                                               
(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, 1997
                     AND THE SIX MONTHS ENDED JUNE 30, 1998

<TABLE>
<CAPTION>
                                                                  Common Stock        Additional                   Unearned      
                                                   Date of    --------------------     Paid-in        Due from     Financing     
Year Ended December 31, 1995:                    Transaction   Shares       Amount     Capital      Stockholders     Costs      
-----------------------------                    -----------  ---------    --------   ----------    ------------  ----------   
                                                                 (1)                              
<S>                                                <C>        <C>          <C>        <C>            <C>          <C>          
Balance - December 31, 1996                                   17,223,836   $  4,306   $ 4,804,298    $   -        $(2,493,219) 
                                                                                                                               
Issuance of stock for consulting fees                                                                                          
  ($2.50 per share)                                  03/97        64,000         16       159,984        -             -       
Issuance of stock for consulting fees                                                                                          
  ($5.45 per share)                                  06/97        39,000          9       212,540        -             -       
Issuance of stock for consulting fees                                                                                          
  ($5.00 per share)                                  09/97        59,000         15       294,986        -             -       
Issuance of stock pursuant to penalty                                                                                          
  provision of bridge financing                                                                                                
  ($5.45 per share)                                  06/97       500,000        125     2,724,875        -         (2,725,000) 
Value assigned to conversion feature of                                                                                        
  Convertible Debentures                             11/97         -           -        1,337,143        -         (1,337,143) 
Value assigned to issuance of 127,500 warrants                                                                                 
  in consideration for interest and placement                                                            -
  fees in connection with Convertible Debentures     11/97         -           -          284,480                    (284,480)  
Value assigned to issuance of 35,000 warrants                                                            -                      
  to shareholder for consulting services             11/97         -           -           39,588                     (39,588)  
Value assigned to issuance of 364,000 warrants                                                                                  
  to shareholder as additional consideration                                                                                    
  for financing activities                           11/97         -           -          862,680        -           (862,680)  
Issuance of stock for consulting fees                                                                                           
  ($4.00 per share)                                  12/97        43,000         11       171,989        -             -        
Accrual of stock issued January 1998 pursuant                                                                                   
  to penalty provision of bridge financing                                                                                      
  ($2.00 per share)                                  12/97     1,000,000        250     1,999,750        -         (2,000,000)  
Amortization of unearned financing costs                           -           -           -             -          8,426,793   
Net loss                                                           -           -           -             -             -        
                                                              ----------   --------   -----------    ---------    -----------   
                                                                                                                                
Balance - December 31, 1997                                   18,928,836   $  4,732   $12,892,313    $   -        $(1,315,317)  
                                                              ==========   ========   ===========    =========    ===========   
</TABLE>

                                                       Deficit           
                                                     Accumulated         
                                                     During the     
                                                     Development     
Year Ended December 31, 1995:                           Stage         Total     
-----------------------------                       ------------   -----------  
                                                                             
Balance - December 31, 1996                         $ (3,990,209)  $(1,674,824) 
                                                                                
Issuance of stock for consulting fees                                           
  ($2.50 per share)                                       -            160,000  
Issuance of stock for consulting fees                                           
  ($5.45 per share)                                       -            212,549  
Issuance of stock for consulting fees                                           
  ($5.00 per share)                                       -            295,001  
Issuance of stock pursuant to penalty                                           
  provision of bridge financing                                                 
  ($5.45 per share)                                       -             -       
Value assigned to conversion feature of                                         
  Convertible Debentures                                  -             -       
Value assigned to issuance of 127,500 warrants                                  
  in consideration for interest and placement                                   
  fees in connection with Convertible Debentures          -                     
Value assigned to issuance of 35,000 warrants                           -       
  to shareholder for consulting services                  -                     
Value assigned to issuance of 364,000 warrants                          -       
  to shareholder as additional consideration                                    
  for financing activities                                -             -       
Issuance of stock for consulting fees                                           
  ($4.00 per share)                                       -            172,000  
Accrual of stock issued January 1998 pursuant                                   
  to penalty provision of bridge financing                                      
  ($2.00 per share)                                       -             -       
Amortization of unearned financing costs                             8,426,793  
Net loss                                             (12,441,242)  (12,441,242) 
                                                    ------------   -----------  
                                                                                
Balance - December 31, 1997                         $(16,431,451)  $(4,849,723) 
                                                    ============   ===========  

(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 STOCKHOLDERS' EQUITY (DEFICIENCY)
                                   (UNAUDITED)

        FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 1997
                     AND THE SIX MONTHS ENDED JUNE 30, 1998

