U.S. Securities and Exchange Commission
                             Washington, D.C. 20549


                                   Form 10-KSB

(Mark One)

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

                   For the fiscal year ended November 30, 1999

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 [No Fee Required]

            For the transition period from _________________________

                         Commission file number 1-12556

                                TOWER TECH, INC.
                 (Name of small business issuer in its charter)

       Oklahoma                                       73-1210013
(State or other jurisdiction of               (IRS Employer Identification No.)
incorporation or organization)

11935 South I-44 Service Road, Oklahoma City, Oklahoma              73173
         (Address of principal executive offices)                 (Zip Code)

Issuer's telephone number 405/290-7788

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.001

       Check  whether the issuer (1) filed all  reports  required to be filed by
Section  13 or 15(d) of the  Exchange  Act  during  the past 12 months  (or 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 ____.
     -------

       Check if there is no disclosure of delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ X ]

       State the issuer's revenues for its most recent fiscal year. $13,975,235.


<PAGE>



State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified date within the past 60 days.  $3,059,742 based on 1,882,918 shares at
$1.625 per share, the last sale price of the Common stock on March 8, 2000. (For
purposes of  calculating  this amount  only,  all the  directors  and  executive
officers of the issuer have been treated as affiliates.)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

       Common stock     $.001 par value 3,576,311 shares as of March 8, 2000.

       Transitional Small Business Disclosure Format     Yes {   }     No  { X }

                       DOCUMENTS INCORPORATED BY REFERENCE

       If  the  following  documents  are  incorporated  by  reference,  briefly
describe them and identify the part of the Form 10-KSB  (e.g.,  Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders;  (2) any proxy or information  statement;  and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").
The listed documents should be clearly  described for  identification  purposes.
Items 9 through 12 of Part III of this Form 10-KSB are incorporated by reference
from the Issuer's  definitive proxy statement to be filed on or before March 30,
2000.

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                                TABLE OF CONTENTS

                                     Part I

                                                                            PAGE

Item 1.         Description of Business                                       4

Item 2.         Description of Property                                       11

Item 3.         Legal Proceeding                                              12

Item 4.         Submission of Matters to a Vote of Security Holders           12

                                     Part II

Item 5.     Market for Common Equity and Related Stockholder Matters          13

Item 6.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations                               14

Item 7.     Financial Statements                                              21

Item 8.     Changes in and Disagreements with Accountants on
            Accounting and Financial Disclosure                               21

                                    Part III

Items 9-12  Incorporated by reference from the Company's proxy
            statement to be filed on or before March 30, 2000                 22

Item 13.    Exhibits and Reports on Form 8-K                                  23

            Financial Statements                                             F-1














                                        3


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                                     PART I

Item 1.  Description of Business.

       The Company is an Oklahoma corporation formed on February 27, 1984 and is
in the business of manufacturing  and selling modular cooling towers. To signify
that the Company has redesigned and has begun to manufacture the main components
of its factory  assembled  modular cooling tower, the Company changed the "TTMT"
designation to "TTEF".  The factory  assembled TTEF Series cooling tower is made
primarily of non-corrosive  materials,  and is sold in both the air conditioning
and  industrial  segments of the cooling  tower  market.  The field erected TTCT
Series modular  concrete cooling tower was introduced in 1995 for the industrial
and utility  segments of the cooling  tower market.  The  Company's  TTEF Series
cooling tower utilizes several  innovative design features  including the Rotary
Spray  Nozzle(TM),  a  bottom-mounted  direct  drive motor fan  assembly,  and a
modular  design to create a compact,  efficient  cooling tower which  management
believes addresses many of the deficiencies  common to cooling towers,  which do
not incorporate all of these innovative design features.  Individual modules can
be utilized for air conditioning and light industrial applications.  The modular
design  also  allows a number of  modules  to be  connected  in series for large
industrial and utility  applications.  The compact design of TTEF Series modules
permits them to be factory assembled, inventoried for immediate shipment, easily
transported and quickly  installed.  The design of the TTEF Series cooling tower
also  allows it to be  transported  as a complete  module on a  standard  lowboy
trailer.  The TTCT Series  modular  concrete  cooling  tower  features  pre-cast
concrete   construction   and  incorporates   many  of  the  innovative   design
characteristics of the TTEF Series cooling tower.

       Drawing on the proprietary knowledge gained since 1997 during the process
of bringing manufacturing of component parts in-house, the Company's ThermoQuest
operating unit was formed in late 1999 to produce extruded, injection molded and
thermoformed  products for its own purposes and for custom  projects for others.
ThermoQuest's  main product line is  comprised  of extruded  fiberglass  polymer
structural  components  which  are  offered  for  sale to  customers  for use in
repairing and  reconstructing  existing wood cooling towers and for constructing
complete  cooling tower systems.  When sold as a complete  cooling tower system,
this  product is known as the TQFX Series  cooling  tower.  TQFX Series  cooling
towers have an innovative  design that promotes labor efficiency during assembly
and are equipped  with Rotary Spray  NozzlesTM to give owners added  operational
flexibility.  TQFX Series  cooling  towers are  available in six  pre-engineered
sizes.

In December 1998 the Company sold its rental division  assets to Aggreko,  Inc.,
the U.S. subsidiary of United Kingdom-based Aggreko plc, and licensed Aggreko as
the Company's  exclusive global licensee for the rental of the Company's cooling
towers.  The Company  also sells  accessory  equipment  and  non-chemical  water
treatment equipment.  The Company also develops technology for the cooling tower
industry  and  markets  that  technology   either  directly  through   licensing
arrangements or in the form of products as above stated.

                                        4


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The Cooling Tower Market

       The  market for  cooling  towers is divided  into  three  general  market
segments:  the air conditioning or HVAC segment,  the light to medium industrial
segment,  and the heavy  industrial  and utility  segment.  Although all cooling
towers work on the same basic  principles,  cooling towers generally are divided
into two  categories:  (1) factory  assembled units and (2) field erected cells.
Factory assembled cooling towers are shipped to the customer as a completed unit
and typically are sold to HVAC and light to medium industrial users. In the HVAC
segment of the market,  cooling  towers are sized from 30 to 1,000 nominal tons.
Light to medium industrial  applications  require cooling towers with capacities
ranging from 500 to 10,000 gallons per minute ("GPM").  GPM is the standard unit
of  measurement in the industrial  segment,  while the HVAC segment  denominates
capacity in nominal tons, with one ton approximately equal to three GPM. Because
of shipping and other technical constraints,  factory assembled units ordinarily
range in size from 30 to 1,000 nominal tons.  Field erected  cooling  towers are
constructed  on site and typically are sold to medium and heavy  industrial  and
utility users. Heavy industrial  applications  require cooling towers sized from
10,000 to 100,000 GPM, while utility  applications  range from 30,000 to 200,000
GPM or more.

