Summary of EURO GROUP OF COMPANIES, INC.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

General

The Company is actively marketing its telephone products and services, and transportation products and will commence marketing of consumer electronic products in 2009.. We will require additional capital in order to expand our operations and implement our business plan and we have no firm commitments for capital at this time.

In 2002, the Company entered into an agreement for the purchase of the assets and the business of Europhone USA, Inc., Europhone, Inc., Eurokool and Eurospeed resulting in our assumption of manufacturing and distribution agreements for long distance calling cards and related activities, air conditioners and scooters. The Company has since expanded and modified the scope of its business and prospective business to include prepaid calling cards, e-pins and sim chips as well as cell phones, motorcycles as well as scooters and flat panel televisions. Moreover, the Company has begun deliveries of scooters and of prepaid calling cards. The goal has been and continues to be, the manufacture or assembly, and marketing of products under the "Eugro" and "Euro" brand names.

We are currently located in Port Chester, New York. Euro Group of Companies is an operating company whose subsidiary companies market and sells the "Euro" and "Eugro" families of products. The Company operates in three separate and distinct business areas - we are currently marketing telecommunications products and services and transportation products, and plans to commence marketing of consumer electronics products in 2009. Additional information on these businesses can be found in the "Business" section of the 10-KSB report.

To satisfy future sales of transportation products we plan to purchase motorcycles and scooters from contract manufacturers located in the Peoples' Republic of China ("PRC") with whom we have contracted to produce Eurospeed-branded products. The Company relies upon the continued ability of the Chinese manufacturers to provide such pricing, payment terms, product quality, and certification with USDOT and EPA to remain competitive.

The Company's exclusive distributor of Eurospeed Inc. products in the United States, Canada and Puerto Rico, American Motor Sports, LLC, has negotiated dealer agreements to date with select dealer franchises in different states.

We have entered into agreements with manufacturers in China, Taiwan and Korea to produce our mobile phone and consumer electronics products.

Business Activities

The Company's revenue during the nine months ended September 30, totaled $3,263,893 from the sale of telecommunications products and services and transportation products. See our "Business" section, above, for a more detailed description of these businesses and our related manufacturer and distribution agreements.

In the quarter ended September 30, 2008 we recorded sales of Eurospeed products aggregating $1,357,559 to Eurospeed's dealer network. Sales of Eurospeed products in the first nine months of 2008 totaled $2,034,447.

Europhone USA LLC markets prepaid wireless services for both residential and corporate users that allow users to purchase either unlimited calling services for a set period of time (a week or a month, for instance), or a designated amount of long distance minutes (the "minute plan") to make calls from virtually any telephone worldwide. These phone cards can be used either until the time period lapses, in the case of the international unlimited card, or until the prepaid minute air time charges and other charges equal the total value of the card. Revenue for these prepaid minute cards is recognized upon activation of prepaid cards regardless of whether all the time is used as prepaid minute cards are non-returnable. Management believes that once the card is activated the face amount of the card is consumed within 30 to 60 days through usage and fees. During the quarter ended September 30, 2008 the Company's Europhone subsidiary sold international calling cards and services aggregating $56,005.

On September 24, 2007 the Company's Europhone USA LLC subsidiary announced the signing of a three year agreement with Verizon Communications as an authorized agent of Verizon's FIOS TV and FIOS Internet services, and Verizon's High Speed Internet and voice services. Verizon FIOS is the brand name for the new services offered over Verizon's advanced fiber-optic broadband network. Europhone USA LLC commenced the marketing of Verizon FiOS services along with its Eugro Full HD LCD flat screen televisions and laptop computers at its first retail store, which opened in October, 2008.

We have continued to finance our activities through the sale of equity through private placements and the resources of management and have devoted the majority of our efforts to implementing our marketing plans for telecommunications products, transportation products, and consumer electronic products and appliances; developing sources of supply; further developing our product offering; developing and testing marketing strategy; and expanding the management team

Results of operations for the nine months ended September 30, 2008, as compared with September 30, 2007 are as follows:

For the nine months ended September 30, 2008, revenue increased to $3,263,993 from $74,286 for nine months ended September 30, 2007. The increase in revenue was attributable to; 1) the launch in 2008, of the Company's Transportation Products subsidiary, Eurospeed, Inc., which recorded sales of $2,034,447, and 2) increased sales generated from the sale of telephone products and services including, sales of world sim and prepaid calling cards, cell phones, mobile activations and commissions, aggregating $1,229,446, an increase of approximately $1,155,000 over the nine months ended September 30, 2007.

Cost of sales increased to $2,167,958 for the nine months ended September 30, 2008 from $51,980 for the nine months ended September 30, 2007. Gross profit increased to $1,095,935 for the nine months ended September 30, 2008 compared to $22,306 for the mine months ended September 30, 2007, an increase of $1,073,629. As a percentage of revenue, gross profit increased to 34% for the nine months ended September 30, 2008 from 30% during the nine months ended September 30, 2007. The increase in gross profit percentage was primarily attributable to the Company's ability to sell its world sim card, a new product with higher margins introduced in 2008. The Company is uncertain that it will be able to maintain its profit margin on this product in the future.

