QUANTECH LTD /MN/, SB-2/A, 1996-08-23

QUANTECH LTD /MN/
SB-2/A, 1996-08-23
COMPUTER STORAGE DEVICES

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As filed with the Securities and Exchange Commission on August 23, 1996
Registration No. 333-6809

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 1 TO FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

QUANTECH LTD.
(Name of Small Business Issuer as specified in its Charter)

Minnesota 3573 41-1709417
(State or other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification
Number)

Quantech Ltd.
1419 Energy Park Drive
St. Paul, Minnesota 55108
(612) 647-6370

(Address and Telephone Number, of Principal
Executive Offices and Principal Place of Business)

R.H. Joseph Shaw, CEO
Quantech Ltd.
1419 Energy Park Drive
St. Paul, Minnesota 55108
(612) 647-6370

(Name, Address and Telephone Number
of Agent for Service)

Copies to:

Timothy M. Heaney, Esq.
Melodie R. Rose, Esq.
Fredrikson & Byron, P.A.
900 Second Avenue South, Suite 1100
Minneapolis, Minnesota 55402
(612) 347-7000

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
this Registration Statement becomes effective.

If any of the securities being registered on this form to be offered on a
delayed or continuous basis, pursuant to Rule 415 under the Securities Act of
1933, check the following box: |X|

If this Form is filed to register additional securities of an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: |_|

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: |_|

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: |_|

CALCULATION OF REGISTRATION FEE
================================= ==================== ======================= ================== ==================

PROPOSED
TITLE OF EACH CLASS PROPOSED MAXIMUM MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
- --------------------------------- -------------------- ----------------------- ------------------ ------------------

<S> <C> <C> <C> <C>
Common Stock ($.01 par value) 49,021,530 shares (2) $0.8435 $41,349,661 $14,259(3)
- --------------------------------- -------------------- ----------------------- ------------------ ------------------

</TABLE>

(1) For purposes of calculating the registration fee in accordance with
Rule 457(c) under the Securities Act of 1933, as amended, such amount
is based upon the average of the bid and asked prices of registrant's
Common Stock on June 20, 1996.

(2) Includes 11,940,103 shares that may be issued upon exercise of
outstanding Warrants.

(3) $13,651 was previously paid so that an additional $608 has been wired
for increased filing fee due to additional shares.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVENESS UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.

<TABLE>
<CAPTION>
QUANTECH LTD.

CROSS-REFERENCE SHEET

<S> <C>
Item Number and Caption Location or Caption in Prospectus
1. Front of Registration Statement and Outside Front
Cover Page of Prospectus.......................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus........................................ Inside Front and Outside Back Cover Pages
3. Summary Information and Risk Factors................. Prospectus Summary; Risk Factors
4. Use of Proceeds...................................... *
5. Determination of Offering Price...................... Outside Front Cover Page; Plan of Distribution
6. Dilution............................................. *
7. Selling Security Holders............................. Principal and Selling Shareholders
8. Plan of Distribution................................. Outside Front Cover Page; Plan of Distribution
9. Legal Proceedings.................................... Business; Legal Proceedings
10. Directors, Executive Officers, Promoters and Control
Persons .......................................... Management
11. Security Ownership of Certain Beneficial Owners and
Management......................................... Principal and Selling Shareholders; Certain Transactions
12. Description of Securities............................. Description of Securities
13. Interest of Named Experts and Counsel................. *
14. Disclosure of Commission position on Indemnification
for Securities Act Liabilities..................... Indemnification
15. Organization within last Five Years .................. *
16. Description of Business............................... Business
17. Management's Discussion and Analysis or Plan of
Operations......................................... Management's Discussion and Analysis or Plan of Operations
18. Description of Property............................... Business
19. Certain Relationships and Related Transactions........ Certain Transactions
20. Market for Common Equity and Related Shareholder Price Range of Common Stock; Description of Securities; and
Matters. ........................................... Risk Factors
21. Executive Co mpensation................................ Management
22. Financial Sta tements.................................. Financial Statements
23. Change In and Disagreements With Accountants on
Accounting and Financial Disclosure................. *

- ---------------------
* Not applicable or answer negative.
</TABLE>

SUBJECT TO COMPLETION, AUGUST 23, 1996

PROSPECTUS

QUANTECH LTD.

49,021,530 SHARES OF COMMON STOCK

This Prospectus relates to the offer and sale of up to 49,021,530 shares of
Common Stock (the "Shares"), par value $.01 per share, of Quantech Ltd., a
Minnesota corporation (the "Company" or "Quantech"), by persons who are
currently shareholders of the Company's Common Stock or who may become such
holders upon exercise of Warrants to purchase shares of Company Common Stock
(the "Selling Shareholders"). The Selling Shareholders may offer their Shares
from time to time through or to brokers or dealers in the over-the-counter
market at market prices prevailing at the time of sale or in one or more
negotiated transactions at prices acceptable to the Selling Shareholders. The
Company will not receive any proceeds from sale of Shares by the Selling
Shareholders. See "Plan of Distribution."

The Company will bear all expenses of the offering (estimated at $35,000),
except that the Selling Shareholders will pay any applicable underwriter's
commissions and expenses, brokerage fees or transfer taxes, as well as any fees
and disbursements of counsel and experts for the Selling Shareholders.

Quantech's Common Stock is traded on the local over-the-counter and Nasdaq
Bulletin Board markets under the symbol of QQQQ. The closing sale price of the
Common Stock on August 8, 1996, as reflected on such markets was $0.906 per
share.

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

THE COMMON STOCK OFFERED BY THIS PROSPECTUS IS
SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 6."

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS ____________________ , 1996

No person is authorized to give any information or to make any
representations, other then those contained or incorporated by reference in this
Prospectus, in connection with the offering contemplated hereby, and, if given
or made, such information or representations must not be relied upon as having
been authorized by the Company. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities other than the
registered securities to which it relates or in any jurisdiction to any person
to whom it is unlawful to make such offer or solicitation in such jurisdiction.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
or incorporated by reference herein is correct as of any time subsequent to its
date.

PROSPECTUS SUMMARY

THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND
FINANCIAL STATEMENTS OF THE COMPANY AND THE NOTES THERETO APPEARING ELSEWHERE IN
THIS PROSPECTUS, INCLUDING INFORMATION UNDER "RISK FACTORS."

THE COMPANY

Quantech Ltd. ("Quantech" or the "Company") is a development stage
company seeking to commercialize Surface Plasmon Resonance ("SPR") technology.
The Company's initial focus is the development of SPR for the hospital
point-of-care ("POC") medical diagnostic market. SPR, the core technology of
Quantech's proposed medical diagnostic system, enables the Company to integrate
the existing diagnostic methodologies of immunoassays, DNA probes and chemical
binding into a single, simple, economical system in order to provide rapid,
quantitative, diagnostic results. The Quantech system configuration will consist
of a small, bench top instrument, each offering a particular test or series of
tests. It is anticipated that the Quantech system will have the ability to
analyze body fluids (e.g., whole blood, urine, saliva) without preparation or
addition of reagents.

The medical diagnostics market can be divided into three broad
segments: home diagnostics, the traditional central lab and POC. Excluding home
diagnostics, the overall world wide in-vitro diagnostic market is growing,
estimated at $13.2 billion in 1994, its expected to grow to $17.5 billion by the
year 2000. Central labs currently account for the majority of this market while
POC represents only a small portion. Introduction of additional POC products,
such as Quantech's system, are expected to cause the POC market to gain a larger
percentage of the overall in-vitro diagnostic market. The extent of such market
shift will be affected by the ability of POC products to provide fast, cost
effective and efficient products. The Company's market entry strategy focuses
its efforts on the POC segment. The POC segment has become important for health
care administrators and third party payers seeking to bring more rapid decision
making to the patient's bedside, thereby decreasing the overall costs of care.

Quantech's business strategy is to capitalize on the flexibility,
extreme sensitivity and relatively low cost of its diagnostic system. Quantech's
intended entry into the POC market will be Critical Care Units of hospitals, the
first being the Emergency Department ("ED") where the most pressing and unmet
customer needs are found. The Critical Care Units represent a significant market
as they require a number of rapid turn-around tests. Although there are some POC
tests available for the Critical Care Units, the Company is not aware of any
currently existing POC product that provides a single instrument that will
perform most of the tests these Units require. Additionally, there is minimal
current competition for POC products in the Critical Care Units from the large,
multinational companies that are presently focused on serving the central lab
market.

There are approximately thirty commonly ordered tests in the ED, all of
which are ordered STAT (very urgent). Some of the most important diagnostic
tests in the ED are cardiac markers. These tests help to identify whether a
patient experiencing chest pain has suffered a myocardial infarction (heart
attack). Current POC competition for this approximately $500 million annual
market consists of colorimetric, non-quantitative disposable kits. Quantech's
first two tests, intended to be introduced in early calendar 1997, are expected
to quantify these markers in two to five minutes through its objective,
computer-controlled system. Similar results are presently available from the
central lab in 60 to 90 minutes. Quantech's price to the customer will be less
than the existing POC products while offering the advantages of rapid
quantification and cost reduction when compared to the central lab.

Quantech believes the benefits of its system over other POC systems are
that the same instrument is expected to be able to be used for a full range of
tests and provide quantitative results. After the initial introduction of tests
for myocardial infarction, the Company intends to introduce additional tests at
the rate of one per quarter. Selection of these tests will be based upon market
demand, ease of development, regulatory hurdles and profit margins. The Company
plans to expand into other critical care diagnostic markets which have needs
similar to the ED. The capabilities of the Quantech system as a broad, flexible
diagnostic testing platform should meet the needs identified by the POC market
and the Company's marketing strategy is expected to enable it to be competitive
in the global medical diagnostics market.

<TABLE>
<CAPTION>
THE OFFERING

<S> <C>

Securities Offered................................... 49,021,530 shares of Common Stock assuming exercise
of all Warrants(1).

Common Stock Outstanding............................. 46,900,759 shares of Common Stock(2).

Use of Proceeds...................................... The Company will not receive any proceeds from
sales of Shares by the Selling Shareholders.

Risk Factors......................................... An investment in the Shares offered hereby involves
a high degree of risk, including the risk of loss
of an investor's entire investment. See "Risk
Factors" for a discussion of factors that investors
should consider before purchasing any of the Shares
offered hereby.
</TABLE>

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

1. Includes 11,940,103 shares that may be acquired upon exercise of
outstanding warrants.

2. Does not include up to 15,853,603 shares that may be issued upon
exercise of outstanding options and warrants, of which 11,940,103
shares are registered hereby for resale. See "Capitalization" and
"Certain Transactions."

SUMMARY FINANCIAL DATA

The following table sets forth summary financial data for the periods
indicated for the Company. This information should be read in conjunction with
the Financial Statements and related Notes and "Management's Discussion and
Analysis or Plan of Operations" appearing elsewhere herein.
<TABLE>
<CAPTION>

PERIOD FROM
SEPTEMBER 30,
1991
STATEMENT OF (DATE OF
OPERATIONS DATA: YEAR ENDED YEAR ENDED INCEPTION), TO
JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996
------------------ -------------------- -------------------
<S> <C> <C> <C>
G&A $1,218,674 $1,193,285 $6,141,471
------------------ -------------------- -------------------
R & D 991,701 503,375 2,531,119
------------------ -------------------- -------------------

Net Loss $(2,396,963) $(2,070,292) $(10,482,840)
================== ==================== ===================

NET LOSS PER COMMON SHARE:
$(.07) $( .31)
================== ====================

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
31,991,150 6,786,986
================== ====================
</TABLE>

BALANCE SHEET DATA: JUNE 30, 1996
---------------------------

Current Assets $2,984,140

Total Assets 5,513,550

Current Liabilities 193,026

Long-Term Obligations 37,500

Total Liabilities & Equity $5,513,550

RISK FACTORS

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SPECULATIVE AND INVOLVES A
HIGH DEGREE OF RISK IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE
FOLLOWING FACTORS SHOULD BE CONSIDERED CAREFULLY BY POTENTIAL PURCHASERS IN
EVALUATING AN INVESTMENT IN THE COMMON STOCK OF THE COMPANY.

NO HISTORY OF OPERATIONS; DEVELOPMENT STAGE COMPANY; GOING CONCERN UNCERTAINTY

The Company (through predecessor entities) was organized in December
1989 and acquired its technology in November 1991. Since November 1991, the
Company has been conducting development of SPR technology and the associated
patents and proprietary information encompassed in the License, as defined
below. To date, the Company does not have a product ready to be brought to
market and has experienced delays in completing development, but is continuing
research and development on its prototype and associated test disposables.
Accordingly, the Company has no operating history and its proposed operations
are subject to all of the risks inherent in a new business enterprise, including
commercial development of its products, lack of marketing experience and lack of
production history. See "Business."

The likelihood of the success of the Company must be considered in
light of the expenses, difficulties and delays frequently encountered in
connection with the start-up of new businesses and the competitive environment
in which the Company will operate. The Company has not had significant revenues
to date. As of June 30, 1996, the Company had an accumulated deficit of
$10,482,840. The report of the independent auditors on the Company's financial
statements for the period ended June 30, 1996, includes an explanatory paragraph
relating to the uncertainty of the Company's ability to continue as a going
concern. The Company is a development stage company which has suffered losses
from operations, requires additional financing, and ultimately needs to
successfully attain profitable operations. These factors raise substantial doubt
about the Company's ability to continue as a going concern. There can be no
assurance that the Company will be able to develop a commercially viable product
or marketing system or attain profitable operations. See "Financial Statements."

FUTURE CAPITAL NEEDS

The Company does not have sufficient funds to commence commercial
production and sales of its system, but anticipates that its current funding is
adequate to complete FDA approval of its first product and start preproduction
and premarket activities. The Company's ability to begin commercial production
and sales of its system will depend upon the continued availability of
investment capital, funding made by strategic partner(s) or licensing revenues,
until revenues from sale of the instruments and associated test disposables are
sufficient to maintain operations. Additional funds may have to be raised
through equity or debt financing. The Company has no commitments for any
additional equity or debt financing and there can be no assurance that any such
commitments can be obtained on favorable terms, if at all. Such additional
financing may result in dilution to Company shareholders. If funding is not
available when needed, the Company may be forced to cease operations and abandon
its business. In such event, Company shareholders could lose their entire
investment. See "Management's Discussion and Analysis or Plan of Operations."

NEW PRODUCT DEVELOPMENT

The Company's reading instrumentation and associated disposables are
under development. Such development is being conducted by the Company using both
internal resources and outside contractors. To date, the Company and certain of
its outside contractors have had difficulty meeting their development timetables
and budget. Although Quantech believes it will complete development of its
initial product for FDA submission in calendar 1996, no assurance can be given
that the Company's development timetable can be kept, that the budget for
development will be maintained, or that development efforts will be successful.
See "Use of Proceeds" and "Business."

UNCERTAINTY OF MARKET ACCEPTANCE

The commercial success of the Company's products will depend upon their
acceptance by the medical community and third-party payors as useful and
cost-effective. Market acceptance will depend upon several factors, including
the establishment of the utility and cost-effectiveness of the Company's tests,
the receipt of regulatory clearances in the United States and elsewhere and the
availability of third-party reimbursement. The availability of POC test systems
for a wide variety of tests has been limited to date. The Company is thus
targeting an emerging market. Diagnostic tests similar to those developed by the
Company are generally performed by a central laboratory at a hospital or clinic.
The approval of the purchase of diagnostic equipment by a hospital is generally
controlled by its central laboratory. The Company expects there will be
resistance by central laboratories to yield control of tests they have
previously performed. The Company will also have to demonstrate to physicians
that its diagnostic products perform as intended, meaning that the level of
accuracy and precision attained by the Company's products must be comparable to
test results achieved by the central laboratory systems. Failure of the
Company's products to achieve market acceptance or third-party payor approval
would have a material adverse effect on the Company. See "Business - The
Market."

LACK OF MARKETING EXPERIENCE

The Company has had no experience in marketing its system. The Company
believes that the ED market is focused enough that a small sales and marketing
force can produce significant results, however, there is no guaranty that the
Company's sales and marketing plans will succeed.

LACK OF FDA PRODUCT APPROVAL

The Company's products will be regulated as medical devices by the Food
and Drug Administration ("FDA") under the Federal Food, Drug, and Cosmetic Act
("FDC Act"), and as such require premarket regulatory clearance before
commericialization in the United States. The Company believes that premarket
clearance can be obtained for its systems, except for a few tests the Company
may introduce at a later time, through submission of a 510(K) premarket
notification ("510(K) Notification") demonstrating the product's substantial
equivalence to another device legally marketed pursuant to 510(K) Notification
clearance. The Company will have to perform in-house clinical trials designed to
produce the data necessary to demonstrate the substantial equivalence of its
instrument and tests. Although 510(K) submissions are supposed to be completed
by the FDA within 90 days of submission, there can be no assurance the FDA will
approve the Company's initial system pursuant to a 510(K) Notification, or do so
in a timely manner, and therefore there can be no assurance that the Company
will be able to introduce its initial system in the United States by the first
quarter of calendar 1997 as it currently intends. If the Company cannot
establish to the satisfaction of the FDA that its products are substantially
equivalent, the Company will have to seek premarket approval ("PMA") of its
system, requiring submission of a PMA application supported by extensive data to
prove safety and efficacy. If a PMA is required, introduction of the initial
system would likely be significantly delayed, which could have a material
adverse effect on the Company. By regulation, FDA review of PMA applications is
required within 180 days of its acceptance for filing; however, reviews more
often occur over a significantly protracted period, usually 12 to 18 months, and
a number of products have never been cleared. See "Business - Government
Regulation."

LIMITED MANUFACTURING AND PRODUCTION EXPERIENCE

To be successful the Company must manufacture its products in
compliance with regulatory requirements, in sufficient quantities and on a
timely basis, while maintaining product quality and acceptable manufacturing
costs. The Company will have to establish a manufacturing facility, or contract
with a third party for manufacturing, which is registered with the FDA.
Production of the Company's disposables requires the placement of antibodies or
other binding reagents on metalized grating surfaces. The chemical and physical
conditions for coating are substantially equivalent to those used to produce
other solid state binding assays. Although the Company believes that its
production methods will be effective for manufacturing its disposables, there
can be no assurance that the methods will be applicable to all the tests it
expects to develop or that the Company will be able to manufacture accurate and
reliable products in large commercial quantities on a timely basis and at an
acceptable cost. Inability to manufacture a full range of diagnostic tests would
limit the Company's access to its intended market.

COMPETITION

The diagnostic testing market is highly competitive. As POC markets
expand, the Company expects that manufacturers of central and STAT laboratory
testing equipment will compete to maintain their revenue and market share and
that new POC products will be developed. All of the industry leaders and many of
the other companies participating in this market have substantially greater
resources than the resources available to the Company, including, but not
limited to, financial resources and skilled personnel. See "Business -
Competition."

TECHNOLOGICAL OBSOLESCENCE

The Company operates in a market characterized by rapid and significant
technological change. While the Company is not aware of any developments in the
medical industry which would render the Company's current or planned products
less competitive or obsolete, there can be no assurance that future
technological changes or the development of new or competitive products by
others will not do so. To remain competitive, the Company must continually make
substantial expenditures for development of both equipment and disposables.