       Cooling  towers  can  range in price  from less  than  $20,000  for a 500
nominal ton unit intended for HVAC use to $1,000,000 or more for a cooling tower
built to meet the  specifications  of a heavy  industrial  or utility  customer.
Accurate  information  about cooling tower industry sales is difficult to obtain
because many cooling  tower  companies  are  privately  held or are divisions of
large  companies.  In addition,  the size of the new cooling tower market can be
understated  because the  refurbishment or rebuilding of a cooling tower in some
cases essentially entails the erection of a new cooling tower even though it may
not be characterized as such.  Limited market  information is available from the
U.S.  Department  of Commerce  and from private  studies.  Based on this limited
information and management's evaluation of the market, management estimates that
the total annual United States  cooling tower market ranges from $300 million to
$380 million and that the total annual worldwide market ranges from $1.5 billion
to $2.0 billion.

The TTEF Series Modular Factory-Assembled Cooling Tower

       Cooling towers come in a variety of sizes,  prices,  designs and quality.
Small  capacity  cooling  towers  intended for HVAC  applications  typically are
forced  draft  or  induced  draft  towers  which  may be  constructed  of  wood,
galvanized metal, plastic or fiberglass. Most large capacity cooling towers used
in the United  States  and  worldwide  today are  induced  draft  towers and are
constructed  primarily  of wood.  These  towers  are  usually  constructed  on a
concrete water basin and have a treated wood framework,  which is sometimes clad
with galvanized steel or fiberglass. Internal components of conventional cooling
towers are typically made of wood, galvanized steel, stainless steel, fiberglass
and plastic.

       The  TTEF  Series  cooling  tower  is  designed  to  address  many of the
deficiencies which management believes exist in the design of most other cooling
towers  on  the  market.   Management  believes  that  the  modular  design  and
interconnectability of the TTEF Series cooling tower is unique in the industrial
segment  of  the  market.   The  TTEF  Series   cooling   tower  is   efficient,
corrosion-free, low maintenance and usually is available for immediate delivery.

                                        5


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       The modular  design of the TTEF Series  cooling  tower allows a number of
units  to be  interconnected  to meet  almost  any  cooling  requirement.  Other
manufacturers  offer small factory  assembled  cooling  towers,  including units
which   incorporate   plastic  and  fiberglass   components  and  which  can  be
interconnected.   However,   interconnection  of  some  models  of  such  towers
exacerbates  recirculation  of exhaust  air,  resulting  in thermal  performance
losses which are typical of this type of tower.  Thus,  other factory  assembled
cooling  towers have  limited  application  except in the HVAC segment and light
industrial segment of the market.  Most segments of the cooling tower market can
be served by the TTEF Series  cooling  tower,  from light HVAC  applications  to
large petrochemical, refinery and utility operations.

       Immediate  delivery of the TTEF Series cooling tower is possible  because
the modules are factory assembled and can be inventoried. Usually, only one hour
of  installation  time is required per module,  excluding  electrical and piping
connections. The concrete basin of most field erected cooling towers is replaced
in the TTEF Series  cooling  tower by an internal  water basin.  The TTEF Series
cooling   tower  is   supported   on  a   substructure   which  can   either  be
customer-provided  fabricated  metal,  concrete  piers,  or  the  Company's  own
fiberglass  reinforced  substructure.  The modular  design also lends  itself to
shipping via standard trucking without special permits.  TTEF Series modules are
readily shipped to international  customers as well,  either in unassembled kits
or fully assembled.

       Management  believes that a problem with many cooling towers manufactured
today arises from water  distribution  nozzles  that tend to clog.  Most nozzles
used in cooling towers today utilize a fixed orifice/splash plate combination in
an attempt to minimize the  clogging  problem.  This design  often  creates void
areas in the water distribution  pattern which causes inefficient  operation and
performance deficiencies.  These deficiencies can be mitigated to some degree by
installing additional fill media and/or designing a higher air inlet area in the
cooling tower,  although these steps result in additional capital investment and
higher   operating   costs  due  to  increased  pump  head  and  fan  horsepower
requirements.

       To address  this  design  deficiency,  Mr.  Harold  Curtis  designed  and
patented the Rotary Spray Nozzle(TM)  primarily for use in the Company's cooling
towers.  The Rotary Spray  Nozzle(TM) is designed to operate  clog-free  even in
severe operating conditions. This nozzle utilizes a rotating disc that floats on
a water bearing to evenly  distribute  the flow of water  throughout  the entire
fill area while generating a self-cleaning  action.  The radial discharge design
allows  the  nozzle to  operate  as low as one inch  above the fill media and at
lower  pressure  than most  conventional  nozzles.  Since  conventional  nozzles
typically  operate at distances  of 18 inches or more above the fill media,  the
Rotary Spray Nozzle(TM)  increases tower performance and  significantly  reduces
pump head requirements.

       In addition to reduced pump head requirements  attributable to the Rotary
Spray Nozzle(TM),  the pump head requirement in the TTEF Series cooling tower is
reduced  because the  circulating  water is collected in an elevated water basin
above the air inlet.  This results in reduced pump operating  costs for the TTEF
Series cooling tower compared with a comparable size conventional cooling tower.

       The TTEF  Series  cooling  tower is  designed  with a bottom  mounted fan
system.  Maintenance  is greatly  reduced by this  design as the fans are direct
motor driven without gearboxes,  drive shafts, or pulleys. Depending on the size
of the  module,  each  module has a number of fans which can be zoned on and off
automatically  to deliver more efficient  cooling.  The mechanical  equipment is
located in the cool,  dry intake air stream and is  protected  from the  natural
elements by the cooling

                                        6


<PAGE>



tower  itself.  Service can be performed  from ground  level and customer  spare
parts  inventory is limited to one motor and one fan. In the event of mechanical
failure,  the  probability  is that only one fan or motor  would be  inoperable,
enabling the continued  operation of the  remaining  fans until repairs could be
made,  thus the TTEF Series cooling tower has built-in  redundancy not typically
seen in other companies' cooling towers.

       The TTEF Series  cooling tower has a water  collection  system  installed
just  below the fill  media and above  the  fans.  The water  collection  system
consists of a series of parallel chevron type blades positioned in a canopy over
the fans.  As cooled  water falls from the fill  media,  it is  discharged  into
hollow  support beams which serve as the cooling  tower's water basin.  The fill
media is nestled on top of the water collector vanes and is easily  installed or
removed from the cooling tower module when cleaning or replacement of fill media
is needed.  The water distribution  system,  consisting of a PVC header pipe and
laterals, is connected to the top of the module. The drift (or mist) eliminators
are  supported by the water  distribution  piping header and laterals and locked
into the molded perimeter wall channel.

       The materials of  construction of the TTEF Series cooling tower virtually
eliminate  all  significant  corrosion  problems.  Conventionally  designed wood
cooling towers contain wood structural components which usually are treated with
chemicals and thus may be environmentally  undesirable.  Conventionally designed
galvanized  metal  cooling  towers  contain  zinc  and  lead  which  also may be
environmentally  undesirable.  Corrosion and deterioration of the wood and metal
parts  of  a  conventionally   designed  cooling  tower  often  lead  to  costly
maintenance, repair, and ultimately replacement.