Selling, general and administrative expenses increased to $1,780,460 through the third quarter of 2008, from $779,101 through the third quarter of 2007, a 129% increase. The increase in selling, general and administrative expenses through the third quarter is attributable to increases in salary related expenses, consulting fees, bad debt expense, insurance expense, freight expense, and travel expenses of approximately $509,000, $283,450, $47,000, $59,000, $12,000 and $59,000, respectively. The increases in salaries and consulting fees are a result of the Company's hiring of new employees and consultants. Included in salaries expense for the nine months ended September 30, 2008, was $290,625 of stock based compensation resulting from the issuance of 5,000,000 shares of restricted common stock to the Company's Chief Executive Officer under the provisions of a non-dilution agreement pursuant to which he is not to be diluted.. The stock was valued at $375,000 after application of a 50% discount to the trading price on the grant date, which discounted the value of the stock for the restrictions on the shares, and is being expensed at the rate of $93,750 per quarter through December 31, 2008. The increase in bad debt expense is attributable to the increase in sales, which required the Company to increase its provision for bad debt. The increase in insurance expense is a result of increased insurance carried by the Company to cover product liability on its transportation products, credit insurance and directors and officers' insurance. The increase in travel expense was primarily attributable to overseas travel to the Company's scooter manufacturers in The People's Republic of China.

The net loss for the nine months ended September 30, 2008 was $719,761compared to a net loss of $798,683 for the nine-month period ended September 30, 2007.

Results of operations for the three months ended September 30, 2008, as compared with September 30, 2007 are as follows:

For the three months ended September 30, 2008, the Company generated net sales of $1,413,564 as compared to $22,770 for the same period last year, an increase of $1,390,794. The increase was primarily attributable to the Company's sale of scooters totaling approximately $1,357,000 during the third quarter of 2008.

Cost of sales for the three months ended September 30, 2008 increased to $1,059,309 from $16,893 for the three months ended September 30, 2007. Gross profit for the three months ended September 30, 2008 increased to $354,255, compared to $5,877 for the three months ended September 30, 2007, an increase of $348,378. As a percentage of revenue, gross profit decreased to 25% due to discounts provided to Eurospeed dealers for first orders. .

The Company's selling, general and administrative costs aggregated $610,132 for the three months ended September 30, 2008, as compared to $227,079 for the same period last year, representing an increase of $383,053. The increase in expenses was due primarily to increases in salaries, consulting fees, rent expense, insurance expense and travel costs of approximately $201,000, $68,000, $30,000, $24,000 and $35,000, respectively. . The increases in salaries and consulting fees are a result of the Company's hiring of new employees and consultants to help the Company execute its growth strategy. Included in salaries expense during the third quarter of 2008, was $96,875 of stock based compensation issued to our chief executive officer s more fully described above.. The increased rent expense in the third quarter of 2008 was primarily attributable to the Company's move to new office space and the leasing of a retail location in 2008. The increase in insurance expense is a result of increased insurance carried by the Company to cover product liability on its transportation products, credit insurance and directors and officers' insurance. The increase in travel expense was primarily attributable to overseas travel to the Company's scooter manufacturers in The People's Republic of China.

The net loss for the three months ended September 30, 2008 was $263,370 compared to a net loss of $238,254 for the period ended September 30, 2007.

Liquidity and Capital Resources

At September 30, 2008 the Company had working capital of approximately $19,000 as compared to working capital of approximately $(560,000) at December 31, 2007. The ratio of current assets to current liabilities was 1:1 at September 30, 2008 and 0.5:1 at December 31, 2007. Cash flow used for operations for the nine months ended September 30, 2008 was approximately $913,000 compared to the cash flow used for operations of approximately $998,000 for the nine months ended September 30, 2007. The company has experienced losses in the past, and has an accumulated deficit of approximately $7,887,000. The accompanying financial statements have been prepared assuming that the Company will continue as a growing concern. These conditions continue to raise doubt about the Company's ability to continue as a going concern. Management's plans with respect to these matters include restructuring its existing debt, raising additional capital through future issuances of stock and/or other equity, and finding profitable markets for its products to generate sufficient cash to meet its business obligations. However, there can be no assurance that the Company will be able to obtain sufficient funds to continue operations and/or the development of its product marketing plan and distribution network. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

At September 30, 2008, loans payable to related parties were $1,759,347. These loans have been reclassified to Long-term liabilities, and repayment will not be demanded before November 2009. As of September 30, 2008, the Company is in default on the balance due on bank lines of credit of $254,826. The bank has orally agreed to suspend the accrual of interest on balances through December 31, 2008. The lines of credit are personally guaranteed by the Chief Executive Officer. We cannot currently repay these bank lines of credit nor are we able to draw any further funds on the credit lines.

As of September 30, 2008 the Company was in default of the payment terms of bank overdraft facilities aggregating $34,293. The bank has agreed to suspend the accrual of interest on the balances due through December 31, 2008. The bank overdraft facilities are personally guaranteed by the Chief Executive Officer.

In the third quarter 2008 the Company sold 112,000 restricted shares of common stock at an average price of $0.50 per share for gross proceeds of $56,000. In the nine months ended September 30, 2008 the Company sold 2,471,000 restricted shares of common stock for gross proceeds of $1,012,000. In the nine months ended September 30, 2007 the Company raised $904,605 through the sale of 6,674,240 restricted shares of common stock.

In a meeting of the Euro Group of Companies, Inc. Board of Directors on February 11, 2008 the members of the Board, with the Chairman and CEO abstaining, unanimously voted to award "non-dilution rights" to the CEO, which will have the effect of preserving his ownership percentage of the Company's common stock at 72.3% of the outstanding common stock of the Company, and unanimously voted to award to the CEO five million shares of Euro Group common stock, under the terms of the "non-dilution" agreement.