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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For Quarter Ended:
December 31, 2000 Commission File Number:
0 - 19957

Quantech Ltd.
(Exact name of small business issuer as specified in its charter)

Minnesota
(State or other jurisdiction
of incorporation or organization) 41-1709417
(I.R.S. Employer identification No.)

815 Northwest Parkway, Suite 100
Eagan, MN 55121
(Address of principal executive offices) (Zip code)

(651)-647-6370
(Issuer's telephone number, including area code)

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

    Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES /x/  NO / /

    State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: 18,648,112 shares of Common Stock, no par value, as of February 6, 2001.

    Transitional Small Business Disclosure Format: YES / /  NO /x/

Index

			Page No.
PART I. FINANCIAL INFORMATION
	Item 1: Financial Statements:
		Consolidated Balance Sheets as of December 31, 2000 and June 30, 2000	3
		Consolidated Statements of Operations for the Three Months and Six Months Ended December 31, 2000 and 1999 and from inception to December 31, 2000	4
		Consolidated Statement of Stockholders' Equity from inception to December 31, 2000	6
		Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2000 and 1999 and from inception to December 31, 2000	11
		Notes to Financial Statements	12
	Item 2: Management's Discussion and Analysis or Plan of Operation		14
PART II. OTHER INFORMATION			18

2

QUANTECH LTD.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEET

			December 31, 2000			June 30, 2000
			(Unaudited)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	2,022,888		$	1,328,797
	8% demand note receivable from officer			148,440			141,000
	Prepaid expenses			50,109			44,261
Total current assets				2,221,437			1,514,058
PROPERTY AND EQUIPMENT
	Equipment			1,912,364			1,193,898
	Leasehold improvements			68,494			28,634
				1,980,858			1,222,532
	Less accumulated depreciation			(350,109	)		(278,088	)
Total equipment				1,630,749			944,444
OTHER ASSETS
	License agreement, at cost, less amortization			1,919,238			2,082,553
	Patents			80,404			25,816
	Deposits			100,919			79,457
Total other assets				2,100,561			2,187,826
TOTAL ASSETS			$	5,952,747		$	4,646,328
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
	Short term debt		$	—		$	750,000
	Current portion of long-term debt			64,316			57,770
	Accounts payable			706,319			614,592
	Accrued expenses:
		Interest		—			3,750
		Payroll and vacation		138,763			138,763
Total current liabilities				909,398			1,564,875
LONG TERM LIABILITIES
	Long term debt, net of current portion			12,127			46,009
MINORITY INTEREST IN SUBSIDIARY				143,282			339,685
REDEEMABLE PREFERRED STOCK (see note 3)				—			4,495,245
STOCKHOLDERS' EQUITY (DEFICIT)
	Series B Preferred Stock (see note 3)			—			1,874,073
	Series C Preferred Stock (see note 3)			—			973,100
	Common stock, no par value; authorized 59,913,000 outstanding 18,648,112 shares and 6,204,416 shares December 31, 2000 and June 30, 2000 respectively			33,640,786			19,959,765
	Subscriptions receivable			(181,000	)		(20,000	)
	Additional paid-in capital			11,134,665			7,313,828
	Deficit accumulated during the development stage			(39,706,511	)		(31,900,252	)
Total stockholders' equity (deficit)				4,887,940			(1,799,486	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)			$	5,952,747		$	4,646,328

3

QUANTECH LTD.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS—UNAUDITED

		Six Months Ended December 31, 2000			Six Months Ended December 31, 1999			Period From September 30, 1991 (Date of Inception), to December 31, 2000
Net Sales		$	40,000		$	—		$	190,000
Expenses:
	General and administrative		1,254,287			765,507			13,460,370
	Marketing		475,796			558,709			1,960,941
	Research and development		3,814,325			1,231,217			15,153,708
	Minimum royalty expense		—			75,000			1,300,000
	Other		—			—			488,978
Total expenses			5,544,408			2,630,433			32,363,997
Loss from operations			(5,504,408	)		(2,630,433	)		(32,173,997	)
Other:
	Interest income		80,869			1,810			293,533
	Interest expense		(23,980	)		(25,776	)		(2,016,854	)
	Minority interest		230,153			—			352,830
Loss before income taxes			(5,217,366	)		(2,654,399	)		(33,544,488	)
Income taxes			—			—			42,595
Net loss		$	(5,217,366	)	$	(2,654,399	)	$	(33,587,083	)
Net loss attributable to common shareholders:
	Net loss	$	(5,217,366	)	$	(2,654,399	)
	Preferred stock accretion		(118,249	)		(263,103	)
	Beneficial conversion feature of preferred stock		(2,470,644	)		(439,850	)
Net loss attributable to common shareholders		$	(7,806,259	)	$	(3,357,352	)
Loss per basic and diluted common share		$	(0.64	)	$	(1.04	)
Weighted average common shares outstanding			12,233,548			3,228,137