<TABLE>
<CAPTION>
                                                                   Common Stock          Additional                    Unearned     
                                                    Date of     --------------------      Paid-in         Due from     Financing    
Six Months Ended December 31, 1998:               Transaction    Shares       Amount      Capital       Stockholders     Costs      
-----------------------------------               -----------   ---------    --------    ----------     ------------  ----------   
                                                                   (1)                                
<S>                                                 <C>         <C>          <C>         <C>             <C>          <C>          
Balance - December 31, 1997                                     18,928,836   $  4,732    $12,892,313     $   -        $(1,315,317)  
                                                                                                                                    
Issuance of stock for consulting fees                                                                                               
  ($2.58 per share)                                  03/98          43,000         11        110,930         -              -       
Value assigned to conversion feature of                                                                                             
  Convertible Debentures and 60,000 warrants                                                                                        
  issued as additional interest                      02/98           -           -         1,100,000         -         (1,100,000)  
Issuance of stock pursuant to penalty                                                                                               
  provision of bridge financing                                                                                                     
 ($1.0625 per share)                                 04/98         500,000        125        531,124         -           (531,249)  
Issuance of stock principally for consulting                                                                                        
  fees ($1.51 per share)                             06/98         143,000         35        215,895         -              -       
Amortization of unearned financing costs                             -           -            -              -          2,622,677   
Net loss                                                             -           -            -              -              -       
                                                                ----------   --------    -----------     ----------   -----------   
                                                                                                                                    
Balance - June 30, 1998                                         19,614,836   $  4,903    $14,850,262     $   -        $  (323,889)  
                                                                ==========   ========    ===========     ==========   ===========   
</TABLE>

                                                    Deficit           
                                                   Accumulated         
                                                   During the     
                                                   Development     
Six Months Ended June 30, 1998:                      Stage          Total     
-------------------------------                      -----          -----     

Balance - December 31, 1997                       $(16,431,451)  $(4,849,723) 
                                                                              
Issuance of stock for consulting fees                                         
  ($2.58 per share)                                     -            110,941  
Value assigned to conversion feature of                                       
  Convertible Debentures and 60,000 warrants                                  
  issued as additional interest                         -              -      
Issuance of stock pursuant to penalty                                         
  provision of bridge financing                                               
 ($1.0625 per share)                                    -                     
Issuance of stock principally for consulting                           -      
  fees ($1.51 per share)                                -            215,930  
Amortization of unearned financing costs                           2,622,677  
Net loss                                            (5,426,908)   (5,426,908) 
                                                  ------------   -----------  
                                                                              
Balance - June 30, 1998                           $(21,858,359)  $(7,327,083) 
                                                  ============   ===========  

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

See notes to financial statements.


                                       F-6
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          For the Six Months Ended June 30,    For the Period   
                                                                          ---------------------------------    from Inception   
                                                                              1997              1998         (May 26, 1995) to 
                                                                          ------------       ------------       June 30, 1998    
                                                                                                                ------------    
<S>                                                                       <C>                <C>                <C>         
CASH FLOWS FROM OPERATING ACTIVITIES                                                                           
    Net loss                                                              $ (3,007,345)      $ (5,426,908)      $(21,858,359)
    Adjustments to reconcile net loss to net cash                                                              
      provided by (used in) operating activities:                                                              
         Depreciation and amortization                                           2,293              4,698             10,699
        Amortization of deferred and unearned financing                                                        
           costs                                                             1,371,012          3,049,661         11,786,082
        Accrued interest                                                       121,379            208,329            208,329
        Stock issued for license                                                    --                 --             37,500
        Consulting fees and other compensation satisfied by                                                    
           stock issuances                                                     372,550            326,871          2,375,898
                                                                                                               
        Cash provided by (used in) the change in assets and liabilities:                                       
            (Decrease) increase in advances to related parties                  84,000                 --             (5,918)
            Increase in prepaid expenses                                        (9,574)            (5,453)           (26,992)
            Increase in other assets                                                --             (2,400)            (5,551)
            Increase in accrued liabilities                                    394,515            539,425          1,116,391
            Increase in deferred revenue                                            --                 --            225,000
                                                                          ------------       ------------       ------------
                                                                                                               
        NET CASH USED IN OPERATING ACTIVITIES                                 (671,170)        (1,305,777)        (6,136,921)
                                                                          ------------       ------------       ------------
                                                                                                               
CASH FLOWS FROM INVESTING ACTIVITIES                                                                           
    Organization and patent costs                                                   --                 --            (31,358)
    Capital expenditures                                                       (18,391)           (20,038)           (37,382)
                                                                          ------------       ------------       ------------
                                                                                                               
       NET CASH USED IN INVESTING ACTIVITIES                                   (18,391)           (20,038)           (68,740)
                                                                          ------------       ------------       ------------
                                                                                                               
