<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

(Mark One)

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

       For the fiscal year ended:  December 31, 2001
                                    -----------------

                                       OR

[ ]    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: 000-22129
                                                ---------

                                 Eurotech, Ltd.
                                 --------------
             (Exact Name of Registrant as Specified in Its Charter)

      District of Columbia                             33-0662435
      --------------------                             ----------
(State or Other Jurisdiction of          (I.R.S. Employer Identification Number)
Incorporation or Organization)

             10306 Eaton Place, Suite 220, Fairfax, Virginia   22030
            ---------------------------------------------------------
           (Address of principal executive offices)        (Zip Code)

                                 (703) 352-4399
                                 --------------
              (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class                         Name of Exchange on Which Registered
-------------------                         ------------------------------------

Common Stock, $.00025 par value             American Stock Exchange
-------------------------------             -----------------------

Securities registered pursuant to Section 12(g) of the Act:  None

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

Yes  X    No ___
    ---

<PAGE>

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

         State the aggregate market value of the voting and non-voting common
equity held by the non-affiliates of the registrant. The aggregate market value
shall be computed by reference to the equity, as of a specified date within 60
days prior to the date of filing. (See definition of affiliate in Rule 405.)

         As of close of business on Wednesday, March 6, 2002: $28,884,948

         NOTE. If a determination as to whether a particular person or entity is
an affiliate cannot be made without involving unreasonable effort and expense,
the aggregate market value of the common stock held by non-affiliates may be
calculated on the basis of assumptions reasonable under the circumstances,
provided that the assumptions are set forth in this form.

                      DOCUMENTS INCORPORATED BY REFERENCE.

         List hereunder the following documents if incorporated by reference and
the Part of the Form 10-K (e.g. Part I, Part II, etc.) into which the document
is incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).

THE INFORMATION REQUIRED BY PART III OF THIS FORM 10-K IS INCORPORATED BY
REFERENCE TO OUR PROXY STATEMENT ON SCHEDULE 14A FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON MARCH 29, 2002.

                                       2


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                                TABLE OF CONTENTS

                                     PART I
                                                                     Page Number
Item 1.   Business                                                          4
Item 2.   Properties                                                       27
Item 3.   Legal Proceedings                                                27
Item 4.   Submission of Matters to a Vote of Security Holders              27

                                     PART II

Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters                                              27
Item 6.   Selected Financial Data                                          28
Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                        30
Item 7A.  Quantitative and Qualitative Disclosures About Market Risk       46
Item 8.   Financial Statements and Supplementary Data                      47
Item 9    Changes In and Disagreements with Accountants on
          Accounting and Financial Disclosure                              47

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant               47
Item 11.  Executive Compensation                                           47
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management                                                       47
Item 13.  Certain Relationships and Related Transactions                   47

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form      47
          8-K

Signatures                                                                 49
Index to Financial Statements                                              F-1

                                       3


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                                     PART I

ITEM 1.  BUSINESS

I. GENERAL.

         Eurotech, Ltd. is a development stage company acquiring, developing,
and marketing emerging chemical and electronic technologies designed to improve
the environmental and security sectors. We manage comprehensive engineering and
scientific development programs designed to identify products and processes that
have unique or superior characteristics with reduced manufacturing and/or use
risks. Our portfolio of technologically advanced products include (i)
proprietary materials created to specifically solve the serious problems of how
nuclear and other hazardous wastes are cost effectively contained, (ii) advanced
performance materials for use in industrial products such as coatings and
paints, and (iii) automatic detection of explosives and illicit materials for
use in Homeland Security. Our three operational divisions are: Nuclear &
Environmental Technology Solutions ("NETS"), Advanced Performance Materials
("APM"), and Security & Safeguards ("S&S"). We commercialize our technologies
using various financial and transactional vehicles including: technology
transfer, licensing, joint venture, and distribution agreements.

         We are not a subsidiary of another corporation, entity, or other
person. We hold a greater than 50% equity interest in several Israeli research
and development companies which may be deemed to be subsidiaries. In addition,
we also own a majority interest in a Delaware corporation which holds certain
encryption technologies, which may also be deemed to be a subsidiary.

         The Company was incorporated under the laws of the District of Columbia
on May 26, 1995. Our executive office is located at 10306 Eaton Place, Suite
220, Fairfax, Virginia 22030.  Our website address is: www.eurotechltd.com.

II. NUCLEAR & ENVIRONMENTAL TECHNOLOGY SOLUTIONS.

         Nuclear & Environmental Technology Solutions has three unique
technologies that are actively marketed consisting of a family of silicon-based
geopolymers known as EKOR(TM), a fire-resistant surface fixative known as
Rad-X(TM), and a set of remote sensing technologies for subsurface
investigation. Each technology was introduced to the market in 2001. All three
technologies are aimed at initial opportunities for sale or licensing within the
U.S. Department of Energy (DOE). In 2001 this division earned 100% of the
Company's revenues of $18,873.

         Despite significant technical advantages to our technologies and
successful demonstrations at various nuclear sites, project implementation and
full-scale application has been initially negatively impacted by budgetary
reductions within the DOE and re-evaluation of priorities and projects as a
result of the events of September 11th. Notwithstanding the foregoing, the
Company believes that the increased attention to Homeland Security will result
in a more favorable marketplace for our technologies.

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1.  EKOR(TM)

a. BACKGROUND. EKOR(TM) was developed jointly by scientists at the I.V.
Kurchatov Institute (Kurchatov) and members of the Euro-Asian Geophysical
Society (EAPS) - both based in Moscow, Russia. EKOR(TM) is our brand name for
our family of materials designed for long-term isolation of hazardous and
radioactive materials. As a silicon-based elastomer, EKOR's adhesive properties
allow it to stick to a wide variety of wet or dry surfaces and materials. When
applied, EKOR(TM) materials surround and "glue down" radioactive or hazardous
debris ranging from fine dust to large pieces of equipment and, in combination
with their fire-resistant and water-proof properties, prevent such debris from
migrating by water or as air-borne particles. EKOR(TM) materials also possess
other highly desirable performance characteristics such as chemical resistance,
fire resistance, heat resistance, and resistance to environmental aging and
degradation from radiation. In addition to its unique combination of performance
characteristics, EKOR(TM) comes in multiple product forms and can be applied
with a variety of application methods. This allows EKOR(TM) to be used as a
solution for a broad spectrum of nuclear and hazardous waste management
problems.

         The EKOR(TM) product family's performance characteristics and
flexibility of form make it a useful tool for a broad spectrum of applications.
There are currently five basic forms of EKOR(TM):

     1.  Sealer Plus, which can be brushed, poured or sprayed to coat containers
         or cover contaminated surfaces;

     2.  Foam, which is pumped in a range of densities to fill crevices, ducts
         or pipes;

     3.  Grout, applied in a pour and mix method, which can be used to make
         shapes for shielding or to macroencapsulate items to form an
         unleachable monolith for transportation or disposal;

     4.  Matrix, applied in a pour and mix method, which can be used to
         microencapsulate radioactive or hazardous wastes to form an elastomeric
         monolith for transportation or disposal; and

     5.  StoneStore, applied in a pour and mix method, which can be used to
         microencapsulate highly radioactive waste and will form a ceramic
         monolith for permanent disposal.

         In tests that we supervised,  EKOR(TM) was shown to be highly
resistant to radiation and structural degradation from exposure to radiation. It
also proved to be highly fire resistant, waterproof, and capable of being
formulated in densities that display considerable structural strength and
weight-bearing properties of 100 pounds per square inch. In these high-dosage
radiation tests, EKOR(TM) has met or exceeded all applicable specifications for
containment materials.

         In 2001, we successfully completed an outsourcing arrangement for the
production of EKOR(TM). We now have the capability to have EKOR(TM)
manufactured in sufficient volumes to support expected EKOR(TM)sales.

         In 2001, Eurotech successfully completed comprehensive product testings
by U.S. Department of Energy approved labs. These tests validated EKOR's
expected performance and provided information required by approved contractors
at all Department of Energy (DOE) sites. We plan to consistently under take
performance testing on additional product forms of EKOR(TM).


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         In March 2001, the EKOR(TM) family of products was presented to waste
management professionals from around the world at the annual Waste Management
Symposium in Tucson, Arizona. The reception and interest in EKOR(TM)resulted in
EKOR(TM)being applied and demonstrated interest generated at the symposium, we
have been presenting EKOR(TM) for use in a variety of applications at DOE sites
to various waste management professionals.

b. INTELLECTUAL PROPERTY. EAPS, as the lead inventor, has patented EKOR(TM) in
the U.S., Russia, and other industrialized countries. On March 23, 1999, the
U.S. Patent and Trademark Office issued to EAPS Patent No. 5,886,060 on the
process for manufacturing one of the EKOR(TM) compound variants. Under
sub-licensing agreements, Eurotech is the exclusive global licensee of all
right, title and interest (inclusive of all patent and other intellectual
property rights now or in the future) in EKOR(TM). For that license and
specified R&D and engineering services, we are required to make fixed payments
to EAPS at the rate of $120,000 per year until 2005. Our license agreement is
structured to require that we pay royalties aggregating up to 3% of our EKOR(TM)
revenues, increasing in 2005 to 3.1% on certain such revenues. Royalties are
payable at the rate of 1% to the intermediate licensee of the EKOR(TM)
technology; a further 2% royalty on certain of our EKOR(TM) revenues payable to
another entity that until November 30, 1999 owned a 50% interest in the EKOR(TM)
sublicense; and, beginning in 2005, a 0.1% royalty on product sales payable to
EAPS. As a regular part of our business activities, we plan to submit patent
applications to protect our developed intellectual property. We do not know if
additional proprietary technology that we develop relating to EKOR(TM) will
prove patentable.

         The use of EKOR(TM) is subject to U.S. environmental safety laws and
regulations pertaining to the safe use and containment of hazardous and nuclear
waste. Based on the results of managed tests, we believe that the EKOR(TM)
compounds meet current applicable regulations for safe use, containment and
storage of hazardous and nuclear materials. It is, however, possible that more
stringent or different standards may be adopted or applied in the future that
might influence EKOR's intended use, and it is also possible that the standards,
if adopted or applied, may materially increase the cost to us of using EKOR(TM)
compounds or prevent their use altogether. NETS operates under a quality
assurance program that meets Federal, domestic and international requirements,
including auditing suppliers and testing laboratories. We are not aware of any
other U.S. or foreign laws or regulations that significantly hinder the
marketing, sale, or use of EKOR(TM) based materials.

c. INVESTMENT. Through December 31, 2001, we have invested approximately
$27,400,000 on the development of EKOR(TM), including costs of materials,
testing, and various fees including consulting and travel.

d. COMMERCIALIZATION. We believe that EKOR(TM) is the most technologically
advanced material for comprehensive long-term isolation of both solid and liquid
radioactive materials, suppressing radioactive dust and preventing such
materials and dust from escaping into the atmosphere and from leaching into and
contaminating ground-water supplies. We believe that EKOR(TM) also has
properties that make it a superior, cost effective and safer isolation
technology for some non-radioactive hazardous materials and a unique sealant for
potential applications in the other industries. The only significant radioactive
waste issues that remain technically challenging are (1) those dealing with the
residue from production of nuclear weapons and (2) the disposal issues
associated with nuclear fuel being discharged from nuclear power plants. These
issues are the responsibility of the U.S. Department of Energy (DOE).

          We offer EKOR(TM) for sale in quantities ranging from 5-gallon
containers and 55-gallon drums to specialized application guns with material
cartridges. We also offer technical support to clients in evaluating the
appropriate equipment and form of EKOR(TM) for their specific needs. We offer
project management support, application training and equipment rental or sale,
but we do not provide application personnel. Following the introduction of
EKOR(TM) in March 2001, we targeted several DOE sites for demonstrations that
that we believed would lead to project implementation and then full-scale
application. Specifically, we had substantial discussions with staff at Savannah
River Site (SRS, near Aiken, SC), Oak Ridge National Laboratory (ORNL, Oak


                                       6
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Ridge, TN), Fernald Closure Site (Fernald, OH), Battelle Memorial Institute
(BMI, Columbus, OH), Rocky Flats Environmental Testing Site (RFETS, near Denver,
CO), Los Alamos National Laboratory (LANL, Los Alamos, NM), Lawrence Livermore
National Laboratory (LLNL, Livermore, CA), Hanford Reservation (Richland, WA)
and Idaho National Engineering & Environmental Laboratory (INEEL, Idaho Falls,
ID). We had numerous meetings with DOE staff at their headquarters in
Washington, DC and Germantown, MD. We also introduced EKOR(TM) to companies
doing project and management work at DOE and commercial sites. We arranged
demonstrations at SRS, ORNL, BMI, INEEL and at our production facility in
California for staff from RFETS and ORNL.

         The technical performance of EKOR(TM) was excellent, but early
demonstrations did point out that the Sealer product, as a solution that
required mixing of a paste and catalyst and significant monitoring of
specialized application equipment, needed further development to be more
user-friendly. To address this issue, our technical staff, working with NuSil
and EAPS, created a one-part formulation that could be applied, as received from
the factory, using standard airless paint sprayers. The new product, Sealer
Plus, was introduced in November 2001 and was initially demonstrated at BMI in
January 2002. In that initial demonstration, Sealer Plus was applied to a
variety of surfaces and tested for over a month to evaluate durability and
performance. Its ease of application and successful performance led BMI to
incorporate it into their planning for decommissioning work at BMI and West
Valley. A further demonstration is planned at RFETS in late March-early April
2002. Reception from other potential users has also been positive.

         The Foam product as initially transferred from EAPS, had a constituent
that was toxic and extremely difficult to work with in the field. Our technical
staff, again working with NuSil and EAPS, identified a non-toxic reformulation
of the Foam product and in late 2001 demonstrated at the factory that a
non-toxic Foam product could be made with properties comparable to the original
form. Further testing at the equipment vendor is scheduled for first quarter
2002 to ensure that the Foam can be pumped into the tanks and crevices that
require this type of sealing.

         The demonstration of EKOR(TM) Grout at INEEL highlighted its unique
ability to cure underwater. INEEL has certain components that are being stored
underwater because of their behavior when exposed to air. Using Grout to
encapsulate these components underwater and form a nearly impermeable barrier
may permit removal of these components from pool storage and disposal in a
normal non-aquatic manner. Due to the success of this demonstration, EKOR(TM)
Grout was selected as a technology participant in their Large Scale
Demonstration & Deployment Project (LSDDP), originally scheduled to start in
October 2001 but postponed to the first half of 2002.

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         EKOR(TM) Matrix was demonstrated at the Savannah River Site with
personnel from Westinghouse Savannah River Company. It was used in bench-scale
quantities (200 ml per application) to encapsulate incinerator ash and wet
resins and then in a gallon size to encapsulate several gallons of simulated
radioactive cell debris. In each application, the material cured over a 24-48
hour period into a solid elastomeric monolith. Based on the results of the
demonstration, Matrix was chosen as the encapsulation technology for debris
coming from cleanup of SRS's Low Activity Cells, with orders scheduled to start
in March 2002. We anticipate other applications of Matrix, including
stabilization of low-level tank waste, will start at other DOE sites in 2002.

         StoneStore is a form of EKOR(TM) that we believe will change the way to
permanently encapsulate extremely radioactive waste. By using certain minerals
as fillers in conjunction with the block copolymer that forms the base of all
EKOR(TM) materials, the Company developed a product that starts as an elastomer
but transitions into a hard ceramic with high doses of radiation. This process
does not require high temperatures or pressures and can be compared to a
room-temperature version of vitrification, only without the complex chemistry
concerns. The DOE has estimated that their vitrification projects may cost up to
$500 Billion to dispose of existing highly radioactive waste, but use of
StoneStore may be able to reduce that estimate by 50-75% or more. Existing
agreements between DOE and other stakeholders to use vitrification have slowed
their response to StoneStore, but they are extremely interested and we expect to
have funded demonstrations in 2002.

         The Company did not achieve its initial projections of $5-10 million in
total EKOR(TM) sales for 2001. In fact, no production orders of EKOR(TM)
material were received in 2001. The Company believes that these shortfalls were
the result of various unanticipated events. Production of EKOR(TM) at NuSil was
more difficult than anticipated and required delay of product rollout until
March 2001, effectively delaying marketing by several months. We believe that
the change of U.S. government and its appointed officials created a flurry of
change in priority at DOE that caused most Decommissioning & Dismantlement (D&D)
activities within their sites to stop or slow severely. As DOE waste management
and D&D strategies, budgets and schedules were close to being initiated, the
events of September 11th apparently caused another reevaluation, with the result
being DOE sites that did not know their 2002 budgets until January 2002, some
four months later than usual.

         Despite the postponements and changes in customer priorities in 2001,
we believe that the DOE's proposed FY2003 budget and their strategy announced
with the budget submittal will provide significant opportunities for the sales
and distribution of EKOR products in the Nuclear and Hazardous Waste Segment. In
addition to the DOE funded projects, we are initiating contacts with the U.S.
Environmental Protection Agency (EPA), the U.S. Department of Defense (DOD), and
various international organizations. New efforts include marketing EKOR(TM)
Sealer Plus' unique capability of sealing contamination in place, allowing it to
be an important part of Homeland Security.

2. RAD-X(TM)

a. BACKGROUND. Rad-X(TM) was developed from a version of Firesil(TM), using
certain new ingredients to improve its properties for its intended use as an

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interior fire-resistant fixative for equipment or facilities with contaminated
surfaces. See "Business - Technologies Acquired from Dr. Oleg Figovsky -
FIRESIL". Rad-X(TM) differs from EKOR(TM) Sealer Plus in that it is not
weather-resistant and does not have the chemical, radiation and aging resistance
needed for long-term protection. Rad-X(TM) does provide a low-cost fixative for
surfaces that are scheduled for disassembly or dismantlement and need strong
adhesion (glue-down of contaminated particles that could become airborne) and
fire-resistance properties. Rad-X(TM) was first presented to the market in
September 2001.

b. INTELLECTUAL PROPERTY. We have chosen to protect our interest in Rad-X(TM) by
treating the formulation as proprietary property. The solution is produced under
contract by Davis-Frost, Inc., a coating fabricator based in Lynchburg VA.
Eurotech has a confidentiality agreement with Davis-Frost, Inc. that precludes
any dissemination of the formulation for Rad-X(TM).

c. INVESTMENT. Our investment to date in the creation of the Rad-X(TM) product
line, is less than $20,000. Including testing and marketing samples projected in
2002, the total investment in its development and commercial roll out should be
less than $50,000.

d. COMMERCIALIZATION. Rad-X(TM) was initially created for feasibility testing at
DOE's Rocky Flats Environmental Testing Site (RFETS) and was delivered in late
September 2001. Testing of the product at other laboratories occurred in
November 2001. This testing confirmed its outstanding fire and smoke resistance.
Rad-X(TM) may be one of a very few coatings that can meet proposed DOE
fire/smoke criteria for certain specialized applications. The Hanford Fire
Protection Center of Excellence, the only DOE-funded research and testing
organization for fire protection issues, has proposed to perform tests on
Rad-X(TM) in April 2002 to quantify its performance at our cost.

         We plan to market Rad-X(TM) in connection with EKOR(TM) at all of the
DOE sites that are performing decommissioning or hazardous material management.
Because we believe that Rad-X(TM) is cost competitive with other coatings being
used in the commercial market, we plan to market it to service vendors starting
in March 2002.

3. SUBSURFACE REMOTE SENSING TECHNOLOGIES

a. BACKGROUND. In an agreement dated July 2001 and amended on October 3, 2002
with Trylon Metrics, Inc., Eurotech acquired the rights to AcousticCore(TM) and
ElectroMagnetic Radiography (EMR(TM)) for specific markets, including subsurface
remote sensing of practically any element or compound. Both technologies use a
non-contact inspection methodology (unique for each technology) that creates
signals that are then interpreted by a digital analyzer that allows
identification of elemental or compound materials from their empirically
determined properties. AcousticCore(TM) is used in applications that are
predominately wet (i.e., riverbeds, wetlands, etc) and EMR(TM) is used in dry
environments. Completed research and development studies have verified that
AcousticCore(TM) and EMR(TM) can uniquely identify materials by their acoustic
or electromagnetic signatures, but the unique feature of these technologies is
its ability to map in three dimensions the existence of target materials at
extremely low concentrations at depths of up to 300 feet. The capabilities of
these technologies complement the EKOR(TM) product line by, for example,
allowing tanks of waste to be monitored for leaks and the leaks, when
discovered, targeted for repair. AcousticCore(TM) and EMR(TM) have applications
in every market that involves subsurface evaluation, from contamination
discovery and monitoring to resource discovery. The October 3rd Amendment to the
Agreement granted certain additional rights to the Company which allowed the
Company to further market this core technology to provide screening capabilities
for explosives. The Company has placed this application in its S&S segment. Due

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to pressing needs for this type of technology in the marketplace, the
application of AcousticCore in the S&S environment has become one of the
Company's core developmental initiatives. See "Business - Security & Safeguards-
Acoustic Core Non-Contact Inspection Technology".

b. INTELLECTUAL PROPERTY. The AcousticCore(TM) technology is covered by U.S.
Patent 4,922,467. EMR(TM) is currently subject to a pending patent application.
Eurotech acquired the worldwide rights to both patents, without restrictions, in
September and October 2001. Additional patent applications on behalf of the
Company have been filed for application of the technology to other specific
remote sensing sensor developments.

c. INVESTMENT. The Company issued 2,500,000 fully paid and non-assessable shares
of its restricted common stock, valued at $2,5000,000, for the acquisition of
the rights to AcousticCore(TM) and EMR(TM), including derivatives of this
technology which are also being used by us in the Security & Safeguard division.
See "Business - Security & Safeguards - Acoustic Core Non-Contact Inspection
Technology". Included with the technologies were the exclusive services of
companies that have manufactured them and demonstrated them in the field. During
the third and fourth quarters of 2001, we spent an additional $50,000 on further
development, refinement, and marketing of the AcousticCore(TM) and EMR(TM) for
the NETS market segment.

d. COMMERCIALIZATION. Both AcousticCore(TM) and EMR(TM) have been validated in
tests at DOE sites (Oak Ridge and INEEL) on a variety of materials utilizing
prototype instrumentation. Sandia National Laboratory did an in-depth evaluation
of the science behind these technologies in 1999 and concluded that they provide
a unique capability to identify and map in three dimensions low levels of
material concentration at substantial depths. Combined with this performance is
a cost effectiveness that should be considerably more economical than current
methods. During the fourth quarter of 2001, we submitted several proposals to
the DOE for evaluation of areas of potential contamination and to commercial
entities being pressured by the EPA for potential subsurface contamination. The
level of interest is significant and we expect to have paid demonstrations in
the second quarter of 2002 where the DOE site pays the Company. Depending on the
success of those demonstrations, we anticipate receiving orders for project
implementation starting in the third quarter 2002.

         We are marketing to U.S. agencies (DOE, DOD and EPA) and companies
either performing work for those agencies or responsible for cleanup activities
being required by them. As our penetration of these markets increases, we
anticipate interest from Western Europe and East Asia, with paid demonstrations
in the fourth quarter 2002. The ability of AcousticCore(TM) and EMR(TM) in
resource detection (oil, gas, minerals) will be explored in 2002, but will not
be a priority. We may enter into licensing, contracts, or joint venture
developments to facilitate the implementation of these technologies.

III. ADVANCED PERFORMANCE MATERIALS DIVISION (APM).

         In 2001, we formed the Advanced Performance Materials Division. Our
objective is to organize our non-nuclear and non-security related technologies
into a business unit that would provide focus to their commercialization effort,
coordinate on-going R&D related to those technologies, allow prioritization of
marketing efforts in-line with available corporate resources and provide a
managerial structure and point of contact for potential licensees. The main
principal of the APM division is Dr. Oleg Figovsky, a renowned Israeli
scientist, who has decided to sell and license his technologies to Eurotech
through various technology transfer agreements which the Company has previously
filed on Forms 8K and 10K. In the APM division, we've initially placed those
technologies acquired directly from Dr. Figovsky and the following seven single

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<PAGE>

technology Israeli startup companies which developed certain technologies and in
which we own a significant equity interest. A majority of these companies have
proceeded through their "incubator stage" and the subject technology is awaiting
commercialization as Eurotech either owns or controls the intellectual property
rights of these entities. However, due to limited working capital, management
decided to temporarily curtail the funding of the operations and further
development of the technologies and related operations for five of the
Israeli-based technology companies: Comsyntech, Ltd., Remptech, Ltd., Sorbtech,
Ltd., Rademate, Ltd. and Amsil, Ltd.

     o   CHEMONOL, LTD. ("CHEMONOL"), has developed formulations and processes
         for manufacturing hybrid non-isocyanate polyurethane ("HNIPU") for use
         in paints, coatings, adhesives, sealants, forms, and other industrial
         applications;

     o   SORBTECH, LTD. ("SORBTECH"), has developed a new inorganic sorbent
         (SB-1) for petroleum product removal;

     o   RADEMATE, LTD. ("RADEMATE"), has developed a biodegradable hydrophobic
         material with application as a packaging coating for the food industry;

     o   REMPTECH, LTD. ("REMPTECH"), has developed processes for the production
         of extra-fine cobalt and nickel powders and a continuous combustion
         synthesis technology;

     o   COMSYNTECH, LTD. ("COMSYNTECH"), is developing a process for the
         continuous combustion synthesis of ceramic, composite and intermetallic
         powders;

     o   AMSIL, LTD. ("AMSIL"), is developing high-thermostable organomineral
         polymers; and

     o   CORPEM, LTD. ("CORPEM"), which will investigate the feasibility of
         water-based suspensions utilizing innovative cross-linking agents,
         which would result in non-toxic environmentally friendly, highly
         stable, crack resistant coatings for concrete, metal or rubber.

1.  CHEMONOL (DEVELOPER OF HYBRID NON-ISOCYANATE POLYURETHANE OR "HNIPU"
    PROCESSES)

a. BACKGROUND. HNIPU is a hybrid polyurethane that does not involve the toxic
isocyanates utilized in the production of conventional polyurethane and that has
lower permeability and greater chemical resistance qualities as compared to
conventional polyurethane. We believe that these advanced characteristics, in
addition to the potential reduced risk from the elimination of isocyanates in
its production, make HNIPU superior to conventional polyurethanes in connection
with their use in a number of industrial application contexts such as
manufacturing automotive components, paints, foams, plastics and truck bed
liners; aerospace sealants, industrial adhesives, coatings, flooring, glues;
industrial equipment and machinery; and consumer goods such as appliances,
footwear, furniture and plastic products.

b. INTELLECTUAL PROPERTY. On December 25, 1997 Chemonol filed an Israeli patent
application (122763) on a process to produce HNIPU. Chemonol and Polymate (see
below) jointly have filed two process patent applications in Europe
(99100586.0-2110 filed on January 14, 1999 and 99114308.2-2102 filed on July 21,
1999). Chemonol and Polymate also filed an international patent application
(PCT/IB99/01/01885 filed on November 24, 1999), based on the European
applications.

                                       11

<PAGE>

c. INVESTMENT. Chemonol is developing manufacturing techniques and applications
for HNIPU. During 1997, 1998, 1999, and 2000, we invested $30,000, $60,000,
$305,000, and $265,000 respectfully, for which we have acquired 52% ownership of
the common stock outstanding. During 2001, we invested an additional $95,000 to
facilitate technology transfer, bringing our total investment to $755,000, which
represents 57% of ownership of the outstanding common stock of Chemonol.

d. COMMERCIALIZATION. Commercialization efforts for HNIPU are being handled by
Eurotech, not Chemonol, and are addressed elsewhere in this document See
"Business - Technologies Acquired from Dr. Oleg Figovsky - HNIPU". Chemonol
operations are dedicated to support transfer of the HNIPU technology to the U.S.
and on-going product research and development as directed by Eurotech.

2.  SORBTECH, LTD. (DEVELOPER OF SB-1)

a. BACKGROUND. There are many oil spill adsorbents available in the market. SB-1
is a new product that can be used to adsorb oil. SB-1 is an innovative new
sorbent composed of basalt non-woven fabric - an ultra-fine basalt filament. A
proprietary process results in extremely high adsorption capacity when compared
to existing adsorbents currently available in the marketplace.

         Major advantages of SB-1 include:

     o   Extremely high adsorption capacity - Common adsorption capacity for
         products currently in the market range approximately from 0.8 - 30
         grams of petroleum products per gram of adsorbent weight (gr/gr). SB-1
         adsorption capacity ranges from 12 to 82 gr/gr, depending on time and
         oil viscosity

     o   Naturally-occurring mineral - SB-1 itself, if handled in accordance
         with its prescribed use, is an environmentally clean material

     o   Nonflammable - SB-1 is thermally resistant (up to 700(degree)C)

         SB-1 can be provided in a variety of forms that facilitate the clean-up
of petroleum products from the multitude of spill types such as: open sea,
harbors, bilges, surface skimming and finishing, large land open surfaces, rail
yards, oil pump stations, oil storage depots, airports, soil contamination,
industrial areas, machinery, gas stations, etc.

         When SB-1 is applied to a petroleum spill, oil is adsorbed, but no
water is incorporated, thus increasing the adsorbent efficiency and effective
life. The extracted oil products can be reused with little, if any,
reprocessing.

b. INTELLECTUAL PROPERTY. Sorbtech applied for patents for oil and waste
adsorbent and the method of manufacturing the same with the U.S. Patent and
Trademark Office (09/497,489) on February 4, 2000 and with the Israeli Patent
Office (128402) on July 2, 1999. Sorbtech has withdrawn these applications at
Eurotech's request as the Company decided to apply trade secret laws to the
protection of the Sorbtech technologies.

                                       12

<PAGE>

c. INVESTMENT. During 1999 and 2000, we invested $62,500, and $260,000
respectfully bringing our total investment $322,500, which represents 52%
ownership of the outstanding common stock of Sorbtech. The Company did not make
any additional investment in Sorbtech in 2001.

d. COMMERCIALIZATION. It was determined in early 2001 that the production of
Sorbtech SB-1 in North America was required for the final product to be cost
competitive. Technologically, SB-1 repeatedly demonstrated superior sorbtive
capacity when measured against polypropylene. Unfortunately, there are no
existing North American facilities equipped with the appropriate technology to
manufacture the required base fiber. Transfer of the technology including
conversion of an existing US facility or the construction of a dedicated
production line will require a capital invest of at least several hundred
thousand dollars. With company resources focused on commercializing HNIPU and
other technologies, SB-1 marketing activities were restricted to our web site
and select contacts with potential manufacturers. We have received some interest
from potential end users of a final sorbent product. Potential users of the SB-1
material for manufacturing an end state sorbent product have elected to wait
until cost competitive production can be established in North America. As these
firms do not traditionally manufacture their sorbtive materials they have not
expressed interest in initiating or funding the production of SB-1 material. Due
to this fact, and the other commercialization efforts focused on HNIPU, the
Company has decided to cease further development and active marketing of this
product until such time as the manufacture or licensing of this technology
becomes cost effective.

3.  REMPTECH (DEVELOPER OF POWDERED METALLURGY TECHNOLOGY)

a. BACKGROUND. Powdered metallurgy, the process of producing metals, alloys or
metal containing compositions in a solid or compact state from powdered or
particulate material with or without heating is generally acknowledged as being
capable of yielding a product with superior structural, physical, and mechanical
properties. We believe that the powdered metallurgy process developed by
Remptech is technologically advanced and, based on Remptech's research and
testing data, is capable of producing cobalt and nickel powders of 99.8% purity
and a grain size of 1-2 micro-centimeters. We believe that such purities and
grain sizes are significant factors in the manufacture of materials of high
quality and internal physical integrity from powdered cobalt and nickel. Cobalt
and nickel are among the three naturally occurring elements that display
magnetic properties at room temperature and are widely used in metal alloys.
Powdered cobalt and nickel are used in a wide variety of industrial
applications, including magnetic, electrical, and electronic materials and
products.

b. INTELLECTUAL PROPERTY. Remptech filed a patent application for powdered
metallurgy technology with the U.S. Patent and Trademark Office on July 30, 1998
(60/093,508) and the application is pending. On July 12, 1999, Remptech also
filed under the Patent Cooperation Treaty (PCT/IL99/00379).

c. INVESTMENT. During 1997, 1998, 1999, and 2000, we invested $21,000, $26,000,
$165,500, and $80,000 respectfully bringing our total investment $292,500, which
represents 52% of ownership of the outstanding common stock of Remptech. The
Company did not make any additional investment in Remptech in 2001.

d. COMMERCIALIZATION. In 2001, commercialization of Remptech was limited to
direct mailings to potential candidate for acquisition of the technology and our
web site. The direct mailings resulted in some requests for additional
information.

                                       13

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4.  COMSYNTECH (DEVELOPER OF CONTINUOUS COMBUSTION SYNTHESIS OR "CCS" AND
    CONTINUOUS ACTION REACTOR)

a. BACKGROUND. With Comsyntech, we participated in the development of two
technologies: CCS and Continuous Action Reactor.

     o   CCS is a newly devised process utilizing the internal chemical
         energy of initial reactants in a continuous action reactor, a device
         being developed by Comsyntech. We believe this process offers
         competitive advantages (such as increased productivity and lower
         production costs) over conventional technology. Comsyntech research and
         testing data indicate that materials produced with the CCS technology
         have exhibited superior high-thermomechanical properties such as high
         strength, thermo and wear resistance and good corrosion stability.
         Based on these properties, we believe that the CCS technology has
         potentially significant utility in producing ceramic, composite, and
         intermetallic powders with potential commercial application in the
         production of metal-cutting tools and abrasives, metal alloys, aircraft
         and automotive combustor, nozzle and turbine parts, piezo- and
         ferro-electric materials, and surgical instruments.

     o   CONTINUOUS ACTION REACTOR (Method for Continuous Combustion Synthesis
         of ceramic, composite and intermetallic powders). The continuous action
         reactor offers the competitive advantage of increased productivity and
         lower production costs relative to conventional high-temperature
         furnace reactors and powder production processes. One apparatus
         replaces high-temperature furnaces as well as spraying and grinding
         equipment. Furthermore, this method offers additional significant
         advantages including:

               o   RAPID PRODUCTION - large quantities can be quickly produced.
               o   LOWER MANUFACTURING COSTS - expensive high-temperature
                   furnaces, complex processes, and equipment are eliminated.
               o   REDUCED ENERGY CONSUMPTION - energy consumption is greatly
                   reduced.
               o   IMPROVED PURITY - mixture purification during synthesis
                   enables high purity materials to be obtained.

b.  INTELLECTUAL PROPERTY.

CCS Patent application (127109) for a method of obtaining powders of inorganic
compounds under combustion conditions was filed by Comsyntech with the Israeli
Patent Office on November 17, 1998 and is pending.

     o   CONTINUOUS ACTION REACTOR. A patent application for an apparatus for
         self-propagating high-temperature synthesis was filed by Comsyntech
         with the U.S. Patent and Trademark Office (09/535,805) on March 28,
         2000 and is pending.

c. INVESTMENT. During 1997, 1998, 1999, and 2000, we invested $21,000, $26,000,
$45,500, and $200,000 respectfully bringing our total investment $292,500, which
represents 52% of ownership of the outstanding common stock of Comsyntech. The
Company did not make any additional investment in Comsyntech in 2001.

d. COMMERCIALIZATION. Commercialization efforts in 2001 were limited to our web
site and target mailings to potential candidates for acquiring the technology.
The target mailings generated a number of requests for additional information.

                                       14

<PAGE>

5.  RADEMATE (DEVELOPER OF RAPIDLY BIODEGRADABLE HYDROPHOBIC MATERIAL OR "RBHM")

a. BACKGROUND. Rademate has developed a cellulose-based, rapidly biodegradable
hydrophobic material. RBHM is a new, hydrophobic (water resistant), strong,
cheap, and completely biodegradable composite material that is environmentally
friendly. The idea of RBHM is to improve the properties of both paper and
plastic packaging materials. Due to its biodegradable nature, RBHM is an ideal
coating for disposable loose fill bags and packages. The material can be used as
a commodity in trade, industry, and agriculture for a wide range of
applications. To date, most attempts to produce biodegradable products for
consumers focused on developing plastics that could biodegrade. RBHM approaches
biodegradable products from the other direction - making cellulose-based
material with the same physical properties as plastic, except the material
biodegrades completely in the same time as regular paper bags.

         RBHM consists of cellulose (paper) and biodegradable organic additives.
Biodegradation of RBHM occurs in wet soil under normal enzymatic action of
various microorganisms - fungi and bacteria. We believe that the main advantages
of RBHM are:

     o   High Strength - RBHM's strength characteristics, especially combined
         with low elongation and acquired water resistance of the material, make
         RBHM unique and highly desirable for packaging applications.

     o   Water Resistance - the RBHM keeps water resistance for one week. Thus,
         it has excellent prospects for many packaging applications. Most of the
         existing biodegradable packaging products are not hydrophobic at all
         and will fail if wetted during use.

     o   Full Degradation in the Environment - Enzymes begin breaking down RBHM
         in the presence of moisture in natural environments such as soil. Then
         microorganisms decompose the material with rapidly occurring metabolic
         reactions. RBHM is completely converted into carbon dioxide, water, and
         biomass in two to three months in wet soil. Thus, this process
         completely coincides with the definition of biodegradability given by
         most experts.

     o   RBHM Uses Reproducible Natural Raw Materials - The cheapest raw
         material, as well as the most widespread organic material in nature, is
         cellulose. Cellulose is renewable, reproducing itself through the
         natural cycle. Sound environmental management balances resources,
         recycles whenever possible and uses them in a renewable cycle.
         Cellulose is present widely on the planet - in trees, bushes, grass,
         and other plants.

     o   Relatively Low Cost -- The main obstacle to widespread use of
         biodegradable polymers has been cost. Biodegradable polymers are
         traditionally significantly more expensive than commodity polymers. The
         high costs involved in the production of biodegradable polymers means
         that they cannot compete favorably with conventional polymers. RBHM
         does not have the cost barriers that are characteristic of all the
         other biodegradable plastics. This high cost deterred the widespread
         adoption of biodegradable plastics in major consumer application. At an
         additional cost of less than 10% , and sometimes less depending on the
         type of material treated, materials treated with RBHM provide
         plastic-like performance and are biodegradable. On the other hand,
         currently available degradable materials can cost twice as much.