4

QUANTECH LTD.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS—UNAUDITED

		Three Months Ended December 31, 2000			Three Months Ended December 31, 1999
Net Sales		$	—		$	—
Expenses:
	General and administrative		619,552			433,354
	Marketing		278,643			289,527
	Research and development		2,443,682			639,763
	Minimum royalty expense		—			37,500
	Other		—			—
Total expenses			3,341,877			1,400,144
Loss from operations			(3,341,877	)		(1,400,144	)
Other:
	Interest income		51,920			427
	Interest expense		(4,754	)		(16,168	)
	Minority interest		147,160			0
Loss before income taxes			(3,147,551	)		(1,415,885	)
Income taxes			—			—
Net loss		$	(3,147,551	)	$	(1,415,885	)
Net loss attributable to common shareholders:
	Net loss	$	(3,147,551	)	$	(1,415,885	)
	Preferred stock accretion		—			(135,632	)
	Beneficial conversion feature of preferred stock		(698,740	)		(439,850	)
Net loss attributable to common shareholders		$	(3,846,291	)	$	(1,991,367	)
Loss per basic and diluted common share		$	(0.21	)	$	(0.46	)
Weighted average common shares outstanding			18,223,573			4,335,846

5

QUANTECH LTD
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Period From September 30, 1991 (date of Inception), to December 31, 2000

			Series B Preferred Stock			Series C Preferred Stock			Series D Preferred Stock											Deficit Accumulated During the Development Stage
												Common Stock
																	Additional Paid-In Capital						Subscriptions Receivable			Paid for Not Issued			Due From Officers			Cumulative Translation Adjustment
			Shares	Amount		Shares	Amount		Shares	Amount		Shares		Amount
Balance at Inception
	Net Loss for 15 months																			$	(3,475,608	)
	Common stock transactions:
	Common stock issued, October 1991											160,000		$	3,154,574
	Common stock issued, November 1991											30,000		$	611,746		$	1,788,254
	Common stock issuance costs																$	(889,849	)
	Cumulative translation adjustment																															$	387,754
	Common stock issued, September 1992											35,000		$	699,033		$	875,967					$	(53,689	)
	Common stock issuance costs																$	(312,755	)
	Common stock to be issued																									$	120,000
	Cumulative translation adjustment																															$	(209,099	)
	Elimination of cumulative translation adjustment																															$	(178,655	)
	Officers advances, net																												$	(27,433	)
Balance, December 31, 1992			0	$	0	0	$	0	0	$	0	225,000		$	4,465,353		$	1,461,617		$	(3,475,608	)	$	(53,689	)	$	120,000		$	(27,433	)	$	0
	Net loss																			$	(996,089	)
	Common stock transactions:
	Common stock issued, January 1993											8,000		$	1,600		$	118,400								$	(120,000	)
	Common stock issued, April 1993											1,500		$	300		$	11,700
	Change in common stock par value resulting from merger													$	(4,420,353	)	$	4,420,353
	Repayments																												$	5,137
Balance,June 30, 1993			0	$	0	0	$	0	0	$	0	234,500		$	46,900		$	6,012,070		$	(4,471,697	)	$	(53,689	)	$	0		$	(22,296	)	$	0
	Net loss																			$	(1,543,888	)
	240,000 shares of common stock to be issued																									$	30,000
	Repayments																						$	53,689					$	22,296
Balance, June 30, 1994			0	$	0	0	$	0	0	$	0	234,500		$	46,900		$	6,012,070		$	(6,015,585	)	$	0		$	30,000		$	0		$	0
	Net loss																			$	(2,070,292	)
	Common stock issued, June 1995											107,500		$	21,500		$	276,068					$	(20,000	)	$	(30,000	)
	Warrants issued for services																$	40,200
Balance June 30, 1995			0	$	0	0	$	0	0	$	0	342,000		$	68,400		$	6,328,338		$	(8,085,877	)	$	(20,000	)	$	0		$	0		$	0
	Net loss																			$	(2,396,963	)
	Common stock issued, net of issuance costs of $848,877:
		July, 1995										308,000		$	61,600		$	1,304,450
		August, 1995										35,880		$	7,176		$	161,460
		September, 1995										690,364		$	138,073		$	2,370,389
		November, 1995										94,892		$	18,978		$	425,482
		December, 1995										560,857		$	112,172		$	1,292,473
		May, 1996										313,750		$	62,750		$	3,300,422
		June, 1996										252		$	51		$	3,650
	Payments received on subscription receivable											(960	)		(192	)	$	(14,808	)				$	20,000
	Compensation expense recorded on stock options																$	125,000
Balance, June 30, 1996			0	$	0	0	$	0	0	$	0	2,345,035		$	469,008		$	15,296,856		$	(10,482,840	)	$	0		$	0		$	0		$	0

6

QUANTECH LTD
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Period From September 30, 1991 (date of Inception), to December 31, 2000