CASH FLOWS FROM FINANCING ACTIVITIES                                                                           
    Proceeds from exercise of stock options                                         --                 --                150
    Proceeds from issuance of common stock                                          --                 --            841,500
    Offering costs                                                                  --                 --             (2,898)
    Repayment by stockholders                                                       --                 --              3,000
    Proceeds from convertible debentures                                            --          3,000,000          6,000,000
    Proceeds from bridge notes                                                      --                 --          2,000,000
    Repayment of bridge notes                                                       --         (2,000,000)        (2,000,000)
    Borrowings from stockholders                                               241,500                 --            561,140
    Repayment to stockholders                                                       --                 --           (561,140)
    Deferred financing costs                                                    75,000           (235,000)          (579,150)
                                                                          ------------       ------------       ------------
                                                                                                               
       NET CASH PROVIDED BY FINANCING                                                                          
         ACTIVITIES                                                            316,500            765,000          6,262,602
                                                                          ------------       ------------       ------------
                                                                                                               
(DECREASE) INCREASE IN CASH                                                   (373,061)          (560,815)            56,941
                                                                                                               
CASH - BEGINNING                                                               380,183            617,756                 --
                                                                          ------------       ------------       ------------
                                                                                                               
CASH - ENDING                                                             $      7,122       $     56,941       $     56,941
                                                                          ============       ============       ============
                                                                                                               
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                              
                                                                                                               
Cash paid during the period for:                                                                               
    Interest                                                              $         --       $     36,630       $    351,561
                                                                          ============       ============       ============
                                                                                                               
    Income taxes                                                          $         --       $         --       $         --
                                                                          ============       ============       ============
</TABLE>

See notes to financial statements.


                                       F-7
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  JUNE 30, 1998

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, 1997, included in the Company's Form 10 and
                  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
                  development-stage, technology transfer, holding and management
                  company, formed to commercialize new, existing but previously
                  unrecognized, and previously "classified" technologies, with a
                  particular current emphasis on technologies developed by
                  prominent research institutes and individual researchers in
                  the former Soviet Union and in Israel, and to license those
                  and other Western technologies for business and other
                  commercial applications principally in Western and Central
                  Europe, Ukraine, Russia and North America. Since the Company's
                  formation, it has acquired development and marketing rights to
                  a number of technologies by purchase, assignments, and
                  licensing arrangements. The Company intends to operate its
                  business by licensing its technologies to end-users and
                  through development and operating joint ventures and strategic
                  alliances. To date, the Company has not generated any revenues
                  from operations.


                                       F-8
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  JUNE 30, 1998

NOTE 2 -          BUSINESS AND CONTINUED OPERATIONS (Continued)

                  The accompanying unaudited 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, 1998, the Company has a
                  stockholders' deficiency of $7,327,083, a working capital
                  deficiency of $1,459,869 and an accumulated deficit since
                  inception of $21,858,359. The Company requires additional
                  funds to commercialize its technologies and continue research
                  and development efforts. Until 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, not yet completely developed, or that with respect
                  to any technology that 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, a bridge
                  financing totalling $2,000,000 completed in December of 1996,
                  a Convertible Debenture financing of $3,000,000 completed in
                  November of 1997 and a Convertible Debenture financing of
                  $3,000,000 completed in February of 1998 and a Convertible
                  Debenture financing of $1,000,000 completed July 20, 1998, as
                  discussed further in Note 7. Proceeds from the February 1998
                  Convertible Debenture financing were used to retire the
                  $2,000,000 bridge notes. 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 1998. 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.


                                       F-9
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  JUNE 30, 1998

NOTE 3 -          NOTES PAYABLE

                  Convertible Debenture Offering

                  On February 23, 1998, the Company sold through a private
                  placement $3,000,000, 8% Convertible Debenture notes, due
                  February 23, 2001. As additional consideration, the Company
                  issued separate warrants to purchase 60,000 shares of the
                  Company's common stock at $2.30 per share. The warrants are
                  exercisable over two
                  years.

                  The debenture agreements permit the holders of the debentures
                  to convert the debt into shares of common stock at beneficial
                  conversion rates based on the timing of the conversion. The
                  notes conversion feature commences at the earlier of: (I) the
                  date the underlying shares to the Convertible Debenture notes
                  are registered and declared effected by the SEC; (ii) 90 days
                  after February 23, 1998. Shares of common stock to be issued
                  at the conversion date shall be equal to the outstanding
                  principal and accrued interest at the conversion date, divided
                  by the conversion price. The conversion price is the lower of
                  $2.62 or the average bid price per share of the Company's
                  common stock for five trading days immediately preceding the
                  conversion date, multiplied by (I) 80% for any conversion
                  honored prior to the 180th day after February 23, 1998, (ii)
                  75% for any conversion honored on or after the 180th day after
                  February 23, 1998, and prior to the 360th after February 23,
                  1998, and (iii) 70% for any conversion honored after the 360th
                  day after February 23, 1998. Commencing on February 23, 2000,
                  all or any portion of the remaining debt due under this
                  financing at the option of Eurotech is convertible into shares
                  of common stock at the 70% conversion rate.