                                       15

<PAGE>

         We believe that the number of potential applications for RBHM is high.
Because RBHM can be applied on sheets, films and fibers, it is suitable for a
range of single-use products, including grocery and waste bags, the top, and
back sheets of disposable diapers, and disposable eating utensils. It can be
used to create agricultural films and bags that cover ripening fruit. RBHM
products such as disposable plates and cups, films for food packaging,
miscellaneous everyday items and sanitary products are but a few of the possible
applications. Box and bag consumers are generally commercial and industrial
users requiring a particular packaging container for a specific product.

b. INTELLECTUAL PROPERTY. Rademate was issued U.S. Patent #6294265 for
"Hydrophobic biodegradable cellulose-containing material" on September 25, 2001.
Rademate has one application pending with the Israeli Patent Office (126306)
dated September 23, 1998.

c. INVESTMENT. During 1998, 1999, and 2000, we invested $30,000, $60,000, and
$370,000 respectfully bringing our total investment $460,000, which represents
52% of ownership of the outstanding common stock of Rademate. The Company did
not make any additional investment in Rademate in 2001.

d. COMMERCIALIZATION. RBHM was marketed through our web site during 2001.

6.  AMSIL (DEVELOPER OF HIGHLY STABLE ORGANOMINERAL POLYMERS)

a. BACKGROUND. Organomineral polymers based on quaternary ammonium silicates
(QAS) are a new kind of silicate material with excellent adhesion properties to
hydrophilic and hydrophobic surfaces, have high chemical resistance, fire
resistance and are environmentally compatible. QAS have superior properties in
comparison to epoxy resins and traditional silicates, including: high adhesion
to metallic and concrete surfaces; extreme stability in water; thermostability
to 2000(degree) K; resistance to corrosion and erosion; and excellent mechanical
characteristics.

         Dr. Figovsky has advised us that QAS may be used as ammonia compounds;
as biocides; in textiles as textile softeners for home use; as the final rinse
in the washing machine; as a rinse after shampooing, as emulsifiers; in metal
working - as additives to acid used in the cleaning and pickling of steel to
prevent hydrogen corrosion; in road building, as bentonite treatment; in
oilfields; as antistatic in polymers - e.g., in PVC belting; for the preparation
of excellent quality toner; as components in special systems of water
purification; as components in self-setting aqueous mixtures for the manufacture
of chemically resisting materials; as additives in concrete and coatings; in
structure-directing agents, e.g., for the synthesis of molecular sieves with
high-modulus silica; in silicate salts - for blends of hydrophilic medical use;
as raw material for preparation of organosilanes; with aggregated titanium
pigment products containing QAS - for pigment preparation; as silicates,
anti-corrosion coating of different surfaces (metals, concrete, wood, etc.); as
fire-protection coating; and for specific application as glue.

b. INTELLECTUAL PROPERTY. With respect to QAS, Amsil has received two U.S.
Patents and has two pending in Israel (128282 filed January 24, 1999 and 129977
filed May 16, 1999). U.S. Patent #6320059 for "Polymeric composition having
self-extinguishing properties" was issued December 11, 2001. U.S. Patent
#6337036 for "Conductive composition having self-extinguishing properties" was
issued January 8, 2002.

                                       16
<PAGE>

c. INVESTMENT. During 1998, 1999, and 2000, we invested $30,000, $62,500, and
$230,000 respectfully bringing our total investment $332,500, which represents
52% of ownership of the outstanding common stock of Amsil. The Company did not
make any additional investment in Amsil in 2001.

d. COMMERCIALIZATION. Currently, we are calling QAS to the attention of
industries through our web site and professional contacts, as a result of which
we have received expressions of interest from companies that included small
regional producers to a large multinational conglomerate.

7.  CORPEM - Protective Crack Resistant Coatings Based on water borne
Chlorosulfonated Polyethylene ("CSPE")

a. BACKGROUND. The proposed project is based on previous research in the field
of statistical modeling of processes of formation of various branched
crosslinked structures. The modeling allows the preparation of materials having
preselected desirable properties. CSPE is hardened by water suspension of
chlorine-sulfonated-polyethylene hardened by Mannich alkalis. All advantages of
CSPE remain similar to the organic solution technology. The process developed by
Corpem is applicable to all grades of CSPE. Future work will apply to other
synthetic rubbers. The main import of the innovative process is the availability
of CSPE dispersed in water instead of organic solutions. This Company is still
in its incubator stage.

b. INTELLECTUAL PROPERTY. Corpem filed US Patent application 09/983,026 on
October 10, 2001.

c. INVESTMENT. In 2001 Eurotech invested $30,000. Eurotech's investment was
matched with $150,000 by the office of the Chief Scientist of the Ministry of
Industry and Commerce of the Israeli Government.

d. COMMERCIALIZATION. There are no commercialization efforts underway as the
technology remains under development.

IV. TECHNOLOGIES ACQUIRED FROM DR. OLEG FIGOVSKY (PART OF APM SEGMENT)

1.  HYBRID NON-ISOCYANATE POLYURETHANE OR "HNIPU"

a. BACKGROUND. We described the HNIPU technology above in our discussion of
Chemonol.

b. INTELLECTUAL PROPERTY. U.S. Patent Number #6120905 on HNIPU was issued to us
September 19, 2000. We also filed under the Patent Cooperation Treaty
(PCT/US99/13413) on June 15, 1999.

c. INVESTMENT. HNIPU was independently developed by Dr. Figovsky and was
acquired by us pursuant to a Technology Purchase Agreement dated January 1, 1998
for a purchase price of $75,000, plus royalties equal to 49% of our net revenues
from sales or licenses of any products incorporating HNIPU, payable over a
period of 15 years commencing on January 1, 1998. To date, we have not derived
any revenues from HNIPU. Dr. Figovsky is one of our consultants. As of February
27, 2000, we entered into an amended agreement with Dr. Figovsky pursuant to
which he surrendered his 49% royalty interest in HNIPU and the other
technologies discussed below for a payment to him of an aggregate of $235,000
and an agreement to pay him a royalty of 1% of gross revenues generated by sales
of products incorporating these technologies.


                                       17

<PAGE>

d. COMMERCIALIZATION. We are seeking to commercialize HNIPU through licensing or
joint venture agreements with major companies in the United States, Europe, and
Japan that would either produce HNIPU binder or incorporate it into their
product lines. Several international companies have requested, and been supplied
with, samples HNIPU binder or foam for evaluation and applications testing. A
market analysis performed for us shows that the U.S. market for polyurethane
coatings and adhesives in the U.S. alone is projected to amount to $8.5 billion
by 2005. We have focused on transferring the HNIPU technology to the United
States. We have identified several suitable binder production facilities and
have furthered our efforts to establish a customer base of paint and coating
manufacturers. We achieved a milestone in 2001 with the development of a HNIPU
foam. This development has created additional opportunity in the global rigid
foam market and has lead to considerable interest from North American and
European based companies.

2.  LIQUID EBONITE MATERIAL OR "LEM"

a. BACKGROUND. LEM is a synthetic liquid rubber with enhanced mechanical,
permeability and anti-corrosive qualities as compared to conventional sheet
rubber coverings. In laboratory testing, coverings made with LEM, as compared to
conventional sheet rubber coverings, have displayed greater resistance to harsh
chemicals such as acids, alkalis and benzene, and have been successfully applied
to intricate and complex surfaces such as sieve meshing. Based on the physical
and chemical properties of LEM, and on the basis of such tests, we believe that
LEM coverings are capable of providing superior protection to small-diameter
piping and to the intricate parts of pumps, fans, and centrifuge rotors. LEM can
be applied to form surface coverings using standard coating techniques,
including spraying and dipping.

b. INTELLECTUAL PROPERTY. We were issued U.S. Patent #6303683 on October 16,
2001 for Liquid Ebonite mixtures and coatings, and concretes formed therefrom.
We also filed under the Patent Cooperation Treaty (PCT/US99/16883) on July
26,1999.

c. INVESTMENT. LEM was independently developed by Dr. Figovsky and was acquired
by us pursuant to a Technology Purchase Agreement dated January 1, 1998 for a
purchase price of $15,000, plus royalties equal to 49% of our net revenues from
sales or licenses of any products incorporating LEM, payable over a period of 15
years commencing on January 1, 1998. On February 27, 2000, we entered into an
amended agreement with Dr. Figovsky pursuant to which he surrendered his 49%
royalty interest in HNIPU and the other technologies, including LEM, for a
payment to him of an aggregate of $235,000 and an agreement to pay him a royalty
of 1% of gross revenues generated by sales of products incorporating these
technologies. To date we have not been paid or earned any royalties or revenues,
relating to LEM.

d. COMMERCIALIZATION. During 2001 and at the time of this report's preparation,
we were devoting limited management time and attention to the marketing of this
technology.

3.  RUBBER CONCRETE OR "RUBCON"

a. BACKGROUND. RubCon is a technologically advanced, polymer-based, rubberized
concrete that utilizes polybutadiene, a polymer derived from liquid rubber, as a
binding material for the various aggregates that, together with binders,
constitute concrete. In laboratory testing, RubCon has exhibited high degrees of
compression, bending and tensile strength, a high degree of water-resistance and
a high degree of resistance to aggressive, corrosive chemicals as compared to
conventional "cement" concrete. We believe that RubCon has significant potential
utility in the manufacture of industrial flooring, equipment operating in
aggressive chemical media such as galvanic and electrolysis "baths,"
foundations, concrete pipes and other underground structures, seismic
reinforcement materials, and outdoor structures such as bridges that are
routinely exposed to harsh weather and corrosive conditions. Other applications
may be for pads in vibration-sensitive machinery such as compressors and pumps.

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<PAGE>

b.  INTELLECTUAL PROPERTY.  RubCon is covered under our LEM patent applications.

c. INVESTMENT. RubCon was independently developed by Dr. Figovsky and was
acquired by us pursuant to a Technology Purchase Agreement dated January 1, 1998
for a purchase price of $35,000, plus royalties equal to 49% of our net revenues
from sales or licenses of any products incorporating RubCon, payable for a
period of 15 years commencing on January 1, 1998. On February 27, 2000, we
entered into an amended agreement with Dr. Figovsky pursuant to which he
surrendered his 49% royalty interest in HNIPU and the other technologies,
including RubCon, for a payment to him of an aggregate of $235,000 and an
agreement to pay him a royalty of 1% of gross revenues generated by sales of
products incorporating these technologies.

d. COMMERCIALIZATION. We have done limited marketing for the manufacture and
sale of RubCon. At the end of 2001 and at the time of this report's preparation,
we were not devoting any management time or attention to the marketing of this
technology.

4.  ANTICORROSIVE ADDITIVES FOR POLYMERS - Upgrades chemical resistance
characteristics of base polymers

a. BACKGROUND. Anticorrosive Additives ("AAdd") are an innovative approach to
creating highly chemical resistant polymer materials. AAdd are specially
designed to upgrade the chemical resistance characteristics of base polymers to
achieve optimal performance capabilities of materials operating in aggressive
environments. AAdd can be mixed into a wide range of polymer materials offering
a significant increase in product life and reducing product permeability. These
custom-made specialty formulations are designed to meet specific client
requirements. When cured with polymer-based materials, AAdd can dramatically
improve the capabilities of poly-based materials by upgrading their chemical
resistance properties. The additives are inorganic powders that react with the
aggressive environments into which they are introduced, forming a new phase of
high-strength hydrate complexes. This enhanced bonding occurs upon the
penetration of aggressive media into the AAdd-containing polymer material. The
chemical resistant properties of AAdd are activated by harsh environmental
conditions where polymer systems without additives remain defenseless to
chemical corrosion.

         Dr. Figovsky has represented to us, but we have not sought independent
testing to verify that (i) AAdd can be mixed into a wide range of polymer
materials such as epoxies, polyurethanes, glues, nylons, polyolephines,
synthetic rubbers and PVC, offering performance-enhancing attributes that
increase the value of the end product; that he has developed an extensive
product range of additives for upgrading the most common polymers against a wide
variety of aggressive media including acids, seawater, fluorine, alkalies, and
more; and that AAdd is an effective solution for many applications.

b. INTELLECTUAL PROPERTY. No patent activity is presently underway. We own
whatever intellectual property rights and patent rights in AAdd that may be
available.

c. INVESTMENT. AAdd was independently developed by Dr. Figovsky, and was
acquired by us pursuant to the Technology Purchase Agreement dated January 1,
1998 referred to above for a purchase price of $45,000 plus royalties equal to
49% of our net revenues from sales or licenses of any products incorporating
AAdd, payable for a period of 15 years commencing on January 1, 1998. On
February 27, 2000, we entered into an amended agreement with Dr. Figovsky

                                       19


<PAGE>

pursuant to which he surrendered his 49% royalty interest in HNIPU and the other
technologies, including AAdd, for a payment to him of an aggregate of $235,000
and an agreement to pay him a royalty of 1% of gross revenues generated by sales
of products incorporating these technologies.

d. COMMERCIALIZATION.  We have not yet begun any marketing efforts for AAdd.

5.  FIRESIL(TM) - FIRE PROTECTION ORGANOMINERAL COATING - Fire-stop for
residential and commercial application

a. BACKGROUND. Firesil(TM) is an environmentally compatible fire-stop material
with good adhesion properties to hydrophilic and hydrophobic surfaces and
exhibits excellent fire resistance, thermostability, and good water resistance.

b. INTELLECTUAL PROPERTY. The Company owns the intellectual property rights to
this technology. An Israeli patent application was filed in January 2000. This
application is pending. The Company filed for trademark protection of
"Firesil(TM)." U.S. Patent application activities were initiated in 2001.

c. INVESTMENT. FIRESIL(TM) was independently developed by Dr. Figovsky, and was
acquired by us pursuant to an amended agreement with Dr. Figovsky dated as of
February 27, 2000 for a purchase price of $5,000 as part of a larger transaction
pursuant to which he surrendered his 49% royalty interest in HNIPU, LEM, RubCon,
AAdd and Poly-D additives for a payment to him of an aggregate of $235,000 and
an agreement to pay him a royalty of 1% of gross revenues generated by sales of
products incorporating these technologies.

d. COMMERCIALIZATION. The Company successfully transferred the Firesil(TM)
technology to the U.S. in 2001 and has had several batches produced under an
agreement with a manufacturer located in central Virginia. We continue to market
Firesil(TM) directly to corporations that are prospective candidates for
acquiring or licensing the technology. Discussions have also been held with U.S.
government agencies and insurance companies. Firesil(TM) was tested by an
accredited lab to ASTM protocol and passed with superior results.

6.  KAUTON - An oil and gas industry pipeline specialty coating

a. BACKGROUND. Kauton is an advanced semi-ebonite two-component liquid rubber
based coating for corrosion protection of oil and gas pipelines. It contains
specialized anticorrosion components and has vulcanization temperature 50% less
than conventional liquid ebonite materials, which allows for easier application
and manufacture. Kauton would provide enhanced protection to weld joints of
large diameter pipelines.

b. INTELLECTUAL PROPERTY. The Company owns the intellectual property rights to
this technology.

c. INVESTMENT. Kauton was independently developed by Dr. Figovsky. We acquired a
99% interest pursuant to an agreement with Dr. Figovsky dated as of February 27,
2000 for a purchase price of $5,000 pursuant as part of a larger transaction
pursuant to which he surrendered his 49% royalty interest in HNIPU, LEM, RubCon,
AAdd and Poly-D additives for a payment to him of an aggregate of $235,000 and
an agreement to pay him a royalty of 1% of gross revenues generated by sales of
products incorporating these technologies.

d. COMMERCIALIZATION. At present, we are not engaged in the marketing of Kauton.

                                       20
<PAGE>

7.  HYPOCORR - Specialized water based crack resistant coating

a. BACKGROUND. Hypocorr is a water-based crack-resistant coating based on
chlorine-sulphonated polyolifines with novel cross-linked agents. As such, this
coating is believed to be more environmentally friendly at half the expense of
conventional crack resistant coatings.

b. INTELLECTUAL PROPERTY. We own the intellectual property rights to this
technology. A U.S. patent application was filed in February 2000 and is pending.

c. INVESTMENT. Hypocorr was independently developed by Dr. Figovsky. We acquired
a 99% interest pursuant to an agreement dated as of February 27, 2000 for a
purchase price of $5,000 as part of a larger transaction pursuant to which he
surrendered his 49% royalty interest in HNIPU, LEM, RubCon, AAdd and Poly-D
additives for a payment to him of an aggregate of $235,000 and an agreement to
pay him a royalty of 1% of gross revenues generated by sales of products
incorporating these technologies.

d. COMMERCIALIZATION. At present, we are not engaged in the marketing of
Hypocorr.

8.  POLYDIENE URETHANE ADHESIVES - Electronic glues for ruggedized applications

a. BACKGROUND. Polymeric adhesives are widely used in the electronic industry,
mainly to protect electronic devices against conditions of vibration and impact,
which can prevent the devices from functioning as designed. Our advanced
polydiene urethane based (Poly-D adhesives) is specially designed to perform
under rugged conditions. Poly-D adhesives used in conjunction with soldering
increase the reliability of electronic devices by providing components with
excellent environmental stability and improved reliability. Other noteworthy
attributes include:

     o   Non-corrosive - limited to no corrosion of the bonded electronic
         components

     o   Non-adsorbent - will not be adsorbed into the components or substrate

     o   Non-reactive - completely non-reactive toward electric isolation during
         and after hardening

     o   Non-disruptive - low internal stress to remain non-disruptive to
         electronic parts

b. INTELLECTUAL PROPERTY. Poly-D additives are protected through U.S. Patent
#5880203. Additional international patent protection activities were recently
halted due to a reassessment of the Company's intellectual property policy.

c. INVESTMENT. Poly-D adhesives were independently developed by Dr. Figovsky
acquired by us pursuant to a technology purchase agreement dated January 1, 1998
for a purchase price of $15,000, plus royalties equal to 49% of our net revenues
from sales or licenses of any products incorporating Poly-D adhesives, payable
over a period of 15 years commencing on January 1, 1998. As of February 27,
2000, we entered into an amended agreement with Dr. Figovsky pursuant to which
he surrendered his 49% royalty interest in HNIPU, LEM, RubCon, AAdd and Poly-D
additives for a payment to him of an aggregate of $235,000 and an agreement to
pay him a royalty of 1% of gross revenues generated by sales of products
incorporating these technologies.

                                       21

<PAGE>

d. COMMERCIALIZATION. We are marketing Poly-D adhesives through our web site and
direct industry requests. Presently, no additional marketing activities are
envisioned. Market analysis indicates a highly specialized niche market with
limited potential to provide adequate return on investment that would justify
more aggressive marketing activities. We propose to attempt to license or sell
this technology in its entirety.

V. ISRAELI TECHNOLOGY START-UP COMPANIES.

         The government of Israel has in place a program pursuant to which an
inventor/developer/entrepreneur may submit to the office of the Chief Scientist
a proposal to develop specified technology. If the Chief Scientist approves the
proposal, arrangements are made pursuant to which (i) an Israeli company is
incorporated; (ii) the entrepreneur is allocated initially 50% of the company's
equity in exchange for his technology; (iii) a local technology company is
brought into the picture as incubator to furnish office and laboratory
facilities and support services for a period of two years in exchange for a
further 20% of the equity; (iv) a venture capital partner, who is required to
invest $60,000, becomes another 20% shareholder; and (v) the remaining 10% of
the equity is made available to the start-up company's employees. Upon
organization of the start-up company, the Israeli government will make available
to it grants of up to $300,000.

         Over the years, we have worked with three Israeli technology incubator
companies (TEIC - Technion Entrepreneurial Incubator Co., Ltd; Ofek La'Oleh
Jesre'el Valley Initiative Center; and ITEK Incubator for Technological
Entrepreneurship, Kiryat Weizmann, Ltd.), which allowed us to act as the venture
capital partner in the incubation seven start-up companies: Chemonol, Ltd.;
Sorbtech, Ltd.; Rademate, Ltd.; Remptech, Ltd.; Comsyntech, Ltd., Amsil, Ltd.
and Corpem, Ltd.

         As provided by Israeli law and regulations, we received initially 20%
of each company's common equity in exchange for an initial investment of U.S.
$60,000. Subsequently we made further investments in each of them for additional
equity. In certain instances the start-up company has developed its technology,
the Company has secured its access to these technologies through licensing or
ownership, and is awaiting the opportunity to further market and commercialize
the technology. The current status of our investment in each of these companies
is discussed in connection with our description of their respective technology.

POLYMATE, LTD.

         Doctor Oleg Figovsky and Mr. Alex Trossman, our two Israeli
consultants, jointly own a company called Polymate, Ltd., which conducts an
operation called the Israeli Research Center. The Israeli Research Center
consists of a laboratory, employing other scientists/ technicians, in the
premises of the Ofek La'Oleh - Jesre'el Valley Initiative Center. The function
of the Israeli Research Center is to continue the development of the
technologies that we purchased from Dr. Figovsky and to supervise the technology
start-up companies in which we participate. We provide all of the funding for
Polymate, Ltd. and the Israeli Research Center in the approximate aggregate
amount of $22,000 per month, inclusive of consulting fees to Dr. Figovsky, Dr.
L. Shapovalov and Mr. Trossman. Dr. Figovsky and Mr. Trossman are presently
retained and compensated by us as consultants. Their original consulting
agreements have expired, but their renewal agreements are in the process of
negotiation and they continue to receive their compensation. Peter Gulko, one of

                                       22


<PAGE>

our significant shareholders and an advisor to our Board, plays a significant
role in the management of our relationship with Polymate, Messrs. Figovsky and
Trossman and with the development of our Israeli technologies.

VI.  SECURITY & SAFEGUARDS.

The recent events of September 11th have resulted in the creation of a
governmental agency to monitor Homeland Security. The products of this division
are generally those types of products and technologies, which management
believes can provide or be a part of cost efficient and reliable solutions to
these Homeland Security needs.

1.  CRYPTO.COM

a. BACKGROUND. In February 2000, we organized Crypto.com., Inc. a Delaware
corporation to develop cryptographic systems for secure communication. At that
time, we entered into a one-year employment/development contract, extendable by
us, with a mathematician-inventor, in which he agreed to develop such a system
and which would restrict his ability to work on related products even if the
contract was not extended. We have recently extended this agreement. The
inventor believes that he can develop the mathematical concepts that can produce
a series of secure communication products. The products' use would vary
depending on the level of security and speed of the cryptographic system. The
inventor's goal is to produce a product that allows secure communication. Secure
communications is a growing market that is fueled by the growth of the Internet,
by business use of intranets and by the growth of global electronic
communications, all of which result in electronic movement of remotely processed
corporate files used in multiple locations. The products when developed will be
targeted to the appropriate commercial entities. As in the case of all start-up
development efforts, there can be no assurance that any commercially viable
products will result from our development efforts.

b. INTELLECTUAL PROPERTY. Although in the development stage, the potential
intellectual property assets will be protected by trade secrecy laws. The
Company has entered into confidentiality agreements with the parties directly
involved in the development process. Should commercially viable products be
developed, we will then decide whether to patent one or more inventions or to
continue to rely on trade secrecy.

c. INVESTMENT. - In 2000, in addition to committing $10,000 to Crypto.com,
Inc.'s capital, we spent $220,462 to support the development of its technology.
During 2001, we spent $316,000 for the account of Crypto.com, Inc. We own 66.04
% of the equity of Crypto.com, Inc., the inventor owns 18.87%, our consultant
who put us in touch with the inventor owns 9.43%, current officers and directors
of Eurotech own 2.83% and the remaining 2.83% is owned by former officers of the
Company.

d. COMMERCIALIZATION. - The need for secure communications at varying speeds and
security levels is a rapidly growing market. Increasing computer power and
software continue to defeat low-level and difficult-to-break cryptographic
systems and thus increase the value and need for effective absolutely secure
communications and higher speed cryptographic systems, which are difficult to
break. The commercialization model depends on the speed and level of security of
the inventor's mathematical concepts. We envision that we would license such a
product, if successfully developed, to many different companies.

When we started Crypto.com, we were under the impression that a patentable
system could be produced by the 2000 calendar year-end. That timing has proved
optimistic and we focused the inventor on the development of the necessary
underlying mathematical concepts of the cryptographic systems that the inventor

                                       23


<PAGE>

envisions rather than the development of the complete cryptographic system. In
the latter part of 2000, we put together a multi-disciplinary team
(cryptography, mathematics and internet security) of third party experts to
evaluate and make recommendations on the development of the technology.

During early 2001, the mathematical concepts developed by the inventor were
reviewed, analyzed, and evaluated in active interactions between the inventor
and our third party experts. On the basis of successful preliminary evaluations
of the concepts performed by our third party experts, the inventor undertook the
further development of several variants of the mathematical concepts into
cryptographic systems for technology demonstration purposes.

While validation studies were being conducted by our third party experts,
Eurotech began marketing the technology concepts and cryptographic systems to
selected potential users. Limited demonstrations were carried out for several
potential users, leading in the fourth quarter of 2001 to preliminary discussion
with a telecommunications company on possible licensing of one of the Crypto.com
encryption technology variants. These discussions resulted in a non-exclusive
licensing agreement to market, license and commercialize its cryptology
technology dated as of December 31, 2001, between Crypto.com. and Etelix, Inc.
("Etelix"). Crypto granted a non-exclusive license and right to market for a
period of five years. Upon receipt of this cryptology technology, the licensee,
Etelix, has 90 days to either use the technology itself or enter into a contract
and licensing agreement with third parties for the use of the technology. If the
licensee elects to utilize the technology solely for its own purpose, the
licensee shall pay to Crypto $100,000 per month for 10 months. In the event that
the licensee successfully markets and licenses the Crypto cryptology technology
to a third party, the licensee will pay Crypto $1,000,000 within 30 days of the
third party agreement. If the licensee enters into a license or market
agreement, in which it receives royalty payments, Crypto shall receive 50% of
the royalty. In addition, Eurotech continues to seek out potential commercial
users for the Crypto.com technology for licensing or joint venture activities.

2.  ACOUSTIC CORE NON-CONTACT INSPECTION TECHNOLOGY

a. BACKGROUND. In a July 2001 agreement, and an amendment to that agreement,
dated October 3, 2001, we entered into an acquisition agreement to acquire the
rights to certain technologies for certain markets for in-situ remote sensing of
hazardous, toxic, explosive, and nuclear waste materials. One of the key
technologies acquired is the Acoustic Core(TM) non-contact inspection technology
that utilizes acoustic sensing to identify illicit and hazardous materials from
their empirically determined acoustic properties. Completed research and
development studies have shown that materials can be uniquely identified by
their acoustic signatures. This includes the highly explosive and difficult to
detect C4 plastic explosive. We are currently preparing the engineering
documentation for the rapid development of a screening portal for detecting
illicit and dangerous materials on individuals entering secured areas such as
public buildings, military reservations, and transportation terminals.

b. INTELLECTUAL PROPERTY. The Acoustic Core technology is covered by U.S. Patent
4,922,467. Additional patent applications have been filed for application of the
technology to other remote sensing sensor developments. The patents and all
associated intellectual property, inclusive of future uses are currently held by
the Company.

c. INVESTMENT. The Company issued 2,500,000 fully paid and non-accessible shares
of its restricted common stock, valued at $2,500,000, for the acquisition of the

                                       24


<PAGE>

rights to certain technologies for in-situ remote sensing of hazardous, toxic,
explosive, and nuclear waste materials. See "Business - Subsurface Remote
Sensing Technologies - Investment." During third and fourth quarters of 2001, we
spent an additional $25,000 on development, refinement, and marketing of the
Acoustic Core part of the acquired technologies.

d. COMMERCIALIZATION. The Acoustic Core(TM) technology has been validated in
tests on a variety of materials utilizing prototype instrumentation. Research,
which began in 1997 in collaboration with the Battelle Memorial Institute
("BMI"), successfully demonstrated that Acoustic Core(TM) is capable of
non-intrusively detecting C4 plastic explosives located within containers. These
proof of concept tests have laid the technical foundations for the development
and deployment of Acoustic Core(TM) based remote sensing security products.
During the fourth quarter of 2001, we submitted proposals to an agency of the
U.S. Government in response to a call for new technologies to address urgent
homeland security needs. In addition, demonstrations of the prototype
instrumentation were conducted for interested commercial and governmental
organizations. We seek to enter into licensing, contracted, or joint venture
developments with organizations for the development, implementation, and
operations of Acoustic Core(TM) based security products. Toward that end, we
have focused our marketing efforts on informing security related government,
private, and commercial organizations of the potential of Acoustic Core(TM)
based technologies to be a cost effective basis for a variety of remote sensing
security products.

PATENTS AND TRADEMARKS

         Many entities, including some developing technologies similar to ours,
now have and may in the future obtain patents and other intellectual property
rights that cover or affect products or services directly or indirectly related
to those that we offer. In general, if a court determines that one or more of
our products infringes on intellectual property held by others, we would be
required to cease infringes on intellectual property held by others, we would be
required to cease developing or marketing those products, to obtain licenses to
develop and market those products from the holders of the intellectual property,
or to redesign those products in such a way as to avoid infringing the patent
claims. If a competitor holds intellectual property rights, the entity might be
predisposed to exercise its right to prohibit our use of its intellectual
property in our products and services at any price, thus impacting our
competitive position.

         We cannot assure you that we are aware of all patents and other
intellectual property rights that our products may potentially infringe. In
addition, patent applications in the United States are confidential until the
Patent and Trademark Office issues a patent and, accordingly, we cannot evaluate
the extent to which our products may infringe claims contained in pending patent
applications. Further, it is often not possible to determine definitively
whether a claim of infringement is valid, absent protracted litigation, which we
may not have the resources to pursue.

         We cannot estimate the extent to which we may be required in the future
to obtain licenses with respect to patents held by others and the availability
and cost of any such licenses. Those costs, and their impact on the net income
we might receive could be material. Damages in patent infringement cases can
also include a tripling of actual damages in certain cases. To the extent that
we are required to pay royalties to third parties to whom we are not currently
making payments, these increased costs of doing business could negatively affect
our liquidity and operating results.

         In addition, there may be entities developing and marketing
technologies which infringe on patents and intellectual property rights held by

                                       25


<PAGE>

us. Patent infringement claims are protracted and costly. We may not have the
resources to adequately protect our intellectual property. Any expenditures to
pursue intellectual property rights by us could negatively affect our ability to
market and develop our existing technologies.

COMPETITORS TO EUROTECH'S PRIMARY TECHNOLOGIES

         While we believe that our business model is unique, we find that our
technologies are targeted at highly competitive markets. Due to the nature and
size of some of the contracts that we bid for, including some of the larger
governmental ones, there are sometimes other competitors who may have
significantly greater name recognition and greater financial and other resources
than we do. We believe however, the proprietary nature of our products when
partnered with our level of technical expertise and the quality of our services
give us a competitive advantage against some of the entities listed below with
respect to some of our primary technologies.

EKOR

         EKOR is a composite material based on a silicone polymer different from
other silicones produced by manufacturers such as GE Silicones and Dow Corning,
because its performance qualities include resistance to chemical and radiation
corrosion. EKOR is also a potential alternative to glass vitrification of
low-level radioactive waste.

HNIPU (Hybrid Non-isocyanate Polyurethane)

         HNIPU is a hybrid that outperforms other non-isocyanate polyurethanes
and should meet or exceed most of the performance characteristics of other
polyurethanes currently available. Some of the major producers of polyurethanes
used in coatings and finishes, sealants and adhesives include Akzo Nobel, Dow
Chemical and Kansai.

Acoustic Core explosive detection technology

         Major competitors of detection and screening equipment include InVision
Technologies and L3 Communications who have equipment installed in major
airports for baggage screening.

Crypto.com encryption technology

         There are many communications and data security systems available today
that include encryption capability from public and private use to commercial and
government applications. One of the largest and most widely used is RSA
Security, Inc.

VII. EMPLOYEES

          As of December 31, 2001, we had seven full-time employees and four
officers. As of December 31, 2001, we also had various consulting arrangements
with individuals and corporations in the United States, Germany, Russia, and
Israel to serve its limited additional staffing needs.

         On March 1, 2002, the Company hired Mr. Todd J. Broms as the President
and Chief Executive Officer.

                                       26


<PAGE>

         None of our employees are covered by a collective bargaining agreement.
We consider our employee relations to be satisfactory and have not experienced
any labor problems.

ITEM 2.  PROPERTIES

         For our corporate headquarters, we rent an office suite with 7,861
square feet of space in Fairfax, Virginia under a lease that expires in 2005 and
calls for the payment of a monthly rent, including certain taxes and utilities,
of $19,229.97, subject to customary escalation. We also pay the rent on
executive, sales, and representative offices in Haifa, Israel, the total monthly
rent for all of these offices is approximately $1,023. Until March 31, 2001, we
also continued to pay $2,800 monthly rent on our former executive office in
Washington, DC which we vacated September 1, 2000 but which the landlord was
unable to lease.

ITEM 3.  LEGAL PROCEEDINGS

         We were not a party to any material pending legal proceedings.

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

         No matters were submitted to a vote of our security holders during the
fourth quarter of 2001.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

TRADING MARKET

         Since September 1, 2000, our common stock has been listed and traded on
the American Stock Exchange under the symbol EUO. Prior to that date, our common
stock was traded on the OTC Bulletin Board under the symbol EURO.

NUMBER OF SHAREHOLDERS OF RECORD

         As of February 8, 2002, we had 427 shareholders of record. We believe
that our common stock is currently held by more than 11,000 beneficial owners.

DIVIDENDS

         To date we have not declared or paid any dividends on our common stock.
Our present plan is to retain earnings, if any, for use in our business.
However, pursuant to the designation of rights relating to the Series A 3%
Preferred Stock ("Series A Preferred"), holders of the Series A Preferred, are
entitled to receive dividends at a rate of three percent (3%) per annum of the
liquidation preference of $100 per share (the "Liquidation Preference"), which
are fully cumulative, prior and in preference to any declaration or payment of
any dividend (payable other than in shares of Common Stock) or other
distribution on the Common Stock of the Company. The dividends on the Series A
Preferred Stock accrue from the date of issuance of each share and are payable
semi-annually on June 30 and December 30 of each year (each a "Dividend Date")
commencing on June 30, 2002. The dividends on the Series A Preferred Stock are
payable only when, as and if declared by the Board of Directors out of funds
legally available therefore.

                                       27


<PAGE>

RECENT SALES OF UNREGISTERED SECURITIES

         On January 31, 2001, the Company issued an aggregate of 5,574 shares of
its common stock as consideration for consulting services performed by Dr.
Figovsky and Mr. Trossman at $2.15 per share, totaling $12,000.

         As of December 31, 2001, the Company issued 12,000 shares of its common
stock as consideration for consulting services performed by a consulting
company, Econ Investor Relations, Inc. for 3,000 shares per quarter, totaling
$9,655.

         In June 2001, the Company reserved for issuance 120,000 shares of its
restricted common stock at $.73 per share for consulting services, totaling
$87,600. To date, these shares have not yet been issued.

         All of the above transactions were made pursuant to an exemption from
registration pursuant to Section 4(2) of the Securities Act regarding
transactions by the issuer not involving a public offering, in that the
transaction was made, without general solicitation or advertising, to a
sophisticated investor with access to all relevant information necessary to
evaluate this investment.

MARKET PRICE

         The following table sets forth the quarterly high and low selling
prices of (for periods since September 1, 2000), or high and low bid prices for
(for earlier periods) our common stock:

                                                             SALE OR BID
                                                             -----------
                                                       High                Low
                                                       ----                ---
            2000
            ----
January 1 through March 31                            7.030              2.190
April 1 through June 30                               5.310              3.250
July 1 through September 30                           6.125              3.000
October 1 through December 31                         3.625              1.125

            2001
            ----
January 1 through March 31                            2.750              1.100
April 1 through June 30                               1.420               .640
July 1 through September 30                            .760               .260
October 1 through December 31                         1.330               .250

Sources: American Stock Exchange and Bloomberg, LLC

         The foregoing data for periods prior to September 1, 2000 represent
prices between dealers and do not include retail mark-ups, mark-downs or
commissions, nor do such data represent actual transactions.

ITEM 6.  SELECTED FINANCIAL DATA

         The selected data as of December 31, 2000 and 2001 and for the years
ended December 31, 1999, 2000, and 2001 are derived from and should be read in

                                       28


<PAGE>

conjunction with our audited financial statements and accompanying notes
included in response to Item 8 below. The data presented below should also be
read in conjunction with Management's Discussion and Analysis of Financial
Condition and Results of Operations included in Response to Item 7 below.