			Series B Preferred Stock			Series C Preferred Stock			Series D Preferred Stock										Deficit Accumulated During the Development Stage
												Common Stock
																Additional Paid-In Capital						Subscriptions Receivable			Paid for Not Issued		Due From Officers		Cumulative Translation Adjustment
			Shares	Amount		Shares	Amount		Shares	Amount		Shares		Amount
	Net loss																		$	(3,925,460	)
	Stock offering costs															$	(12,310	)
	Common stock issued upon exercise of options and warrants
		September 1996										500		$	100	$	2,400
		October 1996										8,500		$	1,700	$	40,800
		November 1996										750		$	150	$	3,600
		December 1996										13,500		$	2,700	$	64,800					$	(57,500	)
		January 1997										1,000		$	200	$	4,800
		February 1997										7,500		$	1,500	$	17,250
		March 1997										7,000		$	1,400	$	33,600
	Payments received on subscription receivable																					$	57,500
	Compensation expense recorded on stock options															$	48,000
	Common stock issued, June 1997											18,250		$	3,650	$	105,850
	Warrants issued with notes payable															$	371
Balance, June 30, 1997			0	$	0	0	$	0	0	$	0	2,402,035		$	480,408	$	15,606,017		$	(14,408,300	)	$	0		$	0	$	0	$	0
	Net Loss																		$	(3,648,748	)
	Conversion of common stock from par value to no par value													$	15,392,446	$	(15,392,446	)
	Common stock issued for license agreement:
		September 1997										150,000		$	390,000
	Common stock issued for equipment and services received: March 1998											13,078		$	45,584
	Warrants issued for services received:
		March 1998														$	15,215
		April 1998														$	500
	Warrants issued with notes payable															$	939
	Amount attributable to value of debt conversion feature															$	988,444
	Warrants issued for license agreement
		December 1997														$	230,000
	Compensation expense recorded on stock options															$	28,000
	Adjustment of fractional shares due to 1-for 20 reverse stock split											(73	)
Balance, June 30, 1998			0	$	0							2,565,040		$	16,308,438	$	1,476,669		$	(18,057,048	)	$	0		$	0	$	0	$	0

7

QUANTECH LTD
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Period From September 30, 1991 (date of Inception), to December 31, 2000

			Series B Preferred Stock			Series C Preferred Stock			Series D Preferred Stock								Deficit Accumulated During the Development Stage
												Common Stock
															Additional Paid-In Capital					Subscriptions Receivable			Paid for Not Issued		Due From Officers		Cumulative Translation Adjustment
			Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
	Net Loss																$	(4,289,816	)
	Warrants issued with notes payable														$	76
	Common stock issued upon conversion of notes payable:
		July 1998										2,000	$	7,060
		September 1998										3,400	$	12,002
		October 1998										25,000	$	18,750
	Common stock issued upon exercise of warrant:
		August 1998										2,045	$	5,114
	Common stock issued for equipment and services received:
		July 1998										5,714	$	20,000
		August 1998										9,196	$	27,589
		September 1998										12,557	$	11,318
		December 1998										6,078	$	5,688
	Stock options issued for services:
		October 1998													$	42,000
	Compensation expense recorded on stock options														$	43,000
	Common stock issued upon conversion of preferred stock:
		November 1998										74,052	$	55,539
		January 1999										15,952	$	11,964
		March 1999										500	$	375
		April 1999										20,000	$	15,000
	Warrants issued for services:
		November 1998													$	781,000
	Series B Preferred Stock issued:
		June 1999	623,334	$	891,500															$	(60,000	)
	Accrete to redemption value on Series A Preferred Stock																$	(377,420	)
Balance, June 30, 1999			623,334	$	891,500	0	$	0	0	$	0	2,741,534	$	16,498,837	$	2,342,745	$	(22,724,284	)	$	(60,000	)	$	0	$	0	$	0
	Net Loss																$	(6,022,853	)
	Series B Preferred Stock issued:
		July 1999	216,666	$	291,829
		August 1999	86,667	$	116,989
		September 1999	16,667	$	22,500
		October 1999—adjust price to $1.00	471,666
		November 1999	100,000	$	100,000
		December 1999	480,000	$	472,500															$	(20,000	)
		January 2000	600,000	$	425,500
		February 2000	1,318,000	$	732,755
	Beneficial conversion expense on Preferred Stock														$	2,742,670	$	(2,742,670	)
	Series C Preferred Stock issued:
		February 2000				1,000,000	$	973,100
	Common stock issued: February 2000											125,000	$	187,500						$	(4,500	)

8

QUANTECH LTD
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Period From September 30, 1991 (date of Inception), to December 31, 2000

								Series C Preferred Stock			Series D Preferred Stock								Deficit Accumulated During the Development Stage
			Series B Preferred Stock											Common Stock
																	Additional Paid-In Capital					Subscriptions Receivable			Paid for Not Issued		Due From Officers		Cumulative Translation Adjustment
			Shares		Amount			Shares	Amount		Shares	Amount		Shares	Amount
	Common stock issued upon conversion of preferred stock:
		July 1999												32,000	$	24,000
		August 1999	(33,333	)	$	(50,000	)							179,121	$	159,341
		September 1999												80,852	$	60,639
		October 1999												50,000	$	37,500
		December 1999												13,252	$	9,939
		January 2000	(880,000	)	$	(880,000	)							890,000	$	887,500
		February 2000												866,664	$	649,998
		March 2000	(75,000	)	$	(72,500	)							89,000	$	83,000
		April 2000	(180,000	)	$	(177,000	)							226,880	$	212,160
		May 2000												68,864	$	51,648
		June 2000												42,824	$	32,118
	Common stock issued upon exercise of warrants:
		September 1999												454,545	$	500,000
		February 2000												24,256	$	18,192
		March 2000												60,263	$	147,835
		May 2000												39,708	$	67,318
		June 2000												7,321	$	7,553
	Warrants issued:
		September 1999															$	10,000				$	(10,000	)
		November 1999															$	15,000				$	(15,000	)
		January 2000															$	152,000
		February 2000															$	469,000
		March 2000															$	25
	Common stock issued upon exercise of options:
		January 2000												2,000	$	2,750
		February 2000												200	$	226
		June 2000												7,001	$	8,751
	Common stock issued for equipment and services received:
		January 2000												2,275	$	2,276
		February 2000												200,856	$	310,684
	Compensation expense recorded on stock options																$	332,300
	Subsidiary stock issued																$	1,250,088
	Payment received on subscriptions receivable																					$	89,500
	Accrete to redemption value on Series A Preferred Stock																		$	(410,445	)
Balance June 30, 2000			2,744,667		$	1,874,073		1,000,000	$	973,100	0	$	0	6,204,416	$	19,959,765	$	7,313,828	$	(31,900,252	)	$	(20,000	)	$	0	$	0	$	0