                  Furthermore, the Company has agreed that if a Registration
                  Statement covering the underlying shares of the convertible
                  note is either not filed with the SEC on or prior to March 2,
                  1998 or, if filed, is not declared effective by the SEC on or
                  prior to March 15, 1998, the Company will be obligated to pay
                  to the debenture holders liquidated damages equal to 1% of the
                  aggregate principal amount of the then outstanding notes on
                  the first day of each month until such filing or effectiveness
                  deficiency is cured. The Company's Registration Statement was
                  declared effective by the SEC in July of 1998.

                  The Company has assigned a value to the debentures' beneficial
                  conversion feature and warrants amounting to $1,100,000, and
                  such amount is being amortized over 180 days commencing
                  February 23, 1998.

                  Proceeds from the sale of the 3,000,000, 8% Convertible
                  Debenture notes amounted to $2,765,000 net of costs which were
                  comprised of: (I) legal and professional fees amounting to
                  $10,000, (ii) a placement fee to an unrelated party amounting
                  to $225,000. The legal and placement fees of $235,000 has been
                  recorded as deferred financing costs and is being amortized
                  over 180 days commencing February 23, 1998.


                                      F-10
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                 MARCH 31, 1998

NOTE 3 -          NOTES PAYABLE (Continued)

                  Repayment of $2,000,000 Bridge Notes

                  On March 6, 1998, the Company repaid all of the $2,000,000
                  principal due to the holders of the bridge notes from proceeds
                  of the February 1998 Convertible Debenture offering.

NOTE 4 -          STOCKHOLDERS' DEFICIENCY

                  Significant Common Stock Issuances During 1998

                  During the quarter ended June 30, 1998, the Company issued
                  500,000 shares of common stock to the unit holders of the
                  bridge financing in connection with the Company's failure to
                  have its S-1 Registration Statement declared effective by the
                  Securities and Exchange Commission by April 1, 1998. The value
                  assigned to the 500,000 shares was based on fair value and
                  amounted to $531,249, all of which was charged to operations
                  during the quarter ended June 30, 1998.

                  Earnings Per Share

                  Securities that could potentially dilute basic earnings per
                  share ("EPS") in the future that were not included in the
                  computation of diluted EPS because to do so would have been
                  anti-dilutive for the periods presented consist of the
                  following:

Warrants to purchase common stock                                      1,426,500
Convertible Debentures (assumed conversion at market value at
    August 12, 1998 and at largest discount)                           9,700,000
Options to purchase common stock                                          75,000
                                                                      ----------

Total as of June 30, 1998                                             11,201,500
                                                                      ==========

Substantial issuance after June 30, 1998:

Convertible Debentures issued July 1998 (assumed
    conversion at market value at August 12, 1998 and
    at largest discount)                                               1,624,000
                                                                      ==========

Warrants to purchase common stock                                        125,000
                                                                      ==========


                                      F-11
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  JUNE 30, 1998

NOTE 5 -          TECHNOLOGY INVESTMENTS AND LICENSING AGREEMENT

                  Technologies Acquired

                  Pursuant to three Technology Purchase Agreements each dated
                  January 1, 1998, the Company has acquired from Oleg L.
                  Figovsky, Ph.D. , a consultant to the Company, all right,
                  title and interest in and to the following three unpatented
                  technologies developed by him, inclusive of future
                  improvements thereto: (I) a group of related technologies,
                  collectively known as "Interpenetrated Network Polymers"
                  ("INPs"), (ii) "Liquid Ebonite Material" ("LEM") and (iii)
                  "Rubber Concrete" ("RubCon") for purchase prices of $75,000,
                  $15,000 and $35,000, respectively (each, a "Purchase Price").
                  Pursuant to each such Technology Purchase Agreement, during
                  15-year period commencing on January 1, 1998, the Company is
                  obligated to pay to Dr. Figovsky royalties equal to 49% of the
                  Company's net revenues from the sale or licensing of any
                  products incorporating the applicable technology, subject to
                  the Company's right to deduct from the first royalties payable
                  under each agreement an aggregate sum equal to the Purchase
                  Price paid thereunder. The Company has accounted for this
                  technology license fee as acquired research and development
                  and, in accordance with FASB Interpretation No. 4, has charged
                  the license fee of $125,000 to research and development
                  expenses during the three months ended March 31, 1998.