STATEMENT OF OPERATIONS DATA

<TABLE>
<CAPTION>
                                                        1999             2000           2001
                                                        ----             ----           ----

<S>                                                <C>             <C>             <C>
REVENUES                                           $    150,000    $    350,000    $     18,873
OPERATING EXPENSES
     Cost of goods sold                                      --              --           8,160
     Research and development                         1,308,442       3,010,391         747,073
     Consulting fees                                    477,746       1,125,477       2,176,848
     Compensatory element of stock
          issuances pursuant to consulting
          agreements                                  1,312,679         925,717         535,031
     Other general and administrative                 2,057,398       3,427,588       3,435,381
          Expenses
Depreciation and amortization                           144,459       1,631,237       1,899,346
TOTAL OPERATING EXPENSES                              5,300,724      10,120,410       8,801,839

OPERATING LOSS                                       (5,150,724)     (9,770,410)     (8,782,966)
OTHER EXPENSES (INCOME)
     Interest expense                                   588,488         415,425         294,106
     Interest income                                       (464)       (313,046)        (91,837)
     Amortization of deferred and unearned
      financing costs                                   297,286               0               0
     Litigation settlement - in shares of stock         456,278               0               0
     Other Income                                             0               0        (225,000)
TOTAL OTHER EXPENSES (INCOME)                         1,341,588         102,379         (22,731)

NET LOSS                                           $ (6,492,312)   $ (9,872,789)   $ (8,760,235)

BASIC AND DILUTED LOSS PER SHARE                   $      (0.27)   $      (0.23)   $      (0.18)

WEIGHTED AVERAGE COMMON SHARES USED IN BASIC AND
DILUTED LOSS PER SHARE
                                                     24,477,178      42,750,339      48,835,959
</TABLE>

                                       29


<PAGE>

BALANCE SHEET DATA

                                                          December 31
                                                     2000               2001
                                                     ----               ----

Working capital (deficiency)                    $  2,116,838       $ (3,166,021)
Total assets                                      11,017,263          8,119,910
Total liabilities                                  5,164,543          4,087,298
Deficit accumulated during development stage     (40,610,695)       (49,370,930)
Total shareholders' equity                         5,852,720          4,032,612

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

         The following is a discussion of our financial condition, results of
our operations and liquidity. This discussion should be read together with our
financial statements and notes included in this report in response to Item 8
below.

         Certain information in this report, including the following discussion,
may include forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. The Company intends the
disclosure in these sections and throughout the Annual Report on Form 10-K to be
covered by the safe harbor provisions for forward-looking statements. All
statements regarding the Company's expected financial position and operating
results, its business strategy, its financing plans, and the outcome of any
contingencies are forward-looking statements. These statements can sometimes be
identified by the Company's use of forward-looking words such as "may,"
"believe," "plan," "will," "anticipate," "estimate," "expect," "intend" and
other phrases of similar meaning. Known and unknown risks, uncertainties, and
other factors could cause the actual results to differ materially from those
contemplated by the statements. The forward-looking information is based on
various factors and was derived using numerous assumptions.

                Important Factors that Might Affect Our Business,
                  Our Results Of Operations and Our Stock Price

         Although the Company believes that its expectations that are expressed
in these forward-looking statements are reasonable, the Company cannot promise
that its expectations will turn out to be correct. The Company's actual results
could be materially different from its expectations, due to a variety of
factors, including the following:

     o   We may not in fact be able to sell significant quantities or profitably
         commercialize EKOR(TM) or any of our other technologies. Expressions of
         interest from potential customers and ongoing negotiations may not
         result in actual agreements or generation of revenues in the time frame
         we envision, if at all.
     o   We have a limited operating history and, therefore, little history on
         which to base any forecasts.
     o   We have incurred substantial operating losses and risk never making any
         money.
     o   Shareholders face substantial dilution of their equity ownership
         percentage if our Series A 3% Convertible Preferred Stock is converted,
         if more of our outstanding options and warrants are exercised, or if
         more of the shares that we have issued during 2000 and 2001 are
         repriced or if we have to issue more shares to raise capital. The
         extent of potential dilution depends significantly on the market price

                                       30


<PAGE>

         of our outstanding shares and may cause significant dilution in the
         value of your investment.
     o   There is a risk that the Company will be unable to meet the conditions
         necessary to close the remaining three closing dates pursuant to the
         $2,500,000 Woodward, LLC Commitment.
     o   There is a risk that the Company will be unable to meet the
         requirements necessary to permit any sales of its stock pursuant to the
         J&K Private Equity Agreement.
     o   There is a risk that the Company may not be able to obtaining future
         financing due to certain rights given to J&K and Woodward, which other
         investors may find to be prohibitive.
     o   There is a risk that the market will not accept any or many of our
         products and technologies.
     o   We face unknown environmental liability risks, and we don't carry
         environmental liability insurance.
     o   Environmental regulation in various countries may prevent the
         cost-effective application of some or all of our technologies.
     o   Department of Commerce controls or other governmental control of our
         encryption technology may negatively impact our ability to sell or
         transfer our technology.
     o   We may be subject to significant competition and the existence or
         development of preferred technologies, which may keep us from selling
         our products and technologies at a profit or at all.
     o   Certain of our Israel-based technologies are based and primarily
         dependent on the efforts of Dr. Figovsky. If Dr. Figovsky were to cease
         his association with the Company or if Dr. Figovsky were to die or
         become incapacitated, this might have an adverse affect on the
         operations and commercialization of certain of our technologies.
     o   Our proprietary technology and patents may not give us adequate
         protection, therefore others may be able to develop similar
         technologies or may not allow us to apply our technologies, either at
         all or without paying license fees.
     o   Our common stock may cease to be listed on the American Stock Exchange.
     o   We may run out of money before we begin to generate cash flow from
         operations and we may not be able to obtain needed financing.

         Forward-looking statements included in this Report speak only as of the
date of this Report and we do not undertake any obligation to release publicly
any revisions to any forward-looking statements to reflect events or
circumstances after the date of this Report or to reflect the occurrence of
unanticipated events.

OVERVIEW

         We are a development stage company acquiring and developing
differentiated emerging technology assets. We enhance these assets by managing
comprehensive engineering and scientific development programs designed to create
a complete vertically integrated array of solutions. We commercialize these
assets using various financial and transactional vehicles including: technology
transfer, licensing, joint venture, and distribution agreements. Our current
emphasis is on technologies developed by prominent research institutes and
individual researchers primarily in the former Soviet Union/Israel or by
independent research organizations in the United States. Since our formation, we
have acquired selected technologies through equity investments, assignments, and
licensing arrangements.

                                       31


<PAGE>

         In the following paragraphs, we will attempt to provide you with a
picture of where we stand on the various technologies on which we are currently
working. These technologies are described in detail in Part I, Item 1of this
report.

         We are not a subsidiary of another corporation, entity, or other
person. We do not have any subsidiaries except to the extent that Israeli
start-up companies in which we have invested and in the equity of which we hold
a greater than 50% equity interest, and a U.S. company that we control, may be
deemed to be subsidiaries.

         In the first quarter 2001, we grouped for management purposes most of
our technologies other than EKOR(TM) and Crypto.com in what we call our Advanced
Performance Materials (APM) Division. The approach of APM is to concentrate
financial and human resources in the first instance on the commercialization of
those technologies that we have determined offer the most immediate promise in
terms of size of market and potential market acceptance. We comment below on the
status of these technologies in accordance with our current order of priority.
In the second quarter 2001, we organized what we call our Nuclear and
Environmental Technology Solutions (NETS) Division. NETS aims to acquire and
implement technologies needed for global remediation and monitoring of
contaminated areas, including management of hazardous materials, or for
exploration of the environment in search of needed minerals or other resources.
At this time, NETS includes the EKOR(TM) family of products, Rad-X(TM) and the
sub-surface remote sensing technologies, but it is expected in the future to
include other technologies. In the fourth quarter 2001, we organized the
Security & Safeguards Division (S&S) to manage the technologies we have that
relate to personal, corporate, and national security. S&S includes the Crypto
encryption technology and inspection technology for containers that can detect
explosives and other hazardous materials. The organization of these three
operational units recognizes the diverse markets and objectives of our
technologies and allows budgeting and strategic planning to be tightly focused.
The following discussion of technologies is grouped by division or segment.

NUCLEAR & ENVIRONMENTAL TECHNOLOGY SOLUTIONS (NETS)

1. EKOR(TM) - In 2001, we successfully completed transfer of the technology to
make EKOR(TM) products in the United States. The Company's manufacturing
licensee for EKOR(TM), NuSil Technologies, is now producing EKOR(TM) under
agreement with us at its facilities in California. This agreement will allow
EKOR(TM) materials to be manufactured in volumes sufficient to support initial
EKOR(TM) sales both in the USA and outside the USA. We contemplate developing
more local production in Europe and Asia as increased demand provides favorable
production economics. Testing performed on the US-produced material validated
EKOR's expected performance and provided information required by contractors at
Department of Energy (DOE) sites. We will continue to perform testing on
additional product forms of EKOR(TM) in 2002.

         In March 2001, the EKOR(TM) family of products was presented to waste
management professionals from around the world at the annual Waste Management
Symposium in Tucson, Arizona. The reception and interest in EKOR(TM) were
excellent.

         For expansion in 2001 we budgeted approximately $1,800,000 on
consulting fees, testing, application procedures, and equipment development,
dedicated staff resources, and other expenses related to the marketing of
EKOR(TM) products, of which we spent about $1,444,000. The lower expenditures
reflect the slowness of the market to develop, requiring less resources. In the
second quarter of 2001, we performed bench-scale tests at three Department of
Energy (DOE) sites and received one order ($7,500) for a full-scale
demonstration at a DOE-funded facility in Ohio. In the third quarter, we

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performed full-scale demonstrations on non-contaminated materials at the
Savannah River Site (SRS) in South Carolina (paid for by Westinghouse Savannah
River Company), the Battelle Laboratory in Columbus, Ohio (paid for by Battelle
Memorial Institute), and in Santa Barbara, California for personnel from Rocky
Flats Environmental Technology Site (RFETS, near Denver, Colorado). All
demonstrations highlighted the ability of EKOR(TM) to coat a wide variety of
materials successfully. These demonstrations provided feedback that enabled the
Company to enhance existing formulations resulting in more efficient application
systems and a more user-friendly product. The enhanced coating formulation,
EKOR(TM) Sealer Plus, was delivered to the market in October. In August,
Eurotech, in cooperation with COGEMA Engineering Corporation, presented a
proposal to DOE's Office of River Protection at Richland, Washington, to
evaluate EKOR(TM) as an alternate tank waste stabilization technology; talks are
ongoing with DOE and their prime contractor on how the evaluation will be
performed. In August, Eurotech signed an agreement with Waste Control
Specialists LLC (WCS) to evaluate the use of EKOR(TM) on waste streams being
processed by WCS. Testing was performed in October on several waste streams, and
commercial strategies are being developed to focus on opportunities to
macroencapsulate waste shipments from DOE starting in December 2001. EKOR(TM)
was selected as a participant in the Large Scale Demonstration & Deployment
Project (LSDDP) being funded by the DOE at the Idaho National Engineering &
Environmental Laboratory (INEEL). We believe that the fourth quarter of 2001 was
unfortunately marked by a general budget reassessment and work slowdown within
the DOE due to a reprioritization of activities in the wake of the events of
September 11th. The INEEL LSDDP, project planning on tank waste, and most other
DOE-related activities were postponed until first quarter 2002. RFETS purchased
a small quantity of EKOR(TM) Sealer Plus in November and was scheduled to
perform a test on it in the first quarter 2002.

2. RAD-X(TM) - In the fourth quarter of 2001, NETS introduced a new
fire-resistant contamination fixative to the market. Derived from our
Firesil(TM) product, Rad-X(TM) is a complement to our EKOR(TM) product line and
provides a low-cost alternative where long-life and long-term isolation are not
concerns, but adhesion and fire-resistance are important. Those criteria apply
to many contaminated facilities being dismantled and we anticipate a healthy
growth of this product in 2002. A small initial quantity was sold in 2001, and
several sites have indicated plans for purchase in first quarter 2002.

3. SUBSURFACE REMOTE SENSING TECHNOLOGIES - On September 25, 2001, we acquired
from Trylon Metrics, Inc., the worldwide rights to patented remote sensing
technologies, Electromagnetic Radiography(TM) and Acoustic Core(TM), for
2,500,000 shares of our common stock. We believe that this acquisition will both
enhance our ability to market EKOR(TM) products and position Eurotech as a prime
technology source for various environmental markets. We can now offer integrated
environmental remediation products, and assessment and monitoring services
throughout the life cycle of nuclear remediation and hazardous waste cleanup
projects. EMR(TM) and Acoustic Core(TM) technologies provide 3D images of
subsurface contaminants with a high degree of discrimination and precision. We
believe these technologies offer large area coverage at high resolution and are
significantly more cost effective than monitoring methods currently used for
environmental assessments. In addition to the complementary benefits of these
technologies for EKOR(TM) products, Acoustic Core(TM) was demonstrated to the
U.S. Customs Service as capable of detecting plastic explosives. Research, which
began in 1997 in collaboration with Battelle Memorial Institute, successfully
tested Acoustic Core(TM) as capable of detecting C4 plastic explosives located
within containers by non-intrusive methods; we believe markets for this
technology exist in the security sector of our economy. The technologies have
been proposed for use to the DOE as follow on Phase 2 work to be conducted at
Hanford. There have also been proposals forwarded for oil exploration related

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<PAGE>

activities. Three patent filings have been executed, which address the use of
the technology in the area of marine geophysical exploration for oil and natural
gas. Two large dredging and marine environmental projects based in the U.S. have
been forwarded technical and pricing proposals for use of the technology in
identification of marine sediment contaminants. The U. S. government General
Accounting Office has identified one of these technologies for future use in
continuing government research for detection and classification of land mines.
The level of interest is significant and we expect to have paid demonstrations
in the second quarter of 2002. Depending on the success of those demonstrations,
we anticipate receiving orders for project implementation starting in the third
quarter 2002. We are marketing to U.S. agencies (DOE, DOD and EPA) and companies
either performing work for those agencies or responsible for cleanup activities
being required by them. As our penetration of these markets increases, we
anticipate interest from Western Europe and East Asia, with paid demonstrations
in the fourth quarter 2002. The ability of AcousticCore(TM) and EMR(TM) in
resource detection (oil, gas, minerals) will be explored in 2002, but will not
be a priority. We may enter into licensing, contracted, or joint venture
developments to facilitate the implementation of these technologies.

ADVANCED PERFORMANCE MATERIALS (APM)

1. HNIPU (Hybrid Non-Isocyanate Polyurethane) - In 1998, we purchased the HNIPU
technology from the inventor, Dr. Oleg Figovsky. HNIPU is intended to be
incorporated in commercial coatings, paints, adhesives, and foams as a
replacement for conventional polyurethane binders. Research, development, and
sample production activities have been performed by Chemonol, Ltd. an Israeli
start-up company in which Eurotech holds majority ownership and to which
Eurotech has funded these directed activities. A U.S. based international paint
and coating company with annual revenue of approximately $2 billion and in the
top ten (10) of global paint and coating producers has notified Eurotech of its
interest in licensing worldwide exclusive rights for HNIPU use in its paint and
coating products. Additionally, we had independently entered discussion with a
subsidiary of this company for the technology transfer and toll production of
HNIPU binder. As one of these companies is a wholly owned subsidiary, when we
learned of the corporate relationship the offers were consolidated, and we have
entered into formal negotiations with the corporate parent of these companies. A
U.S.-based paint and coatings company ranked in the top 100 of North American
producers has expressed interest in and requested rights to HNIPU for specific
market segments and is interactively evaluating samples provided by Eurotech.
Two multi-national companies in the personal care business had requested a
linear variant of HNIPU. We are in discussions with one company for its
evaluation and consideration of L-NIPU, but this is currently a low priority
activity. Recently, we achieved a major milestone with the production of HNIPU
rigid foam. At our direction, Chemonol prepared samples that have been submitted
to a west coast aerospace manufacturer for analysis in lightweight structural
applications. This firm has completed its preliminary analysis, which has
provided useful data on product refinement and market needs. We have received a
proposed joint research and development (R&D) and licensing agreement from a
European company dominant in its field for worldwide exclusive rights to HNIPU
foam for its specific market segment. The agreement provides for an initial
period of joint R&D to tailor the foam to its unique product specifications with
subsequent exclusive rights to its market segment. We have entered into
negotiations with this company. Current marketing of the varied forms of HNIPU
has been focused on Eurotech's strategic goal of licensing HNIPU technology for
the purpose of receiving licensing fees and generating royalty revenue.

2. FIRESIL(TM) (Intumescent Fire-Stop Coating) - We have transferred this
technology to a U.S.-based toll manufacturer and have produced Firesil

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<PAGE>

successfully in the U.S. We have concluded that the product is cost-competitive
with known alternatives. We have filed for the trademark FIRESIL(TM) and have
initiated patent activity on interior and exterior formulations. The interior
and exterior forms were subjected to the American Society for Testing and
Material (ASTM) E-84 fire test by an accredited lab. Both passed with excellent
results achieving Class A equivalent results. We are actively seeking licensing
partners or buyers for this technology.

3. SPCE (Sulfochlorinated Polyethylene Coatings) - During 2001, we paid $30,000
of a committed $60,000 initial investment in Corpem, Ltd., a new Israeli
start-up currently housed in the Ofek La'Oleh Jesre'el Valley Initiative Center
under the Israeli incubator program, for which we will receive 20% of the equity
of Corpem. Corpem will investigate the feasibility of water-based suspensions
utilizing innovative cross-linking agents, which would result in non-toxic
environmentally friendly, highly stable, crack resistant coatings for concrete,
metal or rubber.

4. OTHER ISRAELI TECHNOLOGIES - We refer you to the description of our business
in Part I, Item 1 of our 2001 Form 10-K Annual Report for a description of each
of these technologies other than those discussed above; they are there
identified as:

     o   Continuous Combustion Synthesis and Continuous Action Reactor
     o   Rapidly Bio-degradable Hydrophobic Material (RBHM)
     o   Highly stable organomineral polymers based on quarternary ammonium
         silicates (QAS)
     o   Cobalt and nickel powders
     o   Polydiene Urethane Adhesives (Poly-D Adhesives) - Electronic Glues
     o   Kauton
     o   Hypocorr
     o   Anticorrosive Additives for Polymers (AAdd)
     o   Liquid Ebonite Mixtures (LEM)
     o   Rubber Concrete (RubCon)

We had no activity with respect to these technologies in the year of 2001.

RISKS RELATING TO OUR INTERESTS IN ISRAEL

Even though a majority of our current developmental efforts are not focused on
our Israel-based subsidiaries, due to the current political and military
developments, we believe that certain risks relating to our limited operations
in Israel should be addressed. Some of the risks that might negatively impact
our Israeli interests include:

     o   Any future armed conflicts or political instability in the region would
         likely negatively affect local business conditions and harm our results
         of operations;

     o   Our results of operations may be negatively affected by the obligation
         of our personnel or consultants to perform military service, where
         reservists may be called to duty in emergency situations; and

     o   There might be changes to the policies underlying the grants our
         Israeli companies have received from the Law for the Encouragement of
         Capital Investments, 1959 Government of Israel through the Office of
         the Chief Scientist of the Ministry of Industry and Trade, or Chief
         Scientist.

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<PAGE>

SECURITY & SAFEGUARDS DIVISION (S&S)

1. CRYPTO.COM - During 2001 the Crypto.com mathematical concepts were further
developed, analyzed, and evaluated for application to a range of commercial
encryption needs. The inventor undertook the development of software
demonstration models for the purpose of accelerating the marketing of the
underlying technology to potential users. In the fourth quarter of 2001,
preliminary discussions were initiated with Etelix, Inc. ("Etelix") for possible
licensing of one of the Crypto.com variants. These discussions eventually led to
the signing of an agreement in early January 2002 for the final development and
delivery of the first Crypto.com commercial encryption software package. Upon
successful adoption by Etelix of the to be delivered technology into Etelix's
telecommunications platform, Eurotech will receive a licensing fee and royalties
on future sublicensing by Etelix.

2. ACOUSTIC CORE NON-CONTACT INSPECTION TECHNOLOGY - During the third and fourth
quarters of 2001, Eurotech undertook the marketing of the Acoustic Core(TM)
technology for applications to the detection of illicit and hazardous materials,
particularly for the detection of C4 plastic explosive. Contacts were made with
manufacturers of existing security screening equipment, such as those used in
airport terminals, for the purpose of licensing or joint venture development of
enhanced screening equipment to routinely check for illicit and hazardous
materials. Several demonstrations were conducted on the prototype Acoustic
Core(TM) sensor system for commercial and governmental organizations. Late in
the fourth quarter of 2001, in response to a call for new technologies to
address urgent homeland security needs, Eurotech submitted four proposals to an
Agency of the U.S. Government for the development of Acoustic Core(TM) based
advanced detection systems.

OUR RESULTS OF OPERATIONS

COMPARISON OF 2001 AND 2000

         For the year ended December 31, 2001 and year ended December 31, 2000,
we incurred operating losses of $8,783,000 and $9,770,000 respectively. The
losses result principally from expenses incurred in the acquisition and
development of our technologies, consulting costs, general and administrative
expenses and the absence of revenues. The smaller loss in the 2001 period
resulted principally from a reduction in research and development expenditures.

         In 2001, we recognized $19,000 in revenue from operations relating to
demonstrations of EKOR(TM) and Firesil(TM) Products. Revenue for 2001 was from
our demonstrations of EKOR(TM) and Firesil(TM) Products. For the year ended
December 30, 2000, we had $350,000 of revenue from our completion of our sale of
the TetraPak and Re-sealable Can Technologies to Advanced Technology Industries,
Inc. (ATI, formerly the Kurchatov Research Holdings, Ltd.) pursuant to an
agreement we entered into in 1999.

         Research and development expenses decreased by $2,263,000 to $747,000
for the year ended December 31, 2001 from $3,010,000 for the year ended December
31, 2000. During 2001, we spent $400,000 on further EKOR(TM) development and
$374,000 on development of other technologies. We are continuing to fund the
commercialization of EKOR(TM), including variants and product improvements,
developed and being developed in Russia by scientists and researchers at
Kurchatov Institute and members of Euro-Asian Physical Society (EAPS). During
2001, we paid consulting fees to and travel expenses for several EAPS members to
arrange for EKOR(TM) performing testing at Chernobyl in Ukraine and to transfer
the key EKOR(TM) technology to our manufacturing partner in California.

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<PAGE>

         Consulting expenses increased by $661,000 to $2,712,000 for the year
ended December 31, 2001 from $2,051,000 for the year ended December 31, 2000,
which includes $535,000 for 2001 and $926,000 for 2000 of compensatory element
of stock issuances pursuant to consulting and other agreements. The increase in
consulting expense resulted principally from an increase in the number of
consultants working in the EKOR(TM) business development area.

          Other general and administrative expenses increased by $7,000 to
$3,435,000 for year ended December 31, 2001 from $3,428,000 for the year ended
December 31, 2000. The increase is attributable principally to increases in fees
associated with securing capital financing, SEC filings, office rent, employee
benefits, patents and trademark expenses.

         Depreciation and amortization increased by $268,000 to $1,899,000 for
the year ended December 31, 2001 from $1,631,000 for the year ended December 31,
2000, of which $1,610,000 in each period was for the amortization of acquired
EKOR(TM) technology rights and related to our November 1999 purchase of
technology rights from the company now called Advanced Technology Industries,
Inc. ("ATI"). The increase is attributable to the amortization of acquired
Acoustic Core(TM) technology rights of our July 2001 purchase of technology
rights from Trylon Metrics, Inc.

         Interest income/other income increased by $4,000 to $317,000 for year
ended December 31, 2001 from $313,000 for the year ended December 31, 2000. The
increase is from recognizing revenue as other income due to the fact that the
Company has fulfilled all of its obligations under the January 28, 1997
agreement with American Autopark, Ltd. ("Arbat"). Interest expense decreased by
$121,000 to $294,000 for year ended December 31, 2001 from $415,000 for the year
ended December 31, 2000. This decrease was due principally to the conversion of
$2,160,000 principal amount convertible debentures, and the repayment in cash of
$500,000 principal amount, of previously outstanding convertible debentures.

COMPARISON OF 2000 AND 1999

         For the year ended December 31, 2000 and year ended December 31, 1999,
we incurred operating losses of $9,770,000 and $5,151,000 respectively. The
losses result principally from expenses incurred in the acquisition and
development of our technologies, consulting costs, general and administrative
expenses and the absence of revenues.

         For the year ended December 31, 2000 and year ended December 31, 1999,
we recognized as revenue $350,000 and $150,000 respectively that we received
from the sale of certain technology in a transaction that we discuss further in
Note 3 to our Financial Statements. The only other revenues we have received
since inception have been $19,000 from demonstrations of our EKOR(TM) and
Firesil(TM) products in 2001.

         Research and development expenses increased by $1,702,000 to $3,010,000
for the year ended December 31, 2000 from $1,308,000 for the year ended December
31, 1999. Research and development expenditures for 2000 included $1,405,000,
including expenses, related to our continuing investment in six Israeli
technology companies and $565,000 for our Russian technologies.

         We funded the commercialization of EKOR(TM), including variants and
product improvements, developed and being developed in Russia by scientists and
researchers at Kurchatov Institute and members of Euro-Asian Physical Society
(EAPS). During 2000, we paid consulting fees to and travel expenses for several

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<PAGE>

EAPS members to arrange for EKOR(TM) performing testing at Chernobyl in Ukraine
and to transfer the key EKOR(TM) technology to our manufacturing partner in
California.

         Consulting expenses increased by $261,000 to $2,051,000 for the year
ended December 31, 2000 from $1,790,000 for the year ended December 31, 1999,
which included $926,000 for 2000 and $1,313,000 for 1999 of compensatory element
of stock issuances pursuant to consulting and other agreements. The increase in
consulting expense resulted principally from hiring more consultants and
increased fees.

         Other general and administrative expenses increased by $1,371,000 to
$3,428,000 for year ended December 31, 2000 from $2,057,000 for the year ended
December 31, 1999. Costs, aggregating $600,000, related to the marketing and
management to commercialize our technologies. The remainder of the increase is
accounted for by a variety of expenses, including increases in rent and
personnel costs, including salary increases and bonuses.

         Depreciation and Amortization increased by $1,487,000 to $1,631,000 for
year ended December 31, 2000 from $144,000 for the year ended December 31, 1999.
Included in depreciation and amortization expense for 2000 is amortization
expense of $1,610,000 related to our November 1999 purchase of technology rights
from ATI.

         Other expenses, consisting of interest expense and amortization of
deferred and unearned financing costs, decreased by $1,240,000 to $102,000 for
the year ended December 31, 2000 from $1,342,000 for the year ended December 31,
1999. Amortization of deferred and unearned financing costs decreased from
$297,000 for 1999 to $0 for 2000. The decrease in the amortization of deferred
and unearned financing costs is attributable principally to our having fully
amortized such costs during 1999, 1998, and 1997. In addition, through
conversion and repayments we reduced our interest bearing debt during 2000 by
$3,510,000.

LIQUIDITY AND CAPITAL RESOURCES

         SUMMARY OF WORKING CAPITAL AND STOCKHOLDERS' EQUITY

         As of December 31, 2001, we had negative working capital of
approximately ($3,166,000) and Stockholders' Equity of $4,033,000 compared with
working capital of just under $2,117,000 and Stockholders' Equity of just under
$5,852,720 as of December 31, 2000. Stockholders' Equity declined mainly for
three reasons. First, our operating losses increased due primarily to the fact
that we increased the number of consultants working in the EKOR(TM) business
development area and in the financial consulting area. Second, we were unable to
obtain infusions of additional capital in amounts sufficient to fund our
operating losses and our other uses of cash described in our financial
statements and otherwise discussed below. But, the losses also resulted from the
lack of significant sales, transfers or licensing of our technology.

         LIQUIDITY

         We expect to close the remaining three additional sales of Series A 3%
Convertible Preferred Shares (the "Series A Preferred Shares") to Woodward, LLC
pursuant to its $2,500,000 commitment. Additionally the Company believes that it
will be able to sell its shares pursuant to the Jenks & Kirkland, Ltd. (J&K)

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<PAGE>

$10,000,000 Private Equity Agreement, which will provide liquidity from time to
time until the Company generates revenues or other income from the sale,
licensing or transfer of its technologies and services.

         SOURCES OF WORKING CAPITAL

      SINCE OUR INCEPTION, OUR PRIMARY SOURCES OF WORKING CAPITAL HAVE BEEN THE
NET PROCEEDS OF:

     o   $842,000 from a limited offering of our common stock;

     o   $2,000,000 from a bridge financing completed in 1996 and subsequently
         repaid;

     o   $3,000,000, $3,000,000 and $1,000,000 from private placements of our 8%
         convertible debentures completed November, 1997, February, 1998 and
         July, 1998, respectively;

     o   $450,000 from a secured financing obtained in January 1999 and repaid
         in January 2000;

     o   $2,508,000 from a private offerings of 7,205,000 shares of our common
         stock during the year ended 1999 (these shares were sold at deep
         discounts from market quotations for outstanding shares because of the
         large number of shares placed compared with the size of quotations in
         the market; the trading restrictions on the shares placed; and our
         precarious financial condition at the time of the placement);

     o   $2,832,000 from the issuance on December 31, 1999 of 1,882,353 shares
         and of a warrant to buy an additional 200,000 shares of our common
         stock to Woodward LLC;

     o   $6,000,000 from the issuance on March 2, 2000 of 1,200,000 shares of
         our common stock to Woodward LLC;

     o   $9,500,000 (later increased to $10,687,500) from the issuance on April
         25, 2000 of 2,000,000 shares and of a warrant to buy an additional
         500,000 shares of our common stock to Woodward LLC;

     o   $2,840,000 from the issuance as of March 30, 2001 of 1,333,333 shares
         of our common stock to Woodward LLC;

     o   $972,400 from the issuance as of September 6, 2001 of 3,000,000 shares
         of our common stock to five (5) individuals and one corporation; and

     o   $883,000 from the issuance as of February 9, 2002 of 10,000 shares of
         Series A 3% Convertible Preferred Stock (convertible into 2,000,000
         shares of our common stock, as adjusted by certain repricing
         provisions) to Woodward, LLC (the "$2,500,000 Woodward Commitment").

     o   PRIVATE EQUITY AGREEMENT WITH JENKS & KIRKLAND, LTD.
         On February 22, 2002, Eurotech, Ltd. entered into a Private Equity
         Agreement with Jenks & Kirkland, Ltd. ("J&K"). Subject to the terms
         and conditions of the Private Equity Agreement, Eurotech may from time
         to time at its discretion sell up to an aggregate of $10 million of
         its common stock, par value $.00025 per share, to J&K at a 10%
         discount to market prices, which is defined as the average of the
         lowest Bid Prices (not necessarily consecutive) for any three Trading
         Days during the ten Trading Day period immediately following a Put

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<PAGE>

         Date, wherein the Company has given notice to J&K that it intends to
         sell its stock.

         CONVERTIBLE DEBENTURES

         During the years ended December 31, 1999, debenture holders converted
$410,000 of principal and $161,788 of accrued interest into 1,204,665 shares of
common stock.

         During the year ended December 31, 2000, the obligation under
convertible debentures totaling $902,276 was satisfied for cash payment of
$451,138 and issuance of 289,655 shares of common stock valued at $451,138.

         During the year ended December 31, 2000, the obligation under
convertible debentures dated July 1998 of $900,000, plus accrued interest of
$123,600, was satisfied by the issuance of 965,661 shares of common stock.

         During the year ended December 31, 2000, the obligation under
convertible debentures dated November 1997 of $2,160,000, plus accrued interest
of $117,120, was satisfied by the issuance of 827,412 shares of common stock.

         We paid in cash, after maturity, the remaining $500,000 principal
amount of the November 1997 convertible debenture, together with accrued
interest of $43,000 in the first quarter of 2001.

         The remaining $3,000,000 principal amount of debentures held by JNC
Opportunity Fund Ltd. ("JNC"), along with any outstanding charges and interest,
were converted into 6,000,369 non-restricted, shares of common stock. In
addition, we issued a Warrant to purchase 500,000 shares of common stock at
$1.00, and reimbursed JNC for legal fees up to $25,000.

         SECURED FINANCING

         On January 6, 1999, Dr. David Wilkes, then our Chairman, and the holder
of most of our then outstanding convertible debentures between them provided
$450,000 of short-term financing to us, evidenced by $50,000 and $400,000
secured promissory notes, respectively. Each secured promissory note bore
interest at 13% per annum and was due January 6, 2000. The promissory notes were
collateralized by our intangible assets and could be exchanged for 8%
convertible debentures under terms similar to the current outstanding
debentures. We repaid the $400,000 note on its due date from the proceeds of the
December 31, 1999, $3,000,000 stock and warrant issue. Dr. Wilkes converted his
$50,000 note plus accrued interest into 200,000 shares of our common stock.

         TREASURY STOCK

         During 2000, we expended a total of $8,477,721 to repurchase 3,531,976
previously issued shares of common stock, of which we spent $4,350,000 to buy
2,500,000 shares in the private transactions described further in our Annual
Report on Form 10-K for the year ended December 31, 2000 and the balance of
which we spent to buy 1,131,976 shares in the market.

SECURITIES PURCHASE AGREEMENT WITH WOODWARD, LLC TO SELL SERIES A 3% CONVERTIBLE
PREFERRED STOCK

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<PAGE>

         On February 1, 2002, the Company executed an agreement with Woodward,
LLC ("Woodward") for the private placement of Series A 3% Convertible Preferred
Stock (the "Preferred Stock") with a commitment amount of $2,500,000 to support
ongoing operations, corporate development and development of its technologies
(the "February 1, 2002 Agreement"). On February 1, 2002 the Company amended its
Articles of Incorporation to designate 25,000 shares of its preferred stock as
"Series A 3% Convertible Preferred Stock" and to establish the preferences,
conversion rights, voting powers, restrictions, limitation as to distributions,
qualifications, and terms of redemption of the Preferred Stock.

         In connection with the initial closing under the February 1, 2002
Agreement which took place on February 6, 2002, Eurotech issued 10,000 shares of
Preferred Stock for $1,000,000, which is convertible, at the option of
shareholder, into shares of common stock, $.00025 par value per share, of the
Company (the "Common Stock") at $.50 per share. The holders of Preferred Stock
are entitled to receive dividends at a rate of three percent (3%) per annum of
the liquidation preference of $100 per share (the "Liquidation Preference"),
which are fully cumulative, prior and in preference to any declaration or
payment of any dividend (payable other than in shares of Common Stock) or other
distribution on the Common Stock of the Company. The dividends on the Preferred
Stock accrue from the date of issuance of each share and are payable
semi-annually on June 30 and December 30 of each year (each a "Dividend Date")
commencing on June 30, 2002. The dividends on the Preferred Stock are payable
only when, as and if declared by the Board of Directors out of funds legally
available therefor. Moreover, holders of the Preferred Stock are entitled to a
preferred distribution in the event of a liquidation, dissolution or winding up.
In addition, as part of the closing of the February 1, 2002 Agreement, Woodward
and the Company entered into a Registration Rights Agreement dated as of
February 1, 2002, wherein the Company granted certain registration rights to
Woodward including, but not limited to, the provision that that Company shall
prepare and file with the Securities and Exchange Commission ("SEC"), as soon as
possible after the Closing Date but in no event later than May 20, 2002, either
a Registration Statement or an amendment to an existing Registration Statement,
in either event registering for resale by Woodward shares of Common Stock
issuable in respect of the Preferred Stock sold pursuant to the February 1, 2002
Agreement.

         As part of the February 1, 2002 Agreement, the Company also executed a
Repricing Rights Agreement (the "Repricing Agreement"). Under the Repricing
Agreement, upon conversion, all of the Common Stock issued to Woodward is
subject to repricing. Upon conversion of the Preferred Stock into Common Stock,
the earliest tranche of which is convertible no earlier than September 1, 2002,
Woodward has the right to have additional shares of Common Stock issued to it to
the extent that during the month immediately following conversion of the
Preferred Stock the market price of the Company's outstanding shares is not at
least equal to a specified price in excess of the original issue price. Pursuant
to these reset provisions, during each Repricing Period, if the average of the
lowest Closing Bid Prices for any five (5) Trading Days (not necessarily
consecutive) during a Repricing Period (the "Repricing Price") is not equal to
or greater than the Target Price, then the Repriced Shares shall be repriced,
and the Company shall issue to Woodward the number of additional shares of
Common Stock as determined by the following formula: (Target Price-Repricing
Price) multiplied by (the Number of the Repriced Shares) divided by the
Repricing Price. The initial Target Price is $3.618 per share.

         The three closing dates for the sale of the remaining balance of
$1,500,000 of the $2,500,000 commitment are May 30, 2002, August 30, 2002 and
November 30, 2002. These closings are subject to customary conditions to
closing, including but not limited to, the issuance and delivery of the subject
securities, reaffirmation of all representations and warranties of the Company
made in the February 1, 2002 Agreement, issuance an opinion by the Company's

                                       41


<PAGE>

counsel, timely issuance of all shares pursuant to the Repricing Agreement,
availability and reservation of shares for issuance under the Agreement and a
representation and warranty that there has been no material adverse change to
the business, operations or financial condition of the Company.

         The Company has also agreed to make its best reasonable efforts to
increase the authorized capital from 100,000,000 shares of common stock, par
value $.00025 per share to 200,000,000 shares. The Company has agreed to
authorize and reserve for issuance, free from pre-emptive rights, 10,000,000
shares of common stock for purposes of issuance of the shares for the above
repricing agreement. Upon the amendment of its articles of incorporation, the
number of shares to be reserved for this repricing agreement will increase to
20,000,000.