9

QUANTECH LTD
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Period From September 30, 1991 (date of Inception), to December 31, 2000

																							Deficit Accumulated During the Development Stage
			Series B Preferred Stock					Series C Preferred Stock					Series D Preferred Stock					Common Stock
																					Additional Paid-In Capital					Subscriptions Receivable			Paid for Not Issued		Due From Officers		Cumulative Translation Adjustment
			Shares		Amount			Shares		Amount			Shares		Amount			Shares	Amount
	Net Loss																						$	(5,217,366	)
	Series D Preferred Stock issued:
		August 2000											1,462,400		$	2,817,482
		September 2000											533,600		$	1,123,817
		October 2000											998,200		$	1,774,840										$	(161,000	)
	Common stock issued upon conversion of preferred stock:
		August 2000																14,108	$	10,581
		September 2000	(25,000	)	$	(22,500	)											25,000	$	22,500
		October 2000	(2,719,667	)	$	(1,851,573	)	(1,000,000	)	$	(973,100	)	(2,994,200	)	$	(5,716,139	)	12,119,463	$	13,143,725
	Warrants issued:
		August 2000																			$	576,000
		September 2000																			$	206,000
		October 2000																			$	401,868
		November 2000																			$	34,225
		December 2000																			$	40,850
	Subsidiary stock issued																				$	91,250
	Common stock issued:
		October 2000																56,000	$	65,371
		November 2000																178,000	$	366,300
		December 2000																50,000	$	71,700
	Common stock issued upon exercise of warrants:																	1,125	$	844
	Beneficial conversion expense on Preferred Stock																				$	2,470,644	$	(2,470,644	)
	Accrete to redemption value on Series A Preferred Stock																						$	(118,249	)
Balance December 31, 2000			0		$	0		0		$	0		0		$	0		18,648,112	$	33,640,786	$	11,134,665	$	(39,706,511	)	$	(181,000	)	$	0	$	0	$	0

10

QUANTECH LTD

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

					Six Months Ended December 31, 2000			Six Months Ended December 31, 1999			Period From September 30, 1991 (Date of Inception), to December 31, 2000
Cash Flows From Operating Activities
	Net Loss				$	(5,217,366	)	$	(2,654,399	)	$	(33,587,083	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Elimination of cumulative translation adjustment				—			—			(178,655	)
		Depreciation				72,021			41,772			490,751
		Amortization				163,315			220,814			2,669,452
		Noncash compensation, services and interest				—			61,300			4,019,205
		Minority interest				(230,153	)		—			109,532
		Other				—			—			623,650
		Change in assets and liabilities:
			(Increase) decrease in prepaid expenses			(5,848	)		(130	)		91,483
			Increase (decrease) in accounts payable			91,727			522,403			442,751
			Increase (decrease) in accrued expenses			(3,750	)		96,277			412,887
				Net cash used in operating activities		(5,130,054	)		(1,711,963	)		(24,906,027	)
Cash Flows From Investing Activities
	Purchase of property and equipment					(758,326	)		(37,913	)		(1,743,612	)
	Proceeds on disposition of property					—			—			37,375
	Patent costs					(54,588	)		—			(81,943	)
	Organization costs					—			—			(97,547	)
	Deposits					(21,462	)		—			(100,919	)
	Officer advances, net					—			—			(109,462	)
	Note receivable from officer					(7,440	)		—			(148,440	)
	Purchase of investment					—			—			(225,000	)
	Purchase of license agreement					—			—			(1,950,000	)
	Advances to Spectrum Diagnostics, Inc.					—			—			(320,297	)
	Prepaid securities issuance costs					—			—			(101,643	)
	Purchase of Spectrum Diagnostics, Inc., net of cash and cash equivalents acquired					—			—			(1,204,500	)
				Net cash used in investing activities		(841,816	)		(37,913	)		(6,045,988	)
Cash Flows From Financing Activities
	Net proceeds from the sale of Series A Preferred Stock					—			—			1,523,909
	Net proceeds from the sale of Series B Preferred Stock					—			1,003,818			2,993,573
	Net proceeds from the sale of Series C Preferred Stock					—			—			973,100
	Net proceeds from the sale of Series D Preferred Stock					5,555,139			—			5,555,139
	Net proceeds from the sale of common stock and warrants					1,763,158			525,000			15,584,080
	Net proceeds from the sale of common stock of subsidiary					125,000			4,000			1,375,088
	Proceeds from debt obligations					—			25,000			6,051,085
	Payments received on stock subscriptions receivable					—			—			45,000
	Payments on debt obligations					(777,336	)		—			(1,329,313	)
				Net cash provided by financing activities		6,665,961			1,557,818			32,771,661
Effect of Exchange Rate Changes on Cash						—			—			203,242
				Net increase in cash		694,091			(192,058	)		2,022,888
Cash and Cash Equivalents
	Beginning					1,328,797			436,223			—
	Ending				$	2,022,888		$	244,165		$	2,022,888