                  In the quarter ended June 30, 1998, the Company acquired the
                  rights to certain anticorrosive additives technology from
                  Israeli scientists for a purchase price of $40,000. The
                  Company has charged the $40,000 expenditure to research and
                  development expenses during the quarter ended June 30, 1998.

                  Investments in Israeli Technology Companies

                  During 1997, the Company acquired a 20% interest in four
                  separate Israeli technology, research and development
                  companies. The Company's share of losses incurred by these
                  companies has been accounted for on the equity basis and
                  included in research and development expenses. The amount
                  charged to research and development for 1997 approximated
                  $102,000, which reduced the carrying value of the Company's
                  investment in these four companies to $-0- at December 31,
                  1997.

                  During the six months ended June 30, 1998, an additional
                  $84,000 was invested in these four companies. The amount
                  charged to research and development expenses for the six
                  months ended June 30, 1998 approximated $84,000, which reduced
                  the carrying value of the Company's investment in these four
                  companies to $-0- at June 30, 1998.


                                      F-12
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  JUNE 30, 1998

NOTE 6 -          CONTINGENCIES AND OTHER MATTERS

                  International Operations

                  The Company has strategic alliances, collaboration agreements
                  and licensing agreements with entities which are based in
                  Russia and Ukraine. Both of these countries have experienced
                  volatile and frequently unfavorable economic, political and
                  social conditions. The Russian economy and the Ukraine economy
                  are characterized by declining gross domestic production,
                  significant inflation, increasing rates of unemployment and
                  underemployment, unstable currencies, and high levels of
                  governmental debt as compared to gross domestic production.
                  The prospects of widespread insolvencies and the collapse of
                  various economic sectors exist in both countries.

                  In view of the foregoing, the Company's business, earnings,
                  asset values and prospects may be materially and adversely
                  affected by developments with respect to inflation, interest
                  rates, currency fluctuations, government policies, price and
                  wage controls, exchange control regulations, taxation,
                  expropriation, social instability, and other political,
                  economic or diplomatic developments in or affecting Russia and
                  Ukraine. The Company has no control over such conditions and
                  developments, and can provide no assurance that such
                  conditions and developments will not adversely affect the
                  Company's operations.

                  Risk of Environmental Liability; Present Lack of Environmental
                  Liability Insurance

                  The Company's radioactive contaminant technology is subject to
                  numerous national and local laws and regulations relating to
                  the storage, handling, emission, transportation and discharge
                  of such materials, and the use of specialized technical
                  equipment in the processing of such materials. There is always
                  the risk that such materials might be mishandled, or that
                  there might be equipment or technology failures, which could
                  result in significant claims for personal injury, property
                  damage, and clean-up or remediation. Any such claims against
                  the Company could have a material adverse effect on the
                  Company. The Company does not presently carry any
                  environmental liability insurance, and may be required to
                  obtain such insurance in the future in amounts that are not
                  presently predictable. There can be no assurance that such
                  insurance will provide coverage against all claims, and claims
                  may be made against the Company (even if covered by insurance
                  policies) for amounts substantially in excess of applicable
                  policy limits. Any such event could have a material adverse
                  effect on the Company.


                                      F-13
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  JUNE 30, 1998

NOTE 6 -          CONTINGENCIES AND OTHER MATTERS (Continued)

                  Concentration of Credit Risk

                  Financial instruments which potentially subject the Company to
                  concentration of credit risk consist principally of cash which
                  is at one bank. Future concentration of credit risk may arise
                  from trade accounts receivable. Ongoing credit evaluations of
                  customers' financial condition will be performed and,
                  generally, no collateral will be required.

                  Litigation

                  In December 1997, Raymond Dirks, Jessy Dirks, Robert Brisotti
                  and David Morris filed an action in the Supreme Court for the
                  State of New York, County of New York, against Eurotech, Ltd.
                  for breach of contract, seeking injunctive relief, specific
                  performance and monetary damages of nearly $5 million (the
                  "Dirks Litigation"). The Dirks Litigation arises solely from
                  an agreement between Eurotech and National Securities
                  Corporation ("National") relating to financial advisory
                  services to be performed by National Securities Corporation, a
                  broker/dealer with which the plaintiffs were affiliated and of
                  which Raymond Dirks Research was a division. Eurotech granted
                  National a warrant certificate for 470,000 shares at $1.00 per
                  share as a retainer for general financial advisory services.
                  In conjunction with the separation of the plaintiffs and
                  Raymond Dirks Research from National Securities Corporation,
                  National assigned a significant portion of the warrant
                  certificate to the plaintiffs. It is Eurotech's position that
                  the warrant certificate is voidable.

