SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1999
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from _______________________ to _____________________.
Commission File Number 333-26673
----------------------------------------
EUROTECH, LTD.
--------------
(Exact name of small business issuer as specified in its charter)
District of Columbia 33-0662435
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1216 16th Street, NW
Suite 200
Washington, DC 20036-3772
(Address of principal executive offices)
(202) 466-5591
(Issuer's telephone number)
---------------------------------------------------
(Former name, former address and former fiscal year
if changed since last report)
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes |X| No |_|
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 23,149,454 shares of Common Stock,
$0.00025 par value, were outstanding as of June 30, 1999.
Transitional Small Business Disclosure Forms (check one):
Yes |_| No |X|
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
INDEX TO FORM 10Q
JUNE 30, 1999
Page Nos.
---------
PART I - FINANCIAL INFORMATION:
ITEM I - FINANCIAL STATEMENTS
BALANCE SHEETS F-1
At December 31, 1998 and June 30, 1999
STATEMENTS OF OPERATIONS F-2
For the Six Months Ended June 30, 1998 and
1999 For the Period from Inception (May 26,
1995) to June 30, 1999
STATEMENTS OF OPERATIONS F-3
For the Three Months Ended June 30, 1998 and 1999
STATEMENTS OF STOCKHOLDERS' DEFICIENCY F-4 - F-7
For the Period from Inception (May 26, 1995)
to December 31, 1998 For the Six Months
Ended June 30, 1999
STATEMENTS OF CASH FLOWS F-8
For the Six Months Ended June 30, 1998 and
1999 For the Period from Inception (May 26,
1995) to June 30, 1999
NOTES TO FINANCIAL STATEMENTS F-9 - F-15
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
(Note 2)
<TABLE>
<CAPTION>
At December 31, 1998 At June 30, 1999
-------------------- ----------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,940 $ 156,887
Receivable from related parties 5,918 5,918
Prepaid expenses and other current assets 200 6,481
------------ ------------
TOTAL CURRENT ASSETS 8,058 169,286
PROPERTY AND EQUIPMENT - net of accumulated
depreciation 31,846 27,749
OTHER ASSETS:
Organization and patent costs - net of accumulated
amortization 26,587 25,555
Deferred financing costs 2,361 --
Other assets 7,551 9,750
------------ ------------
TOTAL ASSETS $ 76,403 $ 232,340
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Convertible notes payable $ -- $ 450,000
Accrued liabilities 1,716,809 2,318,125
Deferred revenue 225,000 375,000
------------ ------------
TOTAL CURRENT LIABILITIES 1,941,809 3,143,125
------------ ------------
CONVERTIBLE DEBENTURES 6,970,000 6,660,000
------------ ------------
COMMITMENTS AND OTHER MATTERS (Notes 1, 2, 3, 5 and 6)
STOCKHOLDERS' DEFICIENCY:
Preferred stock - $0.01 par value; 1,000,000 shares
authorized; -0- shares issued and outstanding --
Common stock - $0.00025 par value; 50,000,000 shares
authorized; 19,621,882 and 23,349,454 shares issued and
outstanding at December 31, 1998 and June 30, 1999,
respectively 4,905 5,837
Additional paid-in capital 15,452,783 17,175,640
Unearned financing costs (47,500) (4,873)
Deficit accumulated during the development stage (24,245,594) (26,747,389)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIENCY (8,835,406) (9,570,785)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY $ 76,403 $ 232,340
============ ============
</TABLE>
See notes to financial statements.
F-1
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Period
For the Six Months Ended June 30, from Inception
-------------------------------- (May 26, 1995) to
1998 1999 June 30, 1999
------------ ------------ -----------------
<S> <C> <C> <C>
REVENUES $ -- $ -- $ --
------------ ------------ ------------
OPERATING EXPENSES:
Research and development 560,511 493,149 3,923,254
Consulting fees 178,476 317,486 1,708,357
Compensatory element of stock issuances pursuant
to consulting agreements 326,871 660,088 3,131,315
Other general and administrative expenses 881,669 397,552 3,504,505
------------ ------------ ------------
TOTAL OPERATING EXPENSES 1,947,527 1,868,275 12,267,431
------------ ------------ ------------
OPERATING LOSS (1,947,527) (1,868,275) (12,267,431)
------------ ------------ ------------
OTHER EXPENSES:
Interest expense 429,720 341,107 1,208,240
Amortization of deferred and unearned financing
costs 3,049,661 292,413 13,271,718
------------ ------------ ------------
TOTAL OTHER EXPENSES 3,479,381 633,520 14,479,958
------------ ------------ ------------
NET LOSS $ (5,426,908) $ (2,501,795) $(26,747,389)
============ ============ ============
NET LOSS PER COMMON SHARE $ (.28) $ (.12)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 19,248,919 20,622,701
============ ============
</TABLE>
See notes to financial statements.