11

QUANTECH LTD.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. BASIS OF PRESENTATION

    In the opinion of the management of Quantech, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal, recurring adjustments) necessary to present fairly the financial position of Quantech as of December 31, 2000 and the results of operations and its cash flows for the three month and six month periods ended December 31, 2000 and 1999, and the period from inception to December 31, 2000. The results of operations for any interim period are not necessarily indicative of the results for the year. These interim financial statements should be read in conjunction with Quantech's annual financial statements and related notes in Quantech's Annual Report on Form 10-KSB for the year ended June 30, 2000.

Note 2. LICENSE AGREEMENT

    Quantech has a license agreement with Ares-Serono for certain patents, proprietary information and associated hardware related to Surface Plasmon Resonance ("SPR") technology. The license calls for an ongoing royalty of 6 percent on all products utilizing the SPR technology which are sold by Quantech. In addition, if Quantech sublicenses the technology, Quantech will pay a royalty of 15 percent of all revenues received by Quantech under any sublicense. To date, Quantech has paid $1,300,000 of cumulative royalty payments. This amount satisfies the requirements of the license agreement until royalty accruals based on revenues exceed such minimum payment amount.

Note 3. CONVERTIBLE PREFERRED STOCK

    On October 2, 2000, Quantech closed on a private equity offering greater than $5 million causing all of its Series A redeemable, B, C and D preferred stock to automatically convert into common shares.

Note 4. HTS BIOSYSTEMS

    Quantech's consolidated financial statements include the results of HTS Biosystems, Inc. ("HTS") of which Quantech currently has 72% ownership. HTS was formed around a combination of SPR technologies and intellectual property from both Quantech and Applied Biosystems, Inc. (NYSE:ABI). This technology supports the accelerated development of label-free, cost effective detection systems, initially for the scientific research market. HTS intends to become the definitive source of analytical systems and chemistry for the high-speed detection of molecular and cellular interactions in the fields of functional genomics, proteomics and drug discovery. HTS expects its first product, the FLEX CHIP Kinetic Analysis System, to be available this calendar year.

Note 5. BENEFICIAL CONVERSION FEATURE EXPENSE

    Quantech's loss per share figure for the six months ended December 31, 2000 reflects $2,470,644 of non-cash beneficial conversion feature charges resulting from sales of equity units consisting of four shares of convertible preferred stock and a warrant. A large number of such unregistered preferred shares were sold in a private placement at a customary discount to the current market price of the common stock. For accounting purposes, the selling price of the equity unit was split between the shares and the warrant, with the warrant value calculated using the Black-Scholes model and the remainder of the selling price assigned to the preferred shares. The resulting difference between the accounting value of the preferred stock and the market price of the common stock created large

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beneficial conversion feature charges. These charges were due to the nature of the equity sales and had no effect on net loss or cash flow.

Note 6. SEGMENTS

    The Company has two reportable segments: Quantech Ltd. (Quantech) and HTS Biosystems, Inc. (HTS). Quantech is completing development of a system for the hospital emergency department that is expected to run tests for a number of different medical conditions utilizing its proprietary technology, surface plasmon resonance (SPR). HTS is focused on developing detection systems using SPR and other technologies for the functional genomics, proteomics and drug discovery markets. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

	Three Months Ended December 31, 2000
	Quantech			HTS			Total
Net Sales	$	0		$	0		$	0
Interest Income		39,392			12,528			51,920
Interest Expense		4,754			0			4,754
Depreciation and amortization		115,491			4,616			120,107
Segment loss		(2,329,998	)		(817,553	)		(3,147,551	)
Total assets	$	5,669,444		$	283,303		$	5,952,747

	Six Months Ended December 31, 2000
	Quantech			HTS			Total
Net Sales	$	0		$	40,000		$	40,000
Interest Income		47,500			33,369			80,869
Interest Expense		23,980			0			23,980
Depreciation and amortization		229,174			6,162			235,336
Segment loss		(4,092,433	)		(1,124,933	)		(5,217,366	)
Total assets	$	5,669,444		$	283,303		$	5,952,747

    No segment information is presented for the three months and six months ended December 31, 1999 as HTS did not begin operations until April 2000.

Note 7. REVENUE RECOGNITION

    In December 1999, the staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 (SAB No. 101), "Revenue Recognition in Financial Statements." SAB No. 101 summarizes some of the staff's interpretations of the application of generally accepted accounting principles related to revenue recognition. The Company adopted SAB No. 101 in the first quarter of the fiscal year ending June 30, 2001. The adoption of SAB No. 101 did not have an effect on the Company's financial statements.

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

History

    Quantech Ltd. is a Minnesota company originally founded in 1991. Quantech is completing development of a system that is expected to run tests for a number of different medical conditions. We call our system the FasTraQ™. The FasTraQ consists of an instrument that sits on the top of a counter or cart and reads PrePaQ™ disposable test cartridges developed by Quantech. Each Quantech PrePaQ test cartridge will contain a number of different medical tests such as those for a heart attack or pregnancy. Hand-held communication devices called ReaLinQ™ communicators provide real time test results directly from the FasTraQ instrument to the medical staff members treating a patient.