OBTAINING ANTIBODIES AND CHEMISTRIES

Many of the chemistries that will be necessary for the Company's
diagnostic system must be obtained through commercial suppliers or agreements
for the licensing of such chemistries. Although the Company believes it can
obtain the necessary chemistries, there can be no assurance that the Company
will be able to make satisfactory arrangements to provide its customers with as
wide a variety of products as they might desire. The lack of a sufficient number
of chemistries would greatly limit the Company's ability to market its
diagnostic system.

DEPENDENCE ON KEY PERSONNEL; NEED FOR ADDITIONAL SKILLED PERSONNEL

The operations and future success of the Company will depend upon the
efforts and abilities of R. H. Joseph Shaw, Chief Executive Officer, Dr. Robert
R. McKiel, Executive Vice President and Director of Research and Development and
Gregory G. Freitag, Chief Financial Officer and Vice President of Corporate
Development. The loss of any of these person's services could adversely affect
the Company. The Company does not have key-person life insurance on any of its
officers. The Company has in place employment agreements with each of Mr. Shaw,
Dr. McKiel and Mr. Freitag. Successful development of the Company's products
will require the services of additional personnel. There can be no assurance
that the Company will be able to attract and retain such persons as employees,
independent contractors, consultants or otherwise. See "Management."

PATENT PROTECTION

No assurance can be given that other companies will not develop
technologies substantially equivalent to those owned or to be acquired or
developed by the Company or that the Company will be able to protect its
proprietary technology. See "Business - Patents and Proprietary Rights." The
Company is not aware of any issued patents that would prohibit the use of any
technology the Company currently has under development. However, patents may
exist or issue in the future to other companies covering elements of the
Company's systems. The existence or issuance of such patents may require the
Company to make significant changes in the design of its systems or operational
plans. Although the Company believes that its proposed products will not
infringe patent rights of others, there can be no assurance that such
infringement does not, or will not, exist with respect to the completed product.
The Company has not conducted an independent patent search or evaluation with
respect to the SPR technology. Ares-Serono, the licensor to the Company of its
basic SPR technology, has made no warranties as to the enforceability of any of
its patents or the commercial potential of the technology. Although Ares-Serono
has the obligation to defend the patents they have licensed to the Company,
Quantech will be responsible for the defense of any patents issued to it. Cost
of defending patents can be substantial. See "Business - Patents and Proprietary
Rights."

GOVERNMENT REGULATION

If the Company becomes a provider of health care diagnostic devices as
intended, the Company will be subject to laws and regulations administered by
federal, State and foreign governments. The degree of regulation and areas of
concern differ in each country or region. The Company will be required to comply
with regulations regarding product approval and performance and, in addition,
regulations concerning electronic devices. The industry in which the Company
expects to operate is subject to frequent regulatory changes and there can be no
assurance that the Company will be able to comply with applicable regulations.
In the event of noncompliance, the Company may be unable to market any products.
See "Business - Government Regulation."

POSSIBILITY OF EXPOSURE TO PRODUCT LIABILITY CLAIMS

The Company could be exposed to risk of product liability claims or
other lawsuits in the event of incorrect diagnosis utilizing the SPR equipment
and disposables developed by the Company. Although the Company will evaluate
obtaining liability insurance when the products come to market, there can be no
assurance that the Company will be able to obtain or maintain such insurance or
that the Company will not be subject to claims in excess of its insurance
coverage.

ABSENCE OF DIVIDENDS

The Company has not declared or paid any cash dividends on its Common
Stock since its inception and the Board of Directors presently intends to retain
all earnings for use by the Company for the foreseeable future. Any future
determination as to declaration and payment of dividends will be made at the
discretion of the Board of Directors and will depend upon a number of factors,
including, among others, earnings of the Company, the operating and financial
condition of the Company, the Company's capital requirements, and general
business conditions.

SHARES ELIGIBLE FOR FUTURE SALE

Including the Shares available pursuant to this Prospectus, all of the
Company's outstanding stock may be sold in the public market. In addition,
11,940,103 of a total of 15,853,603 shares that may be obtained upon exercise of
outstanding options and warrants are also included for resale pursuant to this
Prospectus.

LIMITED MARKET FOR SECURITIES

There is a limited trading market for the Company's Common Stock, which
is not listed on any stock exchange or Nasdaq. Although trading in the Company's
Common Stock in calendar 1996 has occurred on a consistent basis, the volume of
shares traded has been sporadic. There can be no assurance that an established
trading market will develop, the current market will be maintained or a liquid
market for the Company's Common Stock will be available in the future. See
"Price Range of Common Stock."

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is traded on the local over-the-counter and
the National Association of Securities Dealers Bulletin Board markets under the
symbol of QQQQ. At August 8, 1996, the Company had approximately 500
shareholders of record. On August 8, 1996 the bid, asked and closing sale prices
of its Common Stock were $0.843, $0.906 and $0.906, respectively. The following
table summarizes the quarterly high and low sale prices for the Company's Common
Stock for the prior two fiscal years.

HIGH LOW
------ -------
Fiscal 1995

First Quarter $0.25 $0.0625
Second Quarter $0.25 $0.0625
Third Quarter $0.12 $0.09
Fourth Quarter $0.34 $0.125

Fiscal 1996

First Quarter $0.34 $0.187
Second Quarter $0.81 $0.50
Third Quarter $1.06 $0.50
Fourth Quarter $1.625 $0.68

DIVIDEND POLICY

The Company has never declared or paid a cash dividend on its Common
Stock. The Company currently intends to retain any earnings for use in the
operation and expansion of its business and therefore does not anticipate paying
any cash dividends in the foreseeable future.

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
June 30, 1996. Such table has not been adjusted for the exercise of any of the
Warrants as there is no assurance that any of the Warrants will be exercised.
This table should be read in conjunction with the Company's Financial
Statements, including the Notes thereto, included elsewhere in this Prospectus.

June 30, 1996
--------------------
Long-Term Obligations................................ $ 37,500
Shareholders' equity:
Common Stock, $.01 par value;
60,000,000 shares authorized;
46,900,759 shares issued and
outstanding(1).................................. $ 469,008
Additional Paid-in Capital 15,296,856
Deficit Accumulated During Development Stage.... $(10,482,840)
--------------------
Total shareholders' equity................... 5,283,024
--------------------
Total capitalization....................... $ 5,320,524
====================
- ------------------------

(1) Does not include up to 15,853,603 shares that may be issued upon
exercise of outstanding options and warrants, of which 11,940,103
shares are registered hereby for resale. See "Capitalization" and
"Certain Transactions."

SELECTED FINANCIAL DATA

The following table has been derived from the Company's financial statements
appearing elsewhere in this Prospectus and sets forth selected financial data
for the periods indicated. The financial statements for the years ended June 30,
1996 and 1995 and for the period from September 30, 1991 (Date of Inception) to
June 30, 1996 have been audited by McGladrey & Pullen, LLP. The data should be
read in conjunction with the Company's Financial Statements and the Notes
thereto included elsewhere in this Prospectus.

PERIOD FROM
SEPTEMBER 30,
1991
FISCAL YEAR ENDED JUNE 30, (DATE OF
----------------------------------
Inception), to
1996 1995 June 30, 1996
------------- -------------- -------------------
<S> <C> <C> <C>
SUMMARY OF OPERATIONS:

Net Loss (2,396,963) (2,070,292) (10,482,840)
------------- -------------- -------------------

NET LOSS PER COMMON SHARE:
( .07) (.31)
============= ==============

WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
31,991,150 6,786,986
------------- --------------

Balance Sheet Data: June 30, 1996
----------------------

Current Assets $2,984,140

Total Assets 5,513,550

Current Liabilities 193,026

Long-Term Obligations 37,500

Total Liabilities & Equity $5,513,550

</TABLE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION

HISTORY

Quantech Ltd. ("Quantech" or the "Company") was formed under the laws
of Minnesota for the purpose of effecting the change of domicile of Spectrum
Diagnostics S.p.A ("SDS") from Italy to the state of Minnesota through the
merger with SDS on April 14, 1993. Quantech had no operations prior to the
merger and is continuing the business of SDS to commercialize Surface Plasmon
Resonance ("SPR") technology licensed from Ares-Serono. SPR, the core technology
of Quantech's proposed medical diagnostic system, enables the Company to
integrate the existing diagnostic methodologies of immunoassays, DNA probes and
chemical binding into a single, simple economical system in order to provide
rapid, quantitative, diagnostic results. The Quantech system configuration will
consist of a small, bench top instrument and a series of disposable slides with
multiple tests per slide. It is anticipated that the Quantech system will have
the ability to analyze body fluids (e.g. whole blood, urine, saliva) without
preparation or addition of reagents. The Company's initial focus is to develop
SPR for the hospital emergency room point-of-care ("POC") medical diagnostic
market. Its first test will aid physicians in assessing whether a patient has
suffered a heart attack.

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

RESULTS OF OPERATIONS

The Company has incurred a net loss of $10,482,840 from September 30,
1991 (date of inception) through June 30, 1996 due to expenses related to
formation and operation of SDS in Italy, continuing costs of raising capital,
normal expenses of operating over an extended period of time, funds applied to
research and development, royalty payments related to the SPR technology, losses
due to expenses of Quantech's predecessor, Spectrum Diagnostics Inc. and
interest on borrowed funds. In addition, an investment of $3,356,629 was made
when Quantech purchased the exclusive rights to the SPR technology.

For the year ended June 30, 1996 the Company had interest income of
$42,038 compared to $0 for the 1995 fiscal year as a result of cash on hand
obtained from Quantech's private placements. General and administration expenses
increased from $1,193,285 for the year ended June 30, 1995 to $1,218,674 for the
year ended June 30, 1996. General and administration expenses, although
increasing slightly in 1996, have in fact changed modestly in how funds are
expended in such category. In fiscal 1996, Quantech was able to reduce general
and administration expenses it has incurred in the past relating to professional
fees, consulting arrangements and other expenses required to maintain an
inadequately funded organization. The overall increase in Quantech's general and
administration expenses in fiscal 1996 was a result of adding personnel, and
costs associated with such personnel, as Quantech continues to build its
infrastructure in anticipation of commercial production of its system. General
and administration expenses will continue to grow as the Company nears market
introduction of, and begins to sell, its system.

Research and development costs increased from $503,375 in 1995 to
$991,701 in 1996. This increase is a result of accelerated research and
development activity including hiring of employees and engaging firms to perform
contract development work. Minimum royalty expense decreased in 1996 as compared
to 1995 as a result of the declining minimum royalties owed under Quantech's
license with Ares-Serono.

For the year ended June 30, 1996 Quantech had a loss of $2,396,963 as
compared to $2,070,292 for the same period ended June 30, 1995. This increase
was a result of the rise in research and development and general and
administrative expenses in 1996 exceeding decreases in such period in minimum
royalty and financing expenses and the increase in interest income.

Management believes the reduction in general and administration
expenses related to expenditures incurred in supporting an under capitalized
organization, while research and development expenses have increased, reflects
the Company's current stability. Quantech is now able to apply an appropriate
amount of funds to pursue the development and commercialization of its product.
The Company believes it will be able to continue to apply funds to the areas
most appropriate to complete its system and introduce it to the market. This
forward looking information regarding the anticipated use of funds will be
influenced, however, by the timing of product introduction, need for additional
capital and other factors beyond the Company's control.

In fiscal 1996, the Company has continued to contract for the
development of its prototype instrument and its manufacture; continued to
develop the chemistries necessary to do specific tests; contracted the
development of the disposable slides for the tests; and continued to raise the
necessary funds to stay in operation. Management anticipates that a system
suitable to begin FDA clinical work will be available in the summer/fall of
1996. The next major step for the Company will be to submit its system to the
FDA for approval which is anticipated prior to the end of calendar 1996. At the
time of submission to the FDA, the system is expected to be ready for the
commercial market and marketing in the United States will proceed upon approval
by the FDA. Such FDA approval is anticipated in the spring of 1997. This
timetable will be influenced by the Company's ability to complete prototype
development of its system and necessary testing for submission of its FDA filing
and delays it may encounter with the FDA in its review of the system.

LIQUIDITY AND CAPITAL RESOURCES

From inception to June 30, 1996, Quantech has raised approximately
$15,500,000 through a combination of public stock sales, private stock sales and
debt obligations. Additional funds will be needed to establish sales and
marketing and production capabilities and to begin any significant sales of the
Company's product once development is completed. There can be no assurance that
the Company will obtain additional capital when needed or that additional
capital will not have a dilutive effect on current shareholders.

During its fiscal year ended June 30, 1996, Quantech had a number of
events occur affecting its capital resources. With regard to debt conversion
transactions, holders of Quantech 8% debentures due September 30, 1995, totaling
$997,500 plus accrued interest on such date, converted these amounts to Common
Stock at conversion prices ranging from $.125 to $.25 per share. In total,
including accrued interest to September 30, 1995, these debentures were
converted into 7,484,896 shares of Common Stock. In addition, holders of notes
due March 19, 1996, totaling $1,230,000 plus accrued interest, converted these
notes to Common Stock at a conversion price of $.125 per share on December 31,
1995. In total, including accrued interest, these notes were converted into
11,217,157 shares of Common Stock.

Quantech has also completed three private offerings of its Common
Stock. In July through September 1995, the Company received $2,882,952 of net
proceeds as a result of completion of a private placement of Units at $1.00 per
Unit. In November 1995, it received $430,000 of net proceeds also from the
private placement of $1.00 Units. Each Unit consisted of four (4) shares of
Company Common Stock and a warrant to purchase one share of Common Stock at $.25
per share. The Company used the proceeds from these offerings for payment of
bridge loans, including interest, minimum royalties due under its license with
Ares-Serono, accounts and accrued payables, purchase of equipment and for
working capital.

On May 3, 1996, Quantech completed its third private offering of
6,275,000 shares of Common Stock at $.60 per share. Such offering provided the
Company with net proceeds of approximately $3,363,000. Quantech intends to apply
the proceeds of such offering, along with cash on hand, to expenses relating to
product development, FDA submission, establishing sales and marketing and
production capabilities and to provide working capital. Although current funds
are expected to allow the Company to proceed through FDA approval of its system,
Quantech will not have sufficient funds to commence commercial production of its
system. Although the Company has a limited lending arrangement with its bank, it
does not anticipate receiving significant funding from lenders.

Quantech incurred capital expenditures of approximately $188,000 in
fiscal 1996. The Company anticipates significant capital expenditures in fiscal
1997 for laboratory and production equipment and office expansion as the Company
nears product introduction. The timing and amount of such expenditures will be
governed by the Company's development and market introduction schedules which
are subject to change due to a number of factors including development delays,
FDA approval and availability of future financing. In addition to capital
expenditures, the Company has a final minimum royalty payment of $150,000 due to
Ares-Serono on December 31, 1997.

The Company currently has outstanding 46,900,759 shares of Common
Stock. It also has options and warrants outstanding to purchase an additional
15,853,603 shares.

ISSUED BUT NOT YET ADOPTED ACCOUNTING STANDARD

In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 123, "Accounting for Stock-Based Compensation", which establishes
financial accounting and reporting standards for stock-based employee
compensation plans. The Company will be required to adopt Statement No. 123 in
fiscal 1997. The Company does not intend to adopt Statement No. 123 in measuring
expense, however it will present the proforma disclosures and those pro forma
amounts will likely be less than the amounts shown in future statements of
income.

BUSINESS

BACKGROUND

Quantech Ltd. ("Quantech" or the "Company") is a development stage
company seeking to commercialize Surface Plasmon Resonance ("SPR") technology.
The Company's initial focus is the development of SPR for the hospital
point-of-care ("POC") medical diagnostic market. SPR, the core technology of
Quantech's proposed medical diagnostic system, enables the Company to integrate
the existing diagnostic methodologies of immunoassays, DNA probes and chemical
binding into a single, simple, economical system in order to provide rapid,
quantitative, diagnostic results. The Quantech system configuration will consist
of a small, bench top instrument and a series of disposables, each offering a
particular test or series of tests. It is anticipated that the Quantech system
will have the ability to analyze body fluids (e.g., whole blood, urine, saliva)
without preparation or addition of reagents.

STRATEGY

Quantech's objective is to establish its SPR biosensor diagnostic
technology as the standard for critical POC diagnostics and steadily expand the
number of its tests available for its system through the introduction of
additional disposables. To reach that objective, Quantech intends to do the
following:

o Finalize the development of the prototype system for hospital
Emergency Departments (initially configured for the cardiac
marker CK-MB).

o Submit the system to the FDA for regulatory review.

o Market this initial system (including evaluating strategic
partners with established distribution channels).

o Develop additional cardiac markers (specifically, Troponin,
Myoglobin, Myosin and CA-III).

o Develop additional markers for other high demand critical care
tests in medical diagnostic testing (specifically, pregnancy,
therapeutic drugs such as Digoxin, drugs of abuse and
infectious diseases).

o Assess capabilities of SPR in nonmedical testing applications.

THE ARES-SERONO LICENSE

The Company has acquired from Ares-Serono at a total cost of $3.4
million a worldwide exclusive license (the "License"), to certain patents,
proprietary information and associated hardware (e.g. molds, test rigs,
prototypes) related to the SPR technology. The Ares-Serono affiliated companies
(the "Ares-Serono Group"), based in Switzerland, comprise a multinational
organization engaged in the development and marketing of ethical pharmaceuticals
and diagnostic products, primarily in the field of human fertility, human
growth, immunology and virology. The SPR diagnostic technology was developed by
a research and development partnership (the "R&D Partnership"), the General
Partner of which was a company belonging to the Ares-Serono Group.

The License calls for an ongoing royalty of 6 percent on all products
utilizing the SPR technology which are sold by the Company. If the Company
sublicenses the technology, the Company will pay a royalty of 15 percent of all
revenues received by the Company under any sublicense. If the payments of the 6
percent royalty and the sublicense royalty fail to reach at least $1,000,000 by
December 31, 1997, an additional payment of $150,000 by December 31, 1997 will
be required. The Company has paid to date $850,000. If such payment is not made,
Ares-Serono has the right to cause a reversion to Ares-Serono of a royalty-free
license, thereby depriving the Company of its exclusive rights under the
License. The obligations of Quantech to pay royalties terminate when the total
royalty payments (excluding any sublicense royalties paid through July 1, 1996)
reach a gross amount of $18 million. After such date, Quantech's rights in the
licensed SPR technology continue in perpetuity with no further obligations to
Ares-Serono.

Ares-Serono specifically reserved, and did not license to Quantech, any
rights with or otherwise integrated with certain fluoresecence capillary fill
device technology (the "FCFD Technology"). The Company believes that such
limitation does not materially impact the value of the License given Quantech's
current plan of commercialization. In addition, the License is subject to the
contingent right of PA Technology, a U.K. corporation, to request a grant of a
non-exclusive royalty-free license to exploit certain rights in the SPR
technology for applications outside the field of the commercial interests of the
Company. Finally, Ares-Serono has retained the right to further develop the SPR
technology, provided, however, that any products commercialized from such
development may only be sold through Ares-Serono under its name. Quantech is
unaware of any attempts by Ares-Serono to further develop the SPR technology.
See "Business-Patents."