F-2
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------
1998 1999
------------ ------------
<S> <C> <C>
REVENUES $ -- $ --
------------ ------------
OPERATING EXPENSES:
Research and development 252,840 199,376
Consulting fees 68,434 203,586
Compensatory element of stock issuances pursuant
to consulting agreements 215,931 570,188
Other general and administrative expenses 322,288 243,336
------------ ------------
TOTAL OPERATING EXPENSES 859,493 1,216,486
------------ ------------
OPERATING LOSS (859,493) (1,216,486)
------------ ------------
OTHER EXPENSES:
Interest expense 299,095 173,593
Amortization of deferred and unearned financing costs 1,803,433 160,687
------------ ------------
TOTAL OTHER EXPENSES 2,102,528 334,280
------------ ------------
NET LOSS $ (2,962,021) $ (1,550,766)
============ ============
NET LOSS PER COMMON SHARE $ (.16) $ (.07)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 19,554,670 21,170,622
============ ============
</TABLE>
See notes to financial statements.
F-3
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
(UNAUDITED)
FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 1998
AND THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Common Stock Additional
Date of ---------------------------- Paid-in
Period Ended December 31, 1995: Transaction Shares (1) Amount Capital
- ------------------------------ ----------- ----------- ----------- -----------
<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
Year Ended December 31, 1996:
Issuance of stock ($0.25 per share) Various 1,278,000 320 319,180
Exercise of stock options 01/18/96 600,000 150 --
Issuance of stock for consulting fees
($0.34375 per share) 03/22/96 160,000 40 54,960
Issuance of stock for consulting fees
($0.0625 per share) 05/15/96 2,628,000 657 163,593
Issuance of stock for consulting fees
($0.590625 per share) 06/19/96 1,500,000 375 885,563
Issuance of stock for consulting fees
($1.82 per share) 11/12/96 57,036 14 104,275
Issuance of stock pursuant to bridge financing
($1.81325 per share) 12/96 1,500,000 375 2,719,500
Amortization of unearned financing costs -- -- --
Repayment by stockholders -- -- --
Net loss -- -- --
----------- ----------- -----------
Balance - December 31, 1996 17,223,836 $ 4,306 $ 4,804,298
=========== =========== ===========
<CAPTION>
Deficit
Accumulated
Unearned During the
Due from Financing Development
Period Ended December 31, 1995: Stockholders Costs Stage Total
- ------------------------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Founder shares issued ($0.00025 per share) $ -- $ -- $ -- $ --
Issuance of stock for offering consulting fees
($0.0625 per share) -- -- -- 27,500
Issuance of stock ($0.0625 and $0.25
per share) (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
Year Ended December 31, 1996:
Issuance of stock ($0.25 per share) -- -- -- 319,500
Exercise of stock options -- -- -- 150
Issuance of stock for consulting fees
($0.34375 per share) -- -- -- 55,000
Issuance of stock for consulting fees
($0.0625 per share) -- -- -- 164,250
Issuance of stock for consulting fees
($0.590625 per share) -- -- -- 885,938
Issuance of stock for consulting fees
($1.82 per share) -- -- -- 104,289
Issuance of stock pursuant to bridge financing
($1.81325 per share) -- (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)
=========== =========== =========== ===========
</TABLE>
(1) Share amounts have been restated to reflect the 4 for 1 stock split on June
1, 1996.
See notes to financial statements.
F-4
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
(UNAUDITED)
FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 1998
AND THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Common Stock Additional
Date of ----------------------------- Paid-in
Year Ended December 31, 1997: Transaction Shares (1) Amount Capital
- ---------------------------- ----------- ---------- ------------ ------------
<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 127,500 warrants
in consideration for interest and placement
fees in connection with Convertible
Debentures 11/97 -- -- 284,480
Value assigned to issuance of 35,000 warrants
to shareholder for consulting services 11/97 -- -- 39,588
Value assigned to issuance of 364,000 warrants
to shareholder 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
========== ============ ============
<CAPTION>
Deficit
Accumulated
Unearned During the
Due from Financing Development
Year Ended December 31, 1997: Stockholders Costs Stage Total
- ---------------------------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
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 127,500 warrants
in consideration for interest and placement
fees in connection with Convertible
Debentures -- (284,480) -- --
Value assigned to issuance of 35,000 warrants
to shareholder for consulting services -- (39,588) -- --
Value assigned to issuance of 364,000 warrants
to shareholder 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>
(1) Share amounts have been restated to reflect the 4 for 1 stock split on June
1, 1996.
See notes to financial statements.
F-5
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 1998
AND THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Common Stock Additional
Date of ------------------------------- Paid-in
Year Ended December 31, 1998: Transaction Shares (1) Amount Capital
- ---------------------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
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 60,000
warrants issued as additional interest 02/98 -- -- 1,100,000
Value assigned to conversion feature of
Convertible Debentures and 125,000 warrants
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
note 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
============ ============ ============
<CAPTION>
Deficit
Accumulated
Unearned During the
Due from Financing Development
Year Ended December 31, 1998: Stockholders Costs Stage Total
- ---------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
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 60,000
warrants issued as additional interest -- (1,100,000) -- --
Value assigned to conversion feature of
Convertible Debentures and 125,000 warrants
issued as additional interest -- (475,000) -- --
Cancellation of stock issued for consulting fees -- -- -- (93,750)
Issuance of stock for conversion of debenture
note 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>
(1) Share amounts have been restated to reflect the 4 for 1 stock split on June
1, 1996.