    The FasTraQ produces test results in a manner different than other testing systems because it uses Quantech's proprietary technology based on the quantum physics phenomenon known as surface plasmon resonance ("SPR"), which involves the interaction of light with the electrons of metal. Quantech's technology creates SPR in a controlled environment which enables the FasTraQ to detect and transmit information concerning the presence and quantity of certain native and foreign molecules in blood, urine or other fluids which may be associated with specific diseases or medical conditions. SPR, along with other analytical methods, will allow the FasTraQ to provide the STAT tests required in the Emergency Department.

    Excluding tests that can be conducted in the home, the overall world wide diagnostic market is more than $20 billion. Routine and "STAT" (from the Latin statim meaning urgent) laboratory tests currently account for the majority of this market. Routine tests required in the hospital are conducted on testing systems located in either the hospital's central laboratory or sent to a laboratory that is not within the hospital. STAT tests are conducted by a hospital's central laboratory or a smaller, more conveniently located version of the central laboratories called STAT labs. Obtaining test results from central laboratories can take a minimum of 45 minutes and up to three hours. This delay negatively affects patient treatment and increases costs. Although STAT labs have been established to reduce the time delay, test costs are higher in STAT labs than central laboratories and turnaround time for tests is not always reduced. We are designing the FasTraQ to address what we believe is a pressing need for a test system that can quickly, in less than 15 minutes, and cost effectively provide test results, especially for patients with critical problems in emergency departments.

    The FasTraQ will be launched with at least a panel of three heart attack tests and a single test for pregnancy. Other tests are under development and are expected to be added to the FasTraQ system to provide the number of different quantitative tests the emergency department requires on an urgent basis. We have received clearance from the U.S. Food and Drug Administration to market for clinical use our tests for the cardiac enzymes Myoglobin and CK-MB and the pregnancy enzyme hCG.

    Quantech also owns 72% of HTS Biosystems, Inc. ("HTS"). HTS was formed around a combination of SPR technologies and intellectual property from both Quantech and Applied Biosystems, Inc. (NYSE:ABI). This technology supports the accelerated development of label-free, cost effective detection systems, initially for the scientific research market. HTS intends to become the definitive source of analytical systems and chemistry for the high-speed detection of molecular and cellular interactions in the fields of functional genomics, proteomics and drug discovery. HTS expects its first product, the FLEX CHIP Kinetic Analysis System, to be available this year.

    Quantech is a development stage company which has suffered significant losses from operations, requires additional financing, and ultimately needs to complete development of its product, generate revenues, and successfully attain profitable operations to realize the value of its license agreement. These factors raise substantial doubt about Quantech's ability to continue as a going concern.

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Results of Operations

    Quantech has incurred a net loss of $33,587,083 from September 30, 1991 (date of inception) through December 31, 2000 due to expenses related to formation and operation of Quantech's predecessor, Spectrum Diagnostics Inc. ("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 SDS and HTS 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, and $1,300,000 of minimum royalties have been paid on the license.

    Net sales increased to $40,000 for the six months ended December 31, 2000 from $0 for the same period in 1999 due to the sale of an evaluation system. We expect additional revenue from evaluation systems during the rest of the fiscal year, but do not expect significant revenue from the sale of commercial systems.

    General and administration expenses increased to $619,552 and $1,254,287 for the three months and six months ended December 31, 2000 from $433,354 and $765,507 for the same periods in 1999 primarily due to expenses associated with financing activities, HTS start-up costs and spending related to company expansion. We expect general and administrative expenses to increase in the future as Quantech and HTS complete development of their systems, prepare for market launch and begin to manufacture and distribute their products.

    Marketing expenses decreased to $278,643 and $475,796 for the three months and six months ended December 31, 2000 from $289,527 and $558,709 for the same periods in 1999 due to lower market research expenses at Quantech. We expect marketing expenses to increase in the future as we prepare for market launch and begin to distribute our products.

    Research and development costs increased to $2,443,682 and $3,814,325 for the three months and six months ended December 31, 2000 from $639,763 and $1,231,217 for the same periods in 1999 primarily due to the initial development work at HTS, and increased internal and outside development work at Quantech including expenses to prepare for clinical trials. We expect R&D spending to significantly increase as Quantech and HTS complete the commercial development of their systems and begin to establish higher volume manufacturing capabilities.

    Quantech had no minimum royalty expense for the three months and six months ended December 31, 2000 compared to $37,500 and $75,000 for the same periods in 1999 due to the final minimum royalty payment made in January 2000. In the future we expect to incur additional royalty expense when royalties based on revenues exceed minimum payments (see Notes to Financial Statements, Note 2—License Agreement).

    Interest income increased to $51,920 and $80,869 for the three months and six months ended December 31, 2000 compared to $427 and $1,810 for the same periods in 1999 as a result of more cash on hand from the proceeds of offerings for Quantech and HTS Biosystems.

    Interest expense decreased to $4,754 and $23,980 for the three months and six months ended December 31, 2000 from $16,168 and $25,776 during the same periods in 1999 as a result of lower debt. Interest expense is expected to be lower for the remainder of the fiscal year as Quantech does not anticipate any debt other than $125,000 of capital lease obligations.