THE TECHNOLOGY

[GRAPHIC OMITTED THAT IS DESCRIBED WITHIN THE FOLLOWING PARAGRAPH]

Surface Plasmon Resonance is an optical-electrical phenomenon involving
the interaction of light with the electrons of a metal. The optical-electronic
basis of SPR is the transfer of the energy carried by photons of light to a
group of electrons (a plasmon) at the surface of a metal. Quantech's SPR sensor
is a disposable slide composed of a clear plastic base with a fine grating
molded into its surface. The grating is coated with a very thin layer of gold (1
ounce of gold is sufficient to produce approximately 200,000 disposables). Gold
is used since it does not oxidize like other metals, which oxidation affects the
ability of the system to perform the test. The gold is subsequently coated with
binding molecules. The binding molecules may be antibodies, DNA probes, enzymes
or other reagents chosen because they react exclusively with a specific analyte.
The analyte is the substance being measured and defines the test to be done such
as a cardiac marker.

The coated metal surface interacts with light at a characteristic
resonant wavelength that depends upon the molecular composition at the metal's
surface. When the coated metal is exposed to a sample that contains analyte, the
analyte becomes bound to the metal through its specific interaction with the
binding molecules. As an analyte is bound, the composition at the surface
changes and consequently the resonant wavelength shifts. The magnitude of the
change in the resonant wavelength is proportional to the amount of binding that
takes place, which is proportional to the concentration of the analyte in the
sample.

[GRAPHIC OMITTED THAT IS DESCRIBED WITHIN THE FOLLOWING PARAGRAPH]

In the examples shown, an antibody is coated onto the surface of the
grating against a specific antigen such as the cardiac marker CK-MB. As the
antigen is captured, the wavelength of light that causes the SPR signal alters
in proportion to the amount of antigen present in the sample. Thus, the shift or
wavelength difference between the initial and final reading provides the
quantitative results.

[GRAPHIC OMITTED THAT IS DESCRIBED WITHIN THE FOLLOWING PARAGRAPH]

Quantech's SPR biosensor combines the strengths of biology and physics
into a single entity. The utilization of the phenomena of SPR produces high
sensitivity. Applications of SPR that have been reported in the scientific
literature or explored by the Company include immunoassays for cardiac markers,
hormones, drugs, viruses and bacteria, quantitation of anesthetic gases, and DNA
binding assays. The Company's SPR biosensor technology presents a simple,
unified platform that is capable of performing a wide range of diagnostic tests.

PRODUCT DESCRIPTION

THE INSTRUMENT

The Quantech instrument will be designed to fill the anticipated needs
of Critical Care Units and in particular the ED. The instrument will be of a
size capable of sitting on a desk or tabletop and moved from room to room if
necessary. It contains a white light source, a microprocessor, a number of
optical components, a computer touch screen and a drawer mechanism. The light is
split into two parts, a unique development of the Company, that enables the user
to read whole blood samples and provides a base line so quantitative results may
be obtained. The computer touch screen will display results of a given test and
enable the user to enter both a user number and the patient or specimen ID
number. The data or results produced by the instrument will also be stored on
its hard drive, thereby allowing the user to download data to a central computer
upon demand, and may be provided on a hard copy through use of an integrated
printer. A bar-code reader will identify the disposable employed and contain
certain calibration information necessary to effectively maintain quality
control. Most importantly, the instrument will be designed to be compatible with
new Quantech test disposables if and when they are introduced to the market. As
a result, when Quantech adds tests through the introduction of new disposables,
its original instrument will accommodate these various tests without a need for
additional hardware or software or training of ED personal.

Because of the small size and configuration of the instrument it will
be able to be located at bedside. It is anticipated that Critical Care Units
such as the ED will have several of these instruments at various locations. For
customers who wish to purchase the instrument, the retail price is anticipated
to be between $18,500 and $25,000. There will also be several industry standard
reagent rental programs based upon the number of disposables purchased.

DISPOSABLES

Quantech's disposable slide consists of an injection molded plastic
carrier containing up to four metal coated grating surfaces. The metallic
surface is overlaid with reagents that react specifically with the analyte to be
identified and measured. One unique aspect of the Quantech disposable will be
the ability to attach a standard vacutainer tube, complete with its top intact,
to the disposable so that it is easy to use and the user has minimal exposure to
the patient sample. The disposables will be configured identically for all of
the tests manufactured by the Company. The only difference between the
disposables will be the reagents coated on each grating to define the particular
test. Future disposables for certain tests may also be configured to handle
samples of urine, saliva, or other body fluid.

Unlike the majority of other disposables on the market, Quantech's
disposables do not require the addition of reagents by the user. This simplicity
translates into lower production costs, quicker development time, easier use,
immediacy of results and reduced costs to the user. Individual disposables will
be packaged in a sterile pouch to provide extended shelf life. Disposables will
be configured to provide single tests or panels of up to three
diagnostically-related tests. Disposables are expected to initially have retail
prices ranging from $5.00 to $35.00 per disposable slide.

The Company has conducted experiments on a limited scale and initial
indications are that the SPR technology is a viable testing method. The Company
intends to manufacture test disposables based upon such SPR technology. The
Company believes that such test disposables will be easily produced, however,
commercial production may pose difficulties which currently are unforeseen.
Because the same disposable configuration may be used for all tests,
manufacturing and quality control costs should be minimized. Additional
development of the disposable is currently being conducted and future
development will continue to expand the number of tests that may be performed in
general and on each disposal.

COMPARISON OF PRODUCT TECHNOLOGIES

A number of basic methods, whether performed manually or by automated
instruments, are utilized in diagnostic testing including immunoassays, DNA
probes and chemical reactions. Each of these testing methods requires the
performance of a series of operations by a skilled technologist. This testing
consists of: sample preparation, addition of reagents, further method-specific
manipulations, and reading and interpretation of raw data. Central laboratory
automated systems have mechanized, rather than eliminated many of thesesteps.
steps. Based upon the Company's current prototype instrument and test
disposables, the Quantech system, consisting of the instrument and disposable,
will not require sample preparation, addition of reagents or operation by a
skilled technologist. No assurance can be given, however, that the SPR
technology can be commercialized so as to provide an instrument and disposable
that will operate in the manner described or that such instrument will be
accepted by the medical community.

In the Critical Care Units of the hospital, low volume or single test
throughput eliminates the economy of the central lab systems without
significantly shortening turnaround time for test results. Quantech's system
economically employs the same basic technologies, but simplifies the process.
The expected advantages of the Quantech system include:

o Considerably faster test results
o Quantitative results
o Objective results (independent of operator skill or
perception)
o Competitively priced instrument and disposables
o Minimal operator training
o No addition of reagents by the operator
o Compact, durable instrument
o Equal to or better sensitivity than other technologies

The Company believes the products to be developed from the SPR
technology will provide the potential to enable medical tests to be conducted at
the patient site with fewer steps, rapid response time, and minimal operator
training. However, the final commercialized SPR product has not been developed
and no assurance can be given that all of the advantages described above will be
attained.

The Company's first instrument is designed for the POC market described
below. It is designed to combine accuracy with simplicity of use and will be
capable of processing one test disposable at a time. Subsequently developed
instruments may offer more automation, may provide greater throughput required
by larger facilities, and may incorporate a small computer for additional data
storage and analysis. The ability of biosensors to convert biological data into
digital signals should also permit designs that capitalize on future advances in
microcomputer technology.

THE MARKET

GENERAL

POINT OF CARE

POC testing represents one of the most rapidly growing segments of the
in-vitro diagnostics market. Part of this growth is a result of the rising costs
of health care that have produced changes in hospital reimbursement. Pressure
has increased to reduce the length of patient stay and provide a greater portion
of services in ambulatory and outpatient settings. Because the cost of providing
care in Critical Care Units far exceeds those of general medical or surgical
units, one goal of critical care medicine is to shorten the amount of time
patients spend in these settings by instituting therapy based upon the rapid
availability of test results.

The strategic direction chosen by Quantech is to exploit the inherent
technological advantages of its SPR technology by identifying the diagnostic
market niche where such technological advantages provide both economic savings
and significant patient benefits. The Company's primary strategy will be to
focus on the critical care diagnostics area. Quantech has identified this area
as one that fulfills both the above criteria. At this time, the large medical
diagnostic testing companies have little presence in this niche as they focus
their resources on the central laboratory. This absence should enable Quantech
to competitively enter the market. However, there is no assurance that the
Quantech system will be accepted by its intended market or that competition from
the large diagnostic companies will not be forthcoming.

In the Critical Care departments and surgical suites, a wide variety of
testing is now conducted that was formerly restricted to the main laboratory.
For example, tests that were done in the central labs, like blood gases and
electrolytes, are now available as POC tests. Conducting testing in proximity to
the patient provides immediate results and avoids the delays, communication
problems and increased costs often associated with a centralized testing
process. The continued growth of the POC will be a result of the advantages POC
testing has over central laboratories.

CRITICAL CARE

Critical Care is defined as the area where immediate diagnostic
information is needed to effect either the treatment or processing of a patient.
When test results are needed in these areas they must be processed in a STAT
manner, thereby significantly increasing the cost. The solution to this
difficulty is to bring a system of diagnostic methodologies to the patient site
in a manner that will provide test results promptly.

Part of Critical Care Units are the ED. The Company believes that there
are approximately 30 different diagnostic tests that require prompt results in
the ED. Quantech intends to develop products primarily focused on the ED and
these 30 tests during the first several years of operation. Since the needs of
the other areas of critical care are similar to the ED, the Company anticipates
that growth into these other areas will be evolutionary.

CARDIAC MARKERS

Of the tests needed by the critical care segment of the POC market, the
Company has selected those tests that the Company believes will minimize
development time and regulatory processes and, most importantly, satisfy unmet
demands of the users. Tests for cardiac markers meet all of these criteria.
These markers are needed to triage and treat individuals that arrive at the ED
with chest pain. An estimated 5.5 million patients are evaluated for chest pain
annually in the United States with approximately 3 million admitted to an
intensive-care unit for further evaluation. Of those admitted only 30%
subsequently "rule-in" for acute myocardial infarction ("AMI"). Assuming an
average cost of $3,000 per admission, this represents a total expenditure of $6
billion annually on patients who do not have AMI. This also does not take into
account that 2-8% of patients with acute chest pain that are released from the
ED without treatment subsequently fulfill criteria for AMI resulting in deaths
and complications that result in greater than 20% of the malpractice dollars
awarded in the field of emergency medicine.

Not only are costs of admission and malpractice claims an important
issue, but in the past, making a rapid definitive diagnosis of chest pain was
not as important as it is today. When a patient was in the early stages of a
heart attack/AMI there was little treatment available. In the last 10 years,
substantial progress has been made in thrombolytic therapy. If the therapy is
started within 6 hours of the onset of a heart attack, it can dissolve the blood
clot, clear arteries and save heart muscle tissue. These therapies are expensive
and present undesirable side effects if the patient has not suffered an AMI,
making rapid testing for an AMI is very important.

During an AMI, certain proteins are released from the damaged heart
muscle into the blood stream as a result of damage to the muscle. These proteins
are in varying concentrations and consist of CK-MB, troponin, myosin, light
chain, myoglobin and CA-III. To identify patients who have suffered an AMI,
tests to identify these proteins/cardiac markers have become important. Such
tests, however, are most effective if they can be performed under five minutes
in the ED or mobile care unit so that medical personnel may take immediate
action. Presently, there is no method available to provide such results
quantitatively. Most of the existing test modalities require a central
laboratory system that may delay the results beyond their effective need.
Quantech's system is expected to provide emergency personnel with the ability to
receive quantitative results within several minutes.

The high cost of therapy, the urgency of the associated conditions and
the difficulty of a definitive diagnosis creates an urgent demand for these
cardiac marker tests in the critical care setting. Quantech has begun to develop
the disposable slide necessary for its first cardiac marker tests for the ED.
This disposable, and Quantech's related reading instrument, are intended to
provide results in a timely and economic manner and be introduced in the United
States by the spring of 1997.

COMPETITION

The majority of in-vitro medical diagnostic testing is conducted in
hospital and commercial reference laboratories. These facilities are
particularly suited for efficiently processing a large number of clinical
samples. While most hospital laboratories must maintain the capability to
perform certain STAT tests on single samples, most of the samples handled by
central laboratories are processed in batches. The competitors for this market
have addressed these laboratories' needs for high sample throughput, low reagent
cost and low labor cost by developing automated systems. These systems are
generally complex and expensive incorporating designs, appropriate to the labs
they serve, which presume skilled operators who are expected to perform sample
preparation, system calibration and basic instrument maintenance.

Both the health care providers and their suppliers are heavily
committed to the current central laboratory model. The laboratories are
constrained by their organizational structure, their substantial capital
investment in instrumentation and the task of processing a large number of
routine (i.e., non-STAT) samples. The suppliers' corporate infrastructures,
marketing and sales organizations, research and development activities and
production capabilities are committed to this market. Even though the economic
savings and medical utility afforded by POC is becoming widely recognized, it is
not necessarily immediately attractive to the most successful laboratories and
the strongest suppliers.

There are more than 150 companies serving this central, clinical
laboratory market. Most of them compete in only one or two segments of the
overall market. Abbott Laboratories, Boehringer Mannheim, and Johnson & Johnson
(reinforced by its acquisition of Kodak Medical) are notable exceptions. These
companies have achieved their broad market penetration by developing several
technologies, each targeted for the specific needs of a market segment and
focusing their marketing, distribution and sales activities on the central lab.
The POC market in general must compete with the central laboratory to gain
market share and as a result, Quantech will meet with competition from these
companies in both sales of its system and the individual tests for such system.

There is significant activity in the Critical Care segment of the POC
market. The majority of current systems address the areas of coagulation, blood
gas and basic chemistry (including electrolytes). Two such systems, i-STAT Corp.
which markets a hand-held biosensor instrument and Abaxis, Inc. (Piccolo) which
markets a tabletop analyzer, are capable of determining blood gas and
electrolyte levels and have become recognized POC instruments. The Company does
not believe current products of i-STAT, Abaxis or others are capable, however,
of diagnosing analytes that indicate cardiac markers or any infectious diseases.
There can be no assurance that current or future POC companies or current
companies providing instruments to the central laboratory market will not invent
systems that will have broad immunoassay testing capabilities like those
expected by the Company's system.

With respect to testing for cardiac markers to diagnose AMI, most
testing is done in the Central Labs with turnaround time from 30 to 120 minutes.
The Company is aware of only four companies that provide POC testing for AMI. Of
such companies, Spectral Diagnostics Limited, a Canadian company, markets a
manual method available for two cardiac markers and Boehringer Mannheim has
recently begun to market a manual test for troponin T. As configured, neither
Spectral's, Boehringer's nor the other POC AMI tests can provide quantitative
results and all but Boehringer's test necessitate addition of reagents by the
user.

The Company believes there is need for quantitative measurement of
cardiac markers, pregnancy, drugs and other critical care tests and that such
need continues to be unfulfilled. The Company plans to enter the market by
serving the unmet needs for quantitative cardiac markers and to extend its
penetration by delivering the full range of ED tests on a single platform. In
doing so, the Company will compete directly with providers of currently
available testing methods. All of the industry leaders, and many of the other
companies participating in the diagnostic testing market, have substantially
greater resources than those available to the Company, including, but not
limited to, financial resources and skilled personnel. However, the Company
believes the SPR technology will enable it to provide products to the POC
market, a market niche believed by the Company to be less competitive. See
"Business -- The Market."

PATENTS AND PROPRIETARY RIGHTS

The License covers a total of eight patents. The two principal patents
covering the SPR technology gratings have been granted in the United States,
Canada, Australia and certain European countries and portions are pending in
Japan and Great Britain. Except for two patents relating to optics, one of which
is pending in the United States and one of which is pending in Canada, the
remaining patents have been granted in the United States, Canada, Australia, and
certain European countries and portions are pending in Japan and Great Britain.
All developments by the Company pursuant to the License, either proprietary or
patentable in nature, will be the property of the Company. The Company has made
a number of advances that it intends to patent. These developments are in the
methodology of chemically coding the SPR disposables, and in enhancements to the
optics that improve the ease and reliability of calibration and eliminate
nonspecific, sample-to-sample variability. Because the Company's licensed
patents do not expire in less than ten years and Quantech intends to file
additional patents, the Company believes that is has the opportunity to complete
development of its product, establish a market position and seek additional
patents on improvements and related technologies. No assurance can be given,
however, that other companies will not develop technologies substantially
equivalent to those owned, or to be developed, by the Company or that granted or
pending and to filed patents, if granted, will protect the Company's technology.
See "Risk Factors - Patent Protection."

GOVERNMENT REGULATION

The Company believes that the products it initially proposes to
manufacture and market will be classified as medical devices and will therefore
be subject to regulation by the United States Food and Drug Administration (the
"FDA") and, in some instances by foreign government authorities. Under the 1976
amendments to the Federal Food, Drug and Cosmetics Act (the "FFDCA") and
regulations promulgated thereunder, manufacturers of medical devices must comply
with certain regulations governing the testing, manufacturing and packaging of
medical devices. Under the FFDCA, medical devices are subject to different
levels of testing and review. The most comprehensive level of review requires
that a clinical evaluation program be conducted before a device receives
premarket approval by the FDA for commercial distribution. As a manufacturer of
medical devices, the Company will also be subject to certain other FDA
regulations, and its manufacturing processes and facilities will be subject to
periodic inspection, without warning, to ensure compliance. Comparable agencies
in certain States and foreign countries will also regulate the Company's
activities. The Company's products could be subject to recall by the FDA or the
Company itself, if it appears that the products and their use do not conform to
regulations.

Generally, medical devices intended for human use that are to be
marketed in the United States are placed in one of three regulatory
classifications depending upon the degree of testing and review to which the
device will be subject. The Company expects that its products will not be
subjected to the highest level of scrutiny because they are in-vitro (outside of
the body) diagnostic devices which do not come into contact directly with a
living human being. Specifically, the systems would be classified as either
Class I or Class II devices as distinct from implantable devices, which are
classified as Class III devices.

The Company believes that premarket clearance can be obtained for its
initial system and tests through submission of a 510(K) premarket notification
("510(K) Notification") demonstrating the product's substantial equivalence to
another device legally marketed pursuant to 510(K) Notification clearance. The
FDA may also require, in connection with the 510(K) Notification, that it be
provided with the test results supporting this claim. The FDA may further
require, in connection with the 510(k) Notification, that it be provided with
test results demonstrating the safety and efficacy of the device. Under certain
circumstances, such clinical data can be obtained only after submitting to the
FDA an application for an Investigational Device Exemption ("IDE"). The FDA must
either deny the 510(K) Notification or require further information within 90
days. If the FDA has not responded within such time period, the applicant may
proceed to market the new product. Generally, a request by the FDA for a 90 day
extension prior to ruling is not uncommon.