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
(UNAUDITED)
FOR THE PERIOD FROM INCEPTION (MAY 26, 1995) TO DECEMBER 31, 1998
AND THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Common Stock Additional
Date of ------------------------------- Paid-in
Six Months Ended June 30, 1999: Transaction Shares (1) Amount Capital
- ------------------------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance - December 31, 1998 19,621,882 $ 4,905 $15,452,783
Issuance of stock for consulting fees
($0.77 per share) 03/99 116,039 29 89,871
Issuance of stock for consulting fees
($0.72 per share) 06/99 624,332 156 446,532
Issuance of stock for conversion of debenture
note payable ($0.35 per share) 02/99 987,201 247 341,029
Value assigned to conversion feature of
Convertible Debentures and 84,750 warrants
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 for additional working
capital ($0.25 per share) 06/99 1,900,000 475 474,525
Modification of warrants issued 06/99 -- -- 123,500
Amortization of unearned financing costs -- -- --
Net loss -- -- --
---------- -------- -----------
Balance - June 30, 1999 23,349,454 $ 5,837 $17,175,640
========== ======== ===========
<CAPTION>
Deficit
Accumulated
Unearned During the
Due from Financing Development
Six Months Ended June 30, 1999: Stockholders Costs Stage Total
- ------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance - December 31, 1998 $ -- $ (47,500) $(24,245,594) $(8,835,406)
Issuance of stock for consulting fees
($0.77 per share) -- -- -- 89,900
Issuance of stock for consulting fees
($0.72 per share) -- -- -- 446,688
Issuance of stock for conversion of debenture
note payable ($0.35 per share) -- -- -- 341,276
Value assigned to conversion feature of
Convertible Debentures and 84,750 warrants
issued as additional interest -- (175,425) -- --
Value assigned to additional consideration for
financing activities ($0.72 per share) -- (72,000) -- --
Issuance of stock for additional working
capital ($0.25 per share) -- -- -- 475,000
Modification of warrants issued -- -- -- 123,500
Amortization of unearned financing costs -- 290,052 -- 290,052
Net loss -- -- (2,501,795) (2,501,795)
------ ----------- ------------ -----------
Balance - June 30, 1999 $ -- $ (4,873) $(26,747,389) $(9,570,785)
====== =========== ============ ===========
</TABLE>
(1) Share amounts have been restated to reflect the 4 for 1 stock split on June
1, 1996.
See notes to financial statements.
F-7
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Period
from Inception
For the Six Months Ended June 30, (May 26, 1995) to
1998 1999 June 30, 1999
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (5,426,908) $ (2,501,795) $(26,747,387)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 4,698 5,128 19,026
Amortization of deferred and unearned financing costs 3,049,661 292,413 13,271,718
Accrued interest 208,329 31,276 31,276
Stock issued for license -- -- 37,500
Consulting fees satisfied by stock issuances 326,871 660,089 3,131,316
------------ ------------ ------------
Sub-total 1,837,343 (1,512,889) (10,256,553)
Cash provided by (used in) the change in assets and liabilities:
Decrease in advances to related parties -- -- (5,918)
Increase in prepaid expenses (5,453) (6,281) (6,481)
Increase in other assets (2,400) (2,199) (9,751)
Increase in accrued liabilities 539,425 601,316 1,970,318
Increase in deferred revenue -- 150,000 375,000
------------ ------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (1,305,777) (770,053) (7,933,385)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Organization and patent costs -- -- (31,358)
Capital expenditures (20,038) -- (40,972)
------------ ------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (20,038) -- (72,330)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options -- -- 150
Proceeds from issuance of common stock -- 475,000 1,316,500
Offering costs -- -- (2,898)
Repayment by stockholders -- -- 3,000
Proceeds from Convertible Debentures 3,000,000 450,000 7,450,000
Proceeds from bridge notes -- -- 2,000,000
Repayments of bridge notes (2,000,000) -- (2,000,000)
Borrowings from stockholders -- -- 561,140
Repayment to stockholders -- -- (561,140)
Deferred financing costs (235,000) -- (604,150)
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 765,000 925,000 8,162,602
------------ ------------ ------------
(DECREASE) INCREASE IN CASH (560,815) 154,947 156,887
CASH - BEGINNING 617,756 1,940 --
------------ ------------ ------------
CASH - ENDING $ 56,941 $ 156,887 $ 156,887
============ ============ ============
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ 36,630 $ 526 $ 316,447
============ ============ ============
Income taxes $ -- $ -- $ --
============ ============ ============
</TABLE>
See notes to financial statements.