                  The plaintiffs allege, among other things, that they are
                  entitled to damages composed of both the value of the stock on
                  the date of their purported exercise of an alleged assignment
                  of the warrant certificate, and the decrease in value of the
                  price of the stock since the date of their purported exercise.
                  Eurotech believes that the plaintiffs have significantly
                  overstated their monetary damage claim and that, having sought
                  monetary damages, the plaintiffs are not entitled to any type
                  of equitable relief.

                  Process was served upon Eurotech at its California office in
                  late January 1998. Based on the advice of its outside counsel,
                  Eurotech believes that the plaintiffs' claims will be resolved
                  favorably to the Company. However, it is possible that the
                  Company will be adjudged liable in the Dirks Litigation, and
                  if so, the resolution of the litigation could have a material
                  adverse effect on the Company.


                                      F-14
<PAGE>

                                 EUROTECH, LTD.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  JUNE 30, 1998

NOTE 7 -          SUBSEQUENT EVENT

                  Convertible Debenture Offering

                  On July 20, 1998, the Company sold through a private placement
                  $1,000,000, 8% Convertible Debenture notes, due July 20, 2001.
                  As additional consideration, the Company issued separate
                  warrants to purchase 125,000 shares of the Company's common
                  stock at $1.06 per share. The warrants are exercisable over
                  two years.

                  The debenture agreements permit the holders of the debentures
                  to convert the debt into shares of common stock at beneficial
                  conversion rates based on the timing of the conversion. The
                  notes conversion feature commences at the earlier of: (i) the
                  date the underlying shares to the Convertible Debenture notes
                  are registered and declared effected by the SEC; (ii) 90 days
                  after July 20, 1998. Shares of common stock to be issued at
                  the conversion date shall be equal to the outstanding
                  principal and accrued interest at the conversion date, divided
                  by the conversion price. The conversion price is the lower of
                  $1.06, or the average bid price per share of the Company's
                  common stock for five trading days immediately preceding the
                  conversion date, multiplied by (i) 75% for any conversion
                  honored prior to the 180th day after July 20, 1998 and (ii)
                  70% for any conversion honored after the 180th day after July
                  20, 1998. Commencing on July 20, 2001, all or any portion of
                  the remaining debt due under this financing at the option of
                  Eurotech is convertible into shares of common stock at the 70%
                  conversion rate.

                  The Company has assigned a value to the debentures' beneficial
                  conversion feature and warrants amounting to $475,000, and
                  such amount will be amortized over 180 days commencing July
                  20, 1998.

                  Proceeds from the sale of the 1,000,000, 8% Convertible
                  Debenture notes, amounted to $975,000, net of legal and
                  professional fees amounting to $25,000. The legal and
                  professional fees of $25,000 have been recorded as deferred
                  financing costs and will be amortized over 180 days commencing
                  July 20, 1998.

                  As part of this agreement, the Company modified its two prior
                  Convertible Debenture agreements to eliminate the moving floor
                  conversion prices.


                                      F-15
<PAGE>

ITEM 2.               MANAGEMENT'S DISCUSSION AND ANALYSIS

General

The following is a discussion and analysis of the results of operations of the
Company and should be read in conjunction with the financial statements and
related notes contained in this Form 10-Q.

Certain information contained in this Form 10-Q may contain forward-looking
statements. The forward-looking statements are subject to certain risks and
uncertainties. Actual results could differ materially from current expectations.
Among the factors that could affect the Company's actual results and could cause
results to differ from those contained in the forward-looking statements
contained herein is the Company's ability to commercialize its technologies
successfully, which will be dependent on business, financial and other factors
beyond the Company's control, including, amoung others, market acceptance,
ability to manufacture on a large scale basis and at feasible costs, together
with all the risks inherent in the establishment of a new enterprise and the
marketing and manufacturing of new products.

Overview

The Company, incorporated in May 1995, is a development stage, technology
transfer, holding and management company formed to commercialize new, existing
but previously unrecognized, and previously "classified" technologies, with a
particular current emphasis on technologies developed by prominent research
institutes and individual researchers in the former Soviet Union and in Israel,
and to commercialize those and other Western technologies for business and other
commercial applications principally in Central Europe, Ukraine, Russia and North
America.

Until recently, the Company had been principally engaged in identifying,
monitoring, reviewing and assessing technologies for their commercial
applicability and potential, and in acquiring selected technologies by equity
investment, purchase, assignment and licensing arrangements. Although the
Company intends to continue identifying, monitoring, reviewing and assessing new
technolgoies, its primary emphasis will be focused on commercializing four of
its present technologies ("Principal Technologies").