       The TTEF Series  cooling  tower is produced in several  sizes.  The basic
units range in size from a seven foot by  eight-foot  module to a twelve foot by
thirty-one foot module.  The individual  module capacities range from 50 nominal
tons to approximately  850 nominal tons, or approximately  150 GPM to 2,550 GPM.
These ranges of cooling duty are achieved by using  various sizes of modules and
internal components,  including motors, fans and fill media.  Individual modules
of varying  sizes can be  connected  in series to satisfy the  specific  cooling
requirements of customers.

The TTCT Series Field-Erected Modular Concrete Cooling Tower

       In 1995, the Company  introduced its TTCT Series  concrete  cooling tower
for the industrial and utility segments of the cooling tower market.  The design
of the concrete cooling tower incorporates some of the patented  technology used
in the Company's TTEF Series cooling tower, as well as technology  unique to the
concrete  product.  The TTCT  Series  cooling  tower  gives  the  Company  added
capabilities  to  penetrate  the large  utility,  petrochemical  and  industrial
markets.  The same  technological  advances  made with the TTEF  Series  cooling
towers are utilized in the concrete tower.  The concrete  cooling tower is built
using a pre-cast  construction method which substantially  reduces  construction
time as compared with a similar size wood or conventional concrete tower.

ThermoQuest and The TQFX Series Field-Erected Cooling Tower

       In October 1999, the Company formed the ThermoQuest operating division to
capitalize on its  technological  know-how of extrusion,  injection  molding and
thermoforming  processes and to gain additional  utilization  from its plant and
equipment. ThermoQuest began soliciting opportunities in October and was awarded
its first contract in November to produce cooling tower structural  members.  In
February  2000,  ThermoQuest  introduced the TQFX Series  field-erected  cooling
tower

                                        7

designed for the  industrial  and utility  segments of the cooling tower market.
The TQFX  Series  cooling  tower  competes  in the  price-driven  segment of the
cooling tower market and is generally  price-competitive  with other  fiberglass
cooling towers.

       The design of the TQFX  Series  cooling  tower  incorporates  some of the
patented  technology  used in the Company's  TTEF Series and TTCT Series cooling
towers,  as well as  technology  unique  to the TQFX  product.  The TQFX  Series
cooling  tower gives the Company  added  capabilities  to penetrate the utility,
petrochemical,  food processing and other industrial  markets.  The design basis
for TQFX Series cooling towers is a "bent-line"  construction  method,  in which
major frame  members are  assembled  on the ground,  then hoisted into place and
connected to other major frame assemblies.  This assembly method increases labor
efficiency and reduces labor costs,  safety hazards and construction  time. This
construction  method differs from the  "stick-built"  method,  which is commonly
used to field-erect  cooling towers of a conventional  design.  In such designs,
structural members are connected in place,  requiring  significantly greater use
of  man-lifts,  scaffolding  and safety  equipment.  In addition to assembly and
efficiency  features,  the TQFX  Series  cooling  tower is  designed  with a low
profile to reduce capital cost and pump energy requirements.

         TQFX Series  cooling  towers are  available in several cell sizes.  The
smallest cell measures 24' wide by 24' long;  the largest cell measures 54' wide
by 54' long. Same size cells may be connected in series to satisfy virtually any
water flow and heat load  requirement,  thereby  satisfying the cooling needs of
any customer. Different ranges of duty can be achieved by selecting various fill
media types and different motor sizes and fan types.

         The fiberglass and polymer  construction  of TQFX Series  field-erected
cooling towers virtually eliminates the significant corrosion problems common to
cooling towers.

Modular Cooling Tower Rental Program

       Until December  1998,  the Company also rented modular  cooling towers to
customers.  Because  of the  compact  size  and  other  design  features  of the
Company's factory assembled cooling tower, they could be easily mounted on skids
and equipped with necessary  electrical  connections to produce a mobile cooling
tower which could be transported by truck to the desired location. The Company's
rented towers were used to augment  customer's  existing  cooling  towers during
peak heat loads, to provide  temporary cooling while maintenance and repairs are
being  made to  existing  cooling  towers,  to supply  cooling in the event of a
failure of an existing  cooling tower due to fire,  weather damage or mechanical
malfunctions,  and to provide temporary cooling during research and development,
testing and evaluation programs.

       In December  1998, the Company sold its fleet of rental cooling towers to
Aggreko,  Inc.,  the United States  subsidiary  of Aggreko,  plc, a London Stock
Exchange  Company in the  business  of renting  industrial  temperature  control
equipment,  electrical power generators,  and oil-free compressed air equipment.
In the  transaction,  Aggreko  purchased Tower Tech's rental operation for $13.5
million and also entered into a strategic  long-term  alliance with the Company.
The  Company  will  receive a three (3) percent  royalty  from the rental of its
technology by Aggreko.  See further  discussion in "Management's  Discussion and
Analysis of Financial Condition and Results of Operations."

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Patents

     The Company owns patents  (U.S.  Patent No.  5,227,095)  covering the basic
design of the TTEF Series  cooling  tower and the TTCT Series  concrete  cooling
tower  (U.S.  Patent  No.  5,545,356).  The  patents  expire  in 2010 and  2014,
respectively.  The  Company  owns and has applied  for other  United  States and
foreign  patents for technology  used in the TTEF Series and TTCT Series cooling
towers. Mr. Harold Curtis has also granted an exclusive, royalty-free license to
the Company for the Rotary Spray Nozzle(TM)which gives the Company the exclusive
right to use  this  technology  in  cooling  tower  applications.  The  licensed
technology is the subject of patents (U.S. Patent Nos.  5,143,657 and 5,152,458)
which  expire in 2009.  Mr.  Curtis has  retained all rights with respect to the
patents in all applications other than cooling towers.

Product Design and Research and Development

       The  Company  spent  $2,491,157,   $1,810,985,  $667,222,  $386,474,  and
$108,183 on research and development  during fiscal years 1999, 1998, 1997, 1996
and 1995,  respectively.  A significant  portion of the 1999 and 1998 costs were
related to the  redesign  of the TTMT Series  tower to the TTEF Series  tower in
order to lower  future  production  costs.  The  development  costs  related  to
ThermoQuest and the TQFX Series cooling tower were not significant.  The Company
is continuously  evaluating its products and manufacturing  methods. The Company
has not incurred  substantial  costs for any products other than its TTEF Series
and TTCT Series  cooling  towers,  and  related  technology,  at this time.  The
Company  plans to continue to research  refinements  in cooling tower design and
construction. Although the Company has no fixed research and development budget,
such costs are anticipated to be significantly less than current levels.

Assembly of Products

       The Company's TTEF Series modular cooling towers are currently  assembled
at its new  manufacturing  and assembly plant in Oklahoma City,  Oklahoma.  (See
Item 2.  Description  of  Property).  In addition to  assembly,  the Company has
brought  "in-house" the manufacturing of substantially all component parts which
were previously  manufactured  by other companies using  pultrusion or extrusion
molding  technology.  The Company  believes  that bringing  these  manufacturing
processes  in-house will help ensure and control quality and supply,  as well as
substantially  reduce costs of production of these parts.  However,  the Company
incurred problems in bringing these processes  in-house.  See further discussion
in "Management's  Discussion and Analysis of Financial  Condition and Results of
Operations".  The Company also pre-casts most of the concrete component parts of
its TTCT Series modular concrete cooling towers.  The Company also  manufactures
all of the  extruded and  injection-molded  structural  components  for its TQFX
Series cooling tower.