AMENDMENTS TO PRIOR WOODWARD, LLC AGREEMENTS

         In connection with the above-referenced private placement and pursuant
to the Repricing Agreement, the Company and Woodward have modified certain terms
and provisions of two previously executed Stock Purchase Agreements,
specifically the Common Stock Purchase Agreement dated April 17, 2000 for
2,000,000 shares and the Common Stock Purchase Agreement dated March 30, 2001
for 1,333,333 shares.

         With regard to the Second and Third Repricing Periods of the Common
Stock Purchase Agreement dated April 17, 2000, by a Letter Agreement dated
December 28, 2001 the Company and Woodward modified the reset shares and
satisfied all obligations arising out of the Second and Third Repricing Periods
that were due and owing by the Company by issuing 2,500,000 shares of Common
Stock to Woodward.

         Additionally, the Company and Woodward agreed to modify the reset
shares and satisfy all obligations arising out of the Fourth and Fifth Repricing
Periods of the Common Stock Purchase Agreement dated April 17, 2000. This was
done through the issuance of 6,000,000 additional shares of the Company's Common
Stock. With respect to the number of additional shares issuable pursuant to the
Sixth Repricing Period of the Common Stock Purchase Agreement dated April 17,
2000 and the First, Second, and Third Repricing Periods of the Common Stock
Purchase Agreement dated March 30, 2001, the number of shares shall be reduced
or increased, as the case may be and in four equal installments by the amount
that the 6,000,000 additional shares are greater than (in which case there shall
be a reduction) or less than (in which case there shall be an increase) the
number of shares exceeding zero determined according to the following formula:

         As to 3,000,000 of the 6,000,000 Shares:

         (3.76-Measurement Period Price) x (333,333)/ Measurement Period Price),
         where the Measurement Period Price is the average Closing Bid Price for
         the period commencing on March 1, 2002, and ending twenty (20) Business
         Days after such date.

         As to 3,000,000 of the 6,000,000 Shares:

         (3.76-Measurement Period Price) x (333,333)/ Measurement Period Price),
         where the Measurement Period Price is the average Closing Bid Price for
         the period commencing on April 1, 2002, and ending twenty (20) Business
         Days after such date.

                                       42


<PAGE>

         In the event that such adjustment results in a reduction in the number
of additional shares issuable pursuant to the Sixth Repricing Period of the
Common Stock Purchase Agreement dated April 17, 2000 and the First, Second, and
Third Repricing Periods of the Common Stock Purchase Agreement dated March 30,
2001, exceeding the number of additional shares issuable, Woodward shall
surrender to the Company for cancellation, without payment of any consideration
by the Company, shares of Common Stock owned by Woodward in an amount equal to
the excess shares as calculated above.

POTENTIAL SHARE ISSUACE UNDER REPRICING PROVISIONS

         Holders of our common shares are subject to the risk of additional and
substantial dilution due to the repricing provisions in our several agreements
with Woodward, LLC. The agreements pursuant to which we raised, net proceeds of
$6,000,000, $10,687,500 and $2,840,000 from Woodward LLC in March and April 2000
and March 2001 were modified in February of 2001, modified in May of 2001, and
again modified as of September 17, 2001. All three of these agreements, as
modified by the modification agreements, contain repricing provisions that
require us to issue additional shares in the proportion to which the outstanding
shares of our common stock trade during specified time periods at prices below
the $3.76 target price specified in the respective agreements as modified to
date.

         As of the date on which this report is filed, we have already issued to
Woodward an aggregate of 12,872,934 additional shares based on the applicable
repricing provisions. From the April 2000 and March 2001 Woodward LLC
financings, there remain only four monthly repricing periods, which in May 2002.
Because the repricing is based on the $3.76 target price compared to actual
market prices of shares, it is impossible to predict exactly how many more
shares we will need to issue to Woodward, LLC.

         We have calculated some hypothetical examples of potential dilution,
taking into account the impact of the repricing provisions for the April 2000
and March 2001 Woodward Agreements. Assuming an average market price of $3.00
per share for the four remaining monthly repricings, we would need to issue by
the end of August 2002 a total of 422,222 shares. Assuming an average market
price of $2.00 per share for the four remaining monthly repricings, we would
need to issue by the end of August 2002 a total of 1,466,667 shares. Assuming an
average market price of $1.00 per share for the four remaining monthly
repricings, we would need to issue by the end of August 2002 a total of
4,600,001 shares. Assuming an average market price of $0.45 per share for the
four remaining monthly repricings, we would need to issue by the end of August
2000 a total of 12,259,267 shares.

PRIVATE EQUITY AGREEMENT WITH JENKS & KIRKLAND, LTD. (J&K)

OVERVIEW

         On February 22, 2002, we entered into a financing agreement with Jenks
& Kirkland, Ltd. ("J&K"), providing for the potential future issuance and sale
of shares of our common stock. The agreement is referred to in this annual
report as the Private Equity Agreement. The following description of the Private
Equity Agreement does not purport to be complete and is subject to, and
qualified in its entirety by, the Private Equity Agreement, which we have
included as an exhibit to a prior filing on Form 8K, which is incorporated
herein by reference.

         Pursuant to the Private Equity Agreement, the Company, at its option,
can sell to the investor up to $10 million of its common shares over a period of
twenty-four (24) months. The common shares to be sold must be registered. Each

                                       43


<PAGE>

sale is limited to a maximum put amount which is the lesser, with respect to any
Put, of (i) the lesser of (a) One Million Dollars ($1,000,000), or (b) two
hundred (200%) percent of the Weighted Average Volume for the twenty (20)
trading days immediately preceding the Put Date, (ii) the maximum amount of
Common Stock that may be issued without the approval of the Company's
Shareholders according to the rules and regulations of the American Stock
Exchange, or (iii) the amount specified in Section 7.2(j) of the agreement,
which limits the aggregate number of Put Shares to be purchased by J&K to less
than 9.9% of the total issued and outstanding shares of Eurotech common stock
and is subject to various other limitations and restrictions. The initial sale
price of the common stock is based on 90% of the average of lowest three days
closing prices of its common stock during the 10 trading days immediately
following the Put Notice date. In addition to the Put Shares, the Company shall
issue to J&K a certain number of shares of common stock of the Company, if the
Company exercises its right to declare a Blackout Period (during which J&K may
not sell or offer to sell its Registrable Shares of the common stock of the
Company) upon the occurrence of a Potential Material Event and a decrease in the
Bid Price of the shares of common stock of the Company on the day following such
exercise. The number of shares to be issued will be based upon the number of Put
Shares held by J&K, the decreased Bid Price and the number of remaining Put
Shares not held by J&K.

                    NECESSARY CONDITIONS BEFORE WE MAY ISSUE
            A PUT NOTICE AND J&K IS OBLIGATED TO PURCHASE OUR SHARES

         The following conditions must be satisfied before we may issue a Put
Notice and J&K is obligated to purchase the shares of common stock that we wish
to sell:

o    a registration statement covering the resale of shares of our common stock
     purchased under the Private Equity Agreement must have been declared
     effective by the SEC and must remain effective as of each date on which a
     closing of a purchase and sale of shares occurs;

o    neither we nor J&K can have received notice that the SEC has issued or
     intends to issue a stop order or has otherwise suspended or withdrawn the
     effectiveness of the registration statement or has threatened or intends to
     do so;

o    our representations and warranties to J&K contained in the Private Equity
     Agreement must be true and correct in all material respects as of the date
     they have been made and on each date we issue a Put Notice, if not
     specified otherwise in the representation;

o    we must have performed, satisfied and complied in all material respects
     with all covenants, agreements and conditions required by the Private
     Equity Agreement and the related registration rights agreement between us
     and J&K and we must not be in default under any of those agreements;

o    no statute, rule, regulation, executive order, decree, ruling or injunction
     may be in effect and no proceeding may have been commenced which affects
     any of the transactions contemplated by the Private Equity Agreement;

o    since the date of filing of the Company's most recent SEC Document, no
     event that had or is reasonably likely to have a Material Adverse Effect
     can have occurred;

                                       44


<PAGE>

o    for the twenty (20) Trading Days immediately preceding the Put Date, the
     Weighted Average Volume of the Common Stock on the Principal Market shall
     exceed $50,000.

o    the trading of our common stock must not have been suspended by the SEC,
     the principal market for our common stock or the National Association of
     Securities Dealers and the common stock must be approved for listing or
     quotation and must not have been delisted;

o    we must not have any knowledge of any event that could reasonably be
     expected to cause the registration statement to become ineffective and is
     likely to occur within the valuation period following the Put Notice;

o    the maximum number of shares that we might sell under such Put Notice must
     not cause the total number of all common shares issued under the Private
     Equity Agreement to exceed 9.9% of our total shares outstanding on the date
     of each Closing Date; and

o    our outside counsel must have delivered an opinion letter that is typical
     of "10b-5" letters in form and substance at the time(s) and in the form
     specified in the Private Equity Agreement.

We have further agreed:

o    not to disclose any material nonpublic information to J&K without
     disclosing the information to the public, unless we identify this
     information as material nonpublic information and give J&K an opportunity
     to accept or refuse the information; and

o    to issue, and have issued, a press release describing the material terms of
     the Private Equity Agreement as soon as practicable following the closing
     date, to file a Current Report on Form 8-K with the SEC and not to make any
     other public disclosure related to the Private Equity Agreement without
     consent by J&K if not required by law.

                       LIMITED GRANT OF REGISTRATION RIGHTS

         We granted registration rights to J&K to enable it to resell the shares
of common stock it purchases under the Private Equity Agreement pursuant to the
to-be-filed registration statement. We agreed to use our commercially reasonable
efforts to file, as necessary, one or more post-effective amendments to the
registration statement filed in conjunction with the Registration Rights
Agreement.

   With regard to the registration statement we further agreed to:

         Prepare and file with the SEC, a Registration Statement with respect to
not less than the number of Registrable Securities, and, thereafter, use all
diligent efforts to cause the Registration Statement relating to the Registrable
Securities to become effective; and keep the Registration Statement effective at
all times until the earliest of (i) the date that is eighteen (18) months after
the last Closing Date under the Equity Agreement, (ii) the date when the
Investor may sell all Registrable Securities under Rule 144(k) without volume
limitations, or (iii) the date the Investor no longer owns any of the
Registrable Securities (collectively, the "Registration Period"); and

         In addition, we have agreed to take certain actions to facilitate
the sale by J&K of the shares purchased under the Private Equity Agreement
pursuant to Rule 144 of the Securities Act, including:

                                       45


<PAGE>

     o   maintaining the registration of our common stock under Section 12 of
         the Exchange Act;

     o   filing all reports required under the Securities Act and Exchange Act;
         and

     o   taking such further action as J&K may reasonably request to enable it
         to sell the shares covered by this prospectus without registration
         under Rule 144.

         We believe that certain following important risk factors relating to
the financing with J&K merit particular attention:

                     OUR PRIVATE EQUITY AGREEMENT AND OTHER
                       TRANSACTIONS MAY RESULT IN DILUTION
                 AND A DECLINE IN THE PRICE OF OUR COMMON STOCK.

         Under the Private Equity Agreement with J&K, we may, subject to certain
conditions, sell to J&K up to $10 million of our common stock from time to time
over a period of two years beginning February 22, 2002. The number of shares and
price per share will depend on the market price and trading volume of the shares
during the applicable ten-day period immediately following delivery of a Put
Notice. The sale of shares pursuant to the Private Equity Agreement will have a
dilutive effect on the percentage ownership of our existing stockholders.
Subsequent sales of these shares in the open market by J&K may also have the
effect of lowering our stock price, thereby increasing the number of shares
issuable under the Private Equity Agreement (should we choose to sell additional
shares to J&K) and consequently further diluting our outstanding shares. These
sales could have an immediate adverse effect on the market price of the shares
and could result in dilution to the holders of our shares.

         In the event that we sell the maximum amount of approximately up to
$10,000,000 worth of shares under the Private Equity Agreement these shares
could represent up to 9.9% of our outstanding shares. The perceived risk
associated with the possible sale of a large number of shares issued under the
Private Equity Agreement at prices discounted as they are pursuant to this
Agreement, could cause some of our stockholders to sell their stock, thus
causing the price of our stock to decline. In addition, anticipated downward
pressure on our stock price due to actual or anticipated sales of stock under
the Private Equity Agreement could cause some institutions or individuals to
engage in short sales of our common stock, which may itself cause the price of
our stock to decline.

         We are also obligated, or in some cases have the option, to issue
additional shares of our common stock under collaboration and other strategic
agreements. If we issue additional stock under the agreements or under other
transactions, it will have a dilative effect on the percentage ownership of our
existing stockholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         As of December 31, 2001, we had no exposure to market risk associated
with activities in derivative financial instruments, other financial
instruments, or derivative commodity instruments because we did not engage in
any such activities during the past fiscal year or, indeed, since our
organization.

                                       46


<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         We submit with this report the financial statements and related
information listed in the Index to Financial Statements on page 1 following this
report's signature page.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL AND
         ACCOUNTING DISCLOSURE

         We have no material changes in and disagreements with our accountants
on financial and accounting disclosure.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item is set forth in our Proxy Statement on
Schedule 14A for the Annual Meeting of Shareholders to be held on March 29,
2002, under the caption "Information Concerning the Nominees for Election as
Directors" and the information regarding the business experience of our
executive officers is set forth in the same Proxy Statement under the caption
"Executive Officers," which information is hereby incorporated herein by
reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is set forth in our Proxy Statement on
Schedule 14A for the Annual Meeting of Shareholders to be held on March 29,
2002, under the caption "COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS,"
which information is hereby incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required by this Item is set forth in our Proxy Statement on
Schedule 14A for the Annual Meeting of Shareholders to be held on March 29,
2002, under the caption "Common Stock Ownership of Certain Beneficial Owners and
Management," which information is hereby incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this Item is set forth in our Proxy Statement on
Schedule 14A for the Annual Meeting of Shareholders to be held on March 29,
2002, under the caption "Certain Relationships and Related Transactions," which
information is hereby incorporated herein by reference.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

         (a)      The following documents are filed as a part of this report:

                                       47


<PAGE>

                  1.       The financial statements and related information
                           referred to in response to Item 8.

                  2.       The following financial statement schedules:

                           None

                  3.       There are filed  herewith or incorporated by
                           reference the Exhibits listed in the Exhibit Index
                           that follows the financial statements.

                           (b) We filed three Current Reports on Form 8-K during
                               the fourth quarter of 2001 and first Quarter of
                               2002: October 5, 2001, October 11, 2001, and
                               November 13, 2001, January 25, 2002, March 1,
                               2002, and March 8, 2002

                                       48


<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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/ TODD J. BROMS
                                           -------------------------------------
                                                        Todd J. Broms
                                           CHIEF EXECUTIVE OFFICER AND PRESIDENT
Dated: March 8, 2002

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

<TABLE>
<CAPTION>
             NAME                              TITLE                       DATE
-------------------------------   ---------------------------------   -------------
<S>                                <C>                                <C>
       /s/ TODD J. BROMS                 President and Chief          March 8, 2002
-------------------------------           Executive Officer
         Todd J. Broms

/s/ DR. RANDOLPH A. GRAVES, JR.    Vice President, Secretary, Chief   March 8, 2002
-------------------------------     Financial Officer and Director
   Dr. Randolph A. Graves, Jr.

      /s/ DON V. HAHNFELDT             Chairman, Executive Vice       March 8, 2002
-------------------------------         President and Director
        Don V. Hahnfeldt

       /s/ CHAD A. VERDI              Vice Chairman and Director      March 8, 2002
-------------------------------
         Chad A. Verdi

       /s/ DR. L. KHOTIN                       Director               March 8, 2002
-------------------------------
         Dr. L. Khotin

        /s/ SIMON NEMZOW                       Director               March 8, 2002
-------------------------------
          Simon Nemzow
</TABLE>

                                       49


<PAGE>

Item 8.

                   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

                                                                       Page No.
                                                                       -------

INDEPENDENT AUDITORS' REPORT                                              F-2

CONSOLIDATED BALANCE SHEETS                                               F-3
  At December 31, 2001 and December 31, 2000

CONSOLIDATED STATEMENTS OF OPERATIONS                                     F-4
  For the Years Ended December 31, 2001, 2000 and 1999
  For the Period from Inception (May 26, 1995) to December 31, 2001

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                        F5 - F19
  For the Period from Inception (May 26, 1995) to December 31, 2001

CONSOLIDATED STATEMENTS OF CASH FLOWS                                    F-20
  For the Years Ended December 31, 2001, 2000 and 1999
  For the Period from Inception (May 26, 1995) to December 31, 2001

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                             F21 - F61

SELECTED FINANCIAL DATA                                                  (*)
  For the Five Years Ended December 31, 2001

(*) Included in Part II, Item 6 of the Form.

                                      F-1


<PAGE>

Board of Directors and Stockholders
Eurotech, Ltd. and Subsidiaries

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

We have audited the accompanying consolidated balance sheets of Eurotech, Ltd.
and Subsidiaries (the "Company") (a development stage company) as of December
31, 2001 and 2000 and the related consolidated statements of operations,
stockholders' equity (deficiency), and cash flows for the years ended December
31, 2001, 2000 and 1999 and for the period from inception (May 26, 1995) to
December 31, 2001. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Eurotech, Ltd. and
Subsidiaries (a development stage company) at December 31, 2001 and 2000 and the
results of its operations and its cash flows for each of the three years ended
December 31, 2001, 2000 and 1999 and for the period from inception (May 26,
1995) to December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.

Under certain equity financing agreements and related repricing rights
agreements, the Company may be required to issue substantial additional common
shares (see Notes 10 and 14).

                                           GRASSI & CO., CPAs, P.C.
New York, New York
February 19, 2002
  (Except for Notes 14d, e and f for which the date is March 6, 2002)

                                      F-2


<PAGE>
<TABLE>
                              EUROTECH, LTD. AND SUBSIDIARIES
                               (A Development Stage Company)

                                CONSOLIDATED BALANCE SHEETS

                                          ASSETS
                                          ------
<CAPTION>
                                                                          At December 31,
                                                                    -----------------------------
                                                                         2001            2000
                                                                    -------------   -------------
<S>                                                                 <C>             <C>
CURRENT ASSETS:
    Cash and cash equivalents                                       $    465,346    $  2,969,106
    Prepaid expenses and other current assets                            253,840          62,275
    Subscription receivable                                                -           1,250,000
                                                                    -------------   -------------
      TOTAL CURRENT ASSETS                                               719,186       4,281,381

MACHINERY AND EQUIPMENT - net of accumulated depreciation                193,661         181,413

OTHER ASSETS:
    Technology rights (EKOR) - net of accumulated amortization of
      $3,353,203 and $1,743,666 at December 31, 2001 and
      2000, respectively                                               4,694,484       6,304,022
    Technology rights (Acoustic Core) - net of accumulated
      amortization of $232,527 at December 31, 2001                    2,267,473           -
    Patent costs - net of accumulated amortization                        21,067          22,820
    Other assets                                                         224,039         227,627
                                                                    -------------   -------------

      TOTAL ASSETS                                                  $  8,119,910    $ 11,017,263
                                                                    =============   =============

                           LIABILITIES AND STOCKHOLDERS' EQUITY
                           ------------------------------------

CURRENT LIABILITIES:
  Accounts payable and accrued liabilities                          $    885,207    $  1,439,543
  Deferred revenue                                                         -             225,000
  Current portion of convertible debentures                            3,000,000         500,000
                                                                    -------------   -------------
      TOTAL CURRENT LIABILITIES                                        3,885,207       2,164,543
                                                                    -------------   -------------
CONVERTIBLE DEBENTURES - Less current maturities                           -           3,000,000

NOTES PAYABLE - RELATED PARTIES                                          202,091           -
                                                                    -------------   -------------
      TOTAL LIABILITIES                                                4,087,298       5,164,543
                                                                    -------------   -------------
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
  (Notes 1, 3, 6, 10, 12, and 14)

STOCKHOLDERS' EQUITY:
  Preferred stock - $0.01 par value; 5,000,000
    shares authorized at December 31,
    2001 and 2000, respectively; -0- shares
    issued and outstanding                                                 -               -
  Common stock - $0.00025 par value; 100,000,000 shares
    authorized at December 31, 2001 and 2000, respectively;
    59,673,377 shares issued and 56,141,401 outstanding at
    December 31, 2001 and 54,933,830 shares issued and
    51,401,854 outstanding at December 31, 2000                           14,919          13,734
  Additional paid-in capital                                          61,998,255      55,073,429
  Unearned compensation                                                 (131,911)       (146,027)
  Deficit accumulated during the development stage                   (49,370,930)    (40,610,695)
  Treasury stock, at cost; 3,531,976 shares at December
    31, 2001 and 2000, respectively                                   (8,477,721)     (8,477,721)
                                                                    -------------   -------------
      TOTAL STOCKHOLDERS' EQUITY                                       4,032,612       5,852,720
                                                                    -------------   -------------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $  8,119,910    $ 11,017,263
                                                                    =============   =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                      F-3


<PAGE>

<TABLE>
                                   EUROTECH, LTD. AND SUBSIDIARIES
                                    (A Development Stage Company)

                                CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>
                                                                                    For the Period
                                                                                    from Inception
                                           For the Years Ended December 31,         (May 26, 1995)
                                     ---------------------------------------------    to December
                                          2001           2000            1999          31, 2001
                                     -------------   -------------   -------------   -------------

<S>                                  <C>             <C>             <C>             <C>
REVENUES                             $     18,873    $    350,000    $    150,000    $    518,873
                                     -------------   -------------   -------------   -------------
COSTS AND EXPENSES:
  Cost of goods sold                        8,160           -               -               8,160
  Research and development                747,073       3,010,391       1,308,442       8,496,011
  Consulting fees                       2,176,848       1,125,477         477,746       5,170,942
  Compensatory element of stock
    issuances for consulting
    expenses                              535,031         925,717       1,312,679       5,244,654
  Other general and administrative
    expenses                            3,435,381       3,427,588       2,057,398      12,013,423
  Depreciation and amortization         1,899,346       1,631,237         144,459       3,688,939
                                     -------------   -------------   -------------   -------------
    TOTAL COSTS AND EXPENSES            8,801,839      10,120,410       5,300,724      34,622,129
                                     -------------   -------------   -------------   -------------
OPERATING LOSS                         (8,782,966)     (9,770,410)     (5,150,724)    (34,103,256)
                                     -------------   -------------   -------------   -------------
OTHER EXPENSES/(INCOME):
  Interest expense                        294,106         415,425         588,488       2,165,152
  Interest income                         (91,837)       (313,046)           (464)       (405,347)
  Amortization of deferred and
    unearned financing costs                -               -             297,286      13,276,591
  Litigation settlement in shares
    of stock                                -               -             456,278         456,278
  Other income                           (225,000)          -               -            (225,000)
                                     -------------   -------------   -------------   -------------
    TOTAL OTHER EXPENSES/(INCOME)         (22,731)        102,379       1,341,588      15,267,674
                                     -------------   -------------   -------------   -------------
NET LOSS                             $ (8,760,235)   $ (9,872,789)   $ (6,492,312)   $(49,370,930)
                                     =============   =============   =============   =============

BASIC AND DILUTED LOSS PER SHARE
  (Notes 2, 10 and 11)               $       (.18)   $       (.23)   $       (.27)
                                     =============   =============   =============
WEIGHTED AVERAGE COMMON SHARES
  USED IN BASIC AND DILUTED LOSS
  PER SHARE (Notes 2, 10 and 11)       48,835,959      42,750,339      24,477,178
                                     =============   =============   =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                          F-4


<PAGE>

<TABLE>
                                   EUROTECH, LTD. AND SUBSIDIARIES
                                    (A Development Stage Company)

                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                                                 Common Stock                 Additional
                                                       Date of           -----------------------------         Paid-in
                                                     Transaction           Shares            Amount            Capital
                                                    ------------         -----------       -----------        -----------
                                                                             (1)

Period Ended December 31, 1995:
------------------------------

<S>                                                 <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
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
                                                                         ===========       ===========        ===========

                                                                                             Deficit
                                                                                           Accumulated
                                                                          Unearned         During the
                                                      Due from            Financing        Development
                                                    Stockholders            Costs             Stage              Total
                                                    ------------         -----------       -----------        -----------

Period Ended December 31, 1995:
------------------------------

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)                          (3,000)              -                 -                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                         $    (3,000)         $    -            $ (513,226)        $   43,376
                                                    ============         ===========       ===========        ===========

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

The accompanying notes are an integral part of these consolidated financial
statements.

                                                F-5


<PAGE>

<TABLE>
                                        EUROTECH, LTD. AND SUBSIDIARIES
                                         (A Development Stage Company)

                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                       FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                                                 Common Stock                 Additional
                                                       Date of           -----------------------------         Paid-in
                                                     Transaction           Shares            Amount            Capital
                                                    ------------         ------------      ------------       ------------
                                                                             (1)
Year Ended December 31, 1996:
----------------------------

<S>                                                 <C>                  <C>               <C>                <C>
Balance - December 31, 1995                                                9,500,800       $     2,375        $   557,227

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
Amortization of unearned financing costs                                       -                 -                  -
Repayment by stockholders                                                      -                 -                  -
Net loss                                                                       -                 -                  -
                                                                         ------------      ------------       ------------
Balance - December 31, 1996                                               17,223,836       $     4,306        $ 4,804,298
                                                                         ============      ============       ============

                                                                                             Deficit
                                                                                           Accumulated
                                                                          Unearned         During the
                                                      Due from            Financing        Development
                                                    Stockholders            Costs             Stage               Total
                                                    ------------         ------------      ------------       ------------

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

Balance - December 31, 1995                         $    (3,000)         $     -           $  (513,226)       $    43,376

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)                          -               (2,719,875)            -                 -
Amortization of unearned financing costs                  -                  226,656             -                226,656
Repayment by stockholders                                 3,000                -                 -                  3,000
Net loss                                                  -                    -            (3,476,983)        (3,476,983)
                                                    ------------         ------------      ------------       ------------
Balance - December 31, 1996                         $     -              $(2,493,219)      $(3,990,209)       $(1,674,824)
                                                    ============         ============      ============       ============

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

The accompanying notes are an integral part of these consolidated financial
statements.

                                                      F-6


<PAGE>

<TABLE>
                                        EUROTECH, LTD. AND SUBSIDIARIES
                                         (A Development Stage Company)

                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                       FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                                                  Common Stock                 Additional
                                                       Date of           ------------------------------         Paid-in
                                                     Transaction           Shares            Amount             Capital
                                                    ------------         ------------      ------------       ------------
                                                                             (1)

Year Ended December 31, 1997:
----------------------------

<S>                                                     <C>               <C>              <C>                <C>
Balance - December 31, 1996                                               17,223,836       $     4,306        $ 4,804,298

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
Value assigned to conversion feature of
  Convertible Debentures                                11/97                  -                 -              1,337,143
Value assigned to issuance of warrant to
  purchase 127,500 shares in
  consideration for interest and
  placement fees in connection with
  Convertible Debentures                                11/97                  -                 -                284,480
Value assigned to issuance to
  shareholder of warrant to purchase
  35,000 shares for consulting services                 11/97                  -                 -                 39,588
Value assigned to issuance to
  shareholder of warrant to purchase
  364,000 shares as additional
  consideration for financing activities                11/97                  -                 -                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
Amortization of unearned financing costs                                       -                 -                  -
Net loss                                                                       -                 -                  -
                                                                         ------------      ------------       ------------
Balance - December 31, 1997                                               18,928,836       $     4,732        $12,892,313
                                                                         ============      ============       ============

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

The accompanying notes are an integral part of these consolidated financial
statements.

                                                     F-7


<PAGE>

<TABLE>
                                   EUROTECH, LTD. AND SUBSIDIARIES
                                    (A Development Stage Company)

                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                                       Deficit
                                                                     Accumulated
                                                   Unearned          During the
                                                   Financing         Development
                                                    Costs              Stage               Total
                                                 ------------       -------------       -------------

<S>                                              <C>                <C>                 <C>
Year Ended December 31, 1997:
----------------------------

Balance - December 31, 1996                      $(2,493,219)       $ (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)                               (2,725,000)              -                   -
Value assigned to conversion feature of
  Convertible Debentures                          (1,337,143)              -                   -
Value assigned to issuance of warrant to
  purchase 127,500 shares in consideration
  for interest and placement fees in
  connection with Convertible Debentures            (284,480)              -                   -
Value assigned to issuance to shareholder of
  warrant to purchase 35,000 shares for
  consulting services                                (39,588)              -                   -
Value assigned to issuance to shareholder of
  warrant to purchase 364,000 shares as
  additional consideration for financing
  activities                                        (862,680)              -                   -
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)                     (2,000,000)              -                   -
Amortization of unearned financing costs           8,426,793               -               8,426,793
Net loss                                               -             (12,441,242)        (12,441,242)
                                                 ------------       -------------       -------------
Balance - December 31, 1997                      $(1,315,317)       $(16,431,451)       $ (4,849,723)
                                                 ============       =============       =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                                F-8


<PAGE>

<TABLE>
                                            EUROTECH, LTD. AND SUBSIDIARIES
                                             (A Development Stage Company)

                                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                           FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                                           Common Stock              Additional
                                                       Date of      ----------------------------      Paid-in
                                                     Transaction      Shares          Amount          Capital
                                                    ------------    ------------    ------------    ------------
                                                                        (1)

<S>                                                  <C>             <C>            <C>             <C>
Year Ended December 31, 1998:
----------------------------

Balance - December 31, 1997                                          18,928,836     $     4,732     $12,892,313
Issuance of stock for consulting fees
  ($2.58 per share)                                     03/98            43,000              11         110,930
Issuance of stock for consulting fees
  ($0.85 per share)                                     06/98           143,000              35         215,895
Issuance of stock for consulting fees
  ($0.32 per share)                                     09/98           126,617              32         107,503
Issuance of stock for consulting fees                   12/98           155,427              39          81,505
Issuance of stock pursuant to penalty
  provision of bridge financing
  ($1.0625 per share)                                   04/98           500,000             125         531,124
Value assigned to conversion feature of
  Convertible Debentures and warrant to
  purchase 60,000 shares issued as
  additional interest                                   02/98             -               -           1,100,000
Value assigned to conversion feature of
  Convertible Debentures and warrant to
  purchase 125,000 shares issued as
  additional interest                                   07/98             -               -             475,000
Cancellation of stock issued for
  consulting fees                                       07/98          (375,000)            (94)        (93,656)
Issuance of stock for conversion of
  debenture payable ($0.32 per share)                09/98, 11/98       100,002              25          32,169
Amortization of unearned financing costs                                  -               -               -
Net loss                                                                  -               -               -
                                                                    ------------    ------------    ------------
Balance - December 31, 1998                                          19,621,882     $     4,905     $15,452,783
                                                                    ============    ============    ============

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

The accompanying notes are an integral part of these consolidated financial
statements.

                                                F-9


<PAGE>

<TABLE>
                                   EUROTECH, LTD. AND SUBSIDIARIES
                                    (A Development Stage Company)

                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                                       Deficit
                                                                     Accumulated
                                                   Unearned          During the
                                                   Financing         Development
                                                    Costs              Stage               Total
                                                 ------------       -------------       -------------

<S>                                              <C>                <C>                 <C>

Year Ended December 31, 1998:
----------------------------

Balance - December 31, 1997                      $(1,315,317)       $(16,431,451)       $ (4,849,723)
Issuance of stock for consulting fees
  ($2.58 per share)                                    -                   -                 110,941
Issuance of stock for consulting fees
  ($0.85 per share)                                    -                   -                 215,930
Issuance of stock for consulting fees
  ($0.32 per share)                                    -                   -                 107,535
Issuance of stock for consulting fees                  -                   -                  81,544
Issuance of stock pursuant to penalty
  provision of bridge financing
  ($1.0625 per share)                               (531,249)              -                   -
Value assigned to conversion feature of
  Convertible Debentures and warrant to
  purchase 60,000 shares issued as
  additional interest                             (1,100,000)              -                   -
Value assigned to conversion feature of
  Convertible Debentures and warrant to
  purchase 125,000 shares issued as
  additional interest                               (475,000)              -                   -
Cancellation of stock issued for consulting
  fees                                                 -                   -                 (93,750)
Issuance of stock for conversion of
  debenture payable ($0.32 per share)                  -                   -                  32,194
Amortization of unearned financing costs           3,374,066               -               3,374,066
Net loss                                               -              (7,814,143)         (7,814,143)
                                                 ------------       -------------       -------------
Balance - December 31, 1998                      $   (47,500)       $(24,245,594)       $ (8,835,406)
                                                 ============       =============       =============

</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.

                                                F-10


<PAGE>

<TABLE>
                                        EUROTECH, LTD. AND SUBSIDIARIES
                                         (A Development Stage Company)

                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                       FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                                           Common Stock              Additional
                                                       Date of      ----------------------------      Paid-in
                                                     Transaction      Shares          Amount          Capital
                                                    ------------    ------------    ------------    ------------
                                                                        (1)

<S>                                                     <C>          <C>            <C>             <C>

Year Ended December 31, 1999:
----------------------------

Balance - December 31, 1998                                          19,621,882     $     4,905     $15,452,783
Issuance of stock on consulting fees
  ($0.77 per share)                                     03/99            78,613              20          62,381
Issuance of stock for consulting fees
  ($0.72 per share)                                     06/99           611,572             153         429,035
Issuance of stock for consulting fees
  ($0.98 per share)                                     09/99           496,002             124         520,116
Issuance of stock on conversion of
  debenture payable ($0.35 per share)                   02/99           987,201             247         341,029
Issuance of stock for finder's fee
  ($1.94 per share)                                     12/99            29,518               7          46,302
Issuance of stock for finder's fee
  ($0.77 per share)                                     09/99            82,580              20          63,727
Issuance of stock for consulting fees
  ($2.04 per share)                                     12/99           100,374              25         190,769
Value assigned to conversion feature of
  Convertible Debentures and warrant to
  purchase 94,750 shares issued as
  additional interest                                   01/99             -               -             175,425
Value assigned to additional
  consideration for financing activities
  ($0.72 per share)                                     05/99           100,000              25          71,975
Issuance of stock ($0.25 per share)                     06/99         1,000,000             250         474,750
Issuance of stock ($0.25 per share)                     09/99         2,000,000             500         499,500
Issuance of stock ($0.38 per share)                     12/99         3,035,000             759       1,179,241
Issuance of stock ($0.25 per share)                     12/99           930,000             233         232,267
Issuance of stock ($0.50 per share)                     12/99           240,000              60         119,940
Issuance of stock in settlement of
  litigation ($2.51 per share)                          11/99           181,784              45         456,233

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

The accompanying notes are an integral part of these consolidated financial
statements.

                                                     F-11


<PAGE>

<TABLE>
                                   EUROTECH, LTD. AND SUBSIDIARIES
                                    (A Development Stage Company)

                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                                       Deficit
                                                                     Accumulated
                                                   Unearned          During the
                                                   Financing         Development
                                                    Costs              Stage               Total
                                                 ------------       -------------       -------------

<S>                                              <C>                <C>                 <C>
Year Ended December 31, 1999:
----------------------------

Balance - December 31, 1998                      $   (47,500)       $(24,245,594)       $ (8,835,406)
Issuance of stock for consulting fees
  ($0.77 per share)                                    -                   -                  62,401
Issuance of stock for consulting fees
  ($0.72 per share)                                    -                   -                 429,188
Issuance of stock for consulting fees
  ($0.98 per share)                                    -                   -                 520,240
Issuance of stock on conversion of
  debenture payable ($0.35 per share)                  -                   -                 341,276
Issuance of stock for finder's fee
  ($1.94 per share)                                    -                   -                  46,309
Issuance of stock for finder's fee
  ($0.77 per share)                                    -                   -                  63,747
Issuance of stock for consulting fees
  ($2.04 per share)                                    -                   -                 190,794
Value assigned to conversion feature of
  Convertible Debentures and warrant to
  purchase 94,750 shares issued as
  additional interest                               (175,425)              -                   -
Value assigned to additional consideration
  for financing activities ($0.72 per share)         (72,000)              -                   -
Issuance of stock ($0.25 per share)                    -                   -                 475,000
Issuance of stock ($0.25 per share)                    -                   -                 500,000
Issuance of stock ($0.38 per share)                    -                   -               1,180,000
Issuance of stock ($0.25 per share)                    -                   -                 232,500
Issuance of stock ($0.50 per share)                    -                   -                 120,000
Issuance of stock in settlement of
  litigation ($2.51 per share)                         -                   -                 456,278
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                                F-12


<PAGE>

<TABLE>
                                        EUROTECH, LTD. AND SUBSIDIARIES
                                         (A Development Stage Company)

                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                       FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                                           Common Stock              Additional
                                                       Date of      ----------------------------      Paid-in
                                                     Transaction      Shares          Amount          Capital
                                                    ------------    ------------    ------------    ------------
                                                                        (1)

<S>                                                   <C>            <C>            <C>             <C>

Year Ended December 31, 1999: (Continued)
----------------------------

Issuance of stock on exercise of
  warrants ($1.50 per share)                          11/99/ 12/99      200,000     $        50     $   299,950
Acquisition of 6,795,000 shares of ATI,
  previously Kurchatov Research
  Holdings, Ltd. ($1.07 per share)                        09/99       4,530,000           1,133       4,840,305
Acquisition from ATI of EKOR technology
  interest ($1.069 per share)                             11/99       2,000,000             500       2,137,000
Issuance of stock to retire debt of ATI
  assumed with purchase of EKOR
  technology interest ($1.06 per share)                   11/99       1,000,000             250       1,068,500
Issuance of stock on exercise of
  warrants ($0.36 per share)                              11/99          75,000              19          26,981
Issuance of stock on conversion of
  debenture note payable, interest and
  penalties ($0.36 per share)                             11/99         217,464              54         230,458
Issuance of stock in private sale
  ($1.59 per share)                                       12/99       1,882,353             471       2,831,529
Modification of warrants issued                                           -               -             123,500
Amortization of unearned financing costs                                  -               -               -
Net loss                                                                  -               -               -
                                                                    ------------    ------------    ------------
Balance - December 31, 1999                                          39,399,343     $     9,850     $31,873,696
                                                                    ============    ============    ============

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

The accompanying notes are an integral part of these consolidated financial
statements.