    Minority interest in the HTS net loss increased to $147,160 and $230,153 for the three months and six months ended December 31, 2000 from $0 during the same periods in 1999 because HTS did not begin operations until April 2000.

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    For the three months and six months ended December 31, 2000 Quantech had losses of $3,147,551 and $5,217,366 as compared to $1,415,885 and $2,654,399 for the same periods in 1999. The higher losses were primarily due to higher operating expenses, especially for research and development.

    Quantech's earnings per share figure for the six months ended December 31, 2000 reflects $2,470,644 of non-cash beneficial conversion feature charges resulting from equity sales of units consisting of four shares of convertible preferred stock and a warrant. A large number of such unregistered preferred shares were sold in a private placement at a customary discount to the current market price of the common stock. For accounting purposes, the selling price of the equity unit was split between the shares and the warrant, with the warrant value calculated using the Black-Scholes model and the remainder of the selling price assigned to the preferred shares. The resulting difference between the accounting value of the preferred stock and the market price of the common stock created large beneficial conversion feature charges. These charges were due to the nature of the equity sales and had no effect on net loss or cash flow.

    The timetable for submitting additional tests to the FDA and introduction of Quantech's system to the market will be influenced by Quantech's ability to obtain further funding, enter into strategic relationships, complete commercial prototype development of its system and develop further tests, and delays it may encounter with the FDA in its review of Quantech's tests and system. There can be no assurance that Quantech will be able to obtain the required funding, enter into any strategic agreements or ultimately complete its commercial system.

Liquidity and Capital Resources

    From inception to December 31, 2000, Quantech has raised approximately $31,400,000 through a combination of public stock sales, private stock sales and debt obligations. In June 2000, Quantech began offering for sale units of its Series D convertible preferred stock to accredited investors. The units were priced at $10.00 per unit consisting of 4 shares of Series D preferred stock and a warrant to purchase one share of common stock at an exercise price of $3.50 per share. Each share of Series D stock was convertible into one share of common stock. During August through October 2000, Quantech raised net proceeds of $6,759,000 from the sale of 748,550 units. This offering triggered the conversion of all of Quantech's preferred stock into common stock. After such conversion, Quantech sold units priced at $10.00 per unit consisting of 4 shares of common stock and a warrant to purchase one share of common stock at an exercise price of $3.50 per share. During October through December 2000, Quantech raised net proceeds of $638,000 from the sale of 71,000 units.

    Quantech anticipates that its cash on hand along with funds to be received from Mitsubishi Chemical Corporation for license and distribution rights in Japan will allow it to maintain operations through March, 2001. Additional financing of approximately $15 million will be needed to develop and submit to the FDA additional tests, complete clinical evaluation of the system, establish manufacturing capabilities and begin sales of the system. Quantech is currently reviewing multiple avenues of future funding including private sale of equity or debt with equity features or arrangements with strategic partners. Quantech does not have any commitments for any such financing and there can be no assurance that Quantech will obtain additional capital when needed or that additional capital will not have a dilutive effect on current stockholders. See "Cautionary Statements—We expect to incur losses in the future and we need additional financing to achieve sales necessary to reach a break-even cash flow." Quantech has terminated its limited lending arrangement with its bank and does not anticipate receiving any significant funding from commercial lenders. In addition, HTS Biosystems anticipates raising up to $15 million for its operations either through strategic partners or the sale of securities. An equity sale would result in a dilution of Quantech's ownership of HTS.

    Quantech incurred capital expenditures of $758,326 in the six month period ended December 31, 2000 primarily for automated production equipment and office systems and equipment. We anticipate

16

significantly higher capital expenditures in the near future for laboratory and production equipment and office expansion as Quantech and HTS Biosystems near product introduction. The timing and amount of such expenditures will be governed by our 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.

    As of February 6, 2001 Quantech had 18,648,112 shares of common stock outstanding.

Cautionary Statements

    Quantech wishes to caution investors that the following important factors, among others, in some cases have affected, and in the future could affect, Quantech's actual results of operations and cause such results to differ materially from those anticipated in forward-looking statements regarding financing needs, expenditures and other matters made in this document and elsewhere by or on behalf of Quantech.

We expect to incur losses in the future and we need additional financing to achieve sales necessary to reach a break-even cash flow.

    We have incurred net losses in each year since inception. We expect to increase significantly our research and development, sales and marketing, manufacturing and general and administrative expenses in the future. We will spend these amounts before we receive any incremental revenue from these efforts. Further financing will be necessary to complete our menu of tests, establish sales and marketing and manufacturing capacity and achieve the sales level required to achieve a break-even cash flow. Additional financing through investment capital, funding by strategic partner(s) or licensing revenues will be needed to operate until revenues can be generated in an amount sufficient to support operations. Quantech does not have any commitments for any such additional financing and does not anticipate receiving any additional significant funding from commercial lenders until product sales commence. There can be no assurance that any such additional financing can be obtained on favorable terms, if at all. Any additional equity financing may result in dilution to Quantech stockholders and could depress the market price of our common stock.

"Going concern" statement in auditor's report may make it difficult to raise new capital.

    Quantech has not had any significant revenues to date. As of June 30, 2000 and December 31, 2000, we had accumulated deficits of $31,900,252 and $39,706,511 respectively. The report of the independent auditors on Quantech's financial statements for the year ended June 30, 2000, includes an explanatory paragraph relating to the uncertainty of Quantech's ability to continue as a going concern, which may make it more difficult for Quantech to raise additional capital.