Suppliers and Vendors

       The  Company  relies  upon  suppliers  for  materials  and parts  used to
manufacture  and assemble its products.  Most materials and parts purchased from
suppliers are available from multiple sources. The Company has invested in tools
and dies  which in a few  cases  are used by  suppliers  in the  manufacture  of
components  for the  Company.  However,  as noted  above,  the Company has moved
substantially all of these manufacturing  processes  "in-house." The Company has
not experienced any significant delays in obtaining parts and components for its
products.  The Company owes vendors and suppliers  significant  past-due amounts
and is currently on a cash-in-advance basis with most suppliers.  Several of the
Company's vendors have filed suit for nonpayment (see Item 3 Legal Proceedings).
See further  discussion at  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations".

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Marketing and Sales

       The Company sells its products  through a combination  of direct sales by
Company  employees,  sales through an  established  nationwide  network of sales
representatives, and sales through representatives,  licensees, distributors and
other  arrangements in international  markets.  The Company has sales offices in
Houston and in Sao Paulo, Brazil. During 1998 and 1999, the Company closed sales
offices  in  Mississippi  and  Singapore.  The  Company  also has  international
ventures and/or licensing agreements for the manufacture, marketing and/or sales
of the Company's products in India, Southeast Asia, South America, South Africa,
Mexico and the  Mediterranean  region.  Negotiations  are in process for similar
arrangements for other international  regions.  Sales representatives  typically
market the Company's  products along with a variety of other products related to
cooling towers.

       In  addition to its direct  sales  activities,  the  Company  markets its
products  in a number  of  other  ways,  including  exhibiting  at trade  shows,
conducting   direct  mail   solicitation,   and  advertising  in  various  trade
publications.  The Company makes extensive use of marketing videos which portray
its products using photography and computer  animation.  These media and compact
discs are  distributed  to engineering  firms,  contractors,  manufacturers  and
specialized  mailing  lists in the HVAC;  utility and  industrial  cooling tower
markets.  The Company also has a full-time  marketing manager who is responsible
for publicizing the product,  identifying marketing opportunities and developing
a marketing strategy.

Warranties and Customer Service

       The Company  provides a limited  warranty on its products.  In 1999,  the
Company  incurred  $1,622,422  of expenses to retrofit  and service  towers,  as
compared to $671,267 during fiscal 1998. See further discussion in "Management's
Discussion and Analysis of Financial  Condition and Results of Operations".  The
Company also  provides  field support  services on an individual  call basis and
offers  service  maintenance  contracts.  Necessary  repairs  are  made  at  the
installation site.

Governmental Regulation and Environmental Laws

       The Company is subject to the requirements of a number of federal,  state
and local laws, such as the federal Occupational Safety and Health Act ("OSHA").
The  Company   generates  small  quantities  of  waste  in  the  course  of  its
manufacturing activities,  some of which are classified as hazardous waste under
state and  federal  law.  The  Company  endeavors  to comply  with all state and
federal laws and believes that it is in compliance with all applicable  federal,
state and local regulations, including environmental regulations.

Competition

       The market for cooling towers is extremely  competitive.  There are 15 to
25  manufacturers  of  cooling  towers in the  United  States.  The two  largest
manufacturers,  Marley  Cooling Tower Co. and  Baltimore Air Coil,  collectively
account  for 60 percent to 70 percent of the market.  A number of the  Company's
competitors  are  substantially  larger in size and have greater  financial  and
other  resources  than the  Company.  Many of  these  competitors  have  been in
business for a number of years and are well  established  in the  industry.  The
Company  estimates  that its share of the United States cooling tower market for
1999 was approximately 5%.

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<PAGE>



A number of the Company's  competitors  manufacture  and market  cooling  towers
which use concrete,  fiberglass and other composite materials, PVC cellular fill
media and other  construction  and design  refinements  which are similar to the
Company's  cooling towers.  Several  competitors  manufacture  factory assembled
fiberglass  cooling towers,  including units which can be connected in a series.
Management  believes  that its cooling  towers  offer  several  advantages  over
cooling towers produced by the Company's competitors.  There can be no assurance
that  competitors  will not develop and produce a product which is comparable or
superior to the Company's products.

Employees

       As of November 30, 1999, the Company had 155 full-time employees. None of
the Company's  employees is subject to a collective  bargaining  agreement.  The
Company believes that relations with its employees are good.

Item 2.    Description of Property

       The Company's  principal  place of business is located in south  Oklahoma
City,  Oklahoma,  on  a  50-acre  tract.  The  new  manufacturing   facility  of
approximately 98,000 square feet houses the Company's manufacturing and assembly
operations as well as plant office  facilities.  The Company began to occupy the
facility in January 1998 and began  production  operations in the fourth quarter
1998. A new administrative  office facility of approximately  25,000 square feet
has been  constructed  on the site and was completed in March 1999. In 1999, the
Company  moved its general  headquarters  to this new facility.  For  additional
information  about the Company's total  investment and financing of the Oklahoma
City facility, see "Management's  Discussion and Analysis of Financial Condition
and Results of Operations-Liquidity and Capital Resources".

       The Company owns approximately 17 acres of land near Chickasha, Oklahoma,
with three  separate  production  buildings  totaling over 52,000 square feet, a
building of approximately 8,000 square feet used as offices and a test facility,
and an office building having  approximately 4,000 square feet. These facilities
were leased to unaffiliated entities through March 2000 when the facilities were
sold.

       The new Oklahoma  City (OKC) plant is expected to increase  efficiency of
the  Company's   production  and  assembly  process.   The  ceiling  height  and
configuration of the Chickasha plant limited production  methods.  The OKC plant
should be  adequate  to  support  annual  TTEF  Series  cooling  tower  sales of
approximately $100 million,  which should be adequate for several years. The OKC
plant is closer to major transportation routes and facilities,  particularly the
Will Rogers World Airport.

The  Oklahoma  City plant and  administrative  office  facility  are  subject to
mortgages in favor of the Oklahoma  Industries  Authority,  the City of Oklahoma
City and a financial institution.

Item 3.  Legal Proceedings

     The Company is a party to litigation  styled Companhia  Petroquimica Do Sul
v.  Tower  Tech,  Inc.,  U.S.D.C.   Western  District  Court  of  Oklahoma  Case
No.CIV-99-1985.  The  complaint  was filed on December 14, 1999.  The  complaint
alleges,  among  other  things,  that  the  Company  sold,  through  one  of its
licensees, cooling tower cells to Companhia Petroquimica Do Sul (Copesul"), that
the cooling  cells did not perform in  accordance  with their  design,  that the
Company has refused to correct the alleged  defects of the cooling  towers,  and
that Copesul has been damaged as a result thereof.