                                                     F-13


<PAGE>

<TABLE>
                                   EUROTECH, LTD. AND SUBSIDIARIES
                                    (A Development Stage Company)

                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                                       Deficit
                                                                     Accumulated
                                                   Unearned          During the
                                                   Financing         Development
                                                    Costs              Stage               Total
                                                 ------------       -------------       -------------

<S>                                              <C>                <C>                 <C>
Year Ended December 31, 1999: (Continued)
----------------------------

Issuance of stock on exercise of warrants
  ($1.50 per share)                              $     -            $      -            $    300,000
Acquisition of 6,795,000 shares of ATI,
  previously Kurchatov Research Holdings,
  Ltd. ($1.07 per share)                               -                   -               4,841,438
Acquisition from ATI of EKOR technology
  interest ($1.069 per share)                          -                   -               2,137,500
Issuance of stock to retire debt of ATI
  assumed with purchase of EKOR technology
  interest ($1.06 per share)                           -                   -               1,068,750
Issuance of stock on exercise of warrants
  ($0.36 per share)                                    -                   -                  27,000
Issuance of stock on conversion of
  debenture note payable, interest and
  penalties ($0.36 per share)                          -                   -                 230,512
Issuance of stock in private sale
  ($1.59 per share)                                    -                   -               2,832,000
Modification of warrants issued                        -                   -                 123,500
Amortization of unearned financing costs             294,925               -                 294,925
Net loss                                               -              (6,492,312)         (6,492,312)
                                                 ------------       -------------       -------------
Balance - December 31, 1999                      $     -            $(30,737,906)       $  1,145,640
                                                 ============       =============       =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                                F-14


<PAGE>

<TABLE>
                                        EUROTECH, LTD. AND SUBSIDIARIES
                                         (A Development Stage Company)

                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                       FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                                                         Common Stock
                                                                Date of           ---------------------------
                                                              Transaction            Shares          Amount
                                                              -----------         -----------      ----------
                                                                                     (1)

<S>                                                           <C>                 <C>              <C>

For the Year Ended December 31, 2000
------------------------------------

Balance - December 31, 1999                                                       39,399,343       $   9,850

Issuance of stock for consulting fees
  ($5.00 per share)                                              03/00                73,672              18
Issuance of stock for consulting fees
  ($4.06 per share)                                              06/00                23,794               6
Issuance of stock for consulting fees
  ($3.67 per share)                                              09/00                21,010               5
Issuance of stock for consulting fees
  ($1.93 per share)                                              12/00                22,198               5
Issuance of stock ($5.00 per share)                              03/00             1,200,000             300
Issuance of stock ($5.37 per share)                              04/00             2,000,000             500
Issuance of stock in payment of note payable and
  related interest ($0.28 per share)                             01/00               200,000              50
Issuance of stock for interest on convertible
  debentures ($1.56 per share)                                   01/00               289,655              74
Issuance of stock and warrants to settle
  penalties of convertible debentures
  ($2.00 per share)                                              03/00               300,000              75
Issuance of stock on conversion of
  debentures and interest ($1.06 per share)                      03/00               965,661             242
Issuance of stock on conversion of debentures
  and interest ($2.75 per share)                                 08/00               827,412             207
Accrual of shares under reset provisions                         12/00             8,500,000           2,125
Issuance of stock for price reset                                12/00               741,085             185
Issuance of stock on exercise of warrants
  ($2.00 per share)                                              02/00                60,000              15
Issuance of stock on exercise of warrants
  ($1.06 per share)                                              02/00               125,000              31
Issuance of stock on exercise of warrants
  ($1.50 per share)                                              03/00               100,000              24
Issuance of stock on exercise of warrants
  ($1.00 per share)                                              05/00                35,000               9
Compensatory element of options to purchase
  325,000 shares issued to employee as
  additional compensation                                        05/00                 -               -
Compensatory element of options to purchase
  12,500 shares issued to employee as additional
  compensation                                                   10/00                 -               -
Value assigned to warrants issued to consultants                 05/00                 -               -
Compensatory element of warrants issued to
  employees                                                      10/00                 -               -
Exercise of stock options                                        08/00                50,000              13
Shares repurchased                                            05/00; 06/00             -               -
Amortization of unearned compensation                                                  -               -
Net loss                                                                               -               -
                                                                                  -----------      ----------
Balance - December 31, 2000                                                       54,933,830       $  13,734
                                                                                  ===========      ==========

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

The accompanying notes are an integral part of these consolidated financial
statements.

                                                     F-15


<PAGE>

<TABLE>
                                        EUROTECH, LTD. AND SUBSIDIARIES
                                         (A Development Stage Company)

                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                       FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                               Treasury Stock              Additional
                                                        -----------------------------       Paid-in         Unearned
                                                          Shares            Amount          Capital       Compensation
                                                        -----------      ------------     ------------    ------------

<S>                                                     <C>              <C>              <C>             <C>
For the Year Ended December 31, 2000
------------------------------------

Balance - December 31, 1999                                  -           $     -          $31,873,696     $     -

Issuance of stock for consulting fees
  ($5.00 per share)                                          -                 -              368,727           -
Issuance of stock for consulting fees
  ($4.06 per share)                                          -                 -               94,869           -
Issuance of stock for consulting fees
  ($3.67 per share)                                          -                 -               77,025           -
Issuance of stock for consulting fees
  ($1.93 per share)                                            174               348           41,523           -
Issuance of stock ($5.00 per share)                          -                 -            5,999,700           -
Issuance of stock ($5.37 per share)                          -                 -           10,749,470           -
Issuance of stock in payment of note
  payable and related interest
  ($0.28 per share)                                          -                 -               56,343           -
Issuance of stock for interest on
  convertible debentures ($1.56 per share)                   -                 -              451,064           -
Issuance of stock and warrants to settle
  penalties of convertible debentures
  ($2.00 per share)                                          -                 -            1,119,925           -
Issuance of stock on conversion of
  debentures and interest ($1.06 per                         -                 -            1,023,358           -
  share)
Issuance of stock on conversion of
  debentures and interest
  ($2.75 per share)                                          -                 -            2,276,913           -
Accrual of shares under reset provisions                     -                 -               (2,125)          -
Issuance of stock for price reset                            -                 -                 (185)          -
Issuance of stock on exercise of warrants
  ($2.00 per share)                                          -                 -              119,985           -
Issuance of stock on exercise of warrants
  ($1.06 per share)                                          -                 -              132,469           -
Issuance of stock on exercise of warrants
  ($1.50 per share)                                          -                 -              149,976           -
Issuance of stock on exercise of warrants
  ($1.00 per share)                                          -                 -               34,991           -
Compensatory element of options to
  purchase 325,000 shares issued to
  employee as additional compensation                        -                 -              187,750        (187,750)
Compensatory element of options to
  purchase 12,500 shares issued to
  employee as additional compensation                        -                 -               18,625           -
Value assigned to warrants issued to
  consultants                                                -                 -              204,718           -
Compensatory element of warrants issued to
  employees                                                  -                 -               78,125           -
Exercise of stock options                                    -                 -               16,487           -
Shares repurchased                                      (3,532,150)       (8,478,069)           -               -
Amortization of unearned compensation                        -                 -                -              41,723
Net loss                                                     -                 -                -               -
                                                        -----------      ------------     ------------    ------------
Balance - December 31, 2000                             (3,531,976)      $(8,477,721)     $55,073,429     $  (146,027)
                                                        ===========      ============     ============    ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                                     F-16


<PAGE>

<TABLE>
                                   EUROTECH, LTD. AND SUBSIDIARIES
                                    (A Development Stage Company)

                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                              Deficit
                                                            Accumulated
                                                            During the
                                                            Development
                                                              Stage                 Total
                                                           -------------         ------------

<S>                                                        <C>                   <C>

For the Year Ended December 31, 2000
------------------------------------

Balance - December 31, 1999                                $(30,737,906)         $ 1,145,640

Issuance of stock for consulting fees
  ($5.00 per share)                                               -                  368,745
Issuance of stock for consulting fees
  ($4.06 per share)                                               -                   94,875
Issuance of stock for consulting fees
  ($3.67 per share)                                               -                   77,030
Issuance of stock for consulting fees
  ($1.93 per share)                                               -                   41,876
Issuance of stock ($5.00 per share)                               -                6,000,000
Issuance of stock ($5.37 per share)                               -               10,749,970
Issuance of stock in payment of note payable
  and related interest ($0.28 per share)                          -                   56,393
Issuance of stock for interest on convertible
  debentures ($1.56 per share)                                    -                  451,138
Issuance of stock and warrants to settle
  penalties of convertible debentures
  ($2.00 per share)                                               -                1,120,000
Issuance of stock on conversion of
  debentures and interest ($1.06 per share)                       -                1,023,600
Issuance of stock on conversion of debentures
  and interest ($2.75 per share)                                  -                2,277,120
Accrual of shares under reset provisions                          -                    -
Issuance of stock for price reset                                 -                    -
Issuance of stock on exercise of warrants
  ($2.00 per share)                                               -                  120,000
Issuance of stock on exercise of warrants
  ($1.06 per share)                                               -                  132,500
Issuance of stock on exercise of warrants
  ($1.50 per share)                                               -                  150,000
Issuance of stock on exercise of warrants
  ($1.00 per share)                                               -                   35,000
Compensatory element of options to purchase
  325,000 shares issued to employee as
  additional compensation                                         -                    -
Compensatory element of options to purchase
  12,500 shares issued to employee as
  additional compensation                                         -                   18,625
Value assigned to warrants issued to
  consultants                                                     -                  204,718
Compensatory element of warrants issued to
  employees                                                       -                   78,125
Exercise of stock options                                         -                   16,500
Shares repurchased                                                -               (8,478,069)
Amortization of unearned compensation                             -                   41,723
Net loss                                                     (9,872,789)          (9,872,789)
                                                           -------------         ------------
Balance - December 31, 2000                                $(40,610,695)         $ 5,852,720
                                                           =============         ============

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                                F-17


<PAGE>

<TABLE>
                                        EUROTECH, LTD. AND SUBSIDIARIES
                                         (A Development Stage Company)

                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                       FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                                     Common Stock                 Treasury Stock
                                                Date of       -------------------------     ---------------------------
                                              Transaction        Shares        Amount          Shares         Amount
                                              -----------     -----------    ----------     -----------    ------------
                                                                  (1)

<S>                                              <C>          <C>            <C>            <C>            <C>
For the Year Ended December 31, 2001
------------------------------------

Balance - December 31, 2000                                   54,933,830     $  13,734      (3,531,976)    $(8,477,721)

Compensatory element of warrants to
  purchase 150,000 shares issued to
  consultant as compensation                     01/01             -             -               -               -
Compensatory element of warrants to
  purchase 60,000 shares issued to
  consultant as additional compensation          02/01             -             -               -               -
Issuance of stock for consulting fees
  ($2.15 per share)                              03/01             5,574             1           -               -
Issuance of stock for consulting fees
  ($1.66 per share)                              03/01             3,000             1           -               -
Exercise of warrants ($1.10 per share)           03/01            50,000            13           -               -
Issuance of stock ($2.25 per share)              03/01         1,333,333           333           -               -
Modification of warrants issued                  05/01             -             -               -               -
Issuance of stock for acquisition of
  Acoustic Core Technology ($1.00 per
  share)                                         05/01         2,500,000           625           -               -
Issuance of stock for consulting fees
  ($.77 per share)                               06/01             3,000             1           -               -
Issuance of stock for consulting fees
  ($.73 per share)                               06/01           120,000            30           -               -
Shares issued under repricing
  agreements for March 2000 financing            06/01         2,279,463           570           -               -
Shares issued under repricing
  agreements for April 2000 financing            06/01         1,352,566           338           -               -
Issuance of stock ($.33 per share)               08/01         3,000,000           750           -               -
Compensatory element of warrants to
  purchase 500,000 shares issued to
  consultant as additional compensation          08/01             -             -               -               -
Issuance of stock for consulting fees
  ($.42 per share)                               09/01             3,000             1           -               -
Compensatory element of warrants to
  purchase 455,000 shares issued to
  consultants as compensation                    10/01             -             -               -               -
Issuance of stock for consulting fees
  ($.37 per share)                               12/01             3,000             1           -               -
Issuance of stock for consulting
  expense ($.345 per share)                      12/01            57,320            14           -               -
Issuance of stock for compensation
  ($.345 per share)                              12/01            29,291             7           -               -
Shares issued under repricing
  agreements for April 2000 financing            12/01         2,500,000           625           -               -
Reversal of December 2000 accrual under
  repricing agreements                           12/01        (8,500,000)       (2,125)          -               -
Amortization of unearned compensation            12/01             -             -               -               -
Net loss                                                           -             -               -               -
                                                              -----------    ----------     -----------    ------------
Balance - December 31, 2001                                   59,673,377     $  14,919      (3,531,976)    $(8,477,721)
                                                              ===========    ==========     ===========    ============

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

The accompanying notes are an integral part of these consolidated financial
statements.

                                                     F-18


<PAGE>

<TABLE>
                                        EUROTECH, LTD. AND SUBSIDIARIES
                                         (A Development Stage Company)

                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                       FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 2001

<CAPTION>
                                                                                           Deficit
                                                                                          Accumulated
                                                       Additional                         During the
                                                        Paid-in           Unearned        Development
                                                        Capital         Compensation         Stage             Total
                                                      ------------      -----------      --------------     ------------

<S>                                                   <C>               <C>              <C>                <C>
For the Year Ended December 31, 2001
------------------------------------

Balance - December 31, 2000                           $55,073,429       $ (146,027)      $ (40,610,695)     $ 5,852,720

Compensatory element of warrants to purchase
  150,000 shares issued to consultant as
  compensation                                            141,000            -                   -              141,000
Compensatory element of warrants to
  purchase 60,000 shares issued to
  consultant as additional compensation                    41,400            -                   -               41,400
Issuance of stock for consulting fees
  ($2.15 per share)                                        11,999            -                   -               12,000
Issuance of stock for consulting fees
  ($1.66 per share)                                         4,974            -                   -                4,975
Exercise of warrants ($1.10 per share)                     54,987            -                   -               55,000
Issuance of stock ($2.25 per share)                     2,839,667            -                   -            2,840,000
Modification of warrants issued                            29,000            -                   -               29,000
Issuance of stock for acquisition of Acoustic
  Core Technology ($1.00 per share)                     2,499,375            -                   -            2,500,000
Issuance of stock for consulting fees
  ($.77 per share)                                          2,319            -                   -                2,320
Issuance of stock for consulting fees
  ($.73 per share)                                         87,570            -                   -               87,600
Shares issued under repricing agreements for
  March 2000 financing                                       (570)           -                   -                -
Shares issued under repricing agreements for
  April 2000 financing                                       (338)           -                   -                -
Issuance of stock ($.33 per share)                        999,250            -                   -            1,000,000
Compensatory element of warrants to purchase
  500,000 shares issued to consultant as
  additional compensation                                  90,000          (90,000)              -                -
Issuance of stock for consulting fees
  ($.42 per share)                                          1,249            -                   -                1,250
Compensatory element of warrants to purchase
  455,000 shares issued to consultants as
  compensation                                             90,500          (38,000)              -               52,500
Issuance of stock for consulting fees
  ($.37 per share)                                          1,109            -                   -                1,110
Issuance of stock for consulting expense
  ($.345 per share)                                        19,746            -                   -               19,760
Issuance of stock for compensation
  ($.345 per share)                                        10,089            -                   -               10,096
Shares issued under repricing agreements for
  April 2000 financing                                       (625)           -                   -                -
Reversal of December 2000 accrual under
  repricing agreements                                      2,125            -                   -                -
Amortization of unearned compensation                       -              142,116               -              142,116
Net loss                                                    -                -              (8,760,235)      (8,760,235)
                                                      ------------      -----------      --------------     ------------
Balance - December 31, 2001                           $61,998,255       $ (131,911)      $ (49,370,930)     $ 4,032,612
                                                      ============      ===========      ==============     ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                                     F-19


<PAGE>

<TABLE>
                                        EUROTECH, LTD. AND SUBSIDIARIES
                                         (A Development Stage Company)

                                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>
                                                                                                               For the Period
                                                                 For the Years Ended December 31,              from Inception
                                                        -----------------------------------------------       (May 26, 1995) to
                                                            2001             2000              1999           December 31, 2001
                                                        ------------     ------------      ------------         -------------

<S>                                                     <C>              <C>               <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                              $(8,760,235)     $(9,872,789)      $(6,492,312)         $(49,370,930)
  Adjustments to reconcile net loss to
    net cash used in operating
    activities:
      Depreciation and amortization                       1,899,346        1,631,237           144,459             3,688,939
      Amortization of deferred and
        unearned financing costs                              -                -               297,314            13,276,619
      Stock issued for license                                -                -                 -                    37,500
      Compensatory element of stock
        issuances                                           535,031          925,717         1,312,679             5,244,654
      Modification of warrants issued                         -                -               123,500               123,500
      Issuance of stock in settlement
        of litigation                                         -                -               456,278               456,278

   Changes in assets (increase) decrease:
       Advances to related parties                            -                -                 5,918                 -
       Prepaid expenses and other current
         assets                                            (191,565)         (62,075)            -                  (253,840)
       Other assets                                           3,588         (217,876)           (2,200)             (224,039)
   Changes in liabilities increase (decrease):
        Accounts payable and accrued
          liabilities                                      (342,149)         118,590         1,578,155             2,723,598
        Deferred revenue                                   (225,000)           -                 -                     -
                                                        ------------     ------------      ------------         -------------
   NET CASH USED IN OPERATING ACTIVITIES                 (7,080,984)      (7,477,196)       (2,576,209)          (24,297,721)
                                                        ------------     ------------      ------------         -------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Capital expenditures                                      (67,776)        (176,610)           (1,220)             (286,578)
  Patent costs                                                -                -                 -                   (31,358)
                                                        ------------     ------------      ------------         -------------
   NET CASH USED IN INVESTING ACTIVITIES                    (67,776)        (176,610)           (1,220)             (317,936)
                                                        ------------     ------------      ------------         -------------
CASH FLOWS FROM FINANCING ACTIVITIES
 Proceeds from exercise of stock options                      -               16,500             -                    16,650
 Net proceeds from issuance of common
   stock                                                  5,090,000       15,499,970         5,345,500            26,776,970
 Proceeds from notes payable                                  -                -               450,000               450,000
 Proceeds from exercise of warrants                          55,000          437,500           327,000               819,500
 Offering costs                                               -                -                 -                    (2,898)
 Repayment by stockholders                                    -                -                 -                     3,000
 Repayment of notes payable                                   -             (400,000)            -                  (400,000)
 Proceeds from bridge notes                                   -                -                 -                 2,000,000
 Repayment of bridge notes                                    -                -                 -                (2,000,000)
 Proceeds from Convertible Debentures                         -                -                 -                 7,000,000
 Repayment of Convertible Debentures                       (500,000)           -                 -                  (500,000)
 Borrowings from stockholders                                 -                -                 -                   561,140
 Repayment to stockholders                                    -                -                 -                  (561,140)
 Deferred financing costs                                     -                -                 -                  (604,150)
 Purchase of treasury stock                                   -           (8,478,069)            -                (8,478,069)
                                                        ------------     ------------      ------------         -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                 4,645,000        7,075,901         6,122,500            25,081,003
                                                        ------------     ------------      ------------         -------------
(DECREASE) INCREASE IN CASH                              (2,503,760)        (577,905)        3,545,071               465,346

CASH - BEGINNING                                          2,969,106        3,547,011             1,940                 -
                                                        ------------     ------------      ------------         -------------
CASH - ENDING                                           $   465,346      $ 2,969,106       $ 3,547,011          $    465,346
                                                        ============     ============      ============         =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the year for:
    Interest                                            $    43,889      $   508,244       $       526          $    824,691
                                                        ============     ============      ============         =============
    Income taxes                                        $     -          $     -           $     -              $      -
                                                        ============     ============      ============         =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                                     F-20


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BUSINESS

Eurotech, Ltd. and Subsidiaries (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, marketing and management company, formed to
commercialize new or existing but previously unrecognized 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 technologies for business and other commercial applications
principally in the United States, Western and Central Europe, Ukraine, and
Russia. 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, by selling products incorporating these technologies,
and through development and operating joint ventures and strategic alliances. To
date, the Company has not generated any substantial revenues from operations.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates
----------------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Consolidation Policy
--------------------

The accompanying consolidated financial statements include the accounts of the
Company and a majority-owned subsidiary, Crypto.com, Inc. ("Crypto"). All
significant intercompany balances and transactions have been eliminated.

Equity Method of Accounting for Unconsolidated Foreign Affiliates
-----------------------------------------------------------------

Investment in companies in which the Company has a 20% to 50% interest and has
the ability to exercise significant influence over operating and financial
policies are accounted for on the equity method. In addition, investments in
Israeli-based technology companies, in which the Company has a 52% to 57%
interest in, have been accounted for under the equity method because the Company
does not have sufficient control in order to consolidate such entities. However,
as of December 31, 2001, such investees do not have any revenue nor any
significant assets and liabilities.

                                      F-21


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Equity Method of Accounting for Unconsolidated Foreign Affiliates (Continued)
-----------------------------------------------------------------

At December 31, 2001, investments in companies accounted for under the equity
method consist of the following foreign companies, which are located in Israel:

                     Chemonol, Ltd. ("Chemonol")              57%
                     Rademate, Ltd. ("Rademate")              52%
                     Comsyntech, Ltd. ("Comsyntech")          52%
                     Remptech, Ltd. ("Remptech")              50%
                     Sorbtech, Ltd. ("Sorbtech")              52%
                     Amsil, Ltd. ("Amsil")                    52%
                     Corpem, Ltd. ("Corpem")                  20%

Cash and Cash Equivalents
-------------------------

The Company considers all short-term highly liquid investments with a maturity
date of three months or less when purchased to be cash equivalents.

Machinery and Equipment
-----------------------

Machinery and equipment procured in the normal course of business is stated at
cost. Machinery and equipment purchased in connection with an acquisition is
stated at its estimated fair value, generally based on an appraisal. Machinery
and equipment is being depreciated for financial accounting purposes, using the
straight-line method over their estimated useful lives, which are generally five
years. Upon retirement or other disposition of these assets, the cost and
related accumulated depreciation of these assets are removed from the accounts
and the resulting gains or losses are reflected in the results of operations.
Expenditures for maintenance and repairs are charged to operations. Renewals and
betterments are capitalized.

Patent Costs
------------

Patent costs are being amortized on a straight-line basis over 17 years, which
represent both the statutory and economic lives of the patents.

Long-Lived Assets
-----------------

The Company periodically assesses the recoverability of long-lived assets,
including property and equipment, intangibles and technology rights, when there
are indications of potential impairment, based on estimates of undiscounted
future cash flows. The amount of impairment is calculated by comparing
anticipated discounted future cash flows with the carrying value of the related
asset. In performing this analysis, management considers such factors as current
results, trends, and future prospects, in addition to other economic factors.

                                      F-22


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes
------------

The Company recognizes deferred income taxes for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year end, based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
necessary to reduce deferred tax assets to the amount that is "more likely than
not" to be realized. Income taxes are provided for the tax effects of
transactions reported in the financial statements and consist of taxes currently
due plus deferred taxes for operating losses that are available to offset future
taxable income.

Revenue Recognition
-------------------

The Company expects that it will derive substantially all of its revenue from
the sale, licensing and sub-licensing of technology. Revenue from the sale of
technology will be recognized in the year of sale. Revenue from licensing and
sub-licensing will be recognized in the periods when the fees have been earned.

Research and Development
------------------------

Research and development expenditures are charged to expense as incurred, unless
they are reimbursed under specific contracts. The Company capitalizes costs
related to acquired technologies that have achieved technological feasibility
and have alternative uses. Acquired technologies, which are in-process at the
date of acquisition or have no alternative uses are expensed as research and
development costs. Losses incurred on the equity basis in the Company's interest
in seven Israeli research and development companies are included in research and
development expense. The Company's share of losses from its Israeli investees
approximates the funding payments under various agreements discussed in Note 3e.
The Company recognizes its share of losses from Israeli investees during the
quarter that the funding payments are made. In addition, expenditures in
connection with technology licensing agreements concluded during the years ended
December 31, 2001, 2000 and 1999, aggregate $-0-, $250,000 and $-0-,
respectively, and were charged to research and development (see Note 3).

Advertising
-----------

Advertising costs are charged to operations when incurred. Advertising expense
was $2,405, $8,732, $-0- and $11,137, respectively, for the years ended December
31, 2001, 2000, 1999 and for the period from inception (May 26, 1995) to
December 31, 2001, respectively.

                                      F-23


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock-Based Compensation
------------------------

The Company follows Statement of Financial Accounting Standards No. 123 (SFAS
123), "Accounting for Stock-Based Compensation." SFAS 123 establishes accounting
and reporting standards for stock-based employee compensation plans. This
statement allows companies to choose between the fair value based method of
accounting as defined in this statement and the intrinsic value based method of
accounting as prescribed by Accounting Principles Board Opinion No. 25 (APB 25),
"Accounting for Stock Issued to Employees."

The Company has elected to continue to follow the accounting guidance provided
by APB 25, as permitted for stock-based compensation relative to the Company's
employees. Stock and options granted to other parties in connection with
providing goods and services to the Company is accounted for under the fair
value method as prescribed by SFAS 123.

Deferred and Unearned Financing Costs
-------------------------------------

Financing costs in connection with a one-year bridge loan completed in December
of 1996 were amortized over the life of the promissory note.

Financing costs in connection with the November 1997, February 1998 and July
1998 Convertible Debenture offerings were amortized over the period the
debentures become convertible, generally 180 days.

Loss Per Share
--------------

Basic loss per common share is computed based on weighted average shares
outstanding and excludes any potential dilution. Diluted loss per share reflects
the potential dilution from the exercise or conversion of all dilutive
securities into common stock based on the average market price of common shares
outstanding during the period. No effect has been given to outstanding options,
warrants or convertible debentures in the diluted computation, as their effect
would be antidilutive.

Fair Value of Financial Instruments
-----------------------------------

The financial statements include various estimated fair value information.

Other Current Assets, and Other Current Liabilities: The carrying amount
approximates fair value because of the short-term maturity of those instruments.

Convertible Debentures and Notes Payable: The carrying amounts of convertible
debentures and notes payable approximate fair value due to the length of the
maturities, the interest rates being tied to market indices and/or due to the
interest rates not being significantly different from the current market rates
available to the Company.

                                      F-24


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Reclassifications
-----------------

Certain prior year balances have been reclassified to conform with the current
year presentation.

Segment Reporting
-----------------

During 1998, the Company adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." SFAS No. 131 requires a new basis of
determining reportable business segments, i.e., the management approach. This
approach requires that business segment information used by management to assess
performance and manage company resources be the source for information
disclosure. On this basis, the Company is organized and operates as one business
segment to acquire and manage the commercialization of advanced technologies
from research institutes and individual inventors worldwide and to select the
optimum approach to commercialization from acquiring technologies through
licensing, joint venture, spinning-out or sale.

Impact of Recently Issued Accounting Standards
----------------------------------------------

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations,"
which supercedes Accounting Principles Board ("APB") Opinion No. 16, "Business
Combinations." SFAS No. 141 requires the purchase method of accounting for
business combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method. The provisions of SFAS 141 have been adopted as of
July 1, 2001. Management believes that the implementation of this standard will
have no impact on the Company's results of operations and financial position.

In July 2001, the FASB also issued Statement of Financial Accounting Standards
No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets," which is effective
for fiscal years beginning after December 15, 2001. Certain provisions shall
also be applied to acquisitions initiated subsequent to June 30, 2001. SFAS 142
supercedes APB Opinion No. 17, "Intangible Assets," and requires, among other
things, the discontinuance of amortization related to goodwill and indefinite
lived intangible assets. These assets will then be subject to an impairment test
at least annually. Management believes that the implementation of this standard
will have no impact on the Company's results of operations and financial
position.

                                      F-25


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Impact of Recently Issued Accounting Standards (Continued)
----------------------------------------------

In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144 ("SFAS 144"), "Accounting for the Impairment or Disposal of Long-Lived
Assets," which supercedes Statement of Financial Accounting Standards No. 121
("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" and certain provisions of APB Opinion No.
30, "Reporting Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." SFAS 144 requires that long-lived assets to be
disposed of by sale, including discontinued operations, be measured at the lower
of carrying amount or fair value, less cost to sell, whether reported in
continuing operations or in discontinued operations. SFAS 144 also broadens the
reporting requirements of discontinued operations to include all components of
an entity that have operations and cash flows that can be clearly distinguished,
operationally and for financial reporting purposes, from the rest of the entity.
The provisions of SFAS 144 are effective for fiscal years beginning after
December 15, 2001. Management believes that the implementation of this standard
will have no impact on the Company's results of operations and financial
position.

NOTE 3 - TECHNOLOGY, RESEARCH, COLLABORATION, INVESTMENTS, TRANSFER AND
         LICENSING AGREEMENTS

a)  EKOR Technology
    ---------------

The Company funds 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."

Pursuant to an agreement dated August 26, 1996, with Advanced Technology
Industries, Inc. ("ATI"), a Delaware corporation, which at such time was
beneficially owned by ERBC Holdings, Ltd. ("ERBC") and individual Russian
scientists, researchers and academics, who were affiliated with Kurchatov and
EAPS, the Company agreed to pay ATI 50% of the net profits (after deducting
development costs and related expenses) derived from the sale, license or
commercialization of a silicon geopolymer compound technology known as EKOR. The
managing director and one former business representative of ERBC were then
shareholders of the Company.

In September 1996, the Company entered into a licensing agreement with ERBC,
whereby ERBC sublicensed to the Company its license to use and exploit the EKOR
technology in the United States, Ukraine, Canada, China, Japan, Republic of
Korea and all European countries who are members of the European Patent
Agreement. The term of the license expires on August 1, 2014. Under this
agreement, the Company is obligated to pay royalties equal to 3%, increasing in
May of 2005 to 3.1% of its revenue from such technology. In addition, the
Company agreed to continue to fund EAPS $10,000 per month until May 15, 2005.

                                      F-26


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - TECHNOLOGY, RESEARCH, COLLABORATION, INVESTMENTS, TRANSFER AND
         LICENSING AGREEMENTS (Continued)

a)  EKOR Technology (Continued)
    ---------------

Disbursements made by the Company related to the above described collaboration
arrangement, including expenses related to the EKOR technology, are charged to
research and development expenses and amounted to approximately $400,000,
$979,000 and $364,000, respectively, during the years ended December 31, 2001,
2000 and 1999.

In an agreement, dated as of November 30, 1999, the Company purchased all of the
rights in EKOR held by ATI for the following considerations:

o        Released to ATI all of the Company's royalty rights in the Re-sealable
         Container Systems and TetraPak Container technologies.

o        Surrendered to ATI the shares of ATI common stock the Company had
         acquired from CIS Development Corp. ("CIS") valued at $4,841,438 (Note
         10).

o        Issued to ATI 2,000,000 shares of Eurotech's common stock valued at
         $2,137,500.

o        Agreed to pay to ATI a royalty of 2% of gross sales, as defined,
         received by Eurotech from all products and services of EKOR by
         Eurotech, and

o        Assumed ATI's obligations to Spinneret Financial Systems, Inc.
         Spinneret had previously loaned to ATI $750,000 pursuant to convertible
         notes on which ATI was in default and on which interest and penalties
         had accrued. Spinneret expressly consented to the assumption of this
         liability. Subsequently, and before December 31, 1999, Spinneret
         converted this liability into 1,000,000 shares of the Company's common
         stock valued at $1,068,750.

The total consideration provided to ATI for the acquired technology interest in
EKOR totaled $8,047,688 and is being amortized over a 5-year period commencing
November 30, 1999. Amortization expense related to this intangible asset was
$1,609,537, $1,609,538 and $134,128 for the years ended December 31, 2001, 2000
and 1999, respectively.

                                      F-27


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - TECHNOLOGY, RESEARCH, COLLABORATION, INVESTMENTS, TRANSFER AND
         LICENSING  AGREEMENTS (Continued)

b)  Acoustic Core
    -------------

In an Agreement dated as of July 2001, and amended in October 2001, the Company
acquired the rights to certain technologies for certain markets that are in-situ
remote sensing of toxic, nuclear waste material and explosives. To evaluate
these technologies, the Company relied on an evaluation performed and completed
by a certified independent third party appraisal firm. In connection with this
transaction, the Company issued 2,500,000 fully paid and non-accessible shares
of its restricted common stock, valued at $2,500,000, and is being amortized
over a five-year period (life of long-term government contracts) commencing July
2001. Amortization expense related to this intangible asset was $232,527 for the
year ended December 31, 2001.

c)  Investments in Israeli Technology Companies
    -------------------------------------------

During 1997 and 1998, the Company acquired a 20% interest in six separate
Israeli technology, research and development companies. The Company made
additional investments in these entities during 2001, 2000 and 1999 and,
accordingly, increased its ownership interest in such investees. During 2001,
the Company acquired a 20% interest in one additional Israeli investee. The
Company's share of losses incurred from these research companies has been
accounted for on the equity basis and is included in research and development
expenses. The amount charged to research and development for the years ended
December 31, 2001, 2000 and 1999 approximated $344,393, $1,781,006 and $944,356,
respectively, which reduced the Company's investment in these seven companies to
zero. The payments remitted to such investees were used to fund the investees'
operating expenses for the corresponding period of each payment. The Company has
the right to suspend the payments under the agreements at any time.

All seven of these investees' technologies are in the development stage and have
not generated any significant revenues to-date. During 2001 and 2002, the
Company has temporarily curtailed five of the seven investees' operations.

Six of the seven investees have each received research grants of $300,000 under
an Israeli-backed incubator program. Each investee is to pay a royalty based on
revenue generated from each technology up to a maximum of $300,000.

                                      F-28


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - TECHNOLOGY, RESEARCH, COLLABORATION, INVESTMENTS, TRANSFER AND
         LICENSING AGREEMENTS (Continued)

c)  Investments in Israeli Technology Companies (Continued)
    -------------------------------------------

A summary of the investments in the seven Israeli technology research and
development companies are as follows:

<TABLE>
<CAPTION>
                                                                             Ownership
                           Year of            Description of                Interest at     Investments Made
                           Initial          Development-Stage               December 31,      During Last
                            Date                Company                         2001          Three Years
                           -------          -----------------               ------------    ----------------

<S>                         <C>       <C>                                        <C>        <C>
Chemonol, Ltd.              1997      Hybrid non-isocyanate polyurethane         57%        2001 - $ 95,000
                                                                                            2000 - $265,000
                                                                                            1999 - $305,000

Rademate, Ltd.  *           1998      Rapid biodegradable composite              52%        2001 - $  -0-
                                        materials                                           2000 - $370,000
                                                                                            1999 - $ 60,000

Comsyntech, Ltd.*           1997      Continuous combustion synthesis            52%        2001 - $  -0-
                                        and continuous action reactor                       2000 - $200,000
                                                                                            1999 - $ 45,500

Remptech, Ltd.  *           1997      Cobalt and nickel powders                  50%        2001 - $  -0-
                                                                                            2000 - $ 80,000
                                                                                            1999 - $165,500

Amsil, Ltd.     *           1998      Highly stable organomineral                52%        2001 - $  -0-
                                        polymers based on quarternary                       2000 - $230,000
                                        ammonium silicates                                  1999 - $ 62,500

Sorbtech, Ltd.  *           1998      High capacity absorbent                    52%        2001 - $  -0-
                                                                                            2000 - $260,000
                                                                                            1999 - $ 62,500

Corpem, Ltd.                2001      Sulfochlorinated polyethylene              20%        2001 - $ 30,000

                                        coatings                                            2000 -    -0-
                                                                                            1999 -    -0-

For all seven investees               Common charges funded by Company                      2001 - $219,393
                                                                                            2000 - $376,006
                                                                                            1999 - $243,356
</TABLE>

* Due to limited working capital, management decided to temporarily curtail the
funding of the operations and further development of the technologies for five
of the Israeli-based technology companies, Comsyntech, Ltd., Remptech, Ltd. and
Sorbtech, Ltd. during year ended December 2001 and Rademate, Ltd. and Amsil,
Ltd. during the first quarter of 2002.

   The Company may or may not choose to resume the funding of these five
companies in the future.

                                      F-29


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - TECHNOLOGY RESEARCH, COLLABORATION, INVESTMENTS, TRANSFER AND LICENSING
         AGREEMENTS (Continued)

d) Pursuant to three Technology Purchase Agreements each dated January 1, 1998
and a fourth agreement dated April of 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 four 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"), (iii) "Rubber Concrete" ("RubCon") and (iv)
Electronic Glues for operations in extreme environments for purchase prices of
$75,000, $15,000, $35,000 and $62,500, respectively (each, a "Purchase Price").
Pursuant to each such Technology Purchase Agreement, the Company, during a
15-year period, 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 as acquired research and development and, in accordance with
FASB Interpretation No. 4, has charged the purchase price of $187,500 to
research and development expenses during the year ended December 31, 1998.