Development of the FasTraQ is not complete and may not be completed on the current timetable and budget.

    Components of the FasTraQ system are under various stages of development. Until the FasTraQ development is completed and cleared through the FDA, there can be no assurance that the FasTraQ system will be finished according to our current development timetable and budget. To date, Quantech has been unable to meet such timetable and budget. Failure to timely finish on budget will require Quantech to seek funding greater than currently anticipated, thus intensifying the risks described in "We expect to incur losses in the future and we need additional financing to achieve sales necessary to obtain break-even cash flow" above. Additionally, the final price that we will need to charge to cover the costs of the FasTraQ instrument and the PrePaQ test cartridges cannot be determined until development is complete and FDA clearances have been obtained. If Quantech cannot receive FDA approval and offer the FasTraQ system with certain required features and tests at a cost acceptable to

17

potential customers, it will be impossible for Quantech to continue operations. Failures in any of these areas will disappoint investors and could result in a decline in our stock price thus causing investors to lose substantial money.

Other Factors

    As described in Quantech's Form 10-KSB for the year ended June 30, 2000 under Cautionary Statements, there are factors concerning Quantech in addition to those identified above that should be considered including, but not limited to: uncertainty of market acceptance of Quantech's product once introduced, inability or delay in obtaining FDA product approval, competition, lack of marketing and manufacturing experience, technological obsolescence, ability to maintain patent protection on Quantech's technology and not violate others' rights, effects of government regulation on Quantech's product and its sale, ability to manufacture its product, dependence on key personnel, exposure to the risk of product liability, risk of loss of investment in HTS Biosystems and the limited market for Quantech shares.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

Not Applicable

Item 2. Changes in Securities

    During October 2000, Quantech sold 249,550 units at $10.00 per unit (each unit consisting of 4 shares of Series D preferred stock and a warrant to purchase one share of common stock at $3.50 per share) to accredited investors. Each share of Series D preferred stock was convertible into one share of common stock. The sale of such shares was deemed to be exempt from registration under Section 4(2) of the 1933 Act and rule 506 promulgated thereunder. Quantech paid commissions and accountable expenses in the aggregate amount of $250,447 to registered investment banks for acting as selling agents, and issued the investment banks warrants to purchase up to 99,820 shares of common stock as additional compensation. The purchasers acquired these securities for their own accounts and not with a view to any distribution thereof to the public.

    During October 2000, Quantech issued 12,119,463 shares of common stock pursuant to conversion of preferred stock. The sale of such shares was deemed to be exempt from registration under Section 3(a)(9) of the 1933 Act. The purchasers acquired these securities for their own accounts and not with a view to any distribution thereof to the public.

    During October through December 2000, Quantech sold 71,000 units at $10.00 per unit (each unit consisting of 4 shares of common stock and a warrant to purchase one share of common stock at $3.50 per share) to accredited investors. The sale of such shares was deemed to be exempt from registration under Section 4(2) of the 1933 Act and rule 506 promulgated thereunder. Quantech paid commissions and accountable expenses in the aggregate amount of $71,631 to a registered investment bank for acting as selling agent, and issued the investment bank a warrant to purchase up to 28,400 shares of common stock as additional compensation. The purchasers acquired these securities for their own accounts and not with a view to any distribution thereof to the public.

    During November 2000, Quantech issued 1,125 shares of common stock pursuant to the exercise of a warrant by an accredited investor. The sale of such shares was deemed to be exempt from registration under Section 4(2) of the 1933 Act. The purchaser acquired these securities for his own account and not with a view to any distribution thereof to the public.

18

Item 3. Defaults upon Senior Securities

    Not Applicable

Item 4. Submission of Matters to a Vote of Security Holders

    The Company held its annual meeting on December 5, 2000 in Minneapolis, Minnesota. The Company solicited proxies and filed a definitive proxy statement with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended. The matters voted upon at the meeting and the votes cast were as follows:

No. 1 Election of Mr. Richard W. Perkins as class 2 director Votes for—10,626,088 Votes Against—0 Votes Withheld—22,263
  
Election of Mr. Edward E. Strickland as class 2 director Votes for—10,625,758 Votes Against—0 Votes Withheld—22,593
 
The terms of the following directors continued after the meeting: Robert Case, Robert W. Gaines and James F. Lyons.

Item 5. Other Information

    Not Applicable

Item 6. Exhibits and Reports on 8-K

a.

Exhibits—None



b.

Reports on Form 8-K—None

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Signatures

    Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	QUANTECH LTD
	/s/ ROBERT CASE Robert Case Chief Executive Officer
Date: February 12, 2001	/s/ GREGORY G. FREITAG Gregory G. Freitag Chief Operating Officer and Chief Financial Officer

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QuickLinks

Index
QUANTECH LTD. (A Development Stage Company) CONSOLIDATED BALANCE SHEET
QUANTECH LTD. (A Development Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS—UNAUDITED
QUANTECH LTD. (A Development Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS—UNAUDITED
QUANTECH LTD (A Development Stage Company) CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY Period From September 30, 1991 (date of Inception), to December 31, 2000
QUANTECH LTD (A Development Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS
QUANTECH LTD. (A Development Stage Company) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

PART II OTHER INFORMATION

Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on 8-K

Signatures