                                       11


<PAGE>



Copesul  alleges  that it has been damaged by the acts of the Company in amounts
in excess of $3,500,000, plus continuing losses, and that it is also entitled to
punitive damages. The Company has filed an answer denying the allegations in the
complaint, and the Company continues to vigorously defend the allegations in the
complaint. The Company cannot estimate when this lawsuit will go to trial.

     The Company is a party to litigation  styled Segotta v. Tower Tech.,  Inc.,
District  Court of Grady County,  Oklahoma Case No.  CJ-99-11.  The petition was
filed on March 4, 1999.  The petition  alleges that the Company  terminated  the
plaintiff (i) in violation of the Family  Medical Leave Act and (ii)  improperly
as a result of the plaintiff's alleged whistle-blowing  activities in connection
with workers' compensation claims. The plaintiff has claimed that he is entitled
to damages in excess of $10,000.  The  Company  has filed an answer  denying the
allegations in the petition,  and the Company continues to vigorously defend the
allegations in the petition.

       Commencing in 1997 and  continuing  into December 1998, the Company was a
party to litigation  styled Tower Tech,  Inc. v. Goodyear Rubber & Tire Company,
U.S.D.C. Western District Court of Oklahoma Case No. CIV-97-1682-T.  The Company
and Goodyear  have  resolved and  compromised  their  disputes in such  lawsuit.
Pursuant to a Settlement Agreement and Conditional Release, the lawsuit has been
dismissed without  prejudice,  and both Goodyear and the Company have denied the
claims  made by both  parties  in the  lawsuit.  Tower Tech is in default of the
payment of final settlement  amount of $100,000 due December 15, 1999. Under the
terms of the  settlement  agreement,  if that  amount  due is not  timely  paid,
consent judgment may be entered against Tower Tech for $250,000.

       The Company is a  defendant  in five other  legal  proceedings  which all
allege  that the Company is in default of payments  owed on open  accounts.  The
aggregate  amount  claimed  under those five  proceedings,  exclusive  of costs,
interest,  and  attorneys'  fees,  is  approximately   $220,000.  Two  of  those
proceedings have been reduced to judgment  against the Company,  and the Company
is currently  negotiating  to settle two of those  proceedings.  The Company has
denied the allegations in the fifth proceeding and is vigorously  defending that
proceeding.

     The Company is the  plaintiff  in  litigation  styled  Tower Tech,  Inc. v.
Hickman  Mechanical,  Inc.,  Superior Court of Los Angeles,  California Case No.
BC-222326.  The Company  has filed suit  against  the  general  contractor  of a
cooling tower project in California alleging that the general contractor refused
to pay the  contract  amount due.  The Company  has alleged  that  approximately
$205,000 remains unpaid by the general  contractor.  The general  contractor has
filed a  counterclaim  against the Company for  $615,000  alleging,  among other
things, breach of contract against the Company.

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

       No matters were  submitted to  stockholders  during the fourth quarter of
the fiscal year covered by this report.

                                       12


<PAGE>



                                     PART II

Item 5.    Market for Common Equity and Related Stockholder Matters.

       The Company's  Common Stock is quoted on the NASDAQ SmallCap system under
the symbol "TTMT". The following table shows the high and low closing bid prices
for the Common  Stock as  reported  by NASDAQ for each  quarter  during the last
three fiscal years. Bid prices represent prices between dealers,  do not include
retail  mark-ups,  markdowns  or  commissions,  and  may  not  represent  actual
transactions.
<TABLE>
<CAPTION>
<S>    <C>                           <C>                  <C>

       Quarter Ended                     High                  Low
       -------------                     ----                  ---
       February 28, 1997             $11.250000            $10.00000
       May 31, 1997                    9.625000              8.00000
       August 31, 1997                 9.375000              7.37500
       November 30, 1997               8.625000              7.00000
       February 28, 1998               7.250000              6.25000
       May 31, 1998                    6.875000              6.12500
       August 31, 1998                 5.250000              4.50000
       November 30, 1998               3.800000              3.50000
       February 28, 1999               5.000000              2.75000
       May 31, 1999                    3.375000              2.75000
       August 31, 1999                 3.000000              0.59375
       November 30, 1999               1.671875              0.37500
</TABLE>


       On March 8, 2000,  the last sale price of the Common Stock as reported by
NASDAQ was $1.625 per share. On March 8, 2000, 60 record holders held the Common
Stock. The Company  believes that there are more than 400 beneficial  holders of
its Common Stock.

       The  Company  has not paid  dividends  on its  Common  Stock and does not
anticipate  paying dividends in the foreseeable  future.  The Company intends to
retain future earnings, if any, for use in its business.


Item 6.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.

General

       The following discussion should be read in conjunction with the Company's
financial statements and the related notes thereto.

     The Company began the extensive effort of introducing new technology to the
cooling tower industry in 1991.  From 1991 through 1999, the Company has focused
significant  efforts on research and  development.  As the Company's  technology
evolved,  the market's  acceptance of its  factory-assembled  and  field-erected
lines of cooling towers accelerated.  To date, the Company and its international
licensees  have sold  approximately  $100,000,000  of  products  containing  the
Company's  technology.  Now that the Company's research and development stage is
substantially completed,  management is optimistic that the Company's technology
will  continue to gain  acceptance  in  international  markets and that domestic
market share will increase going forward.  The Company's estimated sales backlog
is over $8 million, as of March 8, 2000, compared to $6.9 million as of February
1, 1999. Financial stability and sufficient cash flow are key to continuing this
positive trend in revenues.

                                       13
<PAGE>
       Although the Company has seen strong market acceptance of its technology,
extensive  investment in research and development has limited  operating capital
and cash reserves.  Several setbacks have exerted tremendous financial strain on
the Company:

o    In 1996,  in an effort to reduce  costs and  improve  profit  margins,  the
     Company  redesigned its TTMT Series of  factory-assembled  towers,  started
     construction  on a new  manufacturing  plant in  Oklahoma  City,  and began
     bringing  the  production  of certain  component  parts  in-house.  Product
     development  delays,  coupled with construction and tooling delays,  caused
     the new  manufacturing  plant to become  operational over a year later than
     anticipated.  The delays contributed  significantly to the Company's losses
     in FY 1998 and FY 1999.

o    Another major setback was the downturn of several  Asian  economies,  which
     rapidly spread throughout our international  markets in 1998. This economic
     downturn  resulted in the  cancellation  or  postponement  of cooling tower
     projects.  Since 1995, the Company has invested  considerable  resources in
     the  development  of  international  markets.  The Company had  anticipated
     significant revenues from international  activities.  As a direct result of
     the  international  market  downturn,  the Company's  actual  revenues from
     international activities were significantly lower than anticipated.

o    The Company's new Oklahoma City manufacturing plant was put into production
     at the  beginning of 1999.  At that time,  the Company  began  shipping the
     first  factory-assembled  cooling  towers of the new design.  From February
     1999 to May 1999, the Company shipped approximately 145 TTEF Series cooling
     towers with all in-house  extruded wall panels.  When put into  service,  a
     number of these units contained  unforeseen  design or quality defects that
     caused water leaks, and the larger size units had an additional  undetected
     structural deficiency. To effect permanent solutions to these problems, the
     Company ceased its assembly  operations for forty-two days during the third
     quarter 1999 so extrusion and injection molding tools could be modified. As
     a  result,  1999  tower  sales,  cost of  goods  sold  (including  warranty
     expense),  and research and  development  costs were  negatively  impacted.
     Management believes that the design  deficiencies have been corrected,  and
     towers are again being shipped.