F-8
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1999
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements are unaudited. These statements have
been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission ( the "SEC"). Certain information and
footnote disclosures normally included in the financial statements
prepared in accordance with generally accepted accounting principles have
been condensed or omitted pursuant to such rules and regulations. In the
opinion of management, the financial statements reflect all adjustments
(which include only normal recurring adjustments) necessary to state
fairly the financial position and results of operations as of and for the
periods indicated. These financial statements should be read in
conjunction with the Company's financial statements and notes thereto for
the year ended December 31, 1998, included in the Company's Form 10K as
filed with the Securities and Exchange Commission.
The preparation of financial statements in conformity with general
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statement and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
NOTE 2- BUSINESS AND CONTINUED OPERATIONS
Eurotech, Ltd. (the "Company") was incorporated under the laws of the
District of Columbia on May 26, 1995. The Company is a development-stage,
technology transfer, holding, marketing and management company, formed to
commercialize new, existing but previously unrecognized, and previously
"classified" technologies, with a particular current emphasis on
technologies developed by prominent research institutes and individual
researchers in the former Soviet Union and in Israel, and to license those
and other Western technologies for business and other commercial
applications principally in Western and Central Europe, Ukraine, Russia
and North America. Since the Company's formation, it has acquired
development and marketing rights to a number of technologies by purchase,
assignments, and licensing arrangements. The Company intends to operate
its business by licensing its technologies to end-users and through
development and operating joint ventures and strategic alliances. To date,
the Company has not generated any revenues from operations.
F-9
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1999
NOTE 2 - BUSINESS AND CONTINUED OPERATIONS (Continued)
The accompanying unaudited financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern. However, as
shown in the accompanying financial statements, the Company has incurred
losses from operations from inception. As of June 30, 1999, the Company
has a stockholders' deficiency of $9,570,785, a working capital deficiency
of $2,973,839 and an accumulated deficit since inception of $26,747,389.
The Company requires additional funds to commercialize its technologies
and continue research and development efforts. Until the commencement of
sales, the Company will have no operating revenues, but will continue to
incur substantial expenses and operating losses. No assurances can be
given that the Company can complete development of any technology, not yet
completely developed, or that with respect to any technology that is fully
developed, it can be manufactured on a large scale basis or at a feasible
cost. Further, no assurance can be given that any technology will receive
market acceptance. Being a start-up stage entity, the Company is subject
to all the risks inherent in the establishment of a new enterprise and the
marketing and manufacturing of a new product, many of which risks are
beyond the control of the Company. These factors raise substantial doubt
about the Company's ability to continue as a going concern.
Since inception, the Company has financed its operations through sale of
its securities, shareholder loans, a bridge financing totalling $2,000,000
completed in December of 1996, a Convertible Debenture financing of
$3,000,000 completed in November of 1997 and a Convertible Debenture
financing of $3,000,000 and $1,000,000 completed during February and July
1998, respectively. Proceeds from the February 1998 Convertible Debenture
financing were used to retire the $2,000,000 bridge note. In January 1999,
the Company borrowed $450,000 from two stockholders and issued a secured
promissory note (see Note 3). In May 1999, the Company borrowed $50,000
from an unrelated party, which was repaid in June 1999. During the quarter
ended June 30, 1999, the Company raised $475,000 from the sale of
restricted common stock. The Company is exploring additional sources of
working capital, which include a private offering of common stock, private
borrowings and joint ventures.
While no assurance can be given, management believes the Company can raise
adequate capital to keep the Company functioning during 1999. No assurance
can be given that the Company can successfully obtain any working capital
or complete any proposed offerings or, if obtained, that such funding will
not cause substantial dilution to shareholders of the Company. Further, no
assurance can be given as to the completion of research and development
and the successful marketing of the technologies.
These financial statements do not include any adjustments relating to the
recoverability of recorded asset amounts that might be necessary as a
result of the above uncertainty.
F-10
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1999
NOTE 3 - NOTES PAYABLE
Secured Promissory Notes
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 and can be
exchanged for 8% Convertible Debentures under terms similar to the current
outstanding debentures. 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 an exercise price of $0.36
per share. The warrants expire five years from January 6, 1999.
The Company has assigned a value to the debt's beneficial conversion
feature and warrants amounting to $175,425, and such amount is being
amortized over 180 days commencing January 6, 1999.
NOTE 4 - STOCKHOLDERS' DEFICIENCY
Significant Common Stock Issuances During 1999
During the six months ended June 30, 1999, a debenture holder converted
$310,000 of principal and $31,276 of accrued interest into 987,201 shares
of common stock.
During the six months ended June 30, 1999, the Company issued 740,371
shares of common stock as consideration for consulting services performed
by various employees and consultants, including related parties, through
June 30, 1999. Shares issued under these arrangements were valued at
$536,403, which was all charged to operations during the six months ended
June 30, 1999.
During the quarter ended June 30, 1999, the Company sold 1,900,000 shares
of its restricted common stock for $475,000.