During February 2000, the Company acquired all of such royalty interest in the
net profits derived by the Company from such technologies, along with rights to
certain other technologies, for a cash payment to Professor Figovsky of
$235,000, a payment of $15,000 to an Israeli research institute and a 1% royalty
from gross revenue generated by these technologies for a period of 15 years.
Since the acquired technologies are in the development stage, the Company
charged the purchase consideration of $250,000 to research and development costs
during the quarter ended March 31, 2000 (see Note 2).

e) During June 1998, the Company purchased for $40,000 the rights to certain
anticorrosive additive technology from Israeli scientists. The Company has
charged the $40,000 expenditure to research and development expenses for the
year ended December 31, 1998.

f) During February 2000, the Company entered into an employment/development
agreement with an individual to develop a cryptology technology. The Company
formed Crypto.com, Inc. for the purpose of funding the development and
commercialization of such technology. The Company agreed to pay this individual
a salary of $6,000 per month, plus benefits, for a period of one year, which has
been extended to January 31, 2002. The Company is a 66% controlling shareholder
of Crypto.com, Inc.

At December 31, 2001, the Company, through its subsidiary, Crypto.com, Inc.,
entered into an agreement to market, license and commercialize its cryptology
technology. Crypto granted a non-exclusive license and right to market its
cryptology technology for a period of five years. Upon receipt of this
cryptology technology, the licensee has 90 days to either use the technology
itself or enter into a contract and licensing agreement with third parties for
the use of the technology. If the licensee elects to utilize the technology
solely for its own purpose, the licensee shall pay to Crypto $100,000 per month
for 10 months. In the event that the licensee successfully markets and licenses
the Crypto cryptology technology to a third party, the licensee will pay Crypto
$1,000,000 within 30 days of this agreement. If the licensee enters into a
license or market agreement, in which it receives royalty payments, Crypto shall
receive 50% of the royalty.

                                      F-30


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - TECHNOLOGY RESEARCH, COLLABORATION, INVESTMENTS, TRANSFER AND LICENSING
         AGREEMENTS (Continued)

g)  Re-sealable Containers
    ----------------------

Pursuant to a sublicense (the "Re-sealable Container Sublicense") entered into
in December 1997, the Company acquired from ERBC an exclusive, worldwide license
to commercialize, use, exploit and market two mechanical systems (the
"Re-sealable Container Systems") for resealing soft-drink (and other similarly
configured) beverage cans, and cardboard "TetraPak" beverage containers.
"TetraPak" containers are four-sided, pyramidical beverage containers used in
Europe, made of packaging material similar to milk "cartons" familiar to the
U.S. market.

Under the Re-sealable Container Sublicense, the Company paid ERBC $495,000 in
consideration of the sub-license granted thereunder, and was obligated to pay to
the inventor 50% of the Company's net revenues from the sale or licensing of
such products and devices.

The Company accounted for this transaction as acquired research and development
and, in accordance with FASB Interpretation No. 4, charged the license fee of
$495,000 to research and development expenses for the year ended December 31,
1997.

During 1999, the Company sold its sub-licensing rights to the re-sealable
container technology to ATI for $500,000 and a royalty equal to 6% of the gross
revenue from this technology. This royalty was eliminated in the November 1999
Technology Purchase (see Note 3a). The Company received a deposit on such sale
of $150,000 during 1999 and such amount was included in revenue for the year
ended December 31, 1999. During the year ended December 31, 2000, the Company
received the balance of $350,000, which was recognized as revenue during the
year ended December 31, 2000.

h) 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.

In August 1997, the Company received a $225,000 technology transfer fee under
this agreement related to a construction of a parking structure in Moscow,
Russia. The Company has deferred the recognition of this revenue until such time
when all initial technology has been transferred to Arbat and the Company has no
remaining obligation once construction commences.

During the year ended December 31, 2001, the Company recognized the above
revenue of $225,000 as other income due to the fact that the Company has
fulfilled all of its obligations under the agreement. In addition, the Company
believes that it will not receive any other fees from Arbat under the above
agreement.

                                      F-31


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - MACHINERY AND EQUIPMENT

Machinery and equipment consisted of the following:

                                                            December 31,
                                                  ------------------------------
                                                      2001              2000
                                                  -----------        -----------

               Cost                               $  286,579         $  218,803
               Less:  Accumulated depreciation        92,918             37,390
                                                  -----------        -----------
                                                  $  193,661         $  181,413
                                                  ===========        ===========

Depreciation expense for the years ended December 31, 2001, 2000 and 1999
amounted to $55,528, $19,947 and $8,316, respectively.

NOTE 5 - PATENT COSTS

Patent costs consisted of the following:

                                                           December 31,
                                                  ------------------------------
                                                     2001                2000
                                                  -----------        -----------

               Cost of patents                    $   31,358         $   31,358
               Less:  Accumulated amortization        10,291              8,538
                                                  -----------        -----------

                                                  $   21,067         $   22,820
                                                  ===========        ===========

Patent costs capitalized represent legal and other costs related to filing of
patent applications in various countries.

Amortization expense for the years ended December 31, 2001, 2000 and 1999
amounted to $1,753, $1,753 and $2,014, respectively.

                                      F-32


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - NOTES PAYABLE - RELATED PARTIES

On December 23, 2001, the Company converted accrued salaries and accrued
consulting fees into five promissory notes with three employees and two
consultants, totalling $212,187. The Company agreed to pay the principal and the
interest at a rate per annum equal to 3.23% on February 1, 2003. On December 28,
2001, the Company issued 29,291 shares of its common stock valued at $.345 per
share to one of the consultants for the payment of one note, which reduced the
principal balance of the notes to $202,091.

NOTE 7 - 8% CONVERTIBLE DEBENTURES

November 27, 1997 8% Convertible Debentures
-------------------------------------------

On November 27, 1997, the Company sold through a private placement $3,000,000
principal amount of 8% convertible debenture notes, due November 27, 2000. As
additional consideration, the Company issued separate warrants to the purchasers
to acquire 60,000 shares of the Company's common stock at 110% of the market
price, determined over the last five trading days prior to November 27, 1997, or
$4.73 per share. The warrants are exercisable over two years and expired in
1999.

The debenture agreement permits the holders of the debentures to convert the
debt into shares of common stock at beneficial conversion rates based on the
timing of the conversions. All of the debt under this debenture was converted to
common stock during 1998, 1999, 2000 and 2001 (see Note 7 "Payments on
Debentures").

The Company assigned a value of $1,337,143 to the beneficial conversion feature
of the debentures and $134,400 to the warrants to purchase 60,000 shares issued
to the purchasers of the Convertible Debentures. These amounts are accounted for
separately from the Convertible Debentures as an addition to paid-in capital and
as a reduction of stockholders" equity for the unearned portion. The unearned
portion was being amortized on the interest method over the 180-day period
commencing November 27, 1997 and is charged to financing costs. For the years
ended December 31, 2001, 2000 and 1999, amortization of such unearned financing
costs amounted to $-0-, $-0- and $50,000, respectively.

Costs in connection with the $3,000,000 Convertible Debenture offering allocated
to the Convertible Debentures, amounted to $472,080. Such costs were comprised
of: (i) legal and professional fees amounting to $22,000, (ii) a placement fee
to an unrelated party amounting to $300,000 and (iii) the placement agent
received non-cash consideration valued at $150,080 consisting of warrants to
purchase 67,500 shares of the Company's common stock at $4.73 per share, or 110%
of Company's average closing price, determined over the last five trading days
prior to November 27, 1997. The Company amortized such costs over 180 days as a
financing expense commencing November 27, 1997. For the years ended December 31,
2001, 2000 and 1999, there was no amortization related to such costs.

                                      F-33


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - 8% CONVERTIBLE DEBENTURES (Continued)

February 23, 1998 8% Convertible Debenture Offering
---------------------------------------------------

On February 23, 1998, the Company sold in a private placement a principal amount
of $3,000,000, 8% Convertible Debentures, 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. All of the debt under this debenture was converted to
common stock in January of 2002 (see Note 14).

The Company assigned a value of $1,000,000 to the debentures" beneficial
conversion feature and $100,000 to the warrants to purchase 60,000 shares, and
such amount was amortized over 180 days commencing February 23, 1998. For the
year ended December 31, 1998, amortization related to such costs amounted to
$1,100,000.

Proceeds from the sale of a principal amount of 3,000,000, 8% Convertible
Debentures 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
have been recorded as deferred financing costs and were amortized over 180 days
commencing February 23, 1998. For the year ended December 31, 1998, amortization
related to such costs amounted to $235,000.

July 20, 1998 8% Convertible Debenture Offering
-----------------------------------------------

On July 20, 1998, the Company sold through a private placement a principal
amount of $1,000,000, 8% Convertible Debentures 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. All of the debt under this debenture was converted in
1999 and 2000 (see Note 7 "Payments on Debentures").

The Company has assigned a value of $430,000 to the debentures beneficial
conversion feature and $45,000 to the 125,000 warrants, and such amount was
amortized over 180 days commencing July 20, 1998. For the years ended December
31, 2001, 2000 and 1999, amortization related to such costs amounted to $-0-,
$-0- and $47,500, respectively.

Proceeds from the sale of the principal amount of $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 were amortized over 180 days commencing
July 20, 1998. For the years ended December 31, 2001, 2000 and 1999,
amortization of such costs amounted to $-0-, $-0- and $2,500, respectively.

                                      F-34


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - 8% CONVERTIBLE DEBENTURES (Continued)

Payments on Debentures
----------------------

During the year ended December 31, 1998, a debenture holder converted $30,000 of
principal and $2,169 of accrued interest into 100,002 shares of common stock.

During the year ended December 31, 1999, a debenture holder converted $410,000
of principal and $161,788 of accrued interest into 1,204,665 shares of common
stock.

During the year ended December 31, 2000, accrued interest through December 31,
1999 on the November 1997 and the February 1998 Convertible Debentures totaling
$902,276 was satisfied for cash payment of $451,138 and the issuance of 289,655
shares of common stock valued at $451,138.

During the year ended December 31, 2000, the obligation under the Convertible
Debenture dated July 1998 of $900,000, plus accrued interest of $123,600, was
satisfied by the issuance of 965,661 shares of common stock.

During the year ended December 31, 2000, the obligation under the Convertible
Debenture dated November 1997 of $2,160,000, plus accrued interest of $117,120,
was satisfied by the issuance of 827,412 shares of common stock.

In January 2000, the Company settled penalties outstanding under the November
1997 and February 1998 Convertible Debentures that resulted from a failure to
obtain an effective registration statement during July 1998 and part of 1999.
The penalty was settled in full by Eurotech issuing to the holders of the
debentures 300,000 shares of the Company's common stock and warrants to purchase
250,000 shares of common stock at an exercise price of $3. The consideration
issued to the debenture holders was valued at $1,120,000, which was equal to the
penalty assessed.

On February 20, 2001, the Company entered into an agreement with the holders of
the Convertible Debentures dated February 23, 1998 to extend the original due
date of February 23, 2001 by one year to February 23, 2002. In February 2002,
indebtedness under this debenture was satisfied by conversion into common shares
(see Note 14).

During the year ended December 31, 2001, the Company paid principal of $500,000
and accrued interest of $43,276 on the November 1997 Convertible Debentures.

                                      F-35


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - 8% CONVERTIBLE DEBENTURES (Continued)

Payments on Debentures (Continued)
----------------------

Convertible debentures consist of the following:

                                                            At December 31,
                                                        -----------------------
                                                           2001         2000
                                                        -----------  -----------

        November 27, 1997 8% Convertible Debentures
          (Due November 27, 2000)                       $    -       $  500,000

        February 23, 1998 8% Convertible Debentures
          (Due February 23, 2002) (Converted in
          February 2002)                                 3,000,000    3,000,000
                                                        -----------  -----------
               Total                                     3,000,000    3,500,000

        Less: Current maturities                         3,000,000      500,000
                                                        -----------  -----------
                Long-term Portion                       $    -       $3,000,000
                                                        ===========  ===========

Secured Promissory Note
-----------------------

On January 6, 1999, the Company's Chairman and the majority convertible debt
holder provided $450,000 of short-term financing to the Company evidenced by two
secured promissory notes. Each secured promissory note bears interest at 13% per
annum and is due January 6, 2000. The promissory notes are collateralized by the
Company's intangible assets.

As additional consideration for the financing, the Company issued to the secured
promissory note holders warrants to purchase 84,750 shares of the Company's
common stock at the average market value for five trading days immediately
preceding the issuance date at $0.36. The warrants expire five years from
January 6, 1999.

The Company assigned a value to the debt's beneficial conversion feature and
warrants amounting to $175,425, and such amount was amortized over 180 days
commencing January 6, 1999.

These notes were satisfied in full during the year ended December 31, 2000 as
follows:

- The obligation under a note dated January 1999 of $400,000, plus accrued
interest, totalling $52,142, was paid in full.

- The obligation under a convertible promissory note dated January 1999 of
$50,000, plus accrued interest, payable to a former Chairman of the Board of the
Company, was satisfied by the issuance of 200,000 shares of common stock. In
connection with this transaction, warrants to purchase 9,750 shares of common
stock were cancelled.

                                      F-36


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - ACCRUED LIABILITIES

Accrued liabilities consist of the following:

                                                            At December 31,
                                                       -------------------------
                                                          2001           2000
                                                       -----------   -----------

         Interest                                      $  547,953    $  300,146

         Professional fees                                 53,475       128,738

         Consulting fees                                  138,420       351,895

         Other                                            145,359       658,764
                                                       -----------   -----------
                                                       $  885,207    $1,439,543
                                                       ===========   ===========

NOTE 9 - INCOME TAXES

The components of deferred tax assets and liabilities at December 31, 2001 and
2000 are as follows:

                                                         2001           2000
                                                      ------------  ------------

         Deferred Tax Assets:
           Net operating losses carryforwards         $14,500,000   $11,900,000
           Technology rights                              811,000       395,000
           Capitalized research and
             development expenses                       1,100,000     1,060,000
           Compensatory element of stock
             issuances                                    181,900       314,700
                                                      ------------  ------------
              Total Gross Deferred Tax Assets          16,592,900    13,669,700

           Less:  Valuation allowance                 (16,592,900)  (13,669,700)
                                                      ------------  ------------
                  Net Deferred Tax Assets             $     -       $     -
                                                      ============  ============

The net change in the valuation allowance for deferred tax assets was an
increase of approximately $2,923,200.

                                      F-37


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - INCOME TAXES (Continued)

As of December 31, 2001, the Company had available approximately $42,769,000 of
net operating losses ("NOL") for income tax purposes that may be carried forward
to offset future taxable income, if any. The NOL carryforwards for December 31,
1997 and prior expire during the year 2011 through 2012, and the December 31,
1998, 1999 and 2000 NOLs expire in the years 2018, 2019 and 2020, respectively.
Pursuant to Section 382 of the Internal Revenue Code, substantial restrictions
are imposed on the utilization of net operating loss carryforwards in the event
of an ownership change.

                                   Year                 Net Operating Losses
                                   ----                 ----------------------

                                   2011                          $  2,372,000
                                   2012                            12,321,000
                                   2018                             7,989,000
                                   2019                             4,742,000
                                   2020                             7,634,000
                                   2021                             7,711,000
                                                                 -------------
                                                                 $ 42,769,000
                                                                 =============

A reconciliation between the statutory federal income tax rate (34%) and the
Company's effective rate is as follows:

                                                   2001       2000       1999
                                                  ------     ------     ------

            Federal statutory rate                (34.0)%    (34.0)%    (34.0)%
            Non-deductible expenses and losses      1.0        1.0        1.0
            Increase in valuation allowance        33.0       33.0       33.0
                                                  -------    -------    -------
              Effective rate                       -0-  %     -0-  %     -0-  %
                                                  =======    =======    =======

NOTE 10 - STOCKHOLDERS' EQUITY

Amendment of Authorized Shares
------------------------------

On June 20, 2000, the Company adopted an amendment to its Articles of
Incorporation providing an increase to the authorized number of shares of common
stock to 100,000,000 and an increase to the authorized number of shares of
preferred stock to 5,000,000. On February 1, 2002, the Company adopted an
Amendment to its Articles of Incorporation designating 25,000 shares of its
authorized preferred stock as Series A 3% Convertible Preferred Stock (Note 14).

                                      F-38


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - STOCKHOLDERS' EQUITY (Continued)

Sale of Common Stock - December 31, 1999
----------------------------------------

On December 31, 1999, the Company completed the sale to Woodward LLC, an
institutional investor, of 1,882,353 shares of its common stock and a warrant to
purchase 200,000 shares of its common stock, resulting in net proceeds to the
Company of $2,832,000. Pursuant to the terms of the sale, the Company could have
been compelled to issue to the investor additional shares of common stock based
on certain average closing prices of its common stock over the four-month period
following December 31, 1999. No additional common shares were required to be
issued under this agreement.

In addition, in December 1999 another agreement was entered into with the same
investor, under which the Company, at its option, could sell additional common
shares to the investor. The shares must be registered and the agreement was
subject to monthly limits of $4,000,000, and various other limitations and
restrictions. The purchase price of the common stock for each sale was based on
90% of the average of certain closing prices of its common stock of the
preceding 20 days. Pursuant to this agreement, the Company completed three stock
sales described below in March of 2000, April of 2000 and March of 2001.

Sale of Common Stock - March 2, 2000
------------------------------------

On March 2, 2000, under the agreement with Woodward LLC, the Company sold
1,200,000 shares of its common stock for total proceeds of $6,315,790. The
agreement, pursuant to which these shares were sold, provides that the Company
may be required to issue to Woodward LLC additional shares of common stock in
the event that the average bid price in the market for outstanding Eurotech
shares during September and October 2000 is below $6.58. On September 30, 2000,
both parties agreed to amend its March 2000 agreement solely with respect to the
number of reset periods. It was agreed that there will be four reset periods,
each of one calendar month duration (20 trading days) starting September 5,
2000. Each reset period covers 25% of the shares originally sold previous to
this agreement.

Sale of Common Stock - April 24, 2000
-------------------------------------

On April 24, 2000, under the agreement with Woodward LLC, the Company sold to
Woodward LLC 2,000,000 of its common shares, together with a warrant to purchase
500,000 shares at $10 per share, for $10,000,000 and certain other
consideration. The agreement, pursuant to which these shares were sold, provides
that the Company may be required to issue to Woodward LLC additional shares of
common stock under a repricing provision after March 31, 2001, if the average
bid price of outstanding Eurotech shares is not then at least $9.375. The
parties amended this agreement on June 29, 2000 to provide for the payment by
Woodward LLC of a further $1,250,000. The Company recorded the $1,250,000 as a
stock subscription receivable as of December 31, 2000. The Company received the
$1,250,000 on March 13, 2001.

                                      F-39


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - STOCKHOLDERS' EQUITY (Continued)

Sale of Common Stock - March 31, 2001
-------------------------------------

The Company entered into an additional common stock purchase agreement with
Woodward LLC on March 31, 2001. Pursuant to this agreement, the Company sold to
Woodward LLC 1,333,333 shares for a payment of $3,000,000, less related expenses
of $160,000. The shares were subject to repricing after March 1, 2002, if the
bid price of outstanding Eurotech shares for any lowest five business days
during the repricing period is not equal to greater than $3.15.

Modification and Extension of Woodward LLC Agreements
-----------------------------------------------------

On May 18, 2001, the Company and Woodward LLC entered into an agreement to
extend and modify their existing agreements as follows:

o   The repricing terms applicable to the remaining one-half of the 1,200,000
    shares issued pursuant to the March 2000 agreement, to all of the 2,000,000
    shares issued pursuant to the April 2000 agreement and the 1,333,333 shares
    issued pursuant to the March 2001 agreement, as summarized above, will be
    superseded by new repricing terms that reference the target price applicable
    to the new arrangement, which is $3.76 per share. The 3,933,333 shares will
    be subject to repricing in two monthly installments of 300,000 shares each,
    six monthly installments of 333,333 shares each and three monthly
    installments of 444,444 shares each over eleven monthly repricing periods
    beginning as of April 1, 2001, but skipping July and August 2001, as a
    result of which the Company may be required to issue to Woodward LLC
    additional shares of common stock in the proportion to which the outstanding
    shares trade during the specified repricing period below the $3.76 target
    price.

o   The exercise price of the two warrants that were previously issued to
    Woodward LLC for 200,000 and 500,000 shares, respectively, was reduced to
    $4.00 per share.

Based on the strong probability that additional shares would be issuable under
the repricing provisions of the March and April 2000 stock sales, the Company
recorded an accrual of 8,500,000 additional common shares in the stockholders'
equity section of the December 31, 2000 consolidated balance sheet.

During October and November of 2000, the Company issued to Woodward LLC 741,085
shares and in April and May 2001, the Company issued 2,279,463 shares in full
satisfaction of the repricing rights under the March 2000 stock sale.

During the year ended December 31, 2001, the Company issued to Woodward LLC
3,852,566 common shares in satisfaction of repricing rights for 1,000,000 shares
out of the 2,000,000 shares sold under the April 2000 common stock offering. As
of December 31, 2001, the balance of common shares sold to Woodward LLC which
are subject to repricing rights consists of 1,000,000 shares sold under the
April 2000 offering and 1,333,333 shares sold under the March 2001 offering.

The above described repricing agreement has been modified by a new repricing
rights agreement dated February 1, 2002 (Note 14).

                                      F-40


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - STOCKHOLDERS' EQUITY (Continued)

Other Significant Common Stock Issuances During 1999
----------------------------------------------------

The Company issued 1,398,659 shares of common stock as consideration for
consulting services performed by various employees and consultants, including
related parties. Shares issued under these arrangements were valued at
$1,312,679, which was all charged to operations during the year ended December
31, 1999.

During June 1999, the Company sold 1,000,000 shares of its restricted common
stock for $475,000.

During September 1999, the Company sold 2,000,000 shares of its restricted
common stock for $500,000.

During December 1999, the Company sold 3,035,000 shares of its restricted common
stock for $1,180,000.

During December 1999, the Company sold 1,170,000 shares of its restricted common
stock for $352,000.

The Company acquired from a former member of the Company's board of directors
doing business as CIS Development Corp. ("CIS") 6,795,000 shares of the voting
capital stock of ATI in exchange for 4,530,000 shares of its own common stock.
The ATI shares were valued at $4,841,438 (Note 3).

In October of 1999, the Company settled a lawsuit with holders of certain
warrants. In connection with the litigation settlement, the Company issued
181,784 shares in exchange for the cancellation of 450,000 warrants. The shares
were valued at $456,278 and charged to operations during 1999.

Various warrant holders exercised their warrants and purchased 275,000 shares of
common stock. Proceeds from these warrants exercised aggregated $327,000.

Other Significant Common Stock Issuances During 2000
----------------------------------------------------

The Company issued 140,674 shares of common stock as consideration for
consulting services performed by various employees and consultants, including
related parties. Shares issued under these arrangements were valued at $582,526,
which was all charged to operations during the year ended December 31, 2000.

                                      F-41


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - STOCKHOLDERS' EQUITY (Continued)

Other Significant Common Stock Issuances During 2001
----------------------------------------------------

On January 31, 2001, the Company issued 5,574 shares of its common stock as
consideration for consulting services performed by two consultants at $2.15 per
share, totalling $12,000.

On September 6, 2001, pursuant to the Registration Statement on Form S-3 with
the Securities and Exchange Commission, which became effective on February 14,
2001, the Company issued 3,000,000 shares of its shelf-registered common stock
to five individuals and one corporation at $.33 per share for $1,000,000.

As of December 31, 2001, the Company issued 12,000 shares of its common stock as
consideration for consulting services performed by a consulting company for
3,000 shares per quarter, totalling $9,655.

In June 2001, the Company issued 120,000 shares of its restricted common stock
at $.73 per share for consulting services, totalling $87,600.

Stock Repurchases
-----------------

During the year ended December 31, 2000, the Company repurchased 3,532,150
shares of its common stock for $8,478,069. Of such amount, 1,000,000 shares were
repurchased from CIS for $2,000,000 during the quarter ended June 30, 2000,
1,000,000 shares were repurchased from CIS for $1,000,000 during the quarter
ended September 30, 2000 and 500,000 shares were repurchased from Advanced
Technology Industries ("ATI"), for $1,350,000 during the quarter ended September
30, 2000.

Warrants
--------

Pursuant to financial consulting agreements, in April of 1996, the Company
agreed to issue warrants to purchase 600,000 shares of common stock. The
warrants were exercisable for a period of four years commencing May 22, 1997 at
an exercise price of $1.00 per share. The Company has issued warrants to
purchase 130,000 shares of common stock. The remaining warrants were cancelled
pursuant to a settlement agreement dated November 1999 (see Note 11). During
1999, the warrant exercise price was reduced to $0.05 per share, resulting in a
charge to operations of $123,500 for 1999.

In October 1996, the Company entered into two-year consulting agreements with
two individuals for certain advisory services. As full compensation for services
to be rendered to the term of the agreements, the Company issued warrants to
purchase 150,000 shares of common stock each exercisable for a period of five
years commencing October 1, 1996 at an exercise price of $1.50 per share. During
1999, warrants to purchase 200,000 shares of common stock were exercised,
resulting in net proceeds to the Company of $350,000. During the year ended
December 31, 2000, the two individuals exercised warrants and purchased a total
of 100,000 shares of the Company's common stock, for net proceeds to the Company
of $150,000.

                                      F-42


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - STOCKHOLDERS' EQUITY (Continued)

Warrants (Continued)
--------

As additional consideration for monies advanced the Company during 1997, a
shareholder received warrants to purchase 364,000 common shares at a price of
110% of the average market price over the five-day period ending November 20,
1997, or $5.02 per share. The warrants could have been exercised commencing
January 1, 1998 and expired on December 31, 2000. The warrants were assigned a
value of $862,680, which was all charged to operations as a financing expense
during 1997. The warrants were not exercised and expired on December 31, 2000.

Pursuant to a financial consulting agreement in December of 1997, a consultant
was issued warrants to purchase 35,000 shares of common stock at $1.00 per
share. The warrants could have been exercised commencing January 1, 1998 and
expired on December 31, 2000. The warrants were assigned a value of $39,588,
which was all charged to operations as a financing expense during 1997. During
the year ended December 31, 2000, the consultant exercised its warrants and
purchased a total of 35,000 shares of the Company's common stock, for net
proceeds to the Company of $35,000.

Pursuant to the Convertible Debenture financing completed in November of 1997,
the Company issued to the purchasers of the convertible debentures warrants to
purchase 60,000 shares of common stock and issued to the placement agent
warrants to purchase 67,500 shares of common stock at $4.73 per share. The
warrants could have been exercised over a two-year period ended November 27,
1999. The warrants were valued at $284,480 and said amount was charged to
operations as a financing cost over the 180-day period commencing November 27,
1997. The warrants were not exercised and expired on November 27, 1999.

Pursuant to the Convertible Debenture financings completed on February 23, 1998
and July 20, 1998, the Company issued to the purchasers of the convertible
debentures warrants to purchase 60,000 and 125,000 shares of common stock,
respectively, at $2.30 and $1.06 per share, respectively. The warrants from the
February 23, 1998 and July 20, 1998 convertible debt financings could be
exercised over the two-year period ended February 23, 2000 and July 20, 2000,
respectively. The warrants from the February 23, 1998 and July 20, 1998
convertible debt financings were valued at $100,000 and $45,000, respectively,
and said amounts were charged to operations as a financing cost over the 180-day
period commencing February 23, 1998 and July 20, 1998, respectively. During the
year ended December 31, 2000, the above warrants to purchase 60,000 and 125,000
shares of the Company's common stock were exercised for net proceeds to the
Company of $252,500.

During the year ended December 31, 1999, an officer and a board member were
granted warrants to purchase a total of 200,000 common shares at an exercise
price of $0.75 per share for 50,000 shares and $1.50 for 150,000 shares. The
50,000 warrants are exercisable over a three-year period and 150,000 warrants
are exercisable over a four-year period.

                                      F-43


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - STOCKHOLDERS' EQUITY (Continued)

Warrants (Continued)
--------

Pursuant to the January 1999 debt financing, warrants to purchase 94,750 shares
of common stock were granted to the noteholders. During 1999, warrants to
purchase 75,000 common shares were exercised, resulting in proceeds to the
Company of $27,000. In connection with a repayment of an obligation under a
promissory note, the remaining warrants to purchase 9,750 shares of common stock
were cancelled.

As part of a consulting agreement with the Company's Chairman of the Board,
during 2000 the Company granted warrants to purchase 375,000 common shares over
the 5-year term of the agreement, of which 75,000 warrants become exercisable
each year at exercise prices of $1.00, $2.00, $3.00, $4.00 and $5.00,
respectively.

As part of an employment agreement with an officer, during 2000 the Company
granted warrants to purchase 300,000 common shares over the 3-year term of the
agreement, of which 100,000 warrants become exercisable each year, at exercise
prices of $1.00, $2.00 and $3.00, respectively.

In December of 1999, as part of the sale of the Company's securities, a warrant
to purchase 200,000 shares of the Company's common stock was sold to the
investor. The warrant is exercisable over five years at an exercise price of
$3.00. On May 18, 2001, the exercise price was increased to $4.00.

Pursuant to the settlement of penalties of convertible debentures, the Company
issued to the placement agent warrants to purchase 250,000 shares of common
stock at $3.00 per share. The warrants may be exercised over a four-year period
ending March 2004. The warrants were valued at $250,000 and were charged to
operations during the year ended December 31, 2000.

In April of 2000, as part of the sale of the Company's securities, a warrant to
purchase 500,000 shares of the Company's common stock was issued at an exercise
price of $10.00. The warrants are exercisable over a five-year period. On May
18, 2001, the exercise price was reduced to $4.00, resulting in a charge to
operations of $29,000 for the year ended December 31, 2001.

In June of 2000, two consultants were granted warrants to purchase a total of
58,000 common shares at an exercise price of $1.00 per share. The warrants were
valued at $204,718 and were charged to operations during the year ended December
31, 2000. The warrants are exercisable over a three-year period.

During the year ended December 31, 2000, two consultants were granted warrants
to purchase a total of 50,000 shares of common stock at an exercise price of
$1.00. The warrants are exercisable over a six-year period. The warrants were
valued at $78,125 and were charged to operations during the year ended December
31, 2001.

In January 2001, a consultant was granted warrants to purchase a total of
150,000 common shares at an exercise price of $2.00 per share. The warrants are
exercisable over a five-year period. The fair market value of the stock warrants
estimated on the date of grant using the Black-Scholes option pricing model was
$0.94, totalling $141,000, which was charged to operations during the year ended
December 31, 2001.

                                      F-44


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - STOCKHOLDERS' EQUITY (Continued)

Warrants (Continued)
--------

In February 2001, a consultant was granted warrants to purchase a total of
60,000 common shares at an exercise price of $3.00 per share. The warrants are
exercisable over a five-year period. The fair market value of the stock warrants
on the date of grant using the Black-Scholes option pricing model was $.69, or
$41,400, which was charged to operations during the year ended December 31,
2001.

On July 10, 2001, the Company elected an individual as a director of the Company
and as Co-Chairman of the Board. The Company agreed to issue five-year warrants
to purchase 500,000 shares of the Company's common stock at $.70 per share, 50%
issued upon signing the agreement and the balance issued quarterly over a
24-month period. The warrants are exercisable over a five-year period. The
individual subsequently left the Board and became Chairman of the Advisory
Board. The fair market value of the warrants on the date of grant using the
Black-Scholes option pricing model was $.18, or $90,000, of which $66,868 were
charged to operations during the year ended December 31, 2001.

On October 1, 2001, the Company granted a consulting company warrants to
purchase 100,000 shares of its common stock at an exercise price of $.34. The
warrants vested immediately and expire in 10 years from the grant date. The fair
value of stock warrants estimated on the date of grant using the Black-Scholes
option pricing model was $.27, or $27,000, which was charged to operations
during the year ended December 31, 2001.

On October 26, 2001, the Company granted a consulting firm warrants to purchase
280,000 shares of its common stock between $1.00 and $5.00. The warrants vested
on the grant date and expire in five years from the grant date. The fair value
of stock warrants estimated on the date of grant using the Black-Scholes option
pricing model ranging from $.09 to $.20 totalled $38,000, of which $12,667 was
charged to operations during the year ended December 31, 2001.

On October 26, 2001, the Company granted a legal firm warrants to purchase
75,000 shares of its common stock. The exercise price shall be the lower of the
price of its shares at the close of trading on AMEX on the date the agreement
was signed ($.60) and the price at the close of trading on AMEX on the date the
warrants become exercisable which will be six months later. The warrants were
valued at $25,500 and were charged to operations during the year ended December
31, 2001.

At December 31, 2001, the Company had outstanding warrants to purchase 3,108,000
shares of the Company's common stock at prices ranging from $0.34 to $5.00 per
share.

                                      F-45


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - STOCKHOLDERS' EQUITY (Continued)

The following table summarizes the stock warrants transactions from the period
of inception (May 26, 1995) to December 31, 2001:

<TABLE>
<CAPTION>
                                                      Number of Warrants     Exercise Prices
                                                      -----------------      ---------------
         <S>                                                <C>               <C>
         Balance outstanding at December 31, 1995               -                   -
           Granted                                            900,000         $0.05 - $1.50
           Exercised                                            -                   -
           Cancelled/Expired                                    -                   -
                                                            ----------
         Balance outstanding at December 31, 1996             900,000         $0.05 - $1.50
           Granted                                            526,500         $1.00 - $5.02
           Exercised                                            -                   -
           Cancelled/Expired                                    -                   -
                                                            ----------
         Balance outstanding at December 31, 1997           1,426,500         $0.05 - $5.02
           Granted                                            185,000         $1.06 - $2.30
           Exercised                                            -                   -
           Cancelled/Expired                                    -                   -
                                                            ----------
         Balance outstanding at December 31, 1998           1,611,500         $ .05 - $5.02
           Granted                                            494,750         $ .36 - $4.00
           Exercised                                         (275,000)        $ .36 - $1.50
           Cancelled/Expired                                 (660,000)        $ .05 - $4.73
                                                            ----------
         Balance outstanding at December 31, 1999           1,171,250         $ .75 - $5.02
           Granted                                          1,533,000         $1.00 - $5.00
           Exercised                                         (320,000)        $1.06 - $2.30
           Cancelled/Expired                                 (441,250)        $ .36 - $5.02
                                                            ----------
         Balance outstanding at December 31, 2000           1,943,000         $ .75 - $5.00
           Granted                                          1,165,000         $ .34 - $5.00
           Exercised                                            -                   -
           Cancelled/expired                                    -                   -
                                                            ----------
         Balance outstanding at December 31, 2001           3,108,000         $ .34 - $5.00
                                                            ==========
</TABLE>

The following table summarizes information about stock warrants outstanding at
December 31, 2001:

<TABLE>
<CAPTION>
                                            Warrants Granted                  Warrants Exercisable
                                 --------------------------------------     -----------------------
                                                 Weighted     Weighted                     Weighted
                                                 Average      Average                      Average
                                   Number       Remaining     Exercise        Number       Exercise
   Ranges of Exercise Prices     Outstanding   Life (Years)    Price        Exercisable     Price
   -------------------------     -----------   ------------   --------      -----------    --------

        <S>                       <C>                <C>       <C>           <C>            <C>
        $ .01 to $ .34              100,000          10        $ .34           100,000      $ .34
        $ .35 to $. 75              625,000          5.7       $ .67           406,250      $ .65
        $ .76 to $1.00              363,000          4.7       $1.00           363,000      $1.00
        $1.01 to $2.00              485,000          4.7       $1.84           485,000      $1.84
        $2.01 to $3.00              585,000          4.6       $2.90           580,000      $2.90
        $3.01 to $4.00              775,000           4        $4.00           700,000      $4.00
        $4.01 to $5.00              175,000           5        $5.00           100,000      $5.00
                                 -----------   ------------   --------      -----------    --------

                                  3,108,000          4.8       $2.38         2,734,250      $2.40
                                 ===========   ============   ========      ===========    ========
</TABLE>

                                      F-46


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - STOCKHOLDERS' EQUITY (Continued)

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                     3,108,000
                Convertible Debentures and accrued interest
                  (based on actual conversion at January 2002)        6,000,369
                Options to purchase common stock                      1,387,500
                Repricing rights provisions - based on $.50 price
                  per share (6,000,000 shares issued in February
                  2002)                                              15,213,000
                                                                     -----------
                      Total as of December 31, 2001                  25,708,869
                                                                     ===========
                Substantial issuances after December 31, 2001
                  through February 22, 2002:
                    Issuance of warrants to purchase common stock       550,000
                                                                     ===========
                    25,000 shares of Series A convertible
                      preferred stock                                see Note 14
                                                                     ===========

NOTE 11 - 1995 AND 1999 STOCK OPTION PLANS

The Company's 1995 Stock Option Plan was adopted by the Board of Directors and
stockholders of the Company on November 12, 1995. The Company's 1999 Stock
Option Plan was adopted by the Board of Directors during August 1999 and
approved by the stockholders in June 2000. Under the Option Plans, a total of
1,250,000 shares of the Company's common stock, subject to certain adjustments,
are reserved for issuance upon the exercise of options. Options granted under
the Option Plans may be either (i) options intended to constitute incentive
stock options under Section 422 of the Internal Revenue Code of 1986, as
amended, or any corresponding provisions of succeeding law (the "Code") or (ii)
non-qualified stock options. Incentive stock options may be granted under the
Option Plans to employees (including officers) of the Company or a subsidiary
corporation thereof on the date of grant. Non-qualified options may be granted
to (i) non-employees of the Company or a subsidiary thereof on the date of the
grant, and (ii) consultants or advisors who do not provide bonafide services,
and such services must not be in connection with the offer or sale of securities
in a capital raising transaction.