For new products that are not considered to be "substantially
equivalent" to an existing device, two levels of FDA approval will probably be
required before marketing in the United States can begin. First, the FDA and
participating medical institutions must approve the Company's application for an
IDE, permitting clinical evaluations of the product utilizing human samples
under controlled experimental conditions. Second, the FDA must grant to the
Company a Premarket Approval ("PMA"). The FDA should grant a PMA if it finds
that the product complies with all regulations and manufacturing standards. In
addition, the FDA may require further clinical evaluation of the product, or it
may grant a PMA but restrict the number of devices distributed or require
additional patient follow-up for an indefinite period of time. Completion of
this process could take up to 12 months and involve significant costs. The
Company believes it is unlikely that it will be required to obtain a PMA with
respect to any of its currently proposed products except where mandated by the
FDA such as HIV, cancer and hepatitis detection tests. Any claims of panel
diagnostics are subject to a PMA procedure. The Company anticipates that it will
make claims in reference to its cardiac markers. These claims will be made after
the products are marketed with only single claim implications. Accordingly, the
products should not be delayed in their initial introduction. If a PMA is
required for the Company's initial system and CK-MB test, introduction of the
initial system likely would be significantly delayed, which could have a
material adverse effect of the Company. Mr. Shaw and Dr. McKiel, the Company's
President and Executive Vice President-Research and Development, respectively,
have extensive experience in FDA approval and compliance matters.

PRODUCT LIABILITY

The Company could be exposed to risk of product liability claims or
other lawsuits in the event of incorrect diagnosis utilizing the SPR equipment
and disposables developed by the Company. Unless the Company maintains product
liability insurance of a sufficient amount, the Company will have to bear the
economic consequences of any claim in excess of its insurance coverage. While
the Company does not presently have such coverage, it will evaluate its
availability at such time as products are commercially introduced. There can be
no assurance that the Company will be able to obtain or maintain such insurance.

EMPLOYEES AND PROPERTIES

The Company employs fifteen people on a full-time basis and engages
consultants and independent contractors to provide services related to the
development of the SPR technology. The Company expects to hire other personnel
in the next twelve months as necessary for FDA work, sales and marketing,
manufacturing and administration. See "Management."

The Company leases offices (comprised of approximately 6,800 sq. ft.)
at 1419 Energy Park Drive, St. Paul, Minnesota at a base monthly rent of
approximately $5,200 pursuant to a lease arrangement which expires February,
2000 and will thereafter proceed on a month-to-month basis. The Company will
require at least 15,000 sq. ft. of space prior to commercial manufacturing of
its system. The Company is currently reviewing additional space to satisfy it
future needs.

LEGAL PROCEEDINGS

The Company is not a party to any litigation that would have a material
adverse effect on its financial condition or results of operations.

HISTORY OF THE COMPANY

The Company is the culmination of developments dating from early 1989.
R. H. Joseph Shaw, the Company's President, learned that Ares-Serono intended to
sell the SPR technology (patents and proprietary information) due to changes in
corporate strategy. Mr. Shaw formed Spectrum Diagnostics Inc. ("SDI") and
purchased an option on the SPR technology. In August 1991, the Company found
itself in the position of having to raise $2 million to make the final payment
on its option with Ares-Serono to acquire the SPR technology or face the loss of
the previous investment. An organization capable of raising the funds within the
necessary time frame was found, New York-based Ital American Securities, but the
financing had to be conducted in Italy. Spectrum Diagnostics S.p.A. ("SDS")
purchased the assets of SDI, including the Ares-Serono option, completed the
financing and exercised the option. These funds, while adequate to secure the
technology, were insufficient to fully develop it to a commercial level. In
conjunction with the Italian offering, a concurrent offering was conducted by
Schneider Securities, Inc. in the United States, however, funds raised in such
offering fell short of expectations. The inconvenience and costs associated with
operating under both Italian and U.S. regulations, necessitated a repatriation.

Quantech Ltd. was formed under the laws of Minnesota for the purpose of
effecting the change of domicile of SDS from Italy to the state of Minnesota
through a merger with SDS on April 14, 1993. Quantech had no operations prior to
the merger. SDS changed its name to Quantech Ltd. primarily to avoid confusion
with other medical companies. Since that time, the Company has financed its
efforts through a series of private placements of securities.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
R. H. Joseph Shaw 51 President, Chief Executive Officer and Chairman of the Board
Robert R. McKiel, Ph.D. 53 Executive Vice President-Research and Development and Director
Gregory G. Freitag 34 Chief Financial Officer, Vice President of Corporate Development, and Secretary.
James F. Lyons 64 Director
Richard W. Perkins 64 Director
Edward E. Strickland 67 Director
</TABLE>

R. H. JOSEPH SHAW has been President, Chief Executive Officer and
Chairman of the Board of the Company and its predecessor entities since their
inception. Mr. Shaw is an honors science graduate with postgraduate work in the
area of medical science. He has taught at McMaster University and Simon Fraser
University in Canada, has served on the Le Dain Royal Commission investigating
the nonmedical use of drugs and was a guest speaker to the U.S. Senate Committee
on Small Business. He has an extensive background in the medical industry and in
1971 started his career with McNeil Laboratories, Ltd., a subsidiary of Johnson
& Johnson ("J&J") in the position of Manager of Scientific Affairs. In that
capacity he monitored clinical programs and interfaced with the Canadian
equivalent of the FDA. Subsequently, he served as Canadian General Manager of
another J&J company. In 1973, Mr. Shaw joined K-Vet/KVL, a privately owned
medical company, as Executive Vice President, in which capacity he was
responsible for all aspects of the corporate organization. In 1978, Mr. Shaw
purchased the Human Diagnostics Division from this group, which he renamed
Cathra International ("Cathra"). Mr. Shaw remained with Cathra as President
until it was sold in 1985 and coordinated the integration of Cathra and the
purchaser's medical groups into a single operating entity, MCT Medical, Inc. Mr.
Shaw was the President of MCT Medical, Inc. through April 1987. From April 1987
until joining the Company, Mr. Shaw was Vice President and head of diagnostics
of Quadra Logic Technologies, Inc., a company listed on NASDAQ and the Toronto
Stock Exchange. Mr. Shaw has extensive experience in both national and
international markets and has managed the scientific and commercial development
of a number of diagnostic products. He also has experience in establishing and
managing strategic alliances in Canada, the United States, Japan and Europe.

ROBERT R. MCKIEL, PH.D., has been Executive Vice President-Research and
Development since 1992 and a director since May 1995. From 1984 to 1987, Dr.
McKiel served as Vice President of Amersham International, a large medical
company based in the United Kingdom. From 1987 until joining the Company he
served as a consultant to various companies in the medical diagnostics industry,
including Ares-Serono and Boehringer Mannheim Corporation. In that capacity, he
has been involved in a variety of projects including the design of a clinical
immunochemistry analyzer, implementation of a GMP (Good Manufacturing Practices)
program for a clinical device manufacturer and a redesign of a pharmaceutical
quality control program. He earned his baccalaureate degree in organic chemistry
at the University of Notre Dame and a doctorate in biological chemistry at the
University of Illinois. After completion of his post-doctoral residency in
clinical chemistry at the University of Illinois Medical Center, he joined the
Illinois Medical Center staff. From 1973 to 1979, he served as an assistant
Director of the University of Illinois Hospital Laboratories and as head of
Radioimmunoassay Laboratory, held various faculty appointments, and taught in
the departments of Biological Chemistry and Pathology. In 1979, Dr. McKiel
joined Amercham Corporation to establish a U.S. based technical support system
for the company's products, and to enhance the Amerchan's effectiveness in the
design and marketing of new products in the U.S. In 1984, he took on the
additional responsibility of managing the marketing of clinical products.

GREGORY G. FREITAG has been Chief Financial Officer, Vice President of
Corporate Development and Secretary of the Company since December 1, 1995. From
1987 until joining the Company Mr. Freitag was a lawyer with the Minneapolis,
Minnesota law firm of Fredrikson & Byron, P.A. As a shareholder with Fredrikson
& Byron he practiced in the corporate, securities and merger and acquisition
areas of law. Mr. Freitag has his J.D. and CPA, has served on securities
advisory committees to the Minnesota Commissioner of Commerce and is included in
the Minnesota Business Guide to Law & Leading Attorneys.

JAMES F. LYONS has served as a director of the Company since September
7, 1995. From September 1983 through October 1994, when he retired, Mr. Lyons
was Chief Executive Officer of Bio-Vascular, Inc., a cardiovascular medical
products company. From 1978 through 1990, Mr. Lyons was President and Chief
Executive Officer of BioMedicus, Inc., a cardiovascular medical products
company. Mr. Lyons is also a Director and Chairman of the Board of AVECOR
Cardiovascular Inc., and a director of ATS Medical, Inc., Bio-Vascular, Inc. and
Spinetech, Inc.

RICHARD W. PERKINS has been a director of the Company since September
7, 1995. Since 1985, Mr. Perkins has been President, Chief Executive Officer and
a director of Perkins Capital Management, Inc., Wayzata, Minnesota. Prior
thereto he was a Senior Vice President of Piper Jaffray Inc., Minneapolis,
Minnesota. He is also a director of Bio-Vascular, Inc., Eagle Pacific
Industries, Inc., Children's Broadcasting Corporation, Discus Acquisition Corp.,
Garment Graphics, Inc., Lifecore Biomedical, Inc., Nortech Systems, Inc., and
CNS, Inc.

EDWARD E. STRICKLAND has been a director of the Company since September
7, 1995. Mr. Strickland has been an independent financial consultant for more
than seven years. From October 1990 to January 1991, he performed the duties of
Chief Executive Officer while serving on the Executive Committee of the Board of
Directors of Reuter, Inc. Mr. Strickland also serves as a director of
Bio-Vascular, Inc., Hector Communications Corp., Communication Systems, Inc.,
and AVECOR Cardiovascular Inc.

ELECTION OF OFFICERS AND DIRECTORS; COMMITTEES OF THE BOARD OF DIRECTORS

Executive officers of the Company are elected by the Board of Directors
on an annual basis and serve at the discretion of the Board of Directors. The
Company's Board of Directors is divided into three classes with each class being
elected for a term of three years after their initial term is completed. The
Company's directors hold office until their term has expired and their
successors have been elected and qualified. John G. Kinnard and Company,
Incorporated ("JGK"), the Company's investment banker, has the option to
nominate two directors who are not a director, officer, partner, employee or
affiliate of JGK. Messrs. Strickland and Lyons are such designees. JGK's right
to appoint such directors terminates on the earlier of September 22, 2000 or the
closing of a Company public offering of securities in excess of $10 million. See
"Plan of Distribution - The Agent and the Agency Agreement."

The Company's Board of Directors has established two committees. The
Audit Committee has the responsibility of selecting Quantech's independent
auditors and communicating with such auditors on matters of auditing and
accounting. The Audit Committee is comprised of directors Perkins, Lyons and
Strickland with Mr. Strickland as Chairman. The Compensation Committee has the
responsibility of reviewing on an annual basis all officer compensation and
administering any employee options and plans related thereto. The Compensation
Committee is also comprised of directors Perkins, Lyons and Strickland with Mr.
Lyons as Chairman.

SCIENTIFIC ADVISORY BOARD

The Company has established a Scientific Advisory Board comprised of
persons knowledgeable in the area of biosensors, SPR and medical products who
can provide insight into the direction of the Company and its technology. The
Company provided each advisor in April 1996 an option to purchase 50,000 shares
of Company Common Stock at $.60 per share and reimburses them for out-of-pocket
expenses. The persons on the advisory board are as follows:

DR. MICHAEL FLANAGAN is a Professor of Bioelectronics at University
College London. Dr. Flanagan has served as a consultant to numerous companies
investigating the commercial application of biosensors. He is a world recognized
expert in the area of optical sensors. Dr. Flanagan received his B.S. and Ph.D.
degrees from the University of Sheffield, England. His thesis work was in the
area of mapping of protein.

DR. JOHN G. HURRELL, is Vice President of Diagnostic Technology for
Genzyme Corp. Previously he was Senior Vice President, R&D Operations for
Boehringer Mannheim and was responsible for the successful development and
launch of the two leading self-blood glucose monitoring systems, Accu Check Easy
and Accu Check Advantage, as well as the Coagu Check coagulation product
presently available in Europe. Dr. Hurrell was Worldwide Technical Director for
Serono Diagnostics, Waking, England, before joining Boehringer Mannheim. With
Serono Diagnostics, he directed immunoassay systems and optical biosensor
development. Dr. Hurrell was with the founding management team at Allelix, a
diversified biotechnology company in Toronto, Canada, where he cofounded ADI
Diagnostics Inc. An Australian by birth, Dr. Hurrell received his Ph.D. from the
University of Melbourne and was a Fulbright Fellow at Harvard Medical School in
the Cardiac Unit of Massachusetts General Hospital. Dr. Hurrell's research
interests cover biosensor, protein engineering and new diagnostic methods.
binding sites using fluorescent probes.

DR. JOSEPH P. LEVERONE is a partner in Central Regional Pathology
Laboratories, P.A., an independent pathology practice which provides anatomic
and clinical pathology services to twelve urban and rural hospitals in Minnesota
and Wisconsin as well as several medical clinics. Dr. Leverone has been in the
practice of pathology since 1976. He received his M.D. degree from the
University of Minnesota and received his specialty training at Los Angeles
County - USC Medical Center in Los Angeles and St. Paul-Ramsey Medical Center in
St. Paul, Minnesota. Dr. Leverone has served on several committees and task
forces of the College of American Pathologists and has been an inspector in the
CAP's Laboratory Accreditation Program since 1979.

DR. ROGER C. LUCAS is Vice Chairman of Techne Corporation, parent
company to Research & Development Systems, Inc. and the Chief Scientific Advisor
to its Board of Directors. Prior to co-founding R&D Systems in 1980, Dr. Lucas
was an Assistant Professor in the Department of Biochemistry in the medical and
graduate schools of the State University of New York in Brooklyn. Dr. Lucas has
published more than one dozen recent articles in the field of immune system
response modifiers. He established a diagnostic group at R&D Systems to detect
these molecules in blood. These diagnostic assays now dominate their segment of
the marketplace. As both a National Institutes of Health and Muscular Dystrophy
Association Post-doctoral Fellow, he has performed extensive work on the
troponins and myosin light chains. His interests include molecular biology,
genetic engineering and the use of nucleic acid probes to diagnose genetic
disorders.

JON K. NISPER is Manager of Optical Technology for Donnelly Corp. where
he developed and patented a method for injection molding nanostructures and
diffractive optical elements. He is responsible for managing technical aspects
including optical design and engineering. He previously worked as a Principal
Optical Engineer for Martin Marietta Corp. While there he held top secret
compartmentalized clearance and was responsible for design, analysis, and
fabrication of supersonic sensor window technology and frequency selective
surfaces. He also worked as a member of the technical staff for the Rocketdyne
Division of Rockwell International, where he was responsible for High Energy
Excimer Laser Development and Analysis. He received his B.S. in Electrical
Engineering from the University of Michigan in 1984. Since graduation, he has
continued course work in electro-magnetics and optics at California Institute of
Technology and University of Central Florida.

KEMAL SCHANKERELI is presently Vice President of Research and
Development for Bio-Vascular, Inc., a manufacturer of long term implantable
disposable medical devices. His previous work background includes that of
Manager of Research and Development for St. Jude Medical, Senior Scientist for
Meadox Medical and Machida Medical, and as polymer chemist for GAF Corporation.
Mr. Schankereli's primary area of expertise resides in material
characterization, development of coatings, and the development of biomedical
devices intended for cardiovascular applications.

DR. LAWRENCE WEAVER is a past director of Quantech. From 1953 through
1959, he was in Research and Administration for Pitman-Moore Co., Division of
Allied Laboratories and from 1959 through 1966, for Pitman-Moore Co., Division
of Dow Chemical Co. From 1966 through 1984, he served as Dean and Professor of
Pharmacology, College of Pharmacy, University of Minnesota. He has served as
Vice President, Pharmaceutical Manufacturers Association and is presently Dean
of the College of Pharmacy, University of Minnesota. Dr. Weaver served on the
Board of Directors of Fuller Laboratories at the time it was merged into
Parke-Davis Co., and on the Board of Directors for Rowell Laboratories when it
was merged into Reid-Provident.

COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth, the cash and noncash compensation for
each of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and to all executive officers whose compensation exceeded
$100,000 for such fiscal year.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE

LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------
AWARDS
---------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) DOLLARS OPTIONS (#) ($)
-------------- ----------- ------------ --------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
R.H. Joseph Shaw, 1996 $150,000 -- $7,800 0 0
Chief Executive 1995 $150,000 -- $7,800 0 0
Officer 1994 $150,000 -- $7,800 0 0

Robert R. McKiel, 1996 $117,500 -- 0 0 0
Executive Vice Pres- 1995 $110,000 -- 0 0 0
sident of R & D 1994 $ 85,000 -- 0 0 0

</TABLE>

The Company does not currently compensate its directors. The Company
has, however, granted options to its directors from time to time. Additional
directors' options may be granted in the future to attract and retain qualified
personnel to its Board of Directors. The Company's officers are appointed by,
and serve at the discretion of, its Board of Directors. See "Risk Factors -
Dependence on Key Personnel; Need for Skilled Personnel."

No individuals named in the Summary Compensation Table received stock
options during the year ended June 30, 1996.

The following table sets forth, for each of the executive officers
named in the Summary Compensation Table above, the year-end value of unexercised
options.

<TABLE>
<CAPTION>
OPTION EXERCISES AND VALUE OF OPTIONS AT END OF FISCAL 1996

SHARES NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT IN-THE-MONEY OPTIONS
ON VALUE END OF FISCAL 1996 AT END OF FISCAL 1996 (1)
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------

<S> <C> <C> <C> <C> <C> <C>
R.H. Joseph Shaw -- N/A 1,246,262 0 $817,548 $0
Robert R. McKeil
-- N/A 830,841 0 $545,032 $0

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

</TABLE>

(1) Value based on market value of the Company's Common Stock on August 8, 1996
less the exercise price.

EMPLOYMENT AGREEMENTS

In May 1995, the Company entered into three-year employment agreements
with Messrs. Shaw and McKiel and in December of 1995 entered into a two year
employment agreement with Mr. Freitag (the "Employment Agreements"), which
provide for annual base salaries of $150,000, $110,000 (subsequently raised to
$125,000) and $125,000, respectively, and further provide that Messrs. Shaw,
McKiel and Freitag are entitled to certain severance benefits in the event that
their employment is terminated by the Company "without cause" or by such
executive following a "change of control" (both as defined in the Employment
Agreements). In the event the employment agreements are terminated for any
reason by the Company, other than for cause as defined in the agreements,
Messrs. Shaw and McKiel would receive the salary due under the remaining terms
of the agreement plus one year's salary due under the remaining terms of the
agreement plus one year's salary, and Mr. Freitag would receive two year's
salary and bonus. Messrs. Shaw and McKiel also have the right upon termination
without cause to put any shares they own or have the right to receive pursuant
to options, back to the Company at fair market value. Each of the Employment
Agreements contains a covenant not to compete with the Company: (1) for Messrs.
Shaw and McKiel for twelve months following termination, except in the event of
their termination by the Company "without cause" or at their election upon a
"change of control"; and (2) for such period as Mr. Freitag is paid termination
benefits. Finally, Mr. Shaw is provided an automobile allowance.