       Losses resulting from the foregoing business setbacks have reduced equity
and have negatively  impacted cash flow. The Company had a $14.6 million deficit
in working  capital at November 30, 1999. As a result,  the Company is presently
not in  compliance  with the net worth  covenants  in its loan  agreements.  The
Company is also unable to pay past-due balances owed to materials suppliers, and
consequently    is   now   required   to   pay   for   new    materials   on   a
cash-in-advance-basis, which compounds cash flow problems.

       The  Company  has  been  able  to make  payments  due on  secured  credit
obligations and its convertible subordinate debentures. However, the Company has
significant amounts of debt,  including its operating line of credit ($6,304,748
outstanding at November 30, 1999) and $6,000,000 of the convertible  subordinate
debentures,  which are due through  June 2000.  Currently,  the Company does not
have sufficient cash flow to satisfy these obligations.

       Management  has  formulated a plan to address  obstacles to the Company's
financial health. If the plan is successfully  implemented,  management believes
that the Company's financial condition will improve. However,  management cannot
assure that the plan will be consummated, consummated in its current form; or if
consummated, that it will return the Company to profitability.

                                       14
<PAGE>
       The plan consists of several  phases.  The objective of the initial phase
is to  resuscitate  what  then  was a  failing  enterprise  and to  lead it to a
position of relative stability from which a long-range plan can be launched. The
initial phase consists of the following steps:

o    Sales  orders need to be rekindled  and average  $400,000 or more per week.
     This goal was  substantially  met in the period from  September 15, 1999 to
     November 30, 1999. Sales orders fell off somewhat during the holiday season
     as is typical for that time of year, and they have begun  increasing  again
     since early February 2000.

o    Trade  creditors  need to give  temporary  forbearance  and agree to supply
     materials on a  cash-in-advance  basis. A few trade creditors,  most having
     little prospects for ongoing business with the Company, have filed suit for
     payment.  The remaining trade creditors have shown tremendous  patience and
     forbearance.  Still, the cash-in-advance arrangement has exerted tremendous
     pressure on cash flow.

o    The Company needs its primary lender to temporarily waive the breach of net
     worth covenant in its loan  agreements.  To date the net worth covenant has
     neither been amended nor waived.

o    The  Company  needs to obtain  working  capital of at least  $1,500,000.  A
     $2,000,000  loan was  obtained  from the City of Oklahoma  City in November
     1999.  Virtually all of the loan proceeds were used to make payments due on
     secured obligations, for materials and labor to manufacture cooling towers,
     and for overhead expenses.

o    The Company needed to resolve the remaining technical issues related to its
     new line of factory-assembled  cooling towers and the Company's production.
     Management  believes  that  virtually  all  the  technical  issues  are now
     resolved, and the Company is producing a quality product.

o    The  Company  needs to reduce its  breakeven  point by  reducing  costs and
     increasing cooling tower selling prices.  Opportunities to reduce costs are
     being  pursued,  and cooling tower selling prices were increased in October
     1999 by an average of 30%.

The objectives of the second phase are to:
o    Restore liquidity.
o    Secure  additional  working capital,  or a suitable  combination of working
     capital  and  credit  guarantees,   so  the  Company  can  move  away  from
     cash-in-advance purchasing arrangements.
o    Return to compliance  with net worth covenants in loan  agreements.
o    Restore financial strength needed to win large cooling tower projects.
o    Reduce debt and increase equity.

       A small,  private  investor group has expressed a willingness to purchase
$900,000  of the  Company's  common  stock.  Further,  in  consideration  of the
Company's  agreement to issue stock  warrants,  the investor group has agreed to
provide  credit  guarantees  for a period of up to two (2) years.  The  investor
group's  commitments are contingent upon certain  concessions from the unsecured
creditors  including a deferral of up to two years in maturity of amounts due to
unsecured  creditors,  and  amendment  of the net  worth  covenants  in the loan
agreements. The Company has not yet been able to satisfy these conditions.

                                       15


<PAGE>



       An investment  by the group,  coupled with the recovery  steps  described
above, will be a first step to restoring the Company  financially.  In addition,
the  Company  hopes  the  investment  will  increase  customer  and  distributor
confidence   resulting  in  increased  sales.  The  Company  believes  this  new
investment, coupled with the forbearance of its current creditors, will increase
the Company's ability to raise additional working capital. However, there can be
no assurance that these objectives will be accomplished, including being able to
meet the Company's current debt obligations.

Results of Operations

      Twelve Months Ended November 30, 1999 Compared to Twelve Months Ended
                                November 30, 1998

         Tower sales, cost of goods sold, and research and development costs for
the year  ended  November  30,  1999,  were  negatively  impacted  due to design
deficiencies  in the  initial  production  of the first  TTEF  factory-assembled
cooling  towers which were  assembled  with all extruded  wall panels  assembled
in-house. See the discussion above.

         For the twelve  months ended  November 30, 1999,  total tower  revenues
decreased to $13,975,235 from $21,044,304 for the comparable period in the prior
year.  During the current twelve month period, 84 percent of total tower revenue
was derived from sales of 377 modular  fiberglass  cooling towers;  9 percent of
total tower revenue was derived from design and  construction of the TTCT Series
concrete  cooling towers;  and 7 percent of total tower revenue was derived from
other tower revenue.  In the  comparable  twelve month period ended November 30,
1998,  44 percent of total tower  revenue was derived  from sales of 275 modular
cooling  towers;  27 percent of total tower  revenue was derived from design and
construction of modular concrete  towers;  26 percent of total tower revenue was
derived  from  rental of modular  cooling  towers;  and 3 percent of total tower
revenues  were  derived  from other tower  revenue.  The increase in tower sales
revenue  for the year ended  November  30,  1999 is due to the  increase  in the
quantity of units sold. Such increase is due to marketing  efforts for the newly
designed  TTEF  Series  tower and a selling  price  reduction.  The  decrease in
concrete  revenues  is due to the  decrease  in the  number  and  size  of  jobs
completed  and in process.  Other tower revenue is up from the previous year due
to increased  sales of proprietary  parts and an increase in service  sales.  No
licensing agreements were finalized in 1999.

         In December  1998, the Company  consummated  the sale of its industrial
cooling tower rental  operations  (the "Rental  Operations") to Aggreko Inc., an
unrelated party,  for $13,500,000,  with $12,150,000 paid in cash at closing and
the remaining $1,350,000 paid by delivery of Aggreko Inc.'s promissory note (the
"Note").  The Note  provided  for interest at 1% above  prime.  The  outstanding
principal  balance of the Note,  together  with  accrued  interest,  was paid in
December 1999. The assets sold included the modular  cooling tower rental fleet,
other rental fleet  equipment,  and certain  assets used in the operation of the
Rental  Operations.   Accordingly,  the  Company  recorded  a  pre-tax  gain  of
$6,688,670 for the three months ended  February 28, 1999.  Proceeds were used to
reduce debt and for working capital.