By its terms, the Option Plans are to be administered by a committee (the
"Committee") appointed by the Board of Directors which shall consist of either
the entire Board of Directors, or by a committee of two or more persons (who may
or may not be directors), and who serve at the discretion of the Board of
Directors. Subject to the provisions of the Option Plans, the Committee has the
authority to determine the persons to whom options will be granted, the exercise
price, the term during which options may be exercised and such other terms and
conditions as it deems appropriate.

                                      F-47


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - 1995 AND 1999 STOCK OPTION PLANS (Continued)

Any options granted under the Option Plans will be at the fair market value of
the common stock on the date of the grant (or 110% of the fair market value in
the case of employees holding ten percent or more of the voting stock of the
Company). Options granted under the Option Plans will expire not more than ten
years from the date of the grant subject to earlier termination under the Option
Plans. The term of an incentive stock option granted to a 10% shareholder shall
be no more than 5 years from the date of the grant. The 1995 Option Plan will
terminate on November 12, 2005 and the 1999 Option Plan will terminate in August
of 2009.

On August 28, 2000, the Company granted options to its Vice-President of
Advanced Material Division under the 1999 Option Plan to purchase 75,000 shares
of common stock. The exercise price is from $3.00 to $3.50, exercisable equally
on the anniversary date over the next three years. These options expire in five
years from the grant date.

On December 1, 2000, the Company granted options to its General Manager of
Business Development to purchase 12,500 shares of common stock. The exercise
price is $4.00. The Options expire in five years from the grant date.

During the year ended December 31, 2000, a retiring officer exercised options
and purchased 50,000 shares of the Company's stock for $16,500.

In January 2001, the Company granted options to its Chief Operating Officer
under the 1999 Option Plan to purchase 275,000 shares of common stock. The
exercise price is from $2.50 to $3.50, with 50,000 vesting and exercisable
immediately and the remaining 225,000 vesting and exercisable equally on the
anniversary date over the next three years. These options expire in five years
from the grant date.

In January 2001, the Company granted options to its former Chief Financial
Officer under the 1999 Option Plan to purchase 100,000 shares of common stock.
The exercise price is from $1.50 to $2.50, with 50,000 vesting and exercisable
immediately and the remaining 50,000 exercisable on June 30, 2001. These options
expire in five years from the grant date.

Options Granted Outside of the Plan
-----------------------------------

On May 3, 2000, the Company granted to its former Chief Operating Officer
non-qualified stock options, outside of the Company's stock option plans, to
purchase a total of 325,000 shares of common stock. Of the options granted,
options on 25,000 shares vested immediately at $1.00 per share and 100,000
shares will vest on each subsequent anniversary date at exercise prices of
$2.50, $3.00 and $3.50, respectively. All stock options expire on May 2, 2010.
The Company recorded a total of $187,750 as unearned stock compensation during
the year ended December 31, 2000, based on the excess of the closing price of
the common stock at the date of the grant over the exercise price of the
options. The unearned stock compensation is being amortized over the vesting
periods. During the years ended December 31, 2001 and 2000, the Company recorded
$62,580 and $41,723 of compensation expense related to such stock options,
respectively.

                                      F-48


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - 1995 AND 1999 STOCK OPTION PLANS (Continued)

A summary of the Company's stock option activity and related information
follows:

<TABLE>
<CAPTION>
                                                               Weighted                                  Weighted
                                                               Average                Outside            Average
                                      Under the Plans          Exercise              the Plans           Exercise
                                       Stock Options            Price              Stock Options          Price
                                        -----------             ------              -----------          --------

<S>                                      <C>                    <C>                    <C>               <C>
Balance at May 26, 1995                      -                  $ -                      -               $  -

Options granted:
  Outside the option plans                   -                    -                    600,000            .00025
                                        -----------             ------              -----------          --------
Balance at December 31, 1995                 -                    -                    600,000            .00025

Options exercised outside the
  option plans                               -                    -                   (600,000)           .00025
                                        -----------             ------              -----------          --------
Balance at December 31, 1996                 -                    -                      -                  -
                                        -----------             ------              -----------          --------
Balance at December 31, 1997                 -                    -                      -                  -
                                        -----------             ------              -----------          --------
Balance at December 31, 1998                 -                    -                      -                  -
                                        -----------             ------              -----------          --------
Options granted:
  In the 1995 plan                         500,000                .68                    -                  -
  In the 1999 plan                         150,000                .71                    -                  -

Options granted:
  Outside the option plan                    -                    -                      -                  -
                                        -----------             ------              -----------          --------
Balance at December 31, 1999               650,000                .69                    -                  -

Options granted:
  In the 1999 plan                          87,500               3.57                    -                  -

Options granted:
  Outside the option plan                    -                    -                    325,000              2.85

Options exercised in the 1995
  plan                                     (50,000)               .33                    -                  -
                                        -----------             ------              -----------          --------
Outstanding - December 31, 2000            687,500               1.07                  325,000              2.85

Options granted:
  In the 1999 plan                         375,000               2.72                    -                  -
                                        -----------             ------              -----------          --------
Outstanding - December 31, 2001          1,062,500              $1.65                  325,000             $2.85
                                        ===========             ======              ===========          ========
Exercisable at December 31:
   2001                                    787,500              $1.11                  125,000             $2.20
   2002                                    887,500              $1.32                  225,000             $2.56
   2003                                    987,500              $1.51                  325,000             $2.85
   2004                                  1,062,500              $1.65                  325,000             $2.85
</TABLE>

The exercise price for options outstanding as of December 31, 2001 ranged from
$.71 to $4.00.

At December 31, 2001, -0- and 137,500 options are available under the 1995 plan
and 1999 plan, respectively.

The weighted average fair value of exercised options during the year ended
December 31, 2000 was $1.07.

                                      F-49


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - 1995 AND 1999 STOCK OPTION PLANS (Continued)

Had the Company elected to recognize compensation cost based on the fair value
of the options and certain warrants issued to employees at the date of grant, as
prescribed by Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation," net loss in 2001, 2000 and 1999 would have been
$8,932,735, $14,896,800 and $7,742,000, respectively, or $.18, $.33 and $.32 per
share, respectively.

The fair value of options and warrants at date of grant was estimated using the
Black-Scholes option-pricing model. The weighted average fair value and related
assumptions were:

                                                          December 31,
                                                 ------------------------------
                                                   2001        2000       1999
                                                 -------     -------    -------

           Expected stock price volatility        56.81%      138%        33%
           Risk-free interest rate                  5%          5%         5%
           Expected option life in years         5 years     3 years    5 years
           Expected dividend yield                  0%          0%         0%

Employee Benefit Plan
---------------------

The Company adopted a non-contributory 401(k) plan effective January 1, 2000.
The plan covers all employees who are at least 21 years of age with no minimum
service requirements. The contributions to the plan for the years ended December
31, 2001 and 2000 totalled $23,300 and $12,400, respectively.

NOTE 12 - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

Lease Obligations
-----------------

During February 2000, the Company entered into a lease agreement for office
space at a monthly rental of $423. The term of the lease is for one year,
commencing on February 21, 2000 and terminating on February 20, 2001.

On August 30, 2000, the Company entered into a lease agreement for office space
in Fairfax, Virginia for a period of five years. Under the lease agreement,
annual rent will amount to $224,038.50 for each year, commencing September 1,
2000, subject to certain escalation adjustments.

                                      F-50


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

Lease Obligations (Continued)
-----------------

The Company's future minimum lease payments are as follows:

                      Year Ended December 31,                Amount
                      -----------------------              -----------

                               2002                        $  233,067
                               2003                           240,059
                               2004                           247,261
                               2005                           168,105
                               2006                             -

Rent expense for all premise operating leases was approximately $245,794,
$180,468 and $40,790 for the years ended December 31, 2001, 2000 and 1999,
respectively.

Sub-Lease Agreement
-------------------

During June 2001, the Company entered into a one-year sublease agreement of a
portion of its headquarters space for rent receivable of $5,945 per month.

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

On January 11, 1999, the Company entered into an employment agreement with its
president. The agreement provides for a salary $2,000 per week. He also received
a 5-year warrant to purchase 50,000 shares of the Company's common stock at $1
per share. On September 1, 1999, he was awarded, under the 1999 Stock Option
Plan, 150,000 options with exercise price of $0.71. Effective November 5, 1999,
he entered into a three-year employment contract with the Company that provides
for base compensation in the first contract year of $104,000; in the second
contract year, the sum of that amount, plus the bonus awarded to him in the
first contract year; and in the third contract year, that amount, plus the bonus
awarded to him in the second contract year. The bonus to which he is entitled in
each contract year is an amount, not to exceed 50% of base salary, determined by
applying to that year's base salary the percentage by which the market price of
the Company's common stock had increased between the beginning and the end of
the contract year. In addition, for each contract year, he will be issued a
five-year warrant to purchase 100,000 shares of the Company's common stock for
$1, $2 and $3 per share, successively. Effective July 1, 2000, the base pay was
increased to $3,000 per week. As of February 28, 2002, this agreement has been
cancelled (see Note 14).

                                      F-51


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

Employment Agreements (Continued)
---------------------

On August 28, 2000, the Company entered into a one-year employment agreement
with its Vice President, providing for an annual base salary of $138,000 and
non-qualified stock options to purchase a total of 75,000 shares of common
stock. Of the options granted, exercise prices are determined by the board that
approximates the market price during the period of the week preceding the
board's approval. On August 28, 2001, the above agreement was automatically
extended for one more year.

During January 2001, the Company entered into an employment agreement with an
individual to provide services as general manager of its Nuclear and
Environmental Division. The Company agreed to pay $175,000 annually, plus a
five-year option to purchase 275,000 shares of common stock, at prices ranging
from $2.50 to $3.50 per share.

Consulting Agreements/Commitments
---------------------------------

In December 1996, the Company entered into a two-year consulting agreement for
certain advisory services, including directing a technology development branch
in Israel. Effective April 1, 1998, the Company agreed to increase the
consultant's cash compensation to $5,000 per month, and to issue a number of
shares of common stock having a market value of $6,000 per month. The number of
shares were to be determined based on the bid price 5 days prior to issuance. On
March 23, 2001, the Company agreed to extend the consulting agreement by
compensating the consultant $8,000 per month, but the consultant would not
receive any further common stock of the Company. This agreement is effective as
of January 1, 2001.

In December 1996, the Company entered into a two-year consulting agreement for
certain advisory services, including managing a technology development branch in
Israel. Effective April 1, 1998, the Company agreed to increase the consultant's
cash compensation to $5,000 per month, and issued a number of shares of common
stock having a market value $6,000 per month. The number of shares was
determined based on the closing bid price 5 days prior to issuance. On March 23,
2001, the Company agreed to extend the consulting agreement by compensating the
consultant $8,000 per month, but the consultant would not receive any further
common stock of the Company. This agreement is effective as of January 1, 2001.

On August 13, 1999, the Company entered into a five-year consulting agreement,
commencing October 1, 1999, with its Chairman of the Board to provide services
in connection with fund raising and mergers and acquisitions for $1,000 per week
for 52 weeks per year and granted warrants to buy 375,000 shares of common stock
at exercise prices of 75,000 at $1.00, 75,000 at $2.00, 75,000 at $3.00, 75,000
at $4.00 and 75,000 at $5.00, respectively. Effective January 1, 2001, the
consulting fee was increased to $3,000 per week. As of February 28, 2002, this
agreement has been cancelled (see Note 14).

                                      F-52


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

Consulting Agreements/Commitments (Continued)
---------------------------------

In October 1999, the Company entered into a one-year consulting agreement for
marketing and advisory services related to the Company's technologies. The
agreement can be terminated by either party by 90 days written notice. The
agreement provides for a monthly fee of $2,500 per month, starting December 1999
through May 2000, and $5,000 per month thereafter. In addition, the Company
issued 5,000 shares of Eurotech's stock per month starting October 1999 through
May 2000, and 2,500 shares per month thereafter. This agreement was replaced by
a new agreement dated September 1, 2000 with a period of one year commencing on
September 1, 2000 and ending August 31, 2001 for $2,000 per month. The Company
has the right to terminate the agreement with the consultant with a 90-day
notice to terminate. During August 2001, the consulting agreement expired and
was not renewed by the Company.

During February 2000, the Company entered into a one-year consulting agreement
with an individual to carry out various activities for the Company's operations
in Germany. The Company agreed to pay the consultant $4,000 per month. During
January 2001, the above agreement expired and was not renewed by the Company.

The Company entered into a one-year consulting agreement for marketing services
to be provided for $14,000 per month, beginning May 1, 2000. During April 2001,
the above contract expired and subsequently was not renewed.

On May 8, 2000, the Company entered into a consulting agreement for
international product and service marketing and environmental law advice to be
provided for one year at $5,000 per month. The above contract expired June 2001
and was not renewed.

On December 1, 2000, the Company entered into a one-year consulting agreement
for tactical marketing services for the purpose of pursuing government business
objectives. The consultant will identify specific U.S. Department of Energy
("DOE") project opportunities for the Company and assist it in winning these DOE
projects. The Company will pay the consultant a monthly fee of $7,500 during the
term of the agreement. On December 31, 2001, the above contract expired and
subsequently was not renewed.

The Company entered into a one-year consulting agreement with an individual to
provide services as General Manager of Business Development for the Western U.S.
Sales Area. The Company agreed to pay the consultant $158,000 annually and the
option to purchase 12,500 shares of restricted common stock at an exercise price
of $4.00. The consultant also is entitled to additional compensation, as well as
additional options to purchase the Company common stock, if the Company's
revenue exceeds certain levels from the Company's Western U.S. sales area over
the term of the agreement. On December 31, 2001, the above contract expired and
the Company decided not to renew the agreement.

                                      F-53


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

Consulting Agreements/Commitments (Continued)
---------------------------------

During January 2001, the Company entered into a two-year agreement with an
investment banking company for financial consulting services and advice
pertaining to the Company's business affairs. The Company agreed to pay a
consulting fee of $5,000 per month. In addition, the Company was to grant to the
consulting company five-year warrants to purchase 600,000 shares of the
Company's common stock of escalating prices starting at $1.00 per share, of
which warrants to purchase 150,000 shares were to vest immediately. On March 30,
2001, the other party cancelled this agreement due to current market conditions.
Accordingly, warrants to purchase 450,000 shares were cancelled.

During January 2001, the Company entered into a one-year consulting agreement
for general strategic consulting services to be rendered. The Company agreed to
pay a fee of $300,000 in four equal quarterly installments. In addition, the
Company subsequently entered into a more specific agreement in which the
consultant will assist the Company in evaluating possibilities for improving its
capital structure and strategic alternatives. For these services, the consultant
will be entitled to a fee of 4% of the value of any transactions arising out of
these services. During January 2002, the above agreement expired and was not
renewed.

During March 2001, the Company entered into a one-year consulting agreement with
an individual for specific professional business services in administration and
management of international public and private entities, international public
product and general marketing. The Company agreed, commencing February 14, 2001,
monthly to pay to the consultant $5,000 and to issue to the consultant a
five-year warrant to purchase 5,000 shares at $3.00 per share.

On April 25, 2001, the Company entered into a financial and strategic consulting
agreement with a consulting company, pursuant to which this entity will assist
the Company in evaluating possibilities for improving capital structure and
strategic alternatives. The Company agreed to pay $250,000, of which $124,999
was paid upon execution of the agreement and three installments of $41,667 each
were paid monthly thereafter. As of December 31, 2001, the above agreement was
terminated by the Company.

During June 2001, the Company entered into a six-month consulting agreement with
a company for assisting road show presentation in Germany, introductions to
subscription newsletters, television programs, etc. The Company agreed to pay
$20,000 upon the signing of the agreement and to issue consultants 120,000
shares of common stock for $120 subject to other conditions of performance under
the contract. The above contract expired during December 31, 2001 and was not
renewed by the Company.

During July 2001, the Company entered into a one-year consulting agreement for
services as the Company may require in connection with marketing of the
technologies the Company acquired. The Company agreed to pay the consultant
$25,000 in two equal installments. In addition, the Company is providing the
consultant $12,500 monthly. The agreement is renewable annually for up to 5
years at the option of the Company.

                                      F-54


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

Consulting Agreements/Commitments (Continued)
---------------------------------

On October 1, 2001, the Company entered into a month to month consulting
agreement with a New York firm to provide financial planning assistance and act
as a financial advisor to the Board. The Company agreed to pay a monthly
retainer of $6,000 and issued a ten year warrant to purchase 100,000 shares of
the Company's common stock at an exercise price of $.34.

In November 2001, the Company entered into a consulting agreement with a
Massachusetts Partnership to provide Internet consulting expertise to increase
public awareness of the Company. The Company agreed to pay a one time fee of
$17,500 in cash and issue a warrant to purchase 80,000 shares of common stock
with an exercise price of $1.00 per share, a warrant to purchase 100,000 shares
of common stock with an exercise price of $2.50 per share, and a warrant to
purchase 100,000 shares of common stock with an exercise price of $5.00 per
share.

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.

Concentration of Credit Risk
----------------------------

The Company maintains cash balances in two financial institutions. The balances
are insured by the Federal Deposit Insurance Corporation up to $100,000 per
institution. From time to time, the Company's balance may exceed these limits.
At December 31, 2001 and 2000, uninsured cash balances were approximately
$718,000 and $1,360,000, respectively. The Company believes it is not exposed to
any significant credit risk for cash. 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.

                                      F-55


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

Business Risks
--------------

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.

New Technology Transfer Agreement
---------------------------------

On April 6, 2000, the Company entered into a one-year manufacturing and
technology transfer agreement with a California corporation, providing for the
transfer of certain EKOR technology and the manufacture of certain EKOR
products. The agreement will continue automatically from year to year, unless
terminated in writing 30 days prior to the annual renewal anniversary. On April
16, 2001, the Company renewed the above agreement for five years.

NOTE 13 -  SUPPLEMENTAL CASH FLOW INFORMATION

Non-Cash Transactions
---------------------

1999:
----

During the year ended December 31, 1999, a holder of debentures converted
$410,000 of principal and $161,788 of accrued interest into 1,204,665 shares of
common stock.

Technology rights were acquired for non-cash consideration totalling $8,047,688
(Note 3).

2000:
-----

During the year ended December 31, 2000, holders of debentures converted
$3,060,000 of principal and $691,858 of accrued interest into 2,082,728 shares
of common stock.

During the year ended December 31, 2000, 300,000 shares of stock and 250,000
warrants were issued to settle accrued liabilities related to the convertible
debentures of $1,120,000.

An obligation under a convertible promissory note dated January 1999 of $50,000,
plus accrued interest of $6,393, payable to a former Chairman of the Board of
the Company, was satisfied by the issuance of 200,000 shares of common stock.

                                      F-56


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - SUPPLEMENTAL CASH FLOW INFORMATION (Continued)

Non-Cash Transactions (Continued)
---------------------

2001:
----

Technology rights were acquired for non-cash consideration of $2,500,000 (Note
3).

During the year ended December 31, 2001, 29,291 shares of stock were issued to
pay a promissory note of $10,096.

During the year ended December 31, 2001, the Company issued 57,320 shares of its
common stock for accrued expenses of $19,760.

During December 2001, the Company converted accrued salaries and accrued
consulting fees into five promissory notes totalling $212,187.

NOTE 14 - SUBSEQUENT EVENTS

a)  Convertible Debentures
    ----------------------

On January 9, 2002, the Company converted $3,000,000 principal amount of
February 1998 Convertible Debentures, plus the amount of all accrued and unpaid
interest, due February 23, 2002, into 6,000,369 shares of the Company's common
stock in full satisfaction of the debentures. In connection with the conversion,
the Company issued a warrant to purchase 500,000 shares of common stock at an
exercise price of $1.00 per share. The warrants are exercisable over five years.
The warrants were valued at $390,000 based on the Black-Scholes option pricing
model and such amount will be recorded as a debt conversion expense during 2002.

b)  Convertible Preferred Stock
    ---------------------------

On February 1, 2002, the Company amended its Articles of Incorporation to
designate 25,000 of its 5,000,000 authorized preferred stock as a "Series A 3%
Convertible Preferred Stock," par value $.01 per share, with a liquidation
preference of $100 per share. In February 2002, the Company entered into a
securities purchase agreement with Woodward LLC to purchase 25,000 Series A 3%
Convertible Preferred shares for $2,500,000, less expenses and commissions. The
Company received $1,000,000 at the closing date and the remaining balance of
$1,500,000 will be paid in installments of $500,000, payable on May 30, 2002,
August 30, 2002 and November 30, 2002.

The holder of the designated series shares is entitled to receive dividends at a
rate of three percent per annum of the liquidation preference of $100 per share,
which is fully cumulative. The dividends on the designated series shares accrue
from the date of issuance of each share and are payable semi-annually on June 30
and December 30 of each year, commencing on June 30, 2002. The dividends on the
designated series shares are payable only when, as and if declared by the Board
of Directors out of funds legally available.

                                      F-57


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - SUBSEQUENT EVENTS (Continued)

b)  Convertible Preferred Stock (Continued)
    ---------------------------

The holder of the designated series shares has no voting rights. As of September
1, 2002, each designated series share can be converted to fully paid and
non-assessable shares of common stock, at the option of the holder by dividing
$.50 into the liquidation preference. At conversion, all accrued or declared,
but unpaid dividends on the designated series shares have the option to be paid
in cash or in common stock. Under a repricing rights agreement dated February 1,
2002, common shares issued upon conversion are subject to monthly repricing on
or after October 1, 2002, if the average bid price for any lowest five business
days during the repricing period is not equal or greater than $3.618. For
example, if on December 1, 2002 all of the 25,000 preferred shares were
converted into common shares and the put price per share of the Company's common
stock was $.50 per share, or $1.00, or $3.62, then under these scenarios, the
Company would be required to issue the following number of common shares:

                                              Put Price of Common Stock At
                                          --------------------------------------
                                             $0.50         $1.00        $3.62
                                          -----------   -----------   ----------

    Initial shares upon conversion         5,000,000     5,000,000    5,000,000

    Repricing shares upon conversion      31,180,000    13,090,000        -
                                          -----------   -----------   ----------
        Total Shares                      36,180,000    18,090,000    5,000,000
                                          ===========   ===========   ==========

The Company is not obligated to issue any additional shares under this repricing
rights agreement until shareholder approval is received to increase the
authorized shares of common stock to 200,000,000.

Pursuant to a registration rights agreement dated February 1, 2002, the
purchaser of the Series A convertible preferred stock was granted mandatory
registration rights. The Company must file a registration statement with the SEC
no later than May 20, 2002 and such statement must be declared effective on or
before August 20, 2002. If the registration statement covering the registrable
securities is not filed in proper form with the SEC by the required filing date
or becomes effective after August 20, 2002, the Company will be required to pay
certain penalties to the purchaser.

Under certain circumstances, the Company, at its option, may redeem the Series A
convertible preferred stock at $732.60 per share.

                                      F-58


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - SUBSEQUENT EVENTS (Continued)

c)  Amendment to Woodward LLC Agreements
    ------------------------------------

On February 1, 2002, the Company and Woodward LLC entered into an agreement to
extend and modify their existing agreement as follows:

o   The repricing terms applicable to the remaining one-half of the 2,000,000
    shares issued pursuant to the April 2000 Agreement and the 1,333,333 shares
    issued pursuant to the March 2001 Agreement that was modified by the May 18,
    2001 Agreement will be superceded. The new repricing terms and the target
    price applicable to the new agreement, will be $3.76 per share. The
    2,333,333 shares will be subject to repricing in three monthly installments
    of 333,333 shares each and three monthly installments of 444,444 shares each
    over six monthly repricing periods beginning as of March 1, 2002, as a
    result of which the Company may be required to issue to Woodward LLC
    additional shares of common stock in the proportion to which the outstanding
    shares trading during the specified repricing period below the $3.76 target
    price.

o   On February 1, 2002, the Company issued to Woodward LLC 6,000,000 shares of
    its common stock to be applied against the first two repricing periods
    (March 1, 2002 and April 1, 2002). If the actual shares to be issued which
    will be determined in March and April 2002 are less or greater than the
    6,000,000 shares, the Company will apply the difference to the next four
    pricing periods in four equal installments.

o   The exercise price of the two warrants that were previously issued to
    Woodward LLC for 200,000 and 500,000 shares, respectively, was reduced to
    $1.00 per share.

o   The Company has agreed to authorize and reserve for issuance, free from
    pre-emptive rights, 10,000,000 shares of common stock for purposes of
    issuance of the shares for the above repricing agreement. Upon the amendment
    of its articles of incorporation, the number of shares to be reserved for
    this repricing agreement will increase to 20,000,000.

d)  New Equity Agreement
    --------------------

In February of 2002, the Company entered into a Private Equity Agreement with an
investor under which the Company, at its option, could put shares to the
investor to sell up to $10 million of its common shares. The common shares to be
sold must be registered to commence the sales of common stock under this
agreement. Each sale is limited to the lesser of $1 million or two hundred
percent of the weighted average volume for the twenty trading days immediately
preceding the put date and each sale is subject to certain other restrictions.
The initial sale price of the common stock is based on 90% of the average of the
lowest three days closing prices of its common stock during the 10 trading days
immediately following the put date.

In conjunction with this agreement, the investor was granted a warrant to
purchase 50,000 shares of common stock at an exercise price of $0.35 per share.
The warrant vested at the grant date and is exercisable over a three-year period
ending February 22, 2005.

                                      F-59


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - SUBSEQUENT EVENTS (Continued)

e) Management Changes
   ------------------

On February 28, 2002 the Company appointed a new President and Chief Executive
Officer. The former President and Chief Executive Officer resigned in order to
accept his appointment by the Board of Directors to be the Company's new
Chairman. The former Chairman resigned in order to serve as the Company's newly
created post of Vice Chairman.

f) Employment and Consulting Agreements
   ------------------------------------

On February 28, 2002, the Company entered into an Employment Agreement with it
new Chairman Don Hahnfeldt. Under the terms of the agreement, the Company is to
pay to Mr. Hahnfeldt a salary equal to $15,000 per month, plus other fringe
benefits, including medical and health insurance and auto allowances. The
agreement is for a term of two years and provides for a severance payment in the
amount of $180,000 and immediate vesting of all stock options in the event his
employment is terminated without cause. Mr. Hahnfeldt was granted options to
acquire 1,000,000 shares of the company's common stock, of which 500,000 shall
vest immediately and the remaining 500,000 shall vest equally over a 24 month
period beginning March 1 2002 and are exercisable only in the event that the
Company increases the number of authorized shares of common stock to at least
130,000,000 shares. The options are exercisable at the fair market value at the
date of the grant of $0.50 per share. All stock options expire on February 28,
2012.

On February 28, 2002, the company entered into an Employment Agreement with it
new President and Chief Executive Officer Todd J. Broms. Under the terms of the
agreement, the Company is to pay to Mr. Broms a salary equal to $210,000 per
year. The agreement is for a term of two years and provides for a severance
payment in the amount of $210,000 and immediate vesting of all stock options in
the event his employment is terminated without cause. Mr. Broms was granted
options to acquire 1,300,000 shares of the company's common stock, of which
675,000 shall vest immediately and the remaining 625,000 shall vest equally over
a 24 month period beginning March 1 2002 and are exercisable only in the event
that the Company increases the number of authorized shares of common stock to at
least 130,000,000 shares. The options are exercisable at the fair market value
at the date of the grant of $0.50 per share. The options expire on February 28,
2012.

On February 28, 2002, the company entered into a Consulting Agreement with Verdi
Consultants, Inc. Under the terms of the agreement, the Company is to pay to Mr.
Verdi a Consulting fee equal to $15,000 per month plus an automobile allowance.
The agreement is for a term of three years and provides for a severance payment
in the amount of $180,000 and immediate vesting of all stock options in the
event his consulting agreement is terminated without cause. Mr. Verdi was
granted options to acquire 1,000,000 shares of the company's common stock, of
which 125,000 shall vest immediately and the remaining 875,000 shall vest
equally over a 24 month period beginning March 1 2002 and are exercisable only
in the event that the Company increases the number of authorized shares of
common stock to at least 200,000,000 shares. The options are exercisable at the
fair market value at the date of the grant of $0.50 per share. All stock options
expire on February 28, 2012.

                                      F-60


<PAGE>

                         EUROTECH, LTD. AND SUBSIDIARIES
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 - QUARTERLY RESULTS (UNAUDITED)

<TABLE>
<CAPTION>
                                                   Quarter Ended
                           ------------------------------------------------------------
                             March 31         June 30      September 30    December 31     Total Year
                           ------------     ------------   -------------   ------------   ------------

2001:
----

<S>                        <C>              <C>            <C>             <C>            <C>
Revenues                   $     -          $     -        $    10,215     $       498    $    10,713
Net loss                    (2,901,268)      (2,332,679)    (2,462,801)     (1,063,487)    (8,760,235)
Loss per share - basic
  and diluted   (a)              $(.07)           $(.05)         $(.05)          $(.04)         $(.18)

2000:
----

Revenues                   $     -          $     -        $   350,000     $     -        $   350,000
Net loss                    (2,151,027) (a)  (2,523,513)    (2,051,064)     (3,147,185)    (9,872,789)
Loss per share - basic
  and diluted   (a)              $(.05)           $(.06)         $(.04)          $(.09)         $(.23)
</TABLE>

(a) Per common share amounts for the quarters and full year have been calculated
separately. Accordingly, quarterly amounts do not add to the annual amount
because of differences in the weighted average common shares outstanding during
each period due to the effect of the Company issuing shares of its common stock
during the year.

                                      F-61


<PAGE>

<TABLE>
                                        EUROTECH, LTD.
                                         EXHIBIT INDEX
<CAPTION>

                                                                                     Location
Exhibit No.                         Description                                      Reference
-----------                         -----------                                      ---------

<S>      <C>                                                                             <C>
2.1      Technology Transfer Agreement dated July 13, 2001, between Eurotech,
         Ltd., and Trylon Metrics, Inc.,                                                 15

2.1.1    Amendment, dated October 3, 2001, to Technology Transfer Agreement
         dated July 13, 2001, between Eurotech, Ltd., and Trylon Metrics, Inc.,          *

3.1.1    Articles of Incorporation of Eurotech, Ltd. and amendment thereto               1

3.1.2    Articles of Amendment adopted June 20, 2000 and corresponding
         Certificate of Amendment dated June 21, 2000                                    10

3.1.3    Articles of Amendment to the Articles of Incorporation to state the
         terms of the Series A 3% Convertible Preferred Stock dated February 1,
         2002                                                                            20

3.2.1    Bylaws of Eurotech Ltd.                                                         1

3.2.2    Amendment to Bylaws adopted February 23, 2000 to fix the number of
         directors at 5.                                                                 9

3.2.3    Amendment to Bylaws adopted on August 27, 2001 to fix the number of
         directors at 7                                                                  *

4.1      Form of Common Stock certificate                                                1

10.1.1   License Agreement dated September 6, 1996 between Euro-Asian Physical
         Society and ERBC Holding, Ltd.                                                  1

10.1.2   Sub-License Agreement dated September 16, 1996 between ERBC Holding,
         Ltd. and Eurotech, Ltd.                                                         1

10.1.2.1 EKOR Agreement dated as of May 15, 2000 between Euro-Asian Physical
         Society and Eurotech, Ltd. Modifying the EKOR license                           12

10.1.3   Agreement dated January 28, 1997 between Eurotech, Ltd. and Kurchatov
         Research Holdings, Ltd.                                                         1

10.1.4   Memorandum of Intent among Chernobyl Nuclear Power Plant, I. V.
         Kurchatov Institute, Ukrstroj and Eurotech, Ltd.                                1

10.1.5   Agreement dated December 10, 1996 between Ukrstroj and Chernobyl
         Nuclear Power Plant (in past filings, this agreement was identified as
         dated December 6, 1996 when in fact the agreement is dated December 10,
         1996)                                                                           1

10.1.6   Agreement dated December 11, 1996 among Ukrstroj, Eurotech, Ltd. and
         Euro-Asian Physical Society                                                     1

10.2.1   Technology Purchase Agreement between Eurotech, Ltd. and Oleg L.
         Figovsky                                                                        2



<PAGE>

10.2.2   Technology Purchase Agreement between Eurotech, Ltd. and Oleg L.
         Figovsky                                                                        2

10.2.3   Technology Purchase Agreement between the Company and Oleg L. Figovsky          2

10.2.4   Agreement dated February 27, 2000 between Eurotech, Ltd. and Oleg L.
         Figovsky (acquisition of the rights to 49% of net profits)                      8

10.3     Preliminary EKOR (Component A)/Block Copolymer manufacturing licensing
         agreement between Eurotech, Ltd. and NuSil Technology                           9

10.4.1   Agency Contract dated May 19, 2000 between Eurotech, Ltd. and McPhee
         Environmental Supply                                                            10

10.4.2   McPhee Environmental Supply Cancellation dated March 14, 2001                   12

10.5.1   Share Purchase Agreement dated June 29, 2000 between Zohar Gendler and
         Eurotech, Ltd. (Rademate Ltd.)                                                  10

10.5.2   Share Purchase Agreement dated June 29, 2000 between Technion
         Entrepreneurial Incubator Co., Ltd. and Eurotech, Ltd. (Rademate Ltd.)          10

10.5.3   Investment Agreement date July 23, 2000 between Sorbtech Ltd. and
         Eurotech, Ltd. (in past filings, this agreement was identified as
         "share purchase agreement" when in fact it is titled "Investment Agreement")    10

10.5.4   Investment Agreement entered into in May, 2000 between Amsil, Ltd. and
         Eurotech, Ltd.                                                                  10

10.6.1   Form of Agreement among Eurotech, Ltd., V. Rosenband and C. Sokolinsky,
         and Ofek Le-Oleh Foundation                                                     2

10.6.2   Equity Sharing Agreement between the Company, V. Rosenband and C.
         Sokolinsky                                                                      2

10.6.3   Voting Agreement among Eurotech, Ltd., V. Rosenband and C. Sokolinsky           2

10.7.1   Investment Agreement between Eurotech, Ltd. and Chemonol, Ltd.                  2

10.7.2   Equity Sharing Agreement between the Company and Leonid Shapovalov              2

10.7.3   Voting Agreement between Eurotech, Ltd. and Leonid Shapovalov                   2

10.8.1   Agreement between Eurotech, Ltd. and Separator, Ltd.                            2

10.8.2   Equity Sharing Agreement between Eurotech, Ltd. and Efim Broide                 2

10.8.3   Voting Agreement between Eurotech, Ltd. and Efim Broide                         2

10.9.1   Form of Agreement among Eurotech, Ltd., Ofek Le-Oleh Foundation and Y.          2
         Kopit

10.9.2   Equity Sharing Agreement among Eurotech, Ltd., Y. Kopit and V. Rosenband        2



<PAGE>

10.9.3   Voting Agreement among Eurotech, Ltd., Y. Kopit and V. Rosenband                2

10.10    Form of License Agreement between the Company and ERBC Holdings, Ltd.           2

10.11.1  Cooperation Agreement between Eurotech, Ltd. and Forschungszentrum
         Julich GmbH                                                                     2

10.11.2  Agreement among Eurotech, Ltd., Forschungszentrum Julich and two other
         entities for the testing of EKOR in Germany                                     7

10.11.3  Letters of cancellation of German EKOR testing agreement                        12

10.12.1  Convertible Debenture Purchase Agreement among Eurotech, Ltd., JNC
         Opportunity Fund, Ltd. and Diversified Strategies Fund, L.P.                    2

10.12.2  Escrow Agreement among Eurotech, Ltd., JNC Opportunity Fund, Ltd. and
         Diversified Strategies Fund, L.P. and Robinson, Silverman, Pearce,
         Aronsohn & Berman, LLP                                                          2

10.2.3   Registration rights Agreement among Eurotech, Ltd., JNC Opportunity
         Fund, Ltd. and Diversified Strategies Fund, L.P.                                2

10.12.4  Form of 8% Convertible Debenture Due November 27, 2000 issued by
         Eurotech, Ltd. to JNC Opportunity Fund, Ltd.                                    2

10.12.5  Form of 8% Convertible Debenture Due November 27, 2000 issued by
         Eurotech, Ltd. to Diversified Strategies Fund, L.P.                             2

10.12.6  Warrant No. 1 issued by Eurotech, Ltd. to JNC Opportunity Fund, Ltd.            2

10.12.7  Warrant No. 2 issued by Eurotech, Ltd. to Diversified Strategies Fund,
         L.P.                                                                            2

10.12.8  Warrant No. 3 issued by Eurotech, Ltd. to Diversified Strategies Fund,
         L.P.                                                                            2

10.13.1  Convertible Debenture Purchase Agreement between Eurotech, Ltd. and JNC
         Opportunity Fund, Ltd.                                                          2

10.13.2  Escrow Agreement among Eurotech, Ltd., JNC Opportunity Fund, Ltd. and
         Robinson, Silverman, Pearce, Aronsohn and Berman, LLP                           2

10.13.3  Registration Rights Agreement between Eurotech, Ltd. and JNC
         Opportunity Fund Ltd.                                                           2

10.13.4  Form of 8% Convertible Debenture Due February 23, 2001 issued by
         Eurotech, Ltd. to JNC Opportunity Fund, Ltd.                                    2

10.13.5  Warrant No. 3 issued by Eurotech, Ltd. to JNC Opportunity Fund Ltd.             2

10.14.1  Debenture Purchase Agreement between Eurotech, Ltd and JNC Strategic
         Fund Ltd.                                                                       2

10.14.2  Form of 8% Convertible Debenture No.1 Due July 20, 2001 issued by
         Eurotech, Ltd. to JNC Strategic Fund Ltd.                                       3