NONQUALIFIED STOCK OPTIONS

The Company to date has provided current and former employees,
directors and scientific advisory members nonqualified stock options and
warrants for the purchase of up to 7,290,603 shares of Common Stock ranging in
exercise prices from $.125 to $.90. It is expected that the Company at its next
annual shareholders meeting will submit for approval a formal employee stock
option plan under which future options will be granted. The Company will
determine the number of shares to be reserved under such Option Plan at such
time as the Compensation Committee of the Board of Directors takes action to
establish it.

LIMITATION OF LIABILITY AND INDEMNIFICATION

The Company's Articles of Incorporation, as amended, limit the
liability of directors in their capacity as directors to the Company or its
shareholders to the full extent permitted by Minnesota law. The Articles provide
that a director shall not be liable to the Company or its shareholders for
monetary damages for breach of fiduciary duty as a director, except (i) for any
breach of the director's duty of loyalty to the Company or its shareholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for dividends, stock repurchases
and other distributions made in violation of Minnesota law or for violations of
the Minnesota securities laws, (iv) for any transaction from which the director
derived an improper personal benefit or (v) for any act or omission occurring
prior to the effective date of the provision in the Company's Articles of
Incorporation, as amended, limiting such liability. These provisions do not
affect the availability of equitable remedies, such as an action to enjoin or
rescind a transaction involving a breach of fiduciary duty, although, as a
practical matter, equitable relief may not be available. The above provisions
also do not limit liability of the directors for violations of, or relieve them
from the necessity of complying with, the federal securities law.

The Articles of Incorporation of the Company, as amended, also provide
that the Company will exercise, to the extent permitted by law, its power of
indemnification, and that the foregoing right of indemnification shall not be
exclusive of other rights to which a person shall be entitled as a matter of
law. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

CERTAIN TRANSACTIONS

The Company entered into a Consulting Agreement with Weems E. Estelle,
a former director and Chairman of the Board of the Company, in September 1993
and amended the Agreement in May 1995. Under the terms of the amendment, Mr.
Estelle agreed to reduce the cumulative amount of fees owing to him for
consulting services from $213,000 in exchange for $20,000 in cash and 560,000
shares of the Company's Common Stock valued at $.125 per share ($70,000).

R. H. Joseph Shaw and Robert McKiel, officers and directors of the
Company, from time to time over the last three years have either been indebted
to the Company for funds advanced pursuant to authorization by the Board of
Directors or owed money by the Company for services rendered by them which the
Company was unable to pay on a current basis. At the present time, the Company
is not indebted to such persons, does not intend to be in the future and none of
the officers and directors of the Company are indebted to the Company.

The Company has authorized 60,000,000 shares of its Common Stock. As of
the date of this Prospectus the Company had 46,900,759 shares of Common Stock
outstanding and 15,853,603 shares issuable upon the exercise of options and
warrants. Because the total number of shares outstanding and issuable upon
exercise of options and warrants exceeds the Company's authorized shares,
Messrs. Freitag, Perkins, Strickland and Lyons have amended their stock options
for the purchase of up to 500,000 shares each and Mr. Shaw his warrant for up to
346,262 shares to provide that they are not exercisable for such number of
shares until the shareholders of the Company approve an increase in the
aggregate number of authorized shares of Company Common Stock.

All future transactions with directors, officers or shareholders
holding more than 5% of Quantech's outstanding Common Stock, or affiliates of
any such persons, including loans to such persons, will be approved by a
disinterested majority of Quantech's directors.

PRINCIPAL AND SELLING SHAREHOLDERS

Set forth below are the names of: (a) persons who are known to own more
than 5% of the Company's Common Stock; (b) each executive officer named in the
Summary Compensation table; (c) each director of the Company; (d) all directors
and executive officers as a group; and (e) Selling Shareholders. The following
table sets forth as of the date of the Prospectus beneficially owned shares
which include any shares that may be acquired within 60 days of the date of this
Prospectus upon exercise of options or warrants, the number of Shares offered
hereby and the percentage of the outstanding Common Stock to be owned if all of
the Shares registered hereunder are sold by the Selling Shareholders.
<TABLE>
<CAPTION>

NUMBER OF SHARES % OF
BENEFICIALLY OWNED NO. SHARES
------------------- SHARES OWNED
WARRANT OFFERED AFTER
NAME SHARES SHARES HEREBY OFFERING
- ---------------------------------- ------ ------ ------ --------
<S> <C> <C> <C> <C>
Ted & Mary Adams 25,000 25,000 *
Theodore P. Adams 40,000 10,000 50,000 *
American Heritage Fund 250,000 250,000 *
Gerald L. Anderson 25,000 25,000 *
Roy Anderson Jr 200,000 50,000 250,000 *
Roy Anderson III 200,000 50,000 250,000 *
Gregory & Ann Anklam 40,000 10,000 50,000 *
Menesa Anstalt 50,000 50,000 *
Meleah T. & David M. Arnold 400,000 100,000 500,000 *
J. Marc Ashton 40,000 10,000 50,000 *
Atwell & Co. 928,000 928,000 *
Larry Auriana 598,000 598,000 *
Bernard C. Baier 50,000 50,000 *
John G. Ballenger 200,000 50,000 250,000 *
Bank Heusser & Co. LTD 400,000 100,000 500,000 *
W. William & Colette M. Bednarczyk 125,000 125,000 *
Richard T. Bennett 50,000 50,000 *
Denis Berger 250,000 250,000 *
Les Biller 454,704 454,704 *
Nicolas C. Bluhm 360,000 115,000 475,000 *
Jeffrey A. & Brenda L. Bowen 50,000 50,000 *
Donald A. Brattain 450,000 50,000 500,000 *
Courtney W. Brown 210,664 10,000 220,664 *
Paul R. Braun 33,335 33,335 *
Richard M. Brown 25,000 25,000 *
Ralph D. Burgess Jr 50,000 50,000 *
Timothy H. Burton 50,000 50,000 *
Anthony Carideo 40,000 10,000 50,000 *
Fred & Wendy Caslavka 10,000 10,000 *
Joseph B. Catarious 200,000 50,000 250,000 *
James A. Chapman 30,000 30,000 *
Walter L. Chapman 54,264 54,264 *
Lee S. Chapman 538,000 25,000 235,000 0.7%
Martin Chelstrom 10,000 10,000 *
Christianson Investment Co. LP 500,000 100,000 600,000 *
Ann M. Christianson 19,750 4,937 24,687 *
Lynn A. Christianson 19,750 4,937 24,687 *
Warren G. Christianson 800,036 120,378 920,414 *
Warren T. A. Christianson 19,750 4,937 24,687 *
Dual B. & Adelle Cooper 10,000 10,000 *
Dave Cowley Pension Trust 50,000 50,000 *
Thomas A. Cullinan 25,000 25,000 *
Francisco E. dela Rosa Jr 17,000 17,000 *
Robert W. & Rita M. deWerd 48,000 12,000 60,000 *
Glenn Diamond 1,115,037 600,000 1,715,037 *
Robert Diamond 227,200 227,200 *
Michael H. Diemer 50,000 50,000 *
John P. & Emily W. Dirksen 80,000 20,000 100,000 *
Arthur T. Donaldson 25,000 25,000 *
DRAFTCO 200,000 50,000 250,000 *
Neil Durhman 200,000 200,000 *
Paul Ehlen 36,670 5,000 41,670 *
Stanley G. & Carol R. Eilers 958,000 190,000 790,000 *
Engelkes-Abels Funeral Home Inc. 80,000 20,000 100,000 *
W. Bruce Erickson 167,464 167,464 *

Equity Securities Trading Co., Inc. -- 2,000 2,000 *

James E. Ernst 17,500 17,500 *
Weems Estelle 560,000 450,000 1,010,000 *
Robert J. Evans 40,000 10,000 50,000 *
Harvey Feldman 25,000 25,000 *
Lee Felicetta 40,000 10,000 50,000 *
Mary Jane Fleming 84,268 84,268 *

John E. Feltl -- 4,000 4,000 *

Founding Partners Limited
Partnership II 200,000 200,000 *
Carol M. Freeman 19,750 4,937 24,687 *
Gregory G. Freitag 505,500(1) 100,000 100,000 1.1%
Robert D. Furst Jr 289,800 289,800 *
James M. Gahlon 80,000 80,000 *
James Gahlon 92,008 92,008 *
Robert W. Jr. & Patricia T. Gaines 100,000 100,000 *
Robert D. Gearou 50,000 50,000 *
Robert L. Gearou 250,000 62,500 312,500 *
Thomas W. Gearou 250,000 50,000 300,000 *
Marvin A. Ginsburg 40,000 10,000 50,000 *
Michael J. Glass 16,670 16,670 *
Ronald L. Glassman 50,000 50,000 *
Glymar Inc. 40,000 10,000 50,000 *
David S. Goldsteen 3,025,056 3,025,056 *
Mark Goldsteen 400,000 100,000 500,000 *
Franklin N. Groves IRA 25,000 25,000 *
Gummow Investments 50,000 50,000 *
Troy Gummow 50,000 50,000 *
Warren Guy & Lonnie K. Gummow 50,000 50,000 *
H. Eugene Hall 52,232 40,000 *
James W. Hansen 50,000 50,000 *
Thomas Harkness 100,000 50,000 150,000 *
Craig Hartsburg 25,000 25,000 *
Bill R. Hay 80,000 15,000 95,000 *
Timothy Heaney 20,000 5,000 25,000 *
Timothy Heaney IRA 8,335 8,335 *
Heartland Limited Partnership I 750,000 750,000 *
Thomas Craig Hense 50,000 50,000 *
Julie A. Higgins 19,750 4,937 24,687 *
George Holbrook 454,672 454,672 *
Bruce Hubbard 32,000 8,000 40,000 *
Richard G. & Diane L. Hubers 20,000 20,000 *
H. K. Financial Corp 1,420,664 100,000 924,000 1.3%
Hynan Real Estate Partnership 25,000 25,000 *
Industricorp & Co. Inc. 127,600 44,400 172,000 *
Intermed Anstalt 275,000 50,000 325,000 *
Charles A. Jacob 20,000 20,000 *
Stanley J. Johnson 250,000 75,000 325,000 *
Theodore Johnson 100,000 25,000 125,000 *
Wesley E. Johnson Jr 65,000 10,000 75,000 *
James C. Jordan 25,000 25,000 *
E. Elmer &E. Joyce Jutila 40,000 10,000 50,000 *
Jon E. Jutila 40,000 10,000 50,000 *
Nasser J. Kazeminy 85,000 85,000 *
Bernard M. S. Kegan 40,000 10,000 50,000 *

Michael S. Kelly -- 4,000 4,000 *

Kessler Ashler Group
Limited Partnership 800,000 200,000 1,000,000 *
Kurt King DDS, IRA 100,000 25,000 125,000 *
Steven G. King 100,000 25,000 125,000 *
John G. Kinnard & Company Inc. 3,078,500 3,078,500 *
Brandon Koress 116,670 25,000 141,670 *
Mitchell Krieger 175,000 37,500 212,500 *
David J. & Kathryn J. Kruskopf 40,000 10,000 50,000 *
Martin Lackner 116,670 25,000 141,670 *
Lakewood Ortho Clinic-Mark Mills 40,000 10,000 50,000 *
Dennis J. LaValle 1,000,360 175,000 886,345 .6%
Bruce A. Lawin 40,000 10,000 50,000 *
Thomas F. Leahy 100,000 100,000 *
Frank Lee 92,800 92,800 *
Cheri E. Lefebvre 10,000 10,000 *
Donald S. & Mary A.Leonard 84,264 84,264 *
Peter Lerner 460,000 460,000 *
Lopresti Gabbay & Associates Inc. 400,000 400,000 *
C. S. Lozinski 60,000 15,000 75,000 *
Roger Lucas 100,000 25,000 125,000 *
Wayne K. Lund 792,000 150,000 590,000 *

James F. Lyons 750,000(1) 50,000 300,000 1.1%

James F. Lyons & Eleanor Lyons 50,000 50,000 *
Plato Mavroulis 100,000 25,000 125,000 *
Lyle H. Maschoff 25,000 25,000 *
Kenneth Maus 50,000 50,000 *
Victor Mavar 100,000 25,000 125,000 *
Adolfo M. Maglaya 22,120 16,000 *
Trustees of Adolfo Maglaya Profit
Sharing Trust 33,762 24,000 *
David Metz 50,000 12,500 62,500 *
Robert T. Montague 100,808 100,808 *
Joseph Mooibroek 60,000 15,000 75,000 *
Sheliah Mulvaney 16,665 16,665 *
James S. Murphy 80,000 20,000 100,000 *
Michael Nagel 22,898 22,898 *
Andrea McCallister O'Connell 127,664 12,500 140,164 *

Robert R. McKiel 881,330(2) 830,841 *

H. Vincent O'Connell 345,864 32,500 378,364 *
Steve O'Hara 40,000 10,000 50,000 *
Okabena Partnership K 2,765,328 2,765,328 *
Jay Osman 5,000 5,000 *
John & Delores Owensby 340,000 90,000 430,000 *
Deming L. Payne 260,000 90,000 350,000 *
Richard W. Perkins 800,000(1) 50,000 350,000 1.1%
Jeff Peterson 41,864 41,864 *
Patrick Peyton 16,744 16,744 *
Thomas J. Pierce 40,000 10,000 50,000 *
William W. Prain 100,000 25,000 125,000 *
Charlie H. Pulley 342,000 75,000 417,000 *
Arthur Querfeld 40,000 40,000 *
Mary J. Rasley 19,750 4,937 24,687 *
Willard Charles Rehbein 400,000 150,000 550,000 *
Victor P. Reim 50,000 50,000 *
Ben Reuben 25,000 25,000 *
River Edge Partners, Inc. 300,000 100,000 400,000 *
Kenneth S. Roberts 50,000 50,000 *
Richard Rog 25,000 25,000 *
Douglas Schmid 25,000 25,000 *
Robert A. & Lois R. Schmiege 100,000 37,500 137,500 *
Schneider Securities Inc. 17,500 17,500 *
Thomas J. Schrade 100,000 100,000 *
James R. Schroeder 25,000 25,000 *
John P. & Gloria E. Schweich 50,000 12,500 62,500 *
Sekhavat Ltd. Partnership 560,000 190,000 750,000 *
Byron G. Shaffer 335,000 335,000 *

R.H. Joseph Shaw 1,335,855(3) 1,246,262 *

Gerald J. Shink 50,000 50,000 *

Patrick M. Sidders 72,136 6,000 78,136 *

Ronald & Catherine M. Silver 50,000 50,000 *
Terryl Sinko 50,000 50,000 *
Soldier Creek Family Limited
Partnership 2,200,000 2,200,000 *
Jeannette A. & John E. Slaughter 25,000 25,000 *
Allan P. Steffes 100,000 25,000 125,000 *
Thomas E. Steinhaus 50,000 50,000 *

Michael Stone -- 1,000 1,000 *

Ross Strehlow 20,000 20,000 *

Edward E. Strickland 700,000(4) 50,000 250,000 1.1%
Strickland Family Limited Partnership 100,000 100,000 *

Douglas V. & Kathleen L. Swanson 25,000 25,000 *
William R. & Catherine A. Swanson 40,000 10,000 50,000 *
Curtis R. Swenson 25,000 25,000 *
James W. Swenson 200,400 50,100 250,500 *
James E. Tarr 25,000 25,000 *
David M. & Susan M. Thymian 508,000 50,500 202,500 *
Elizabeth J. Tonne 50,000 50,000 *
John M. Tonne 50,000 50,000 *
Larry & Gayla Torguson 40,000 10,000 50,000 *
Marlin F. Torguson 1,000,000 275,000 1,275,000 *
Ben Trainer 255,000 75,000 330,000 *
Charles E. Underbrink 325,000 125,000 450,000 *
Greg & Patricia Vogelpohl 35,000 35,000 *
Randall S.& Nancy Brostrom Vollertdon 17,500 17,500 *
Chris Warren 100,000 100,000 *
Larry Weaver 5,861 250,000 250,000 *
George Vitalis 61,000 250,000 250,000 *
Paul Walker 25,000 25,000 *
Willard Weikle 45,000 45,000 *
Kevin E. & Delana S. Were 17,000 17,000 *
Donald Westrup 272,328 250,000 *
Dr. Henry & Dr. Carolyn Wiggins 248,302 220,000 *
Frank W. Worms 85,000 85,000 *
Jeff M Zalasky 310,024 310,024 *
Alvin Zelickson 50,000 12,500 62,500 *
Richard J. Zentgraf 50,000 50,000 *
All directors and executive officers as a Group
(6 persons) 5,022,685(5) 250,000 3,127,103 3.7%

</TABLE>

* Less than 0.5%.

(1) Includes 500,000 shares issuable upon exercise of options.

(2) Includes 830,841 shares issuable upon exercise of warrants.

(3) Includes 1,246,262 shares issuable upon exercise of warrants and 37,925
shares held by Mr. Shaw's wife. Also includes 11,168 shares held by
Spectrum Diagnostics, Inc.("SDI"), of which company Mr. Shaw is an
officer and director, but not a shareholder, and by such position has
voting and dispositive power over such shares.

(4) Includes 500,000 shares issuable upon exercise of options, but excludes
100,000 shares held by the Strickland Family Limited Partnership.

(5) Includes 4,077,103 shares issuable upon exercise of options and
warrants and 11,168 shares held SDI. Excludes 100,000 shares held by
the Strickland Family Limited Partnership. The address of each
executive officer and director of the Company is 1419 Energy Park
Drive, St. Paul, Minnesota, 55108.

DESCRIPTION OF SECURITIES

The following description of the Company's capital stock is qualified in its
entirety by reference to the Company's Articles of Incorporation, as amended,
its Bylaws, and the Minnesota Business Corporation Act (the "MBCA").

GENERAL

The Company's Articles of Incorporation authorize the issuance of up to
60 million shares of Common Stock, par value $0.01 per share. None of the
holders of any class or series of the Company's capital stock have preemptive
rights or a right to cumulative voting.

COMMON STOCK

As of the date of this Memorandum, there were 46,900,759 shares of the
Company's Common Stock issued and outstanding. The Board of Directors may issue
additional shares of Common Stock without the consent of the holders of Common
Stock.

Each outstanding share of Common Stock is entitled to one vote except
as may be otherwise required under the terms of the MBCA. All outstanding shares
of Common Stock are fully paid and non-assessable.

Holders of Common Stock are entitled to receive such dividends as may
be declared by the directors out of funds legally available therefor, and to
share pro rata in any distributions to holders of Common Stock upon liquidation
or otherwise. However, the Company has not paid cash dividends on its Common
Stock, and does not expect to pay such dividends in the foreseeable future.