The Company's Principal Technologies include: (I) Silicon-organic compound
technology ("EKOR") (a silicon-based elastomer which may be used to contain
radioactive dust and waste materials); (ii) Non-isocyanate Polyurethane ("NIPU")
(a modified polyurethane that does not contain the toxic isocyanates used in the
production of conventional polyurethane); (iii) Liquid Ebonite Material ("LEM")
(a synthetic liquid rubber); and (iv) Rubcon (a rubber based concrete).

The Company believes that the Principal Technologies are presently ready for
commercialization and marketing. To that end, the Company has decided to devote
its business activities and resources principally to the marketing and sale of
the Principal Technologies. The Company recently has initiated a marketing and
sales program for the Principal Technologies, and also has initiated discussions
with a number of prominent, potential users of the technologies, with a view
towards the future negotiation and execution of licensing and/or joint venture
marketing and sales agreements. The Company is proceeding with the marketing and
potential application of its EKOR technology in connection with nuclear
contamination projects at Reactor 4 of the Chernobyl Nuclear Power Plan
("ChNPP") (which experienced a catastrophic near-meltdown in 1986), and in the
U.S., Russia and Germany. The Company intends to operate its business by
licensing its technologies to end-users and through development and operating
joint-ventures and strategic alliances. To date, the Company has not generated
any revenues from operations.


                                      F-16
<PAGE>

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, 1998, the Company incurred a cumulative net loss of
approximately $21,858,000. The Company expects that it will generate losses
until at least such time as it can commercialize its technologies, if ever. No
assurance can be given that any of the Company's technologies 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.

Results of Operations

For the Six months Ended June 30, 1998 vs. the Six Months Ended June 30, 1997

The Company has had no revenues since inception. Consulting and other general
and administrative expenses increased from $1,244,000 for the six months ended
June 30, 1997 to $1,387,000 for the six months ended June 30, 1998. The increase
is principally a result of a provision of $330,000 for penalties to holders of
its 8% Convertible Debentures due November 27, 2000 and February 23, 2001 for
failure by the Company to have the Registration Statement declared effective by
the SEC by February 16, 1998. Further, the Company has incurred professional
expenses related to developing the Company's Principal Technologies. This
overall increase was partially offset by a decrease in consulting expenses
attributable to a reduction in the number of consultants engaged by the Company
during the period.

Research and development expenses increased in the six months ended June 30,
1998 to $561,000, from $271,000, for the six months ended June 30, 1997,
principally attributable to $125,000 paid by Company to Professor Oleg L.
Figovsky, Ph.D. in connection with the three technology purchase agreements,
each dated January 1, 1998, between the Company and Professor Figovsky, and the
purchase of technology from Israeli scientists in April of 1998 for $40,000, all
of which were charged to research and development expenses during the six months
ended June 30, 1998 (see Note 5 to the June 30, 1998 financial statements).

For the six months ended June 30, 1998 and the six months ended June 30, 1997,
the Company incurred operating losses of $1,948,000 and $1,515,000,
respectively. The losses are principally due to expenses incurred in the
acquisition and development of its technologies, including an overall increase
in general and administrative expenses.

Interest expenses and amortization of deferred and unearned finance costs
increased from $1,492,000 for the six months ended June 30, 1997 to $3,479,000
for the six months ended June 30, 1998. This increase was attributable to an
increase in the amount of debt outstanding and the amortization of the
conversion discounts on the Convertible Debentures of $2,091,000 for the six
months ended June 30, 1998. Furthermore, during the quarter ended June 30, 1998,
the Company issued 500,000 shares of common stock to the unit holders of the
bridge financing in connection with the Company's failure to have its S-1
Registration Statement declared effective by the Securities and Exchange
Commission by April 1, 1998. The value assigned to the 500,000 shares was based
on fair value and amounted to $531,249, all of which was charged to operations
during the quarter ended June 30, 1998.

The Company expects to incur significant losses during 1998. The Company
anticipates that any revenue recognized in 1998 will be substantially offset by
expenses incurred by the Company in its efforts to commercialize, sell and
market its Principal Technologies.


                                      F-17
<PAGE>

For the Three Months Ended June 30, 1998 Vs. the Three Months Ended June 30,
1997

Consulting and other general and administrative expenses increased from $600,000
for the three months ended June 30, 1997 to $606,000 for the three months ended
June 30, 1998. The increase is principally a result of a provision of $180,000
for penalties to holders of its 8% Convertible Debentures due November 27, 2000
and February 23, 2001 for failure by the Company to have the Registration
Statement declared effective by the SEC by February 16, 1998. Further, the
Company has incurred increased professional expenses related to developing the
Company's Principal Technologies. This overall increase was partially offset by
a decrease in consulting expenses attributable to a reduction in the number of
consultants engaged by the Company during the period.