F-11
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1999
NOTE 4 - STOCKHOLDERS' DEFICIENCY (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 1,696,250
Convertible Debentures (assumed conversion at June 30, 1999
market value price and at largest discount) 16,174,380
Option to purchase common stock 50,000
----------
Total as of June 30, 1999 17,920,630
==========
Substantial issuance after June 30, 1999 through July 31, 1999:
Warrants to purchase common stock 50,000
==========
NOTE 5 - TECHNOLOGY INVESTMENTS AND LICENSING AGREEMENT
Investments in Israeli Technology Companies
During 1997 and 1998, the Company agreed to acquire a 20% interest in
seven separate Israeli technology, research and development companies
("incubators"). The Company's share of losses incurred by these companies
has been accounted for on the equity basis and included in research and
development expenses.
The Company had, as of December 31, 1998, a 20% interest in Chemonol, an
Israeli research and development company. On January 20, 1999, the Company
entered into an agreement to invest $300,000 in exchange for an additional
16% of Chemonol's voting stock. The agreement provides for the Company to
make four (4) equal payments of $75,000 commencing March 1, 1999, July 1,
1999, October 1, 1999 and January 1, 2000. At the completion of the
transaction, the Company will own 36% of Chemonol. During the six months
ended June 30, 1999, the Company paid $150,000 under the agreement, which
was charged to research and development costs.
During the six months ended June 30, 1999, an additional $71,000 was
invested in the seven Israeli technology incubators.
The amount charged to research and development expenses related to these
investments for the six months ended June 30, 1999 approximated $221,000,
which reduced the carrying value of the Company's investment in these
seven companies to $-0- at June 30, 1999.
F-12
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1999
NOTE 5 - TECHNOLOGY INVESTMENTS AND LICENSING AGREEMENT (Continued)
Proposed Sale of Technology
The Company received a deposit on a proposed sale of its sublicensing
rights to Re-sealable Container Systems and TetraPak containers. The
proposed transaction is presently in the discussion stage and to-date, no
agreements have been signed. Included in unearned revenue is the $150,000
deposit related to the proposed sale.
NOTE 6 - CONTINGENCIES AND OTHER MATTERS
Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of cash which is at one
bank. Future concentration of credit risk may arise from trade accounts
receivable. Ongoing credit evaluations of customers' financial condition
will be performed and, generally, no collateral will be required.
International Operations
The Company has strategic alliances, collaboration agreements and
licensing agreements with entities which are based in Russia and Ukraine.
Both of these countries have experienced volatile and frequently
unfavorable economic, political and social conditions. The Russian economy
and the Ukraine economy are characterized by declining gross domestic
production, significant inflation, increasing rates of unemployment and
underemployment, unstable currencies, and high levels of governmental debt
as compared to gross domestic production. The prospects of wide-spread
insolvencies and the collapse of various economic sectors exist in both
countries.
In view of the foregoing, the Company's business, earnings, asset values
and prospects may be materially and adversely affected by developments
with respect to inflation, interest rates, currency fluctuations,
government policies, price and wage controls, exchange control
regulations, taxation, expropriation, social instability, and other
political, economic or diplomatic developments in or affecting Russia and
Ukraine. The Company has no control over such conditions and developments,
and can provide no assurance that such conditions and developments will
not adversely affect the Company's operations.
F-13
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1999
NOTE 6 - CONTINGENCIES AND OTHER MATTERS (Continued)
Litigation
In December 1997, Raymond Dirks, Jessy Dirks, Robert Brisotti and David
Morris filed an action in the Supreme Court for the State of New York,
County of New York, against Eurotech, Ltd. for breach of contract, seeking
injunctive relief, specific performance and monetary damages of nearly $5
million (the "Dirks Litigation"). The Dirks Litigation arises solely from
an agreement between Eurotech and National Securities Corporation
("National") relating to financial advisory services to be performed by
National Securities Corporation, a broker/dealer with which the plaintiffs
were affiliated and of which Raymond Dirks Research was a division.
Eurotech granted National a warrant certificate for 470,000 shares at
$1.00 per share as a retainer for general financial advisory services. In
conjunction with the separation of the plaintiffs and Raymond Dirks
Research from National Securities Corporation, National assigned a
significant portion of the warrant certificate to the plaintiffs. It is
Eurotech's position that the warrant certificate is voidable.
The plaintiffs allege, among other things, that they are entitled to
damages composed of both the value of the stock on the date of their
purported exercise of an alleged assignment of the warrant certificate,
and the decrease in value of the price of the stock since the date of
their purported exercise. Eurotech believes that the plaintiffs have
significantly overstated their monetary damage claim and that, having
sought monetary damages, the plaintiffs are not entitled to any type of
equitable relief.
Process was served upon Eurotech at its California office in late January
1998. Based on the advice of its outside counsel, Eurotech believes that
the plaintiffs' claims will be resolved favorably to the Company. In
response to the Dirks litigation, the Company has filed an appropriate
response, including counterclaims relating thereto. However, it is
possible that the Company will be adjudged liable in the Dirks Litigation,
and if so, the resolution of the litigation could have a material adverse
effect on the Company.
Former Employee Dispute
The former president has advised the Company that he believes that he was
wrongfully terminated under the provisions of a certain employment
agreement allegedly executed by the Company in his behalf, and has made
demand for certain payments, as provided in the employment agreement in
his possession. The Company has taken the position that there is no valid
employment agreement with the former president and that he is not entitled
to the payments demanded and is attempting to negotiate a settlement of
the matter. The Company is unable to predict the outcome of this matter or
any potential liability, which the Company may incur.