         In connection with the sale of assets  described  above,  Aggreko Inc.,
the Company,  and Harold D.  Curtis,  the  Company's  Chief  Executive  Officer,
entered  into  a  Non-competition   Agreement.  The  Non-competition   Agreement
generally  prohibits the Company and Mr. Curtis from  conducting any business in
competition  with  the  Rental  Operations,  as well as  hiring  certain  of the
Company's prior employees who worked in the Rental Operations.

                                       16


<PAGE>



       The  Company's  cost of good  sold and  constructed  for the  year  ended
November  30, 1999 was  $16,429,004,  or 118  percent of total tower  revenue as
compared to  $17,594,126,  or 84 percent during the  comparable  period in 1998.
Lower margins in the factory-assembled  cooling tower line are due to the delays
in the  completion  and occupancy of the Oklahoma City (OKC) plant combined with
delays in the delivery of the manufacturing  equipment and tooling for the first
three months of 1999; and continued  refinements  required for the completion of
the manufacturing  processes,  equipment, and tooling for the last six months of
1999 (see discussion above). Included in cost of goods sold for the twelve month
period ended  November  30, 1999 is  $1,622,422  to retrofit and service  towers
previously  sold.  This compares to twelve month  retrofit and warranty costs of
$671,267  during  the  same  period  in  1998.  The  increase  is due to  design
deficiencies as described above and includes $400,000 to increase the reserve to
$600,000 to cover future costs to retrofit and service towers previously sold.

       The  twelve-month  period ended November 30, 1999 reflected a decrease in
general and  administrative  expenses  from  $3,033,369 in 1998 to $2,869,824 in
1999. The decrease is due mainly to the reduction in expenses related to the OKC
facility offset by an increase in bad debt expense.  Selling expenses  decreased
from  $1,989,322 to  $1,442,531.  The decrease is due to a reduction in expenses
related  primarily  to the opening of direct  domestic and  international  sales
offices in 1998. Research and development  expenses increased from $1,810,985 in
1998 to $2,491,157 in 1999. A significant  portion of the increase is related to
the  redesign  of the  TTMT  Series  tower to the TTEF  Series  tower.  With the
redesign  of the tower  and with  manufacturing  of  component  parts  in-house,
management  believes that the Company will be able to reduce  future  production
costs.  (See discussion above related to design flaw in the first production run
of the TTEF tower). Although the Company has no research and development budget,
such future costs are anticipated to be  significantly  less than those incurred
in the twelve months ended November 30, 1999.

         Interest expense increased from $899,066 to $2,088,917 primarily due to
the  capitalization  of $1.1  million  of  interest  costs in  1998.  Due to the
completion of the manufacturing  facility,  no interest was capitalized in 1999.
Miscellaneous  income for the twelve months ended  November 30, 1999 consists of
royalties and interest related to the sale of the Rental Operations (see above).

         The Company recognized an income tax expense of $2,330,636 for the year
ended November 30, 1999, compared to an income tax benefit of $1,670,088 for the
comparable  period in 1998. FAS 109 requires that the Company record a valuation
allowance  when it is more  likely  than not  that  some  portion  or all of the
deferred  tax assets  will not be  realized.  The  ultimate  realization  of the
deferred  income  tax  assets  depends  on the  Company's  ability  to  generate
sufficient  taxable income in the future.  The sale of the Rental  Operations in
the first  quarter of 1999 allowed the Company to conclude that the deferred tax
assets  at  November  30,  1998  and the  first  three  quarters  of  1999  were
realizable.  The  severity  of  the  design  flaws  and  resultant  difficulties
discussed  above  have  caused  management  to  believe  that a  full  valuation
allowance is required at November 30, 1999. Management has determined that based
on the  Company's  inability  to generate  taxable  income in the last two years
(1999 and  1998),  even with the gain from the sale of the Rental  Operation  in
December  1998,  it is more likely than not the Company will not realize the net
deferred tax assets at November 30, 1999.  Therefore,  a valuation  allowance in
the amount of $4,082,451  was  established  in the fourth  quarter of 1999.  The
Company has a net operating loss  carryforward  of $10,500,000  expiring 2009 to
2019.

                                       17
<PAGE>
         The Company's  estimated backlog is $8 million as of March 8, 2000, and
includes one contract for TTCT Series modular  concrete  cooling towers totaling
$.85 million. This contract is scheduled for completion in the second quarter of
2000.  Estimated backlog for the TTEF Series modular cooling towers is over $7.2
million.  Substantially  all this backlog is scheduled for delivery in first six
months of FY2000.

Liquidity and Capital Resources

       At  November  30,  1999,  the Company  had a working  capital  deficit of
$14,623,196  as compared to a deficit of  $3,890,374  at November 30, 1998.  The
Company's cash flow provided by (used in) its operating, investing and financing
activities during fiscal years 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                             1999                    1998
                                         -----------             --------------
<S>                                      <C>                     <C>

Operating activities                     ($6,722,443)               ($495,572)
Investing activities                      $9,739,564             ($11,912,145)
Financing activities                     ($2,769,024)             $11,859,561
</TABLE>


       The Company's capital requirements for its continuing  operations consist
of its general working capital needs, scheduled payments on its debt obligations
and  capital  expenditures.  The  Company  tries to minimize  its  inventory  of
component parts, although minimum order requirements of some suppliers can cause
inventory  levels to  fluctuate  significantly  from period to period.  Although
bringing the manufacturing  processes in-house has taken over a year longer than
expected and has cost substantially more than anticipated,  management  believes
that it will enable the  Company to better  manage  inventory  levels and reduce
costs.  However,  fluctuations in inventory levels are still expected due to the
size of planned  production  runs of  components.  Management  also  attempts to
manage  accounts  receivable to increase cash flow, but it is  anticipated  that
accounts receivable will increase as sales increase. Other significant variances
in working  capital items can also be expected.  Also,  the  Company's  concrete
construction  projects will have an effect on working capital  requirements.  At
November  30,  1999,  costs and  estimated  earnings  in excess of  billings  on
uncompleted  contracts were $85,120 as compared to costs and estimated  earnings
in excess of billings on uncompleted contracts of $437,207 at November 30, 1998.
Normally,  concrete  construction  projects provide for progress payments of the
contract price with a retainage of 10 to 15 percent payable after  completion of
the project.

       Scheduled  principal  payments on capital leases will total $231,620 over
the next twelve  months.  In addition,  $17,787,578  of principal  payments will
become due on the Company's debt during the next twelve months. The Company does
not have  sufficient  capital  resources  to fund its debt  service  and capital
requirements for the next four quarters.