Research and development expenses increased in the three months ended June 30,
1998 to $253,000, from $12,000, for the three months ended June 30, 1997,
principally attributable to the acquisition of technology from Israeli
scientists ($40,000) and continued research and development costs for its
Principal Technologies.

For the three months ended June 30, 1998 and the three months ended June 30,
1997, the Company incurred operating losses of $859,000 and $612,000,
respectively. The losses are principally due to expenses incurred in the
acquisition and development of its technologies, including an overall increase
in general and administrative expenses.

Interest expenses and amortization of deferred and unearned finance costs
increased from $745,000 for the three months ended June 30, 1997 to $2,103,000
for the three months ended June 30, 1998. This increase was attributable to an
increase in the amount of debt outstanding and the amortization of the
conversion discounts of the Convertible Debentures totalling $1,036,000 for the
three months ended June 30, 1998. Furthermore, during the quarter ended June 30,
1998, the Company issued 500,000 shares of common stock to the unit holders of
the bridge financing in connection with the Company's failure to have its S-1
Registration Statement declared effective by the Securities and Exchange
Commission by April 1, 1998. The value assigned to the 500,000 shares was based
on fair value and amounted to $531,249, all of which was charged to operations
during the quarter ended June 30, 1998.

Liquidity and Capital Resources

The Company's principal sources of working capital from inception have been net
proceeds of $842,000 from the offering of common stock under Rule 504 of
Regulation D, shareholder advances aggregating $761,440, the bridge financing
completed in December 1996 of $2,000,000, and from the private placement of
$3,000,000 principal amount of 8% Convertible Debentures completed in November
1997, $3,000,000 principal amount of 8% Convertible Debentures completed in
February 1998 and $1,000,000 principal amount of 8% Convertible Debentures
completed in July of 1998.

In November 1997 and February 1998, the Company completed two private
placements, each of $3,000,000 principal amount of its 8% Convertible Debentures
due November 27, 2000 and February 23, 2001, respectively (the "Debentures"). In
each such private placement, warrants (the "Warrants") to purchase up to 60,000
shares of common stock (the Debentures and Warrants, collectively, the
"Securities", each offering of the Securities, a "Debenture Offering", and the
offering of the Securities the "Debenture Offerings") were also issued. The
Securities were offered and sold only to accredited investors as defined by Rule
501 of Regulation D under the Act, in reliance on an exemption from registration
under Rule 506 of Regulation D.


                                      F-18
<PAGE>

The terms and conditions under which the Debentures may be converted into shares
of the Company's common stock and the manner in which the Warrants may be
exercised are set forth in the Company's Annual Report on Form 10-K.

During the six months ended June 30, 1998, the Company's principal source of
cash was the February 1998 Debenture Offering from which it derived net proceeds
of approximately $2,750,000 of this amount $2,000,000 was used to satisfy the
Bridge Notes and $125,000 was applied to the acquisition of three technologies.
The remaining funds were used for working capital. On July 20, 1998, the Company
completed a private placement of $1,000,000 principal amount of 8% Convertible
Debentures due July 20, 2001. See Note 7 to the June 30, 1998 financial
statements for a further discussion of the terms of this financing.

The Company has agreed to fund the commercialization of certain technologies
developed in the former Soviet Union by scientists and researchers at Kurchatov,
other institutes associated therewith, and EAPS, collectively the "Scientists".
Kurchatov will provide the materials, facilities and personnel to complete the
necessary work to commercialize such technologies. The Company also has agreed
to provide funding in connection with the marketing and sale of three of its
Principal Technologies. Total planned expenditures under these programs,
including related general and administrative expenses, are expected to
approximate $1,000,000 during fiscal year 1998, of which $561,000 was incurred
through June 30, 1998. The Company's principal source of funding for these
expenditures during fiscal year 1998 will be the remaining proceeds of the
Debenture Offerings.

The Company will require additional financing to continue to fund research and
development efforts, operating costs and complete necessary work to
commercialize its technologies. The report of the Company's independent
certified public accountants contain an explanatory paragraph which expresses
substantial doubt as to the Company's ability to continue as a going concern.

No assurance can be given that the Company can successfully obtain any
additional financing or, if obtained, that such funding will not cause 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
Company's technologies.

The Company had a working capital deficiency and stockholders' deficiency of
$1,460,000 and $7,327,000, respectively, as of June 30, 1998.


                                      F-19
<PAGE>

27       Financial Data Schedule (2)

         (b)      Reports on Form 8-K

                  Executive changes.

         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.


Dated: August 14, 1998


                                          EUROTECH, LTD.
                                          (Registrant)


                                          /s/ John McNeil Wilkie
                                          -------------------------------------
                                          President and Chief Financial Officer


-----------------------------
(2) Filed herewith


                                      F-20