F-14
<PAGE>
EUROTECH, LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1999
NOTE 7 - SUBSEQUENT EVENT
Employment Agreements
In April 1999, the Company entered into an employment agreement with the
President of the Company providing for an annual salary of $140,000. In
addition, the Company issued 60,000 shares of common stock. As of July 1,
1999, the President resigned. On July 7, 1999, the Company entered into a
letter agreement with its new President providing for a salary of $100,000
for the year commencing July 7, 1999, with an initial signing bonus of
warrants to purchase 50,000 shares of common stock at a price equal to the
market price at July 1, 1999. The warrants are exercisable for a term of
three years.
F-15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
General
The following is a discussion and analysis of the results of operations of the
Company and should be read in conjunction with the financial statements and
related notes contained in this Form 10-Q.
Certain information contained in this Form 10-Q may contain forward-looking
statements. The forward-looking statements are subject to certain risks and
uncertainties. Actual results could differ materially from current expectations.
Among the factors that could affect the Company's actual results and could cause
results to differ from those contained in the forward-looking statements
contained herein is the Company's ability to commercialize its technologies
successfully, which will be dependent on business, financial and other factors
beyond the Company's control, including, among others, market acceptance,
ability to manufacture on a large scale basis and at feasible costs, together
with all the risks inherent in the establishment of a new enterprise and the
marketing and manufacturing of new products.
Overview
The Company, incorporated in May 1995, is a development stage, technology
transfer, holding and management company formed to commercialize new, existing
but previously unrecognized, and previously "classified" technologies, with a
particular current emphasis on technologies developed by prominent research
institutes and individual researchers in the former Soviet Union and in Israel,
and to commercialize those and other Western technologies for business and other
commercial applications principally in Europe, Ukraine, Russia and North
America.
Until recently, the Company had been principally engaged in identifying,
monitoring, reviewing and assessing technologies for their commercial
applicability and potential, and in acquiring selected technologies by equity
investment, purchase, assignment and licensing arrangements. Although the
Company intends to continue identifying, monitoring, reviewing and assessing new
technologies, its primary emphasis will be focused on commercializing four of
its present technologies ("Principal Technologies").
The Company believes that the Principal Technologies are presently ready for
commercialization and marketing. To that end, the Company has decided to devote
its business activities and resources principally to the marketing and sale of
the Principal Technologies. The Company recently has initiated a marketing and
sales program for the Principal Technologies, and also has initiated discussions
with a number of prominent, potential users of the technologies, with a view
towards the future negotiation and execution of licensing and/or joint venture
marketing and sales agreements.
The Company intends to operate its business by licensing its technologies to
end-users and through development and operating joint-ventures and strategic
alliances. To date, the Company has not generated any revenues from these
operations.
<PAGE>
The Company has not been profitable since inception and expects to incur
substantial operating losses over the next twelve months. For the period from
inception to June 30, 1999, the Company incurred a cumulative net loss of
approximately $26,747,000. The Company expects that it will generate losses
until at least such time as it can commercialize its technologies, if ever. No
assurance can be given that any of the Company's technologies can be
manufactured on a large scale basis or at a feasible cost. Further, no assurance
can be given that any technology will receive market acceptance. Being a
start-up stage entity, the Company is subject to all the risks inherent in the
establishment of a new enterprise and the marketing and manufacturing of a new
product, many of which risks are beyond the control of the Company.
Results of Operations
For the Six Months Ended June 30, 1999 vs. the Six Months Ended June 30, 1998
The Company has had no revenues since inception. Consulting expenses increased
from $505,000 for the six months ended June 30, 1998 to $978,000 for the six
months ended June 30, 1999. The increase in consulting expense is principally
the result of the Company's increase in non-cash compensation issued to
consultants and its Board of Directors and Advisory Board. Other general and
administrative expenses decreased from $882,000 for the six months ended June
30, 1998, to $398,000 for the six months ended June 30, 1999, primarily due to a
decrease in professional fees and other costs related to the completion of a
registration statement.
Research and development expenses decreased for the six months ended June 30,
1999 to $493,000, from $560,000, for the six months ended June 30, 1998. During
1998, the Company paid $187,500 to Professor Oleg L. Figovsky, Ph.D. in
connection with four technology purchase agreements. These payments were charged
to research and development expenses during the first quarter of 1998. Research
and development expenditures for the six months ended June 30, 1999 included
$221,000 related to the Company's continuing investment in its seven Israeli
technology companies and $272,000 for its German and Russian technologies.
For the six months ended June 30, 1999 and 1998, the Company incurred operating
losses of $1,868,000 and $1,948,000, respectively. The losses are principally
due to expenses incurred in the acquisition and development of its technologies,
consulting costs, general and administrative expenses and the lack of revenues.