Under the provisions of the MBCA, which governs the actions of the
Company, an amendment to the Articles of Incorporation of the Company generally
may be adopted by the affirmative vote of the holders of a majority of the
voting power of the shares present and entitled to vote at a shareholders'
meeting at which an amendment is proposed. Under the statute, a majority of the
voting power of the shares entitled to vote at a meeting is generally a quorum
for the transaction of business. Accordingly, it is possible that the
affirmative vote of shares in excess of 25 percent of the outstanding shares
could authorize an amendment to the Company's Articles of Incorporation. Under
the Statute, the affirmative vote of the holders of a majority of the voting
power of all shares entitled to vote is necessary to approve a plan of merger, a
plan of exchange, a sale of all or substantially all of the assets of the
Company, or its dissolution.

OPTIONS AND WARRANTS

The Company has granted options and warrants to purchase up to
15,853,603 shares of Common Stock to officers, directors, scientific advisors,
consultants, investors, and financial advisors at exercise prices ranging from
$.125 to $.90 per share.

CONTROL SHARE ACQUISITION ACT

Section 302A.671 of the MBCA applies to any acquisition of Common Stock
of the Company (from a person other than the Company, and other than in
connection with certain mergers and exchanges to which the Company is a party)
resulting in beneficial ownership (including the power to vote and direct
disposition) of 20% or more of the Common Stock then outstanding. Section
302A.671 requires a majority vote of approval of any such acquisition by the
shareholders of the Company prior to its consummation. In general, shares
acquired in the absence of such approval are denied voting rights and are
redeemable by the Company within 30 days after certain specified events at
market value at the time of redemption.

Furthermore, Section 302A.673 of the MBCA generally prohibits any
business combination by the Company, or any subsidiary of the Company, with any
interested shareholder of the Company within five years following the interested
shareholder's share acquisition date, unless the business combination is
approved by a committee of the Board of Directors of the Company before the
interested shareholder's share acquisition date. These provisions under the MBCA
may impede or deter unsolicited tender offers or takeover proposals with respect
to the Company and may, therefore, adversely affect the value of the Company's
shares.

TRANSFER AGENT

Norwest Bank Minnesota, N.A., St. Paul, Minnesota is the transfer agent
for the Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

The Company has outstanding 46,900,759 shares of Common Stock. In
addition, as of the date of this Prospectus, the Company has outstanding
15,853,603 shares reserved for issuance upon exercise of options and warrants.
All of the Company's outstanding shares and 11,940,103 shares issuable upon
exercise of warrants, when and if such warrants are exercised, will be freely
tradable without restrictions or registration under the Securities Act, except
that Officers and directors of the Company, who beneficially hold 5,080,580
shares of the Company's Common Stock, are subject to the restrictions of Rule
144 with respect to the sale of such shares.

In general, under Rule 144 a person (or persons whose sales are
aggregated) who beneficially owns shares acquired privately from the Company or
an affiliate of the Company at least two years previously and an affiliate of
the Company who beneficially owns shares acquired (whether or not such shares
were acquired privately) from the Company or an affiliate of the Company at
least two years previously, are entitled to sell within any three-month period a
number of shares that does not exceed the greater of 1% of the then outstanding
shares of the Company's Common Stock or the average weekly trading volume in the
Company's Common Stock during the four calendar weeks preceding the filing of
notice with the Commission in connection with such sale. Sales under Rule 144
are also subject to certain manner-of-sale provisions, notice requirements and
the availability of current public information about the Company. A person who
has not been an affiliate of the Company at any time during the three months
preceding a sale and who beneficially owns shares acquired from the Company or
an affiliate of the Company at least three years previously is entitled to sell
all such shares under Rule 144 without regard to any of the limitations of the
Rule.

In addition, Rule 144A under the Securities Act, as currently in
effect, in general, permits unlimited resales of certain restricted securities
of any issuer provided that the purchaser is an institution that owns and
invests on a discretionary basis at least $100 million in securities or is a
registered broker-dealer that owns and invests $10 million in securities. Rule
144A allows the existing shareholders of the Company to sell their shares to
such institutions and registered broker-dealers without regard to any volume or
other restrictions. Unlike under Rule 144, restricted securities sold under Rule
144A to nonaffiliates do not lose their status as restricted securities.

The Company cannot predict the effect, if any, that sales of the Shares
offered hereby or pursuant to Rule 144 could have on the market price of the
Company's Common Stock, if any, prevailing from time to time. Nevertheless,
sales of substantial amounts of the Company's securities, including the
securities offered hereby, could adversely affect prevailing market prices of
the Company's securities and the Company's ability to raise additional capital
by occurring at a time when it would be beneficial for the Company to sell
securities.

PLAN OF DISTRIBUTION

All or a portion of the Shares offered by the Selling Shareholders
hereby may be sold from time to time by the Selling shareholders or by pledgees,
donees, transferees or other successors in interest. Such sales may be made in
the over-the-counter market or otherwise at prices and at terms then prevailing
or at prices related to the then current market price, or in negotiated
transactions. The Shares may be sold by one or more of the following means: (a)
ordinary brokerage or market making transactions and transactions in which the
broker or dealer solicits purchasers; (b) block trades in which the broker or
dealer so engaged will attempt to sell the Shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction; and
(c) purchases by a broker or dealer as principal and resales by such broker or
dealer for its account pursuant to this Prospectus. In effecting sales, brokers
or dealers engaged by the Selling Shareholders may arrange for other brokers or
dealers to participate. Brokers or dealers will receive commissions or discounts
from the Selling Shareholders in amounts to be negotiated immediately prior to
the sales. Such brokers or dealers and any other participating brokers or
dealers may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended, in connection with such sales. In addition, any
securities covered by this Prospectus which qualify for sale pursuant to Rule
144 under the Act may be sold under Rule 144 rather than pursuant to this
Prospectus.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for
the Company by Fredrikson & Byron, P.A.

EXPERTS

The financial statements of the Company as of June 30, 1996, and 1995,
and for the years ended June 30, 1996, and 1995 and the period from September
30, 1991 (date of inception) to June 30, 1996, included herein and elsewhere in
the Registration Statement, of which this Prospectus is a part, have been
audited by McGladrey & Pullen, L.L.P., independent certified public accountants,
as set forth in their report thereon appearing elsewhere herein and in the
Registration Statement, and are included herein in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

Prior to this Offering, the Company has been subject to the reporting
requirements of the Securities Exchange Act of 1934. The Company has filed with
the Washington, D.C. Office of the Commission a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
sale of the Shares. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain portions of which have been omitted
as permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Shares, reference is made to the
Registration Statement, including the exhibits thereto. Statements contained in
this Prospectus as to the contents of any contract or other document referred to
are not necessarily complete, and in each instance reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement. The Registration Statement may be inspected by anyone without charge
at the principal office of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, or at one of the Commission's regional offices: 500 West Madison,
Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade Center, 13th Floor,
New York, New York, 10048. Copies of all or any part of such material may be
obtained upon payment of the prescribed fees from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.

<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS

QUANTECH LTD.
Page
---------
<S> <C>

FINANCIAL STATEMENTS FOR FISCAL YEARS 1996 AND 1995
Report of Independent Auditors................................................................ F-2
Balance Sheets as of June 30, 1996 and 1995................................................... F-3
Statements of Operations For the Period from Inception (September 30, 1991) through
June 30, 1996 and for the Years Ended June 30, 1996 and 1995.................................. F-5
Statements of Stockholders' Equity (Deficit) For the Period from Inception
(September 30, 1991) through June 30, 1996.................................................... F-6
Statement of Cash Flows For the Period from Inception (September 30, 1991)
through June 30, 1996 and for the Years Ended June 30, 1996 and 1995......................... F-8
Notes to Financial Statements................................................................. F-10

</TABLE>

INDEPENDENT AUDITOR'S REPORT

To the Stockholders and the Board of Directors
Quantech Ltd.
St. Paul, Minnesota

We have audited the accompanying balance sheets of Quantech Ltd. (A Development
Stage Company) as of June 30, 1996 and 1995 and the related statements of
operations, stockholders' equity (deficit) and cash flows for the years ended
June 30, 1996 and 1995 and the period from September 30, 1991 (date of
inception) to June 30, 1996. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Quantech Ltd. (A Development
Stage Company) as of June 30, 1996 and 1995, and the results of its operations
and its cash flows for the years ended June 30, 1996 and 1995 and the period
from September 30, 1991 (date of inception) to June 30, 1996 in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage company which has
suffered losses from operations, requires additional financing and ultimately
needs to successfully attain profitable operations. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

McGladrey & Pullen, LLP

Minneapolis, Minnesota
July 16, 1996

QUANTECH LTD. (A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS
JUNE 30, 1996 AND 1995

ASSETS (NOTE 3) 1996 1995
---------- ----------
<S> <C> <C>
Current Assets
Cash and cash equivalents $2,942,871 $ 4,276
Prepaid expenses 41,269 37,222
---------- ----------
TOTAL CURRENT ASSETS 2,984,140 41,498
---------- ----------
Property and Equipment
Equipment 268,058 87,347
Leasehold improvements 15,000 8,000
---------- ----------
283,058 95,347

Less accumulated depreciation 78,657 41,257
---------- ----------
204,401 54,090
---------- ----------
Other Assets
License agreement, at cost, less amortization (Note 4) 2,320,334 2,544,110
Organization expenses, at cost, less amortization 4,675 19,825
Deferred offering costs -- 76,437
---------- ----------
2,325,009 2,640,372
---------- ----------

$5,513,550 $2,735,960
========== ==========

See Notes to Financial Statements

</TABLE>

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 1996 1995
------------ ------------
<S> <C> <C>
Current Liabilities
Short-term debt (Note 3) $ 24,455 $ 2,628,120
Accounts payable 114,934 785,121
Accrued expenses:
Minimum royalty commitment (Note 4) -- 562,500
Spectrum Diagnostics, Inc. obligations (Note 8) 53,637 65,000
Compensation -- 104,989
Interest -- 283,451
Other -- 15,918
------------ ------------
Total current liabilities 193,026 4,445,099
------------ ------------

Long-Term Obligations
Minimum royalty commitment (Note 4) 37,500 --
------------ ------------

Commitments and Contingencies (Notes 4, 5 and 8)

Stockholders' Equity (Deficit) (Notes 2, 3 and 6)
Common stock, $.01 par value;
authorized 60,000,000 shares;
shares outstanding, 46,900,759 and
6,840,000 in 1996 and 1995, respectively 469,008 68,400
Additional paid-in capital 15,296,856 6,328,338
Subscriptions receivable -- (20,000)
Deficit accumulated during the development stage (10,482,840) (8,085,877)
------------ ------------
5,283,024 (1,709,139)
------------ ------------

$ 5,513,550 $ 2,735,960
============ ============

</TABLE>

QUANTECH LTD. (A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30, 1996 AND 1995, AND PERIOD FROM SEPTEMBER 30, 1991 (DATE OF
INCEPTION) TO JUNE 30, 1996

Expenses:
General and administrative 1,218,674 1,193,285 6,141,471
Research and development 991,701 503,375 2,531,119
Minimum royalty expense (Note 4) 125,000 175,000 887,500
Losses resulting from transactions with Spectrum
Diagnostics, Inc. (Note 8) -- -- 556,150
Net exchange gain -- -- (67,172)
Financing 103,626 198,632 481,104
------------ ------------ ------------
2,439,001 2,070,292 10,530,172
------------ ------------ ------------

LOSS BEFORE INCOME TAXES (2,396,963) (2,070,292) (10,440,245)

Income taxes (Note 7) -- -- 42,595
------------ ------------ ------------

NET LOSS $ (2,396,963) $ (2,070,292) $(10,482,840)
============ ============ ============

Loss per common share $ (.07) $ (.31)
============ ============

Weighted average common shares outstanding 31,991,150 6,786,986
============ ============

</TABLE>

See Notes to Financial Statements.

QUANTECH LTD. (A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
PERIOD FROM SEPTEMBER 30, 1991 (DATE OF INCEPTION) TO JUNE 30, 1996

Common Stock
------------------------------------------- Additional
Shares Par Value Paid-in
Issued Amount Capital
- ------------------------------------------------------------------------------------------------------------- ---------------------
<S> <C> <C> <C>
Balance, at inception - $ - $ -
Net loss - - -
Common stock transactions:
Common stock issued, October 1991 3,200,000 3,154,574 -
Common stock issued, November 1991 600,000 611,746 1,788,254
Common stock issuance costs - - (889,849)
Cumulative translation adjustment - - -
---------- ---------- ------------
Balance, December 31, 1991 3,800,000 3,766,320 898,405
Net loss - - -
Common stock transactions:
Common stock issued, September 1992 700,000 699,033 875,967
Common stock issuance costs - - (312,755)
160,000 shares of common stock to be issued - - -
Officer advances, net - - -
Cumulative translation adjustment - - -
Elimination of cumulative translation adjustment - - -
---------- ---------- ------------
Balance, December 31, 1992 4,500,000 4,465,353 1,461,617
Net loss - - -
Common stock transactions:
Common stock issued, January 1993 160,000 1,600 118,400
Common stock issued, April 1993 30,000 300 11,700
Change in common stock par value resulting
from merger - (4,420,353) 4,420,353
Repayments - - -
---------- ---------- ------------
Balance, June 30, 1993 4,690,000 46,900 6,012,070
Net loss - - -
240,000 shares of common stock to be issued - - -
Repayments - - -
---------- ---------- ------------
Balance, June 30, 1994 4,690,000 46,900 6,012,070
Net loss - - -
Common stock issued, June 1995 2,150,000 21,500 276,068
Warrants issued for services - - 40,200
---------- ---------- ------------
Balance, June 30, 1995 6,840,000 68,400 6,328,338
Net loss - - -
Common stock issued, net of issuance costs of $848,877:
July, 1995 6,160,000 61,600 1,304,450
August, 1995 717,600 7,176 161,460
September, 1995 13,807,296 138,073 2,370,389
November, 1995 1,897,840 18,978 425,482
December, 1995 11,217,157 112,172 1,292,473
May, 1996 6,275,000 62,750 3,300,422
June, 1996 5,058 51 3,650
Payments received on subscription receivable (19,192) (192) (14,808)
Compensation expense recorded on stock options - - 125,000
---------- ---------- ------------
Balance, June 30, 1996 46,900,759 $ 469,008 $ 15,296,856
========== ========== ============

</TABLE>

WIDE TABLE CONTINUED FROM ABOVE

<TABLE>
<CAPTION>
Deficit
Accumulated
Paid For, During the Cumulative
But Not Subscriptions Due From Development Translation
Issued Receivable Officers Stage Adjustment
- -------------- ----------- --------- -------------- ------------
<S> <C> <C> <C> <C>
- $ - $ - $ - $ -
- - - (594,620)

- - - - -
- - - - -
- - - - -
- - - - 387,754
- -------------- ---------- -------- ------------- -----------
- - - (594,620) 387,754
- - - (2,880,988) -

- (53,689) - - -
- - - - -
120,000 - - - -
- - (27,433) - -
- - - - (209,099)
- - - - (178,655)
- -------------- ---------- -------- ------------- -----------
120,000 (53,689) (27,433) (3,475,608) -
- - - (996,089) -

(120,000) - - - -
- - - - -

- - - - -
- - 5,137 - -
- -------------- ---------- -------- ------------- -----------
- (53,689) (22,296) (4,471,697) -
- - - (1,543,888) -
30,000 - - - -
- 53,689 22,296 - -
- -------------- ---------- -------- ------------- -----------
30,000 - - (6,015,585) -
- - - (2,070,292) -
(30,000) (20,000) - - -
- - - - -
- -------------- ---------- -------- ------------- -----------
- (20,000) - (8,085,877) -
- - - (2,396,963) -

- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- 20,000 - - -
- - - - -
- ------------- ----------- -------- ------------- -----------

- $ - $ - $(10,482,840) $ -
============= =========== ======== ============= ===========

</TABLE>

See Notes to Financial Statements.

QUANTECH LTD. (A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS
YEARSENDED JUNE 30, 1996 AND 1995, AND PERIOD FROM SEPTEMBER 30, 1991 (DATE OF
INCEPTION) TO JUNE 30, 1996

September 30,
1991 (Date of
Years Ended June 30, Inception) to
------------------------------- June 30,
1996 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net loss $ (2,396,963) $ (2,070,292) $(10,482,840)
Adjustments to reconcile net loss to net cash used
in operating activities:
Elimination of cumulative translation adjustment -- -- (178,655)
Depreciation 37,400 27,505 125,011
Amortization 238,926 238,926 1,128,279
Noncash compensation and interest 187,050 90,200 489,250
Losses resulting from transactions with
Spectrum Diagnostics, Inc. (Note 8) -- -- 556,150
Write-down of investment -- -- 67,500
Change in assets and liabilities, net of effects from purchase of
Spectrum Diagnostics, Inc.:
Increase in prepaid expenses 72,390 (30,056) 35,168
Increase (decrease) in accounts payable (670,187) 379,600 113,379
Increase (decrease) in accrued expenses (647,270) 221,758 365,261
------------ ------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (3,178,654) (1,142,359) (7,781,497)
------------ ------------ ------------

Cash Flows From Investing Activities
Purchase of property and equipment (187,711) (30,853) (322,441)
Organization expenses -- -- (97,547)
Officer advances, net -- -- (109,462)
Purchase of investment -- -- (225,000)
Purchase of license agreement -- -- (1,950,000)
Advances to Spectrum Diagnostics, Inc. -- -- (320,297)
Prepaid securities issuance costs -- -- (22,943)
Purchase of Spectrum Diagnostics, Inc., net of
cash and cash equivalents acquired -- -- (1,204,500)
------------ ------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (187,711) (30,853) (4,252,190)
------------ ------------ ------------

Cash Flows From Financing Activities
Net proceeds from the sale of common stock 6,676,125 -- 12,608,236
Proceeds on debt obligations 30,555 1,202,422 2,658,435
Payments received on stock subscription receivables 5,000 -- 5,000
Payments on debt obligations (406,720) (61,101) (498,355)
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 6,304,960 1,141,321 14,773,316
------------ ------------ ------------

Effect of Exchange Rate Changes on Cash -- -- 203,242
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH 2,938,595 (31,891) 2,942,871

Cash
Beginning 4,276 36,167 --
------------ ------------ ------------

Ending $ 2,942,871 $ 4,276 $ 2,942,871
============ ============ ============

(Continued)
</TABLE>

<TABLE>
<CAPTION>
QUANTECH LTD. (A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS (CONTINUED)
YEARSENDED JUNE 30, 1996 AND 1995, AND PERIOD FROM SEPTEMBER 30, 1991 (DATE OF
INCEPTION) TO JUNE 30, 1996

September 30,
1991 (Date of
Years Ended June 30, Inception) to
----------------------------- June 30,
1996 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Supplemental Disclosures of Cash Flow Information
Cash payments for interest $ 49,736 $ 26,925 $ 133,171
=========== =========== ===========

Supplemental Schedule of Noncash Investing and
Financing Activities
Acquisition of Spectrum Diagnostics, Inc. (Note 8):
Cash purchase price, less $5,199 cash
acquired $ -- $ -- $ 1,204,500
=========== =========== ===========

Fair value of other assets acquired, including
$1,406,629 assigned to the license agreement $ -- $ -- $ 1,489,500
Liabilities assumed -- -- (285,000)
----------- ----------- -----------
$ -- $ -- $ 1,204,500
=========== =========== ===========

Advances to Spectrum Diagnostics, Inc. (Note 8) $ -- $ -- $ 20,000
Prepaid security issuance costs (acquired from
Spectrum Diagnostics, Inc.) ultimately used
to reduce proceeds from the sale of
common stock -- -- 58,830
Due from Ital-American Securities, Inc. -- -- (674,734)
Stock issuance costs to be paid -- 76,437 237,201
Subscriptions receivable offset by accrued
compensation -- -- 53,689
Officer advances offset by accrued compensation -- -- 109,462
Issuance of debt obligation for services and
accounts payable -- 40,000 90,000
Issuance of warrants for services -- 40,200 40,200
=========== =========== ===========

Common stock issued/to be issued for:
Services and interest $ 62,050 $ 212,000 $ 274,050
Subscriptions receivable (15,000) 20,000 5,000
Debt obligations 2,227,500 90,625 2,318,125
Accounts payable -- 40,000 40,000
Accrued expenses 293,451 66,943 360,394
----------- ----------- -----------
$ 2,568,001 $ 429,568 $ 2,997,569
=========== =========== ===========

See Notes to Financial Statements

</TABLE>

QUANTECH LTD. (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS: Quantech Ltd. (Quantech or the Company) was formed
under the laws of Minnesota, for the purpose of effecting the change in domicile
of Spectrum Diagnostics S.p.A (SDS) from Italy to the state of Minnesota through
a merger with SDS on April 14, 1993. The merger has been accounted for as if it
were a pooling of interests and, accordingly, all prior financial statements
include SDS. The Company's fiscal year end is June 30 and SDS' fiscal year end
was December 31.