<PAGE>

10.14.3  Form of 8% Convertible Debenture No.2 Due February 23, 2001 issued by
         Eurotech, Ltd. to JNC Opportunity Fund, Ltd.                                    3

10.14.4  Warrant No. 4 issued by Eurotech, Ltd. to JNC Strategic Fund Ltd.               3

10.14.5  Registration Rights Agreement issued by Eurotech, Ltd. to JNC Strategic
         Fund Ltd.                                                                       3

10.14.6  Amended and Revised 8% Convertible Debenture No.1 Due February 23, 2001
         issued by Eurotech, Ltd. to JNC Opportunity Fund, Ltd.                          3

10.14.7  Amended and Revised 8% Convertible Debenture No.2 Due July 20, 2001
         issued by Eurotech, Ltd. to JNC Strategic Fund Ltd.                             3

10.14.8  Amended and Revised 8% Convertible Debenture No.13 Due November 27,
         2000 issued by Eurotech, Ltd. to JNC Opportunity Fund, Ltd.                     3

10.14.9  Amended and Revised 8% Convertible Debenture No.14 due November 27,
         2000 issued by Eurotech, Ltd. to Diversified Strategies Fund, L.P.              3

10.14.10 Agreement dated February 25, 2000 regarding conversion price                    8

10.14.11 Agreement dated February 21, 2001 regarding extension of maturity              12

10.15.1  Agreement between Eurotech, Ltd. and David Wilkes                               3

10.15.2  Secured Promissory Note issued by Eurotech, Ltd. to JNC Strategic Fund
         Ltd.                                                                            3

10.15.3  Secured Promissory Note issued by Eurotech, Ltd. to David Wilkes                3

10.15.4  Secured Promissory Note issued by Eurotech, Ltd. to David Wilkes                3

10.15.5  Escrow Agreement among the Company, JNC Strategic Fund Ltd. and Encore
         Capital Management, L.L.C.                                                      3

10.15.6  Security Agreement by Eurotech, Ltd. in favor of JNC Strategic Fund
         Ltd. and David Wilkes                                                           3

10.15.7  Warrant issued by Eurotech, Ltd. to JNC Strategic Fund Ltd.                     3

10.15.8  Warrant issued by the Company to David Wilkes                                   4

10.15.9  Form of 8% Convertible Debenture Due Three Years from Original Issue
         Date issued by Eurotech, Ltd. to JNC Strategic Fund Ltd.                        4

10.15.10 Employment Agreement between Eurotech, Ltd. and Frank Fawcett                   4

10.15.10 Disengagement Agreement between Eurotech, Ltd. and Frank Fawcett                7

10.16.1  Employment Agreement between Eurotech, Ltd. and Don V. Hahnfeldt                4

10.16.2  Revised employment agreement between Eurotech, Ltd. and Don V. Hahnfeldt        7

10.17    Agreement dated September 9, 1999 between Eurotech, Ltd. and Peter
         Gulko (acquisition of KRHL shares)                                              5



<PAGE>

10.18.1  Agreement dated as of November 30, 1999 between Eurotech, Ltd. and
         Kurchatov Research Holdings, Ltd.                                               7

10.18.2  Agreement dated June 20, 2000 between Eurotech, Ltd. and Advanced
         Technology Industries, Inc. (formerly Kurchatov Research Holdings, Ltd.)        10

10.19    Agreement dated as of December 15, 1999 between Eurotech, Ltd. and
         Spinneret Financial Systems, Inc.                                               7

10.20.1  Common Stock Purchase Agreement dated December 31, 1999 between
         Eurotech, Ltd. and Woodward LLC                                                 7

10.20.2  Warrant issued by Eurotech, Ltd. to Woodward LLC on December 31, 1999           7

10.20.3  Registration Rights Agreement dated December 31, 1999 between Eurotech,
         Ltd. and Woodward LLC                                                           7

10.20.4  Commitment Agreement ($22,000,000) between Eurotech, Ltd. and Woodward
         LLC                                                                             7

10.20.5  Escrow Agreement dated December 31, 1999 among Eurotech, Ltd., Woodward
         LLC and Krieger & Prager                                                        7

10.20.6  Common Stock Purchase Agreement dated as of March 1, 2000 between
         Eurotech, Ltd. and Woodward LLC                                                 9

10.20.7  Common Stock Purchase Agreement dated as of April 24, 2000 between
         Eurotech, Ltd. and Woodward LLC                                                 10

10.20.8  Registration Rights Agreement dated as of April 17, 2000 between
         Eurotech, Ltd. and Woodward LLC                                                 10

10.20.9  Warrant issued by Eurotech, Ltd. to Woodward LLC on June 22, 2000               10

10.20.10 Amendment Agreement dated June 29, 2000 between Eurotech, Ltd. and
         Woodward LLC, amending April 24, 2000 Common Stock Purchase Agreement
         and Registration Rights Agreement and December 31, 2000 Commitment
         Agreement                                                                       10

10.20.11 Amendment Agreement dated September 28, 2000 between Eurotech, Ltd. and
         Woodward LLC, amending March 1, 2000 Common Stock Purchase Agreement            11

10.20.12 Modification Agreement dated as of February 28, 2001, amending March 1
         and April 24, 2000 Common Stock Purchase Agreements                             12

10.20.13 Common Stock Purchase Agreement as of March 30, 2001 between Eurotech,
         Ltd. and Woodward LLC                                                           13

10.20.14 Registration Rights Agreement dated as of March 30, 2001 between
         Eurotech, Ltd. and Woodward LLC                                                 13

10.20.15 Modification Agreement dated as of May 18, 2001, amending March 1,
         2000, April 24, 2000, and March 30, 2001 Common Stock Purchase Agreements       14



<PAGE>

10.20.16 Securities Purchase Agreement as of February 1, 2002 between Eurotech,
         Ltd. and Woodward LLC                                                           20

10.20.17 Repricing Rights Agreement dated as of February 1, 2002 between
         Eurotech, Ltd. and Woodward LLC                                                 20

10.20.18 Registration Rights Agreement dated as of February 1, 2002 between
         Eurotech, Ltd. and Woodward LLC                                                 20

10.20.19 Letter Agreement dated December 28, 2001 between Eurotech, Ltd. and
         Woodward LLC                                                                    20

10.20.21 Private Equity Agreement dated February 22, 2002, between Eurotech,
         Ltd. and Jenks & Kirkland, Ltd                                                  21

10.20.22 Registration Rights Agreement dated as of February 22, 2002 between
         Eurotech, Ltd. and Jenks & Kirkland, Ltd.                                       21

10.21    Technology Acquisition and Development Agreement related to Cypto.Com, Inc.      9

10.22.1  Investment Banking Consulting Agreement dated January 15, 2001 between
         Eurotech, Ltd. and Adolph Komorsky Investments, together with addendum
         thereto                                                                         12

10.22.2  Cancellation of Investment Banking Consulting Agreement dated March 30,
         2001 between Eurotech, Ltd. and Adolph Komorsky Investments                     13

10.23.1  Consulting Agreement as of January 18, 2001 between Eurotech, Ltd. and
         Davis Manafort, Inc.                                                            13

10.23.2  Second Consulting Agreement dated April 25, 2001 between Eurotech, Ltd.
         and Davis Manafort, Inc.                                                        13

10.24    Consulting Agreement dated April 25, 2001 between Eurotech, Ltd. and
         Harborstone Financial Group, Inc.                                               13

10.25    Consulting Agreement dated March 23, 2001 between Eurotech, Ltd. and
         Robert Tarini/ip Partners                                                       13

10.26    Consulting Agreement dated October 22, 2001 between Eurotech, Ltd. and
         Race Rock Design Partners                                                       18

10.27    Employment Agreement between Eurotech, Ltd. and Todd J. Broms dated
         February 28, 2002                                                               *

10.27.1  Stock Option Grant for Broms Holding LCC dated February 28, 2002
                                                                                         *
10.27.2  Employment Agreement between Eurotech, Ltd. and Don V. Hahnfeldt dated
         February 28, 2002                                                               *

10.27.3  Stock Option Grant for Don V. Hahnfeldt dated February 28, 2002                 *

10.27.4  Consultant Agreement between Eurotech, Ltd. and Chad A. Verdi dated
         February 28, 2002                                                               *

10.27.5  Stock Option Grant for Verdi Consultants, Inc. dated February 28, 2002          *



<PAGE>

10.27.6  Lease Agreement between SMII FAIRFAX, LLC and Eurotech, Ltd dated
         August 30, 2000                                                                 *

99.1     News Release - EUROTECH, Ltd. Acquires Sub-Surface Remote Sensing
         Technology Trylon Metrics 3D Electromagnetic Radiography(TM) and
         Acoustic Core(TM) Technologies Complement Eurotech's EKORT Nuclear
         Remediation Product                                                             15

99.2     Investment Agreement dated October 2, 2001 between Eurotech, Ltd. and
         Jenks & Kirkland, Ltd                                                           16

99.3     Letter to Shareholders from Chairman and President/CEO dated November
         9, 2001                                                                         17

99.4     Press Release, dated November 12, 2001                                          17

99.5     Update Letter to Shareholders from Chairman, dated November 12, 2001            17

99.6     Agreement between Etelix, U.S. ("Etelix") and Crypto.Com ("Crypto")
         made this 30th day of December, 2001                                            19

99.7     Modification and Conversion of $3,000,000 Principal Amount 8% Convertible
         Debentures of Eurotech, Ltd., due February 23, 2002 dated January 9, 2002       19

99.8     Eurotech, Ltd. Press Release dated March 1, 2002 announcing appointment
         of Todd J. Broms as President and Chief Executive Officer                       21

99.9     Eurotech, Ltd. Press Release dated March 5, 2002 announcing financing
         commitment from Jenks & Kirkland, Ltd.                                          21

(for Legend, see next page)



<PAGE>

LEGEND:
------

*        Incorporated by reference to such Exhibit filed with our registration
         statement on Form 10 on file with the Commission, file number 000-22129

1        Incorporated by reference to such Exhibit filed with Pre-Effective
         Amendment No. 2 to our registration statement on Form S-1, File No.
         333-26673, on file with the Commission

2        Incorporated by reference to such Exhibit filed with our current report
         on Form 8-K dated August 3, 1998, on file with the Commission as of
         August 25, 1998

3        Incorporated by reference to such Exhibit filed with Post-Effective
         Amendment No. 1 to our registration statement on Form S-1, File No.
         333-26673, on file with the Commission

4        Incorporated by reference to such Exhibit filed by Peter Gulko with his
         Statement on Schedule 13D

5        Incorporated by reference to such Exhibit filed with our current report
         on Form 8-K as of November 30, 1999, on file with the Commission

6        Incorporated by reference to such Exhibit filed with Post-Effective
         Amendment No. 2 to our registration statement on Form S-1, File No.
         333-26673, on file with the Commission

7        Incorporated by reference to such Exhibit filed with our annual report
         on Form 10-K for the year ended December 31, 1999, on file with the
         Commission

8        Incorporated by reference to such Exhibit filed with our quarterly
         report on Form 10-Q for the quarter ended March 31, 2000, on file with
         the Commission

9        Incorporated by reference to such Exhibit filed with our quarterly
         report on Form 10-Q for the quarter ended June 30, 2000, on file with
         the Commission

10       Incorporated by reference to such Exhibit filed with our quarterly
         report on Form 10-Q for the quarter ended September 30, 2000, on file
         with the Commission

11       Incorporated by reference to such Exhibit filed with our annual report
         on Form 10-K for the year ended December 31, 2000, on file with the
         Commission

12       Incorporated by reference to such Exhibit filed with our quarterly
         report on Form 10-Q for the quarter ended March 31, 2001, on file with
         the Commission

13       Incorporated by reference to such Exhibit filed with our quarterly
         report on Form 10-Q for the quarter ended June 30, 2001, on file with
         the Commission

14       Filed as an Exhibit to the current filing

15       Incorporated by reference to such Exhibit filed on Form 8-K as of
         October 5, 2001, on file with the Commission

16       Incorporated by reference to such Exhibit filed on Form 8-K as of
         October 11, 2001, on file with the Commission

17       Incorporated by reference to such Exhibit filed on Form 8-K as of
         November 13, 2001, on file with the Commission

18       Incorporated by reference to such Exhibit filed with our quarterly
         report on Form 10-Q for the quarter ended September 30, 2001, on file
         with the Commission



<PAGE>

19       Incorporated by reference to such Exhibit filed on Form 8-K as of
         January 25, 2002, on file with the Commission

20       Incorporated by reference to such Exhibit filed on Form 8-K as of March
         1, 2002, on file with the Commission

21       Incorporated by reference to such Exhibit filed on Form 8-K as of March
         5, 2002, on file with the Commission
</TABLE>



<PAGE>

Exhibit 10.27

                                 EUROTECH, LTD.

                              EMPLOYMENT AGREEMENT

         This Employment Agreement (the "Agreement" or "Employment Agreement"),
is dated as of February 28, 2002, (the "Effective Date"), by and between
Eurotech, Ltd., a District of Columbia corporation (the "Company") and Todd J.
Broms (the "Employee").

         WHEREAS, the Company wishes to employ the Employee as Chief Executive
Officer and President of the Company on the terms and conditions set forth in
this Agreement and the Employee wishes to be employed by the Company as Chief
Executive Officer and President on the terms and conditions set forth in this
Agreement.

         WHEREAS, it is contemplated that the Company nominate and endorse the
Employee for membership on the Company's Board of Directors at the next Annual
Meeting of the Shareholders of the Company.

         WHEREAS, the Employee shall have the option to be employed as Chairman
effective as of March 1, 2003.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties, intending to be legally bound, hereby agree as
follows:

         1. EMPLOYMENT. The Company hereby employs the Employee and the Employee
hereby accepts employment on the terms and conditions hereinafter set forth.

         2. TERM. Subject to the provisions for termination hereinafter
provided, the initial term of this Agreement shall be two years commencing on
March 1, 2002 and terminating at 11:59 p.m. New York City time on February 29,
2004 (the "Term").

         3. COMPENSATION.

         (a)      Salary. For all services provided by the Employee under this
                  Agreement as Chief Executive Officer and President of the
                  Company, the Company shall pay a base annual salary to the
                  Employee of $210,000, less payroll deductions and all required
                  withholdings, in 24 equal semi-monthly installments payable on
                  the first and fifteenth days of each month.

         (b)      Benefits. The Company shall provide the Employee with medical
                  and dental coverage and any other benefits provided to other
                  senior executives or directors of the Company.

         (c)      Stock Options. Contemporaneously with the execution of this
                  Agreement, or as soon thereafter as practicable, the Company
                  shall issue to the Employee a non-qualified stock option grant



<PAGE>

                  to purchase 1,300,000 shares of the common stock of the
                  Company, par value $.00025 per share, pursuant to the terms
                  and conditions of a stock option agreement dated
                  contemporaneously herewith, which, when signed by the Parties,
                  shall be incorporated herein by reference (the "Grant").

         (d)      Bonus. In addition to the Employee's salary, the Company
                  agrees that the Employee shall receive an annual bonus to be
                  determined at the discretion of the Board of Directors to be
                  paid on or before December 31 of each year, commencing with
                  the year ending December 31, 2002. The annual bonus shall be
                  based on the performance of the Employee and the financial
                  results and operations of the Company.

         4. CHAIRMAN. In addition to the positions of Chief Executive Officer
and President, the Employee shall have the exclusive option to assume the
position of Chairman of the Company as of March 1, 2003. In the event that the
Employee wishes to exercise this option, he shall deliver, on or before 5:00
p.m. New York City time on February 1, 2003 (the "Election Deadline"), written
notice to the Board of Directors of the Company by hand delivery, expressing his
desire to assume the position of Chairman. Upon the receipt of such notice, the
Board of Directors of the Company shall take such action necessary to remove the
then current Chairman and elect the Employee to the position of Chairman. If the
Employee does not so give written notice to the Board of Directors indicating
such desire to become Chairman on or before the Election Deadline, this option
shall expire by its own terms. Such failure to so give such notice shall not, of
itself, affect the Employee's position as Chief Executive Officer and President.
If such notice is received by the Board of Directors on or before the Election
Deadline but the Board of Directors do not elect the Employee to the position of
Chairman on or before March 1, 2003, the Employee may immediately terminate his
employment hereunder and, in such case, shall receive the Entire Severance
Payment pursuant to the terms of Section 11(c).

         5. ADDITIONAL CONDITIONS SUBSEQUENT OF EMPLOYMENT. As conditions
subsequent to the Employee's employment hereunder, the following events shall
occur. Notwithstanding the provisions of Section 11(e), if any of the following
conditions subsequent do not occur within thirty days after the date required,
the Employee may terminate his employment hereunder and, in such case, shall
receive the entire Severance Payment pursuant to the terms of Section 11(c).

         (a)      Initial Nomination for Board of Directors. The Company shall
                  nominate and endorse the Employee for membership on the
                  Company's Board of Directors at the annual meeting of the
                  Shareholders of the Company to be held in March 2002 (the
                  "2002 Shareholders Meeting"), or any duly authorized
                  postponement thereof. The Company shall take all reasonable
                  efforts to effectuate the election of the Employee to the
                  Board of Directors during the Term of this Agreement.

                                       2


<PAGE>

         (b)      Compensation Committee. Promptly after the 2002 Shareholders
                  Meeting, the Employee shall be elected as a member and the
                  chairman of the Compensation Committee of the Board of
                  Directors.

         (c)      Subsequent Nomination for Board of Directors. At every meeting
                  of the Shareholders of the Company during the Term of this
                  Agreement at which Directors of the Company are elected (but
                  not including the 2002 Shareholders Meeting), the Board of
                  Directors shall nominate and endorse those persons for
                  membership on the Company's Board of Directors that have been
                  set forth by the Employee in a writing delivered to the Board
                  of Directors prior to the earlier of (i) the date on which the
                  notice of such meeting must be sent to the Shareholders of the
                  Company or (ii) the date on which a preliminary proxy
                  statement must be filed with the United States Securities and
                  Exchange Commission.

         (d)      Directors and Officers Insurance. At all times during the Term
                  and any extensions thereto, the Company shall maintain
                  directors and officers liability insurance ("D&O Insurance")
                  for the benefit of the Employee and other Directors and
                  Officers of the Company in an aggregate amount not less than
                  Ten Million dollars ($10,000,000) or such other amount agreed
                  upon by the Employee. The Company shall immediately notify the
                  Employee of any lapse in the D&O Insurance. The form of any
                  D&O Insurance policy shall be acceptable to the Employee,
                  which acceptance shall not be unreasonably withheld.

         (e)      Board and Committee Meetings. The Company shall have at least
                  four regularly scheduled meetings of the Board of Directors in
                  person (or by telephone) each year, as well as regularly
                  scheduled meetings of the Audit Committee and Compensation
                  Committee of the Board of Directors.

         (f)      Director/Officer/Consultant Agreements. No individual
                  director, officer or consultant of the Company shall bind the
                  Company to a material agreement or make any material
                  representations or warranties, unless such agreements or
                  representations or warranties shall have been reviewed and
                  approved by the Employee in writing prior to the taking of
                  such actions or making of such representations or warranties.
                  For purposes of this paragraph, any action shall be deemed
                  "material" if the monetary value of such action exceeds
                  $5,000.

         (g)      Public Statements. All documents filed with the United States
                  Securities and Exchange Commission or any other government or
                  non-government regulatory agency, press releases, written
                  communications with shareholders of the Company, and any other
                  public documents shall be reviewed and approved by the
                  Employee in writing prior to release, subject to applicable
                  law and review by the accountants and legal counsel for the
                  Company.

                                       3


<PAGE>

         (h)      Securities Law Violations. The Company shall not be found by
                  the United States Securities and Exchange Commission or any
                  court of competent jurisdiction to have materially violated
                  any federal securities law for any action, inaction or
                  omission of the Company made prior to the date of this
                  Agreement.

         (i)      Reduction of Duties. The duties and responsibilities of the
                  Employee shall not be reduced materially without the prior
                  written consent of the Employee.

         (j)      Material Breach. This Agreement shall not be breached
                  materially by the Company.

         (k)      Legal Fees of the Employee. In addition to any expenses
                  incurred by the Employee in accordance with Section 8 hereof
                  and in addition to any other indemnification to which the
                  Employee might otherwise be entitled, the Company shall pay
                  for personal legal services of the Employee up to an aggregate
                  of $15,000 related to the review by Employee's counsel of the
                  terms and conditions of this Agreement and all matters related
                  thereto. The payment shall be made to the Employee (or his
                  counsel) promptly upon presentation of an invoice or request
                  for reimbursement.

         6. DUTIES. Initially, the Employee is engaged as Chief Executive
Officer and President of the Company. The Employee shall report only to the
Board of Directors of the Company. As Chief Executive Officer and President of
the Company, the Employee's responsibilities to the Company shall include
management of all day-to-day operations of Company, including, without limiting
the foregoing, hiring and firing of all employees, consultants and other
professionals. The Employee shall also be responsible for the implementation of
strategic plans for future operations of the Company, including locating
suitable office space for the Company in New York City or the Metropolitan New
York area. The Employee shall perform all duties incident to his office along
with other duties as from time to time may be reasonably assigned to the
Employee by the Board of Directors. The foregoing duties shall remain the duties
of the Employee when, and if, he becomes the Chairman of the Company.

         7. BEST EFFORTS OF THE EMPLOYEE. The Employee shall, with diligence and
to the best of his ability, experience and talents, perform all duties agreed to
be performed by him, pursuant to the express and implicit terms hereof, to the
reasonable satisfaction of the Company and its Board of Directors. The Employee
shall devote his full time (defined for the purposes herein as forty (40) hours
per calendar week) to the activities of the Company. Employee use his good faith
best efforts and judgment in performing his duties as required hereunder and
shall act in the best interests of the Company. The Company acknowledges that
Employee may participate in other business activities so long as those business
activities do not represent a direct conflict of interest with the business
activities of the Company.

         8. EXPENSES. In addition to his salary provided for in Section 3
hereof, the Company will promptly reimburse the Employee, in accordance with the
Employee's position with the Company and the Company's policies and practices in
effect from time to time, for all expenses reasonably incurred in performance of

                                       4


<PAGE>

his duties under this Agreement. The Company shall reimburse the Employee for
all such approved expenses within 30 days of the Employee's presentation of an
itemized account of such expenditures.

         9. VACATION. The Employee shall be entitled to three (3) weeks of paid
vacation, six (6) standard holidays and four (4) personal leave days per year.
The Employee will not be entitled to accumulate unused vacation days. The
Employee may not choose to forego vacation and receive additional pay instead of
time-off.

         10. PRIOR ACTS. The Company hereby acknowledges, represents and
warrants that the Employee has had no control over any actions or decisions of
the Company or the Board of Directors prior to the date hereof and is in no way
responsible or liable for any such actions, inactions or decisions of the
Company prior to the date hereof. Any indemnification to which the Employee is
entitled under the bylaws of the Company or by law shall extend to such prior
actions, inactions and decisions. Any legal fees incurred by the Employee as a
result of such prior actions, inactions and omissions, including the deposit of
a reasonable retainer to the Employee's legal counsel, shall be paid to such
legal counsel for the Employee as such expenses are incurred.

         11. TERMINATION.

                  (a) By action of its Board of Directors, the Company may
terminate this Agreement for cause at any time upon delivery by hand, overnight
courier or certified, return-receipt U.S. Mail of sixty (60) days written notice
to the Employee of the termination and the reasons therefor. Such notice having
been given, this Agreement shall terminate in accordance herewith. For the
purpose of this Section 11, "cause" shall be defined as (i) Employee's continued
failure to perform his duties and responsibilities in good faith to the best of
his abilities after 30 days prior written notice of non-performance from the
Company; (ii) conviction of a felony; (iii) fraudulent misconduct; (iv)
embezzlement, misappropriation or theft; (v) material breach of confidentiality
agreements; (vi) gross misconduct; (vii) any willful or grossly negligent act by
the Employee that has a material detrimental effect on the Company's reputation
or business; or (viii) any material violation of the terms and conditions of
this Agreement.

         Within ten days after the date of delivery of such termination for
cause, the Employee may respond in writing to the notice of termination for
cause, setting forth any basis for his objection to the termination. The Board
of Directors or the Chairman of the Company shall, within ten days after the
receipt of such written response, evaluate the response of the Employee and
determine to either rescind or affirm the termination notice. The Employee shall
be notified in writing by hand delivery, overnight courier or certified,
return-receipt U.S. Mail, of such determination of the Company, upon which
delivery, such determination shall be final. In the event that the termination
for cause is affirmed, this Agreement, the employment of the Employee as Chief
Executive Officer and President and, if applicable, Chairman, shall terminate
immediately. Except as set forth in Section 11(b), if the Employee is terminated
for cause, the Employee shall not be eligible for any severance payment.

                                       5


<PAGE>

                  (b) If the Employee is terminated by the Company with "cause",
the Employee or his legal representative or estate, as the case may be, shall be
paid by the Company, in full satisfaction of all of its compensation (base
salary and bonus) obligations under this Agreement an amount equal to the sum of
any base salary due to the Employee to which he was entitled on the last day of
employment, plus any accrued bonus, as determined on a pro rata basis, to which
the Employee may have been entitled on the last day of employment, but had not
received.

                  (c) In addition to any payments due the Employee under this
Section 11, if employment is terminated by the Company without "cause", the
Employee shall be paid a severance payment of $210,000 (the "Severance
Payment"). Such Severance Payment shall be paid to the Employee within ten (10)
days from the Employee's last day of employment. If the Severance Payment is not
paid within such ten-day period, the Company shall reimburse the Employee for
any costs or expenses incurred by him for the collection of the Severance
Payment, including, without limitation, any attorneys fees incurred by the
Employee, including the deposit of a reasonable retainer to the Employee's legal
counsel, which attorneys fees shall be paid as they are incurred.

                  (d) Any payment made by the Company pursuant to Section 11(b)
or any Severance Payment made by the Company pursuant to Section 11(c) above (i)
will be subject to offset for any advances, amount receivable, and loans,
including accrued interest, outstanding on the date of the employment
termination; but (ii) will not be subject to any offset on account of any
remuneration paid or payable to the Employee for any subsequent employment the
Employee may obtain, whether during or after the period during which the payment
is made, and the Employee shall have no obligation whatever to seek any
subsequent employment.

                  (e) The Employee may terminate this Agreement with or without
cause by providing sixty (60) days written notice to the Company. In such event,
the Employee shall receive all compensation and benefits due to him up to the
date of termination. In the event of such voluntary termination, or in the event
that Employee terminates as a result of death or disability, no compensation,
bonus or other payment will be provided for the period after the date of
termination, except as provided in Sections 4 and 5 above.

                  (f) If employment is terminated either by the Company or by
the Employee, either with or without cause, the Employee will participate in an
exit interview conducted by the Company's representative for the purposes of
finalizing any remaining matters, returning all relevant property and
information to the Company, and assuring a proper transition of duties.

                  (g) Except as provided otherwise in this Section 11, the
Company and Employee shall not have any further right or remedy against one
another in the event Employee's employment by the Company is terminated. After
termination of employment pursuant to Sections 4, 5 or 11(a), (b) or (e), or
upon the expiration of the Term any extension thereof, the provisions of
Sections 12 (Covenant Not to Compete), 13 (Inventions or Discoveries) 14
(Disclosure of Information), and 15 (Enforcement by Injunctive Relief) hereof
shall remain if full force and effect.

                                       6


<PAGE>

         12. COVENANT NOT TO COMPETE.

                  (a) For the Term of this Agreement, and for a period of one
(1) year after the expiration of this Agreement or its termination by either the
Company or the Employee, the Employee shall not, either directly or indirectly,
own, manage, operate, control, be employed by, participate in, assist in the
recruitment of employees for, or be connected in any manner with the ownership,
management, operation, or control of any business entity involving technology,
processes, programs or systems which are being sold or marketed by the Company,
or are under active funded development, by the Company during the term of this
Agreement or at the time of the expiration or termination of this Agreement
within the states of New York, New Jersey or Connecticut or in any state,
territory, or city where the Company or its subsidiaries may do business.

                  (b) During the term of the Employee's employment with the
Company, and for a period of one (1) year thereafter, the Employee shall not (i)
directly or indirectly cause or attempt to cause any employee of the Company to
leave the employ of the Company, (ii) in any way interfere with the relationship
between the Company and any employee, (iii) directly or indirectly hire any
employee of the Company to work for any business of which the Employee is an
officer, director, employee, consultant, independent contractor or owner of an
equity or other financial interest, or (iv) interfere or attempt to interfere
with any transaction in which the Company was involved during the term of the
Employee's employment with the Company or at the time of termination of the
Employee's employment with the Company. However, Employee or Employee's
subsequent employer may hire a former employee of the Company, provided that
such hiring results exclusively from such employee's affirmative response to a
general recruitment effort carried out through public or general solicitation.

         13. INVENTIONS OR DISCOVERIES.

                  (a) The Employee acknowledges that, while in the employ of the
Company, any and all inventions, improvements, discoveries, processes, programs
or systems relating to the business of the Company developed or discovered by
the Employee shall be fully disclosed by him to the Company and shall be the
sole and absolute property of the Company. For the purpose of this Section 13,
the meaning of the phrase "inventions, improvements, discoveries, processes,
programs or systems relating to the business of the Company" includes all
inventions, improvements, discoveries, processes, programs or systems (i)
relating to any of the Company's products, services, potential products, or
potential services; (ii) which result in modifications or enhancements of, or
can be used in connection with or in lieu of, services or products then offered
commercially by the Company; (iii) which are the subject of copyrights or
patents held or applied for by the Company; or (iv) which are under active
funded development by the Company during the term of this Agreement or at the
date of the expiration or termination of this Agreement.

                                       7


<PAGE>

                  (b) The Employee acknowledges that upon the request of the
Company, the Employee shall execute, acknowledge and deliver, such assignments,
certificates or other documents as the Company may consider necessary or
appropriate to properly vest all right, title and interest to any such invention
or discovery in the Company. Any such invention or discovery by the Employee
within one (1) year of the termination or expiration of this Agreement shall
fall within the provisions of this Section unless proved conclusively by the
Employee to have been first invented or discovered by him following such
termination or expiration.

         14. DISCLOSURE OF INFORMATION. The Employee recognizes and acknowledges
that his employment by the Company will, throughout the Term and any extension
thereof, bring him in contact with many confidential affairs of the Company not
readily available to the public, and plans for future developments. In
recognition of the foregoing, the Employee covenants and agrees that he will not
use or disclose to anyone outside of the Company, as the case may be, any
material confidential matters of the Company, which are not otherwise in the
public domain, either during, or for, a period of one (1) year after the
termination of his employment with the Company, except with the Company's
written consent, or pursuant to a separate confidentiality agreement entered
into between the Company and a third party or as required by court order, law or
subpoena, or other legal compulsion to disclose.

         15. ENFORCEMENT BY INJUNCTIVE RELIEF. Irreparable harm should be
presumed if this Agreement is breached in any way. Damages would be difficult if
not impossible to ascertain, and the faithful observance of all terms of this
Agreement is an essential condition of employment with Company. Furthermore,
this Agreement is intended to protect the proprietary rights of Company in
important ways, and even the threat of any misuse of the confidential
information of Company would be extremely harmful to the Company. In light of
these considerations, Employee acknowledges that a court of competent
jurisdiction should immediately enjoin any breach of this Agreement upon
Company's request and Company is released from the requirement of posting any
bond in connection with temporary or interlocutory injunctive relief to the
extent permitted by law. Nothing herein shall be construed as prohibiting the
Company from pursuing any other remedy available to the Company for such breach
or threatened breach including, but not limited to, the recovery of damages from
the Employee.

         16. NOTICES. Except as set forth otherwise herein, all notices,
consents, instructions, demands or requests (however characterized or described)
required or authorized hereunder shall be deemed sufficiently given if in
writing and delivered personally or sent by registered mail, postage prepaid,
effective ten days after mailing, addressed as follows:

If to Company:                      Eurotech, Ltd.
                                    10306 Eaton Place, Suite 220
                                    Fairfax, Virginia 22030
                                    Fax: (703) 352-5994

                                       8


<PAGE>

with a copy to:                     Solomon Pearl Blum Heymann & Stich LLP
                                    40 Wall Street-35th Floor
                                    New York, New York 10005
                                    Attn: Robert A. Solomon, Esq.
                                    Fax: (313) 885-8126

If to Employee:                     Mr. Todd Broms
                                    215 East 79th Street
                                    New York, New York 10021

with a copy to:                     Elliott I. Miller, Esq.
                                    Kleban & Samor, P.C.
                                    2425 Post Road
                                    South Southport, CT 06490
                                    Fax: (203) 259-9617

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

         17. ASSIGNMENT OF AGREEMENT. No party may assign or otherwise transfer
this Agreement or any of its rights or obligations hereunder without the prior
written consent to such assignment or transfer by the other party hereto. Any
attempted assignment without written consent by the non-assigning party shall be
void and without force or effect at the option of the latter. All the provisions
of this Agreement shall be binding upon the respective employees, delegatees,
successors, heirs and permitted assignees of the parties.

         18. FURTHER INSTRUMENTS. The parties hereto shall execute and deliver
any and all other instruments and shall take any and all other actions as may be
reasonably necessary to carry the intent of this Agreement into full force and
effect.

         19. EMPLOYEE HANDBOOK. The Employee acknowledges and understands that
as an employee of the Company he is expected to abide by Company rules and
regulations (except where such rules and regulations are superceded by this
Agreement), and acknowledge in writing the he has read the Company's Employee
Handbook (once it has been made available to him).

         20. SEVERABILITY. If any provision of this Agreement shall be held,
declared or pronounced void, voidable, invalid, unenforceable or inoperative for
any reason by any court of competent jurisdiction, government authority or
otherwise, such holding, declaration or pronouncement shall not effect adversely
any other provisions of this Agreement, which shall otherwise remain in full
force and effect and be enforced in accordance with its terms. The effect of
such holding, declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.

                                       9


<PAGE>

         21. WAIVER. All the rights and remedies of either party under this
Agreement are cumulative and not exclusive of any other rights and remedies
provided by law. No delay or failure on the part of either party in the exercise
of any right or remedy arising from a breach of this Agreement shall operate as
a waiver of any subsequent right or remedy arising from a subsequent breach of
this Agreement. The consent of any party where required hereunder to any act or
occurrence shall not be deemed to be a consent to any other act or occurrence.

         22. SURVIVAL. The provisions of Sections 8, 10, 11(c), 12, 13, 14 and
15 shall survive the expiration of this Agreement or its termination by either
the Company or the Employee and shall remain in full force and effect thereafter
as provided herein.

         23. GENERAL PROVISIONS. This Agreement shall be construed and enforced
in accordance with, and governed by, the laws of New York, without regard to
provisions of conflicts of law. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings relating to this subject matter, including any and all prior
employment or consulting agreements entered into between the Employee and the
Company, which are, as of the date hereof, deemed terminated and released. This
Agreement may not be modified or amended or any term or provision hereof waived
or discharged except in writing signed by the party against whom such amendment,
modification, waiver or discharge is sought to be enforced. The headings of this
Agreement are for convenience in reference only and shall not limit or otherwise
affect the meaning thereof. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.

         24. ARBITRATION. Any and all disputes arising out of this Agreement
will be determined by submission to binding arbitration before a three-member
arbitral panel, which arbitration shall be conducted in New York, New York,
pursuant to the Rules of Arbitration of the American Arbitration Association,
the jurisdiction to which all parties hereto, as well as their successors,
assigns and transferees, hereby consent. The Company shall pay all costs and
fees relating to such arbitration, including the reasonable attorneys fees and
costs of the Employee, including the deposit of a reasonable retainer to the
Employee's legal counsel, which attorney fees shall be paid by the Company when
they are incurred, unless an award is made in favor of the Company, in which
case the Employee shall immediately reimburse the Company for all costs and fees
paid by the Company on the Employee's behalf, including, without limitation, the
attorneys fees and costs of the Employee, one-half of the cost of commencing the
arbitration, and one-half of the costs and fees of the three-member arbitral
panel.

         EMPLOYEE ACKNOWLEDGES THAT, BEFORE SIGNING THIS AGREEMENT, HE WAS GIVEN
AN OPPORTUNITY TO READ IT, EVALUATE IT AND WAS ENCOURAGED BY THE COMPANY TO
DISCUSS IT WITH HIS PERSONAL ADVISORS AND ATTORNEY AND WITH REPRESENTATIVES OF
THE COMPANY. EMPLOYEE ACKNOWLEDGES THAT HE FULLY UNDERSTANDS ALL TERMS,
CONDITIONS AND IMPLICATIONS OF THIS AGREEMENT. IN LIGHT OF THE FOREGOING

                                       10


<PAGE>

ACKNOWLEDGEMENT, IT IS FURTHER UNDERSTOOD THAT TO THE EXTENT THAT THERE MAY BE
ANY AMBIGUITIES IN ANY PROVISION HEREIN THAT MIGHT HAVE TWO OR MORE PLAUSABLE
CONSTRUCTIONS, THE LANGUAGE OF THE AGREEMENT SHALL NOT BE CONSTRUED AGAINST
EITHER PARTY HERETO.

         IN WITNESS WHEREOF, the parties have executed this Agreement on
February 28, 2002.

                                           Eurotech, Ltd.

                                     By:   /S/ DON V. HAHNFELDT
                                           -------------------------------------
                                           Don V. Hahnfeldt,
                                           President and Chief Executive Officer

                                           The Employee

                                           /S/ TODD J. BROMS
                                           -------------------------------------
                                           Todd J. Broms

                                       11