Other expenses, consisting of interest expense and amortization of deferred and
unearned finance costs, decreased from $3,479,000 for the six months ended June
30, 1998 to $634,000 for the six months ended June 30, 1999. Amortization of
deferred and unearned financing costs decreased from $3,050,000 for the six
months ended June 30, 1998 to $292,000 for the six months ended June 30, 1999.
The decrease in the amortization of deferred and unearned financing costs is
principally attributable to portions of unearned financing costs having been
fully amortized during 1998.
The Company expects to incur significant losses during 1999. The Company
anticipates that any revenue recognized in 1999 will be substantially offset by
expenses incurred by the Company in its efforts to commercialize, sell and
market its Principal Technologies.
For the Three Months Ended June 30, 1999 vs. the Three Months Ended June 30,
1998
Consulting expenses increased from $284,000 for the three months ended June 30,
1998 to $774,000 for the three months ended June 30, 1999. The increase in
consulting expense is principally the result of the Company's increase in
non-cash compensation issued to consultants and its Board of Directors and
Advisory Board. Other general and administrative expenses decreased from
$322,000 for the three months ended June 30, 1998, to $243,000 for the three
months ended June 30, 1999, primarily due to a decrease in professional fees and
other costs related to the completion of a registration statement.
<PAGE>
Research and development expenses decreased for the three months ended June 30,
1999 to $199,000, from $253,000, for the three months ended June 30, 1998.
Research and development expenditures for the three months ended June 30, 1999
included $105,000 related to the Company's continuing investment in its seven
Israeli technology companies and $94,000 for its German and Russian
technologies.
For the three months ended June 30, 1999 and 1998, the Company incurred
operating losses of $1,216,000 and $859,000, respectively. The losses are
principally due to expenses incurred in the acquisition and development of its
technologies, consulting costs, general and administrative expenses and the lack
of revenues.
Other expenses, consisting of interest expense and amortization of deferred and
unearned finance costs, decreased from $2,103,000 for the three months ended
June 30, 1998 to $334,000 for the three months ended June 30, 1999. Amortization
of deferred and unearned financing costs decreased from $1,803,000 for the three
months ended June 30, 1998 to $161,000 for the three months ended June 30, 1999.
The decrease in the amortization of deferred and unearned financing costs is
principally attributable to portions of unearned financing costs having been
fully amortized during 1998.
The Company expects to incur significant losses during 1999. The Company
anticipates that any revenue recognized in 1999 will be substantially offset by
expenses incurred by the Company in its efforts to commercialize, sell and
market its Principal Technologies.
Liquidity and Capital Resources
The Company's principal sources of working capital from inception through
December 31, 1998 have been net proceeds of $842,000 from the offering of common
stock under Rule 504 of Regulation D, shareholder advances aggregating $761,440,
a bridge financing completed in December 1996 of $2,000,000, $3,000,000
principal amount of 8% Convertible Debentures completed in November 1997, due
November 27, 2000, $3,000,000 principal amount of 8% Convertible Debentures
completed in February 1998, due February 23, 2001 and $1,000,000 principal
amount of 8% Convertible Debentures completed in July of 1998, due July 20,
2001.
During the six months ended June 30, 1999, the Company's principal source of
cash was the January 1999 secured promissory notes from which it derived net
proceeds of approximately $450,000, a $150,000 deposit received in connection
with a proposed sale of certain sublicensing rights and proceeds of $475,000
from the sale of restricted common stock.
The Debentures discussed above may be converted into shares of the Company's
common stock at beneficial conversion rates based on the timing of the
conversion. During the six months ended June 30, 1999, a debenture holder
exercised the conversion right under the November 27, 1997 Convertible Debenture
agreement and converted principal of $310,000 and accrued interest of $31,276
into 987,201 shares of the Company's common stock. Based on the bid price of the
Company's common stock at June 30, 1999, the Debentures' principal could be
converted into approximately 16 million shares of the Company's common stock.
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 and can be exchanged for 8% Convertible
Debentures under terms similar to the current outstanding debentures.
<PAGE>
During the six months ended June 30, 1999, the Company received deposits of
$150,000 in connection with the proposed sale of its sublicensing rights to
Resealable Container Systems and TetraPak Containers. The proposed transaction
is presently in the discussion stage and to-date, no agreements have been
signed.
The Company has agreed in principle to fund the commercialization of certain
technologies developed in the former Soviet Union by scientists and researchers
at Kurchatov, other institutes associated therewith, and EAPS, collectively the
"Scientists". Kurchatov will provide the materials, facilities and personnel to
complete the necessary work to commercialize such technologies. The Company also
has agreed in principle to provide funding in connection with the marketing and
sale of its Principal Technologies. Total expenditures under these programs
approximated $128,000 during the six months ended June 30, 1999. The Company's
principal source of funding for these expenditures during the six months ended
June 30, 1999 was the proceeds from the Debenture Offerings and proceeds from
the sale of restricted common stock.
On January 20, 1999, the Company entered into an agreement to invest $300,000 in
exchange for an additional 16% interest in Chemonol, an Israeli research and
development company. The agreement obligates the Company to make four equal
payments of $75,000, commencing March 1, 1999, July 1, 1999, October 1, 1999 and
January 1, 2000. At the completion of the transaction, the Company will own 36%
of Chemonol's common stock. During the six months ended June 30, 1999, the
Company paid $150,000 under this obligation.