The Company had no operations prior to the merger and is continuing the business
of SDS to commercialize its Surface Plasmon Resonance (SPR) technology.
Commercialization will consist of developing and introducing an instrument which
will run various tests capable of diagnosing various human health conditions,
and which the Company intends to market to the world medical diagnostic
industry. The Company anticipates that it will grant trade credit to future
customers on credit terms it establishes with individual customers.

A summary of the Company's significant accounting policies follows:

CASH EQUIVALENTS: The Company maintains its cash in bank deposit and money
market accounts which, at times, may exceed federally insured limits. The
Company has not experienced any losses in such accounts. Cash equivalents
include $2,825,617 invested in money market funds.

FAIR VALUE OF FINANCIAL INSTRUMENTS: At June 30, 1996, the Company adopted the
FASB Statement No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS.
The following methods and assumptions were used by the Company in estimating the
fair value of each class of financial instruments:

CASH AND CASH EQUIVALENTS: The carrying amount approximates fair value
because of the short maturity of those instruments.

SHORT-TERM DEBT: The fair value of the Company's short-term debt is
estimated based on interest rates for the same or similar debt offered to
the Company having the same or similar remaining maturities with similar
collateral requirements. At June 30, 1996, cost approximated fair value.

OTHER ASSETS: The license agreement is being amortized by the straight-line
method over the remaining life of the related patents of 15 years (Note 4).
Organization expenses are being amortized by the straight-line method over 5
years.

The Company reviews its intangible assets quarterly to determine potential
impairment by comparing the carrying value of the intangibles with expected
future net cash flows provided by operating activities of the business. Should
the sum of the expected future net cash flows be less than the carrying value,
the Company would determine whether an impairment loss should be recognized. An
impairment loss would be measured by comparing the amount by which the carrying
value exceeds the fair value of the intangible. Fair value will be determined
based on estimated expected future discounted cash flows. To date, management
has determined that no impairment of intangible assets exists.

PROPERTY AND EQUIPMENT: Property and equipment are stated at cost. Depreciation
is computed by the straight-line method over five years.

INCOME TAXES: Deferred income tax assets and liabilities are computed annually
for differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities.

RESEARCH AND DEVELOPMENT: The Company contracts with certain outside parties for
the design and development of its product in addition to conducting its own
research and development. Research and development costs are charged to expense
as incurred.

LOSS PER COMMON SHARE: Loss per common share is computed based upon the weighted
average number of common shares outstanding during the period. Fully diluted and
primary loss per common share are the same amounts for all periods presented.

ESTIMATES: The preparation of financial statements in conformity with generally
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
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

ISSUED BUT NOT YET ADOPTED STANDARD: In October, 1995, the FASB issued Statement
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION. Statement No. 123 establishes
financial accounting and reporting standards for stock-based compensation plans.
Statement No. 123 encourages the adoption of a FAIR VALUE BASED METHOD of
accounting for stock-based compensation plans, but also allows entities to
continue to measure compensation cost using the INTRINSIC VALUE BASED METHOD of
accounting prescribed by APB Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES. Entities electing to remain with the accounting in Opinion No. 25
must make pro forma disclosures of net income and earnings per share as if the
fair value based method had been applied.

Statement No. 123 is effective for the year ending June 30, 1997. The Company
does not intend to adopt Statement No. 123 in measuring expense, however it will
present the pro forma disclosures and those pro forma amounts will likely be
less than the amounts shown in future statements of income.

TRANSLATION OF FOREIGN CURRENCY STATEMENTS: Prior to September of 1992, the
functional and reporting currency for SDS was the Italian lire. Concurrent with
the receipt of net proceeds from its initial public offering of common stock in
the United States in September 1992, and in connection with the phase out of its
Italian operations, the functional and reporting currency of SDS changed from
the Italian lire to the United States dollar. As a result, the cumulative
translation adjustment component of equity was eliminated in 1992.

NOTE 2. BASIS OF PRESENTATION

The Company was incorporated for the purpose of acquiring, developing and
commercializing SPR technology for use in medical diagnostics. The Company has
had no sales and the only revenue generated by the Company since its inception
has been interest income.

The Company is a development stage company which has suffered losses from
operations, requires additional financing and ultimately needs to successfully
attain profitable operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not reflect any adjustments which might be necessary should the Company not
remain a going concern.

Management intends to pursue funding of future operations through private or
public common stock offerings, or arrangements with strategic partners. The
proceeds of such offerings or arrangements, if received, along with cash on
hand, will be applied to expenses relating to product development, FDA
submission, establishing sales and marketing and production capabilities and to
provide working capital. Although current funds are expected to allow the
Company to proceed through FDA approval of its system, the Company will not have
sufficient funds to commence commercial production or sale of its system.

NOTE 3. SHORT-TERM DEBT OBLIGATIONS

Short-term debt obligations as of June 30, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
June 30,
1996 1995
<C> <C> <C>
8% convertible debenture, paid September 1995 $ -- $ 25,000
8% convertible debentures, converted to common stock
September, 1995 at $0.125 to $0.25 per share -- 997,500
8 - 10% convertible debentures, converted to common
stock December 1995 at $0.125 per share -- 1,230,000
11.5% note, paid September 1995 -- 25,000
12% notes, paid September 1995 -- 327,500
Obligations under capital lease agreements, due in
monthly installments of $1,855,
expiring between October and
November 1997, personally guaranteed
by the chief executive officer 24,455 23,120

$ 24,455 $2,628,120
</TABLE>

NOTE 4. AGREEMENTS

LICENSE AGREEMENT: The Company has a license agreement for certain patents,
proprietary information and associated hardware related to the SPR technology.
The license calls for an ongoing royalty of 6 percent on all products utilizing
the SPR technology which are sold by the Company. In addition, if the Company
sublicenses the technology, the Company will pay a royalty of 15 percent of all
revenues received by the Company under any sublicense. If the cumulative
payments of these two royalties fail to reach at least $500,000 by December 31,
1993, $850,000 by December 31, 1995, and $1,000,000 by December 31, 1997, then
each time one of such benchmarks is not met, the licensor has the right to
deprive the Company of its exclusive rights under the license agreement. As of
June 30, 1996, the Company has paid $850,000 of the cumulative payment. The
Company has also ratably accrued additional minimum royalty payments of $37,500
as of June 30, 1996, because sales or sublicense revenues through December 31,
1997 may not be adequate to meet the cumulative minimum royalty payments. The
Company intends to accrue the entire $150,000 by December 31, 1997.

The obligations of the Company to pay royalties terminates on the earlier of
such time as the total royalty payments reach a gross amount of $18,000,000,
which amount would be increased by $2,000,000 each time a benchmark is not met.
After such date, the Company's rights in the licensed SPR technology continue in
perpetuity with no further royalty obligations.

EMPLOYMENT AGREEMENTS: The Company has three-year employment agreements with its
chief executive officer and its executive vice president of research and
development and a two-year employment agreement with its chief financial
officer. Annual salaries under the agreements are $150,000 for the chief
executive officer and $125,000 for the executive vice president of research and
development and the chief financial officer with such adjustments and bonuses as
may be determined by the Board of Directors. In the event the employment
agreements are terminated for any reason by the Company, other than for cause as
defined in the agreements, the chief executive officer and executive vice
president of research and development would receive the salary due under the
remaining terms of the agreement plus one year's salary, and the chief financial
officer would receive two year's salary and bonus. The chief executive office
and executive vice president of research and development also have the right
upon termination to put any shares they own or have the right to receive
pursuant to options, back to the Company at fair market value. Total shares
subject to this put option, consisting primarily of shares issuable upon
exercise of stock options, totalled approximately 2,200,000 at June 30, 1996.

CONSULTING AGREEMENTS: The Company had an agreement with a member of the Board
of Directors whereby the Company agreed to pay the Board member for consulting
services. Consulting expense under this agreement was $45,000 for the year ended
June 30, 1995, which was paid by issuing stock at $0.125 per share.

In August 1993, the Company entered into an agreement with a consultant whereby
the consultant would provide assistance to the Company with respect to
financing, corporate development and other business matters. In consideration
for these services, the consultant was to receive a monthly fee and a
combination of cash and warrants based on performance. The consultant earned a
total of $118,250 under this agreement, which consisted of cash and warrants to
purchase 600,000 shares of common stock at $0.125. (See Note 6) $40,000 of these
fees were expensed in 1995 with the balance expensed in the prior year. In April
1995, this agreement was canceled and no further obligations are due this
consultant.

In July 1994, the Company entered into a consulting agreement with a consultant
who was also a secured creditor of the Company, being the holder of $300,000 in
convertible debentures that have since been converted to common stock (see Note
3). The consultant earned $60,000 under this agreement consisting of $10,000 in
cash and 400,000 shares of stock issued at $0.125. In May 1995, this agreement
was canceled.

NOTE 5. LEASES

The Company leases its office space under an agreement which expires February,
2000. The Company leases vehicles and office equipment under various lease
agreements which expire at various dates through 1997. Approximate minimum
aggregate rental commitments under these leases are as follows:

Years ending June 30:
1997 $ 47,000
1998 39,000
1999 38,000
2000 26,000

Rental expense for the years ended June 30, 1996 and 1995, and the period from
September 30, 1991 (date of inception) to June 30, 1996, was $82,134, $103,681,
and $375,067, respectively.

NOTE 6. STOCKHOLDERS' EQUITY

COMMON STOCK PLACEMENTS: During the year ended June 30, 1996, the Company
completed three private offerings of its common stock. In September, 1995, the
Company received net proceeds of approximately $2,883,000 from a private
placement of units at $1.00 per unit. In November, 1995, the Company received
net proceeds of approximately $430,000 also from the private placement of $1.00
units. Each unit consisted of four (4) shares of Company common stock and a
warrant to purchase one share of common stock at $.25 per share. In May, 1996,
the Company completed its third private offering of 6,275,000 shares of common
stock at $.60 per share, resulting in net proceeds of approximately $3,363,000.

COMMON STOCK PURCHASE WARRANTS: Common stock purchase warrants outstanding as of
June 30, 1996, are summarized below:

Warrant Class Shares of Common Stock Exercise Price Exercisable Until
Undesignated 150,000 0.125 February, 1997
250,000 0.250 May, 1997
450,000 0.125 August, 1998
1,173,000 0.125 May, 2000
655,000 0.125 June, 2000
687,760 0.250 July, 2000
200,000 0.250 August, 2000
4,382,240 0.250 September, 2000
597,500 0.720 May, 2001
Unit 17,500 5.400 September, 1997

STOCK OPTION PLAN: The Company had 400,000 shares of its common stock reserved
for issuance under a 1992 Stock Option Plan (the Plan) and had granted options
for the purchase of 307,500 shares. In May 1995, the Plan, along with options
granted thereunder, was canceled. As of the date of this report, the Company has
not established a new plan.

NONQUALIFIED STOCK OPTIONS: The Company granted nonqualified common stock
options to purchase shares of common stock to certain employees, directors and
other individuals. A summary of outstanding stock options follows:

Number of Exercise Expiration
Shares Price Date
Balance, June 30, 1994 -- $ -- --
Options granted 3,392,103 0.125 - 0.25 2000

Balance, June 30, 1995 3,392,103 $ 0.125 - 0.25
Options granted 3,825,000 0.25 - 0.90 2000 - 2001

Balance, June 30, 1996 7,217,103 $ 0.125 - 0.90 2000 - 2001

The options that have been granted are exercisable for a period of five years
from the date of grant and vest over a period of two to three years from date of
grant. At June 30, 1996, options for 4,994,606 shares were exercisable at prices
ranging from $0.125 to $0.90.

Compensation expense related to stock option grants was $125,000 in 1996 and $0
in 1995.

NOTE 7. INCOME TAXES

The Company's income tax expense consists solely of a franchise tax in Italy
during the year ended December 31, 1992, as the Company has incurred no United
States income taxes. For United States income tax purposes, under provisions of
the Internal Revenue Code, the Company has approximately $5,293,000 in operating
loss carryforwards and $91,000 in research and development credits at June 30,
1996, which may be used to offset otherwise future taxable income. These
carryforwards have been limited under the provisions of the Internal Revenue
Code, Section 382, which relates to a 50 percent change in control over a 3-year
period. The annual net operating loss carryforward limitation due to Section 382
is approximately $200,000 per year which reduced the previously available
carryforwards by approximately $2,800,000. In addition, the Company has
"post-change" carryforwards of approximately $2,261,000 that are not limited.
Further changes of control may result in the additional expiration of a portion
of the remaining carryforward before it can be used and are also dependent upon
the Company attaining profitable operations in the future.

Loss and tax credit carryforwards, reduced by the Section 382 limitation
discussed above, as of June 30, 1996 have the following expiration dates:

Expiration Date Net Operating Loss Tax Credit
2006 $ 241,000 $ --
2007 1,115,000 --
2008 827,000 20,000
2009 849,000 26,000
2010 45,000
2011 2,261,000 --

$ 5,293,000 $ 91,000

The tax effects of principal temporary differences at an assumed effective
annual rate of 34 percent are shown in the following table:

<TABLE>
<CAPTION>
June 30,
1996 1995
<S> <C> <C>
Loss carryforwards $ 1,800,000 $ 1,978,000
Royalties 21,000
Research and development credits and deductions 296,000 251,000
Guarantee of Spectrum Diagnostics, Inc. debt 115,000 137,000
Compensation expense 43,000 --
Accrued payroll 30,000
Gross deferred tax assets 2,254,000 2,417,000
Valuation allowance for deferred tax assets (2,254,000) (2,417,000)

$ -- $ --

</TABLE>

The income tax provision differs from the amount of income tax determined by
applying the U.S. federal income tax rate to pretax income for the years ended
June 30, 1996 and 1995, due to the valuation allowance recorded against deferred
tax assets.

NOTE 8. SPECTRUM DIAGNOSTICS, INC.

During 1991, SDS acquired substantially all of the assets of Spectrum
Diagnostics, Inc. (SDI) for 1,200,000 shares of SDS common stock plus the
assumption of certain SDI liabilities and guarantees.

As a result of its merger with SDS (see Note 1), Quantech now guarantees payment
of certain SDI liabilities previously guaranteed by SDS. SDI expects to sell an
investment it has in Quantech's common stock, the proceeds of which are expected
to be used to pay certain of SDI's obligations, but are not expected to be
sufficient to pay the entire amount guaranteed by Quantech.

Quantech has accrued its estimated loss which may result should SDI be unable to
pay the obligations discussed above. The Company has recorded a liability of
approximately $54,000 as of June 30, 1996.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 302A.521 of the Minnesota Business Corporation Act provides
that a corporation shall indemnify any person who was or is threatened to be
made a party to any proceeding by reason of the former or present official
capacity of such person , against judgments, penalties and fines, including,
without limitation , excise taxes assessed against such person with respect to
an employee benefit plan, settlements and reasonable expenses, including
attorneys' fees and disbursements, incurred by such person in connection with
the proceeding, if, with respect to the acts or omissions of such person
complained of in the proceeding such person has not been indemnified by another
organization or employee benefit plan for the same expenses with respect to the
same acts or omissions, acted in good faith, received no improper personal
benefit and Section 302A.255 (which pertains to director conflicts of interest),
if applicable, has been satisfied; in the case of a criminal proceeding, had no
reasonable cause to believe the conduct was unlawful; and in the case of acts or
omissions by a person in their official capacity for the corporation, reasonably
believed that the conduct was in the best interests of the corporation, or in
the case of acts or omissions by persons in their capacity for other
organizations, reasonably believed that the conduct was not opposed to the best
interests of the corporation.

The Minnesota Business Corporation Act also permits Minnesota
corporations in their Articles of Incorporation to limit or eliminate personal
liability of directors to the corporation or its shareholders for monetary
damages for breach of fiduciary duty; however, for bids any limitation or
elimination of director liability for (i) a breach of the director's duty of
loyalty, (ii) acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) corporate distributions which
are either illegal or in contravention of restrictions in the Articles, Bylaws
or any agreement to which the corporation is a party, (iv) violations of
Minnesota securities laws, (v) any transaction from which the director derived
an improper personal benefit, or (vi) any act or omission occurring prior to the
effective date of the provision in the corporation's Articles eliminating or
limiting liability.

Article 8 of the Registrant's Articles of Incorporation reads as
follows:

"To the fullest extend permitted by Chapter 302A, Minnesota Statutes,
as the same exists or may hereafter be amended, a director of this corporation
shall not be personally liable to the corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director."

The Registrant's Bylaws provide for the indemnification of its
directors, officers, employees and agents in accordance with, and to the fullest
extent permitted by, Section 302A.521 of the Minnesota Business Corporation Act,
as amended form time to time.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses in connection with this offering are as follows:

Securities and Exchange Commission Filing Fee......................... $14,259
Legal Fees and Expenses .............................................. $ 7,500
Accounting Fees and Expenses ......................................... $ 7,500
Printing ............................................................. $ 5,000
Miscellaneous ........................................................ $ 741
-------
Total Expenses ....................................................... $35,000

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

During the past three years, the Registrant has sold the following
securities pursuant to exemptions from registration under the Securities Act of
1933, as amended (the "Act"):

(i) The Registrant in a number of individual transactions from May 1,
1993 through June 1995 sold 20,831,861 shares of its Common Stock at prices
ranging from $.125 to $.25 per share to accredited investors. The transactions
were made in reliance upon the exemptions from registration provided under
Section 4(2) of the Securities Act. The registrant paid commissions in the
aggregate amount of $76,700 to John G. Kinnard and Company, Incorporated ("JGK")
for certain of these sales and issued JGK a warrant to purchase up to 1,173,000
shares at $.125 per share as additional compensation. Such warrants were granted
in reliance upon the exemption from registration provided under Section 4(2) of
the Act. The purchasers of such Common Stock and warrants acquired such
securities for their own account and not with a view to any distribution thereof
to the public.

(ii) In September 1995, the Registrant sold 3,300,000 Units at $1.00
per Unit to a number of accredited investors. Each Unit consisted of four (4)
shares of Company Common Stock and a warrant to purchase one share of Common
Stock at $.25 per share. The transactions were made in reliance upon the
exemptions from registration provided under Section 4(2) of the Securities Act
and Rule 505 of Regulation D. The registrant paid commissions and accountable
expenses in the aggregate amount of $354,950 to JGK for acting as selling agent
in the offering and issued JGK a warrant to purchase up to 1,320,000 shares at
$.25 per share as additional compensation. Such warrants were granted in
reliance upon the exemption from registration provided under Section 4(2) of the
Act. The purchasers of such Common Stock and warrants acquired such securities
for their own account and not with a view to any distribution thereof to the
public.

(iii) In November 1995, the Registrant sold 450,000 Units at $1.00 Unit
to five accredited investors. Each Unit consisted of four (4) shares of Company
Common Stock and a warrant to purchase one share of Common Stock at $.25 per
share. The transactions were made in reliance upon the exemptions from
registration provided under Section 4(2) of the Securities Act and Rule 505 of
Regulation D. No commissions were paid on such sales. The purchasers of such
Common Stock and warrants acquired such securities for their own account and not
with a view to any distribution thereof to the public.

(iv) On May 3, 1996, the Registrant sold 6,275,000 shares of Common
Stock at $.60 per share. The transactions were made in reliance upon the
exemptions from registration provided under Section 4(2) of the Securities Act
and Rule 506 of Regulation D. The registrant paid commissions and accountable
expenses in the aggregate amount of $363,841 to JGK for acting as selling agent
in the offering and issued JGK a warrant to purchase up to 597,500 shares at
$.72 per share as additional compensation. Such warrants were granted in
reliance upon the exemption from registration provided under Section 4(2) of the
Act. The purchasers of such Common Stock and warrants acquired such securities
for their own account and not with a view to any distribution thereof to the
public.

(v) On November 8, 1995 the Company sold 80,000 shares of Common Stock
at $.25 per share and on December 8, 1995 17,840 shares of Common Stock at $.60
per share to two investors and a consultant to the Company. On June 1, 1996 the
Company made an additional sale of 5,058 shares to a consultant to the Company
at $.86 per share. The transactions were made in reliance upon the exemptions
from registration provided under Section 4(2) of the Securities Act. No
commissions were paid on such sales. The purchasers of such Common Stock and
warrants acquired such securities for their own account and not with a view to
any distribution thereof to the public.

ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

See Exhibit Index on page following signatures.

ITEM 28. UNDERTAKINGS.

The undersigned Registrant undertakes that it will:

(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:

(I) Include any prospectus required by section 10(a)(3) of the
Securities Act;

(II) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement; and

(III) Include any additional or changed material information on the
plan of distribution.

(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.

(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

The undersigned Registrant further undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned in the City of St. Paul,
State of Minnesota, on August 23, 1996.

QUANTECH LTD.

By /s/ R. H. Joseph Shaw
-------------------------------------------
R. H. Joseph Shaw, Chief Executive Officer

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature to this
Registration Statement appears below hereby constitutes and appoints R. H.
Joseph Shaw and Gregory G. Freitag, and each of them, as his or her true and
lawful attorney-in-fact and agent, with full power of substitution, to sign on
his or her behalf individually and in the capacity stated below and to perform
any acts necessary to be done in order to file all amendments and post-effective
amendments to this Registration Statement, and any and all instruments or
documents filed as part of or in connection with this Registration Statement or
the amendments thereto, and each of the undersigned does hereby ratify and
confirm all that said attorney-in-fact and agent, or his or her substitutes,
shall do or cause to be done by virtue hereof.

Signatures Title

/s/R. H. Joseph Shaw Chief Executive Officer and
R. H. Joseph Shaw Chairman of the Board

/s/ Robert R. McKiel* Executive Vice President-Research
Robert R. McKiel and Development and Director

/s/ Gregory G. Freitag Chief Financial Officer, Vice
Gregory G. Freitag President of Corporate Development
and Secretary

/s/ James F. Lyons* Director
James F. Lyons

/s/ Richard W. Perkins* Director
Richard W. Perkins

/s/ Edward E. Strickland* Director
Edward E. Strickland

*Pursuant to Power of Attorney previously filed: /s/R..H. Joseph Shaw
R.H. Joseph Shaw

/s/Gregory G. Freitag
Gregory G. Freitag

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUANTECH LTD.
EXHIBIT INDEX TO FORM SB-2

Exhibit
Number Description
<S> <C>
2.1 Plan of Reorganization, dated November 24, 1992, by and among Quantech
Ltd. and Spectrum Diagnostics S.p.A. (incorporated by reference to Exhibit
2.1 of the Registrant's Registration Statement on Form S-4; Reg. No.
33-55356).

2.2 Amendment and Restatement Agreement and Plan of Merger dated January 20,
1993 by and among Quantech Ltd., Spectrum Diagnostics S.p.A. and Spectrum
Diagnostics Corp. (incorporated by reference to Exhibit 2.2 of the
Registrant's Registration Statement on Form S-4; Reg. No. 33-55356).

3.1 Articles of Incorporation of Quantech Ltd., as amended
(incorporated by reference to Exhibit 3.1 of the Registrant's
Form 10-KSB for the year ended June 30, 1996).

3.2 Bylaws of Quantech Ltd. (incorporated by reference to Exhibit 3.2 of the
Registrant's Registration Statement on Form S-4; Reg. No. 33-55356).

4.1 Form of Stock Certificate (incorporated by reference to Exhibit 4.1 of the
Registrant's Registration Statement on Form S-4; Reg. No. 33-55356).

4.2 Form of Private Placement Warrant. *

5.1 Opinion and Consent of Fredrikson & Byron, P.A.

10.1 Lease for office at 1419 Energy Park Drive, St. Paul, MN 55108
(incorporated by reference to Exhibit 10.1 of the Registrant's
Form 10-KSB for the Year Ended June 30, 1995).

10.2 Option Agreement with Ares-Serono, as amended (including license) assigned
to Quantech Ltd. pursuant to the Merger (incorporated by reference to
Exhibit 10.2 of the Registrant's Registration Statement on Form S-4; Reg.
No. 33-55356).

10.3 Employment Agreement with R.H. Joseph Shaw (incorporated by reference to
Exhibit 10.3 of the Registrant's Form 10-KSB for the Year Ended June 30,
1995).

10.4 Employment Agreement with Robert M. McKiel (incorporated by reference to
Exhibit 10.4 of the Registrant's Form 10-KSB for the Year Ended June 30,
1995).

10.5 Letter of amendment to Ares-Serono License (incorporated by reference to
Exhibit 10.6 of the Registrant's Form 10-KSB for the Year Ended June 30,
1995).

10.6 Agreement with Donnelly Corporation. *

10.7 Stock Option to purchase 1,246,000 shares by R.H. Joseph Shaw
(incorporated by reference to Exhibit 10.12 of the
Registrant's Form 10-KSB for the Year Ended June 30, 1995).

10.8 Stock Option to purchase 830,841 shares by Robert M. McKiel (incorporated
by reference to Exhibit 10.13 of the Registrant's Form 10-KSB for the Year
Ended June 30, 1995).

10.9 Employment Agreement with Gregory G. Freitag.

10.10 First Amendment to Warrant of Messrs. Strickland, Perkins, Lyons, Freitag
and Shaw. *

22 Quantech has no subsidiaries.

23.1 Consent of Fredrikson & Byron, P.A. (included in Exhibit 5.1)

23.2 Consent of McGladery & Pullen L.L.P.

24 Power of Attorney (included on signature page to Registration Statement)

</TABLE>

* Previously filed.

August 19, 1996

Quantech Ltd.
1419 Energy Park Drive
St. Paul, Minnesota 55108

Re: EXHIBIT 5 to Registration Statement on Form SB-2

Ladies/Gentlemen:

We are acting as corporate counsel to Quantech Ltd. (the "Company") in
connection with the preparation and filing of a Registration Statement on Form
SB-2 (the "Registration Statement") relating to the registration under the
Securities Act of 1933, as amended (the "Act") of 46,932,427 shares of the
Company's Common Stock (the "Shares") to be sold by certain shareholders,
including 9,851,000 shares which may be issued upon exercise of outstanding
warrants (the "Warrants").

In acting as such counsel and for the purpose of rendering this
opinion, we have reviewed copies of the following, as presented to us by the
Company:

1. The Company's Articles of Incorporation, as amended.

2. The Company's Bylaws, as amended.

3. Certain corporate resolutions of the Company's Board of
Directors pertaining to the issuance by the Company of the
Shares.

4. The Registration Statement.

Based on, and subject to, the foregoing and upon representations and
information provided by the Company or its officers or directors, it is our
opinion as of this date that:

1. The Shares are validly authorized by the Company's Articles of
Incorporation, as amended.

2. The Shares have been duly authorized and are, or upon payment
therefor upon exercise of the Warrants will be, validly issued and outstanding,
fully paid and nonassessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" included in the Registration Statement and the related Prospectus.

Very truly yours,

FREDRIKSON & BYRON, P.A.

By /s/ Timothy M. Heaney
Timothy M. Heaney

EMPLOYMENT AGREEMENT

DATE: November 13, 1995

PARTIES AND ADDRESSES:

Quantech Ltd. ("Employer")
1419 Energy Park Drive
St. Paul, Minnesota 55108

Gregory G. Freitag ("Employee")
1227 Hennepin Avenue
Minneapolis, Minnesota 55403

RECITALS:

A. Employer is engaged in the business of developing and
commercializing certain patents, technology, associate propriety and existing
operating prototypes related to medical diagnostics based upon Surface Plasmon
Resonance.

B. Employee seeks to be employed, and Employer seeks to employ,
Employee under the terms of this Agreement.

C. Employer will develop and acquire valuable technology, know-how, and
ideas as a result of the Merger, all of which it will regard as valuable
confidential information.

D. During his employment, Employee will have access to and learn the
Employer's valuable and confidential information.

E. Employee desires to be employed in a capacity in which he may
contribute to, and receive, confidential information and acknowledges that
Employer will suffer irreparable harm if Employee uses confidential information
outside his employment or makes any unauthorized disclosure of confidential
information to any third party (whether outside or inside of corporate
environment).

F. Employee further recognizes that execution of this Agreement is an
express condition of employment.

AGREEMENT:

NOW, THEREFORE, in consideration of the mutual promises herein
contained, and other benefits now or hereafter paid or made available to
Employee by Employer, the parties hereby agree as follows:

1. Term of Employment. Subject to the provisions of Paragraph 5 hereof,
Employer hereby employs Employee as Chief Financial Officer of Employer for a
term of two years commencing on December 1, 1995 ("Initial Term"); subject to
automatic renewal for additional two (2) year periods unless either party
delivers written notice of nonrenewal to the other party at least sixty (60)
days prior to the expiration of the Initial Term or any two-year extension.

2. Duties and Supervision. During the term of this Agreement, Employee
agrees to devote best efforts to the business and affairs of Employer and agrees
to perform such reasonable services and duties as may from time to time, be
assigned to him by the Board of Directors or Chief Executive officer of
Employer. During the term, Employee will not perform services for any other
person, firm or corporation, either as an employee or an agent or other
independent contractor, that is in direct competition with the business of the
Company, without the express consent of the Board of Directors. Employee shal1
be subject to the supervision and direction of Employer's Board of Directors as
to all matters relating to the performance of his services. Employee agrees to
comply in every respect with the general standards and policies of Employer as
in effect from time to time during the term of this Agreement all of which
Employer reserves the right to change in its sole discretion.

3. Compensation.

A. Base Salary. Employer shall pay Employee an initial annual
salary of $125,000 the ("Base Salary"), payable in accordance with
Employer's normal payroll practices in effect from time to time
beginning as of the date the Initial Term of this Agreement begins. The
Employee's compensation shall be subject to discretionary periodic
upward adjustments by the Employer's Board of Directors.

B. Bonus. Employer shall establish a bonus plan whereby
Employee shall be entitled to receive bonuses in cash and/or securities
based upon the performance of the Employee in performing his duties and
the performance of the Employer in developing and marketing its
products up to 100% of Employee's Base Salary.

C. Long Term Incentive Plan. Employee shall participate in the
long term incentive plan to be established by Employer.

4. Other Employee Benefits. For so long as Employee remains employed by
Employer, Employer agrees to obtain and maintain for the benefit of Employee,
health insurance benefits of the same nature as employer maintains from time to
time in favor of its employees in general, disability insurance and to provide
such other benefits as Employer announces from time to time to apply to its
employees in general.

5. Events of Termination. Each party acknowledges that he or it intends
this employment relationship to extend for the full Initial Term hereof.
Employer shall have the right to terminate Employee's employment under this
Agreement for any reason outlined below:

A. Upon written notice by Employer for "cause" as a result of
(i) Employee's conviction of or entry of a plea of guilty or nolo
contendere to any felony against him in connection with any allegation
against him of fraud, misrepresentation or misappropriation of
property; (ii) Employee's theft or misappropriation of the Employer's
property; or (iii)) Employee knowingly making material false statements
to the Employer's Board of Directors regarding the affairs of the
Company.

B. Upon written notice by Employer if Employee willfully and
materially fails to perform his duties in a reasonable and timely
manner and does not correct such failure within a period of ten (1())
days after written notice thereof from Employer specifying the nature
of such failure of performance and demanding that it be cured. Upon
occurrence of the third such failure of a similar nature or the third
failure of any kind, Employer may terminate this Agreement on written
notice without opportunity to cure.

C. Upon delivery of written notice of nonrenewal by Employer
to Employee sixty (60) days prior to the end of the Initial Term or any
renewal period.

D. Upon thirty (30) days prior written notice in the event
Employee shall suffer from a physical or mental illness or incapacity
that prevents Employee from rendering his substantial and material
duties described above for one hundred eighty (180) consecutive
calendar days determined in good faith by the Board of Directors of
Employer.

E. Automatically upon death of Employee or violation of any of
the terms of this Agreement.

F. By Employee upon thirty (30) days written notice.

G. Automatically upon the sale of substantially all of the
assets of Employer and a change in the control of more than 50% of
Employer's Common Stock pursuant to a single transaction or series of
transactions be the same acquiring party.

Nonexercise by Employer of its right to terminate Employee's employment
pursuant to Paragraphs 5(A) or 5(B) above shall not constitute a waiver by
Employer of its right to terminate Employee's employment upon future violations
of those provisions.

6. Effect of Termination Employment. If Employee dies or becomes
disabled as provided in Paragraphs 5(D) or 5(E) respectively, during the term of
this Agreement or if Employer terminates this Agreement at any time and for any
cause other than for a cause outlined in Paragraph 5A above, or employment is
terminated pursuant to Section 5(G), or Employer sends notice that this
Agreement shall not be renewed pursuant to Section 1 hereof Employer's only
obligation to Employee under this contract shall be to pay Employee's estate or
Employee, as the case may be, an amount equal to two times Employee's last
stated annual base salary and bonus pursuant to Section 3(B) for the last full
year of employment, which amount may be paid bi-weekly over a two year period
with the first installment to begin on the first day of the month following the
month in which the employment arrangement is terminated.

7. Restrictive Covenant. During his employment, Employee shall not
plan, organize, or engage in any business competitive with any product or
services marketed or planned for marketing by Employer or conspire with others
to do so. For a period following termination of employment with Employer equal
to the time in which severance payments are owing to Employee pursuant to
Section 6 hereof or if no severance payments are to be paid pursuant to Section
6 hereof for six months, provided that Employer may at its option extend such
period for an additional one year upon payment of an amount equal to Employees
last year base salary and bonus, pursuant to Section 3(B):

A. Employee shall not attempt to divert or divert any of
Employer's business, or business which it has a reasonable expectation
of obtaining, by soliciting, contacting, or communicating with any
customers or potential customers for Employer's products and services
with whom Employee or other employees under Employee's supervision had
contact at any time during the period of Employee's employment.

B. Employee shall not, without prior written authorization of
Employer, directly or indirectly render services, advise, or counsel as
an employee, representative consultant, or independent contractor for
any third party if the rendering of such services, advice or counsel
(i) relates to a specific product, product line, or services or a
product, product line, or services under development which is, or if
developed would be, competitive with any product, product line, or
services of Employer or a product, product line, or service under
development by Employer; or (ii) requires or is likely to result in the
use or disclosure by Employee of confidential information as defined in
the Confidentiality Agreement.

8. Injunctive Relief. Employee expressly acknowledges and agrees that
any violation of any covenant in Paragraph 7 of this Agreement may result in the
issuance of a temporary restraining order and/or injunction against Employee to
effect specific performance thereof. If Employer institutes and prevails in any
action against Employee alone or in conjunction with any third party or parties,
to enforce any term of this Agreement, Employee shall pay Employer its
reasonable attorneys' fees incurred in instituting and maintaining such action
and all costs and expenses incurred in connection therewith recognizing that
Employer does not have an adequate remedy at law for damages.

9. Severability. If any term of this Agreement is deemed unenforceable,
void, violable, or illegal such unenforceable, void, violable or illegal term
shall be deemed severable from all other terms of this Agreement which shall
otherwise continue in full force and effect and Employer and Employee expressly
acknowledge that a court of competent jurisdiction may at Employer's request
modify and thereafter enforce any of the terms, conditions, and covenants
contained in this Agreement.

10. Obligations Which Survive Termination. The obligations and remedies
of Paragraphs 7 and 8 of this Agreement shall survive termination hereof.

11. Whole Agreement. It is expressly understood that this Agreement is
the whole Agreement and supersedes any previous agreement, written or oral,
between Ernployer and Employee.

12. Binding Effect. The terms of this Agreement shall bind and inure to
the benefit of Employer and Employee and their respective successors and
assigns, heirs and legal representatives.

13. Governing Law. This Agreement shall be construed and enforced in
accordance with the statutes and common law of the state of Minnesota.

14. Arbitration. All disputes arising under this Agreement shall be
submitted for arbitration in the state of Minnesota, the United States of
America.

IN WITNESS WHEREOF, Employer and Employee have caused this Agreement to
be executed in the manner appropriate to each effective as of the date first
above written.

"Employer"

QUANTECH LTD.

By/s/ R.H. Joseph Shaw
Its CEO

"Employee"

/s/ Gregory G. Freitag
Gregory G. Freitag

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANT'S

The Board of Directors
Quantech, Ltd.
St. Paul, Minnesota

We hereby consent to the use in this Registration Statement on Form SB-2 of our
report, dated July 16, 1996, relating to the financial statements of Quantech,
Ltd., and to the reference to our Firm under the captions "Experts" and
"Selected Financial Data" in the Prospectus.

McGLADREY & PULLEN, LLP

Minneapolis, Minnesota
August 23, 1996