The Company will require additional financing to continue to fund research and
development efforts, operating costs and complete necessary work to
commercialize its technologies. As the development of each technology is
completed and the technology's commercial applications are identified, the
Company will seek joint venture partners to fund any further capital
expenditures, including the project financing. The Company is exploring
additional sources of working capital, including further private sales of
securities, joint ventures and licensing of technologies. The report of the
Company's independent certified public accountants at December 31, 1998 contains
an explanatory paragraph which expresses substantial doubt as to the Company's
ability to continue as a going concern.
No assurance can be given that the Company can successfully obtain any
additional financing or, if obtained, that such funding will not cause dilution
to shareholders of the Company. Further, no assurance can be given as to the
completion of research and development and the successful marketing of the
Company's technologies.
The Company had a working capital deficiency and stockholders' deficiency of
$2,974,000 and $9,571,000, respectively, as of June 30, 1999.
Year 2000 Compliance
The Company recognizes the need to ensure its operations will not be adversely
impacted by Year 2000 software failures. Software failures due to processing
errors potentially arising from calculations using the Year 2000 date are a
known risk. The Company is addressing this risk to the availability and
integrity of financial systems and the reliability of operational systems. The
Company has established processes for evaluating and managing the risks and
costs associated with this problem. The computing portfolio was identified and
an initial assessment has been completed. The cost of achieving Year 2000
compliance will not have a material impact on the accompanying financial
statements.
<PAGE>
Impact of Recently Issued Accounting Standards
Statement of Financial Accounting Standards No. 130, "Comprehensive Income"
(SFAS 130), was issued in June 1997. SFAS 130 requires reclassification of
earlier financial statements for comparative purposes. SFAS 130 requires that
all items defined as comprehensive income, including changes in the amounts of
certain items, foreign currency translation adjustments and gains and losses on
certain securities, be shown in a financial statement SFAS 130 does not require
a specific format for the financial statement in which comprehensive income is
reported, but does require that an amount representing total comprehensive
income be reported in that statement. The adoption of SFAS 130 did not have a
material effect on the Company's financial statements.
Statement of Financial Accounting Standards No. 131, "Disclosures About Segments
of an Enterprise and Related Information" ("SFAS 131"), was issued in June 1997.
SFAS 131 becomes effective for the Company's fiscal year 1999 and requires
restatement of disclosures for earlier periods presented for comparative
purposes. This new standard requires companies to disclose segment data based on
how management makes decisions about allocating resources to segments and how it
measures segment performance. SFAS 131 requires companies to disclose a measure
of segment profit or loss, segment assets, and reconciliations to consolidated
totals. It also requires entity-wide disclosures about a company's products and
services, its major customers and the material countries in which it holds
assets and reports revenues. The adoption of SFAS 131 did not have a material
effect on the Company's financial statements.
Statement of Financial Accounting Standards No. 132, "Employers' Disclosures
About Pensions and Other Postretirement Benefits" ("SFAS 132"), was issued in
February 1998. SFAS 132 becomes effective for 1999 and requires restatement of
disclosures for earlier periods presented for comparative purposes. SFAS 132
revises employers' disclosure about pension and other postretirement benefit
plans. It does not change the measurement or recognition of those plans, but
rather standardizes the disclosure requirements for pensions and other
postretirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair values of plan assets
that will facilitate analysis, and eliminates certain disclosures that are no
longer useful. The adoption of SFAS 132 did not have a material effect on the
Company's financial statements.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: 8/16/99
-------
EUROTECH, LTD.
(Registrant)
/s/ Don V. Hahnfeldt
-------------------------------------
Don V. Hahnfeldt
President and Chief Financial Officer
<PAGE>
PART II -- OTHER INFORMATION.
Item 1. Legal Proceedings.
There have been no material legal proceedings to which the Company is a
party which have not been disclosed in previous filings with the
Securities and Exchange Commission. There are no material developments to
be reported in any previously reported legal proceedings.
Item 2. Changes in Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item. 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Current president resigned from the Company and a new president was added
on July 7, 1999.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Not applicable.
(b) Reports on Form 8-K.
Item 27. Financial Data Schedule (2)
- ----------
(2) Filed herewith
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EUROTECH,
LTD. BALANCE SHEET AS OF JUNE 30, 1999 AND STATEMENT OF OPERATIONS FOR THE SIX
MONTHS ENDED JUNE 30, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 157
<SECURITIES> 0
<RECEIVABLES> 6
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 169
<PP&E> 41
<DEPRECIATION> 13
<TOTAL-ASSETS> 232
<CURRENT-LIABILITIES> 3,143
<BONDS> 6,660
0
0
<COMMON> 6
<OTHER-SE> (9,576)
<TOTAL-LIABILITY-AND-EQUITY> 232
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 493
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 579
<INCOME-PRETAX> (2,502)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,502)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,502)
<EPS-BASIC> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