       Virtually  all of the  Company's  capital  expenditures  during 1999 were
related to additional equipment and tooling for the new manufacturing  facility.
As of November 30, 1999, the manufacturing  facility was substantially  complete
with a total  investment of $11.5 million.  However,  to finalize the process of
producing  all  component  parts   in-house,   the  Company  added  a  2200  ton
injection-molder,  at a cost  of  $1.2  million  in  December  1999.  Management
anticipates  additional  capital  expenditures  of  $1.0  million  in FY 2000 to
complete  the  final  tooling   requirements  of  the  production  process.  The
manufacturing  facility  includes  equipment and tooling to allow the Company to
produce  parts used in its modular  cooling  towers  which  previously  had been
purchased from outside vendors.  Management  believes  manufacturing these parts
in-house can reduce product costs.

                                       18
<PAGE>

       The new  manufacturing  facility has been partially  financed with a $4.4
million loan from the Oklahoma Industries Authority (the "OIA") and a portion of
the  proceeds  of a private  placement  in 1997 of $6 million,  10%  Convertible
Subordinated  Debentures (the  "Debentures").  The industrial revenue bonds were
issued  by  the  OIA in  October  1996.  The  bonds  are  payable  in  quarterly
installments of principal and interest in the amount of approximately  $157,000,
with final payment due October 1, 2007. A debt service  reserve fund of $157,000
was also set aside from the bond proceeds.  The reserve fund was used to pay the
October  1,  1999  principal  and  interest  payment.   This  reserve  fund  was
reestablished  in November  1999.  The OIA holds a mortgage on the Oklahoma City
facility to collateralize  the bond  indebtedness.  The balance  outstanding was
$3,705,000 at November 30, 1999.

       The  Debentures  were issued by the Company  during the third  quarter of
1997,  providing net proceeds of approximately  $5,467,000.  The Debentures bear
interest at 10 percent,  which is payable  semiannually,  and mature on June 30,
2000.  The principal  balance of each  Debenture is  convertible  into shares of
common  stock at a price of $8.75  per  share at the  option  of each  Debenture
holder or at the option of the Company if the closing  price of the common stock
is at least 175% of the conversion  price for 20 of 30 consecutive  trading days
and certain other conditions are satisfied. The Company is currently negotiating
with  Debenture  holders to either convert the Debentures or extend the maturity
date up to two years.

       In September  1997,  the Company  entered into a loan  agreement with the
City of  Oklahoma  City in the form of a HUD  Section  108 loan in the amount of
$1,250,000 for start-up  expenses of the  manufacturing  facility and associated
working  capital  requirements.  As of November 30, 1999, all of these funds had
been advanced to the Company and were  outstanding.  The loan bears  interest at
5.5%. Principal and interest payments are due annually beginning August 1, 2000,
in the amount of $140,000. An interest only payment is due each February 1 until
maturity on August 1, 2008. The loan is  collateralized  by a second mortgage on
the manufacturing facility.

       The Company has entered into an agreement with a lending  institution for
a  total  funding  of   $1,775,815   for  equipment  and  tooling  for  the  new
manufacturing  facility.  Principal and interest, at 9.25%, is paid monthly with
the final  payment  due in July 2004 and is  collateralized  by  equipment.  The
outstanding balance at November 30, 1999, was $1,440,389.  The Company is not in
compliance  with net worth  requirements  in the loan agreement and  accordingly
this debt is classified as current in the Company's financial statements.

       The  Company  has a line of  credit at  Chickasha  Bank,  secured  by the
Chickasha property, in the amount of $380,000 for short-term cash flow needs, of
which $373,577 was outstanding at November 30, 1999. This line of credit matures
December 6, 2000.  In March 2000,  the Company  closed the sale of the Chickasha
plant and the proceeds were used to pay off this loan.

       In April 1998, the Company  finalized a $2,000,000  construction loan for
the Oklahoma City office  facility that cost  approximately  $2.4 million.  This
loan was converted to a permanent loan in June 1999 in the amount of $2,010,000.
Initially,  the loan bears interest at 8.25%. Principal and interest payments of
$17,127 are due monthly.  The note matures in June 2002.  Also,  in June 1999, a
second  mortgage in the amount of $253,000 was  finalized.  Initially,  the loan
bears  interest  at 8.25%.  Principal  and  interest  payments of $3,103 are due
monthly.  The note  matures in June 2002.  The  interest  rates on both of these
notes are variable at Wall Street  Journal  prime rate plus .5%. The balances on
the loans at November 30, 1999, are $1,993,232 and $246,087 respectively.

                                       19


<PAGE>



       In April 1999, the Company  increased its line of credit with a financial
institution  from  $4,000,000 to $6,500,000  for working  capital  requirements.
Interest is payable monthly at a variable rate of 2.0% over national prime. This
line of credit matures in June 2000. The agreement contains a financial covenant
that  provides  for a minimum  tangible net worth.  At November  30,  1999,  the
Company  was not in  compliance  with this  covenant.  This  credit  facility is
collateralized  by certain  accounts/notes  receivable,  inventory  and  general
intangibles and as of November 30, 1999, $6,304,748 was outstanding.  Subsequent
to year-end  this note was reduced to $5,034,060  and the financial  institution
has indicated that it will not advance above this amount.

       In November 1999, the Company entered into a loan agreement with the City
of Oklahoma City in the amount of $2,000,000 for working capital purposes. As of
November 30, 1999,  $1,150,000  of these funds had been advanced to the Company.
The loan  bears  interest  at 6%. An  interest-only  payment is due May 2, 2000.
Remaining interest and principal is due at maturity on November 2, 2000.

       Total  notes  payable of  $2,000,000  to a company  were  outstanding  at
November 30, 1999.  These notes are secured by certain patents and bear interest
ranging from 10.75% to 13% at November 30, 1999 and mature June 14, 2000.

       On December 29, 1995,  Tower Tech entered into a joint venture  agreement
with J-Tech  Enterprises,  Inc.  ("J-Tech") to form Tower Tech SE ("TTSE").  The
original  joint  venture gave TTSE the sole and  exclusive  right to use certain
Tower Tech technology in Alabama, Florida, and Georgia. On April 30, 1999, Tower
Tech entered  into an  agreement  and plan of  dissolution  to acquire  J-Tech's
interest  and  dissolve  the joint  venture.  The  aggregate  purchase  price of
$430,677 was comprised of $100,000 in cash and $330,677 of net receivables  owed
to the Company by TTSE. Tower Tech also received all cash, accounts  receivable,
inventory,  accounts  payable,  and  other  current  liabilities  of  TTSE.  The
transaction  resulted  in  goodwill  to  Tower  Tech of  $431,120  that  will be
amortized  on a  straight-line  basis over its  estimated  useful life of twenty
years.

       The Company does not have sufficient  capital  resources to fund its debt
service and capital requirements for the next four quarters. Continued operating
losses have  increased  the  Company's  funding  requirements  and require it to
obtain additional capital. Accordingly,  management is negotiating for increases
in its credit  facilities,  as well as term  extensions.  The  Company  has also
engaged an investment banker to seek additional sources of capital. There can be
no assurances  that  management's  or the  investment  banker's  efforts will be
successful.

Forward Looking Statements

       Statements  of  the  Company's  or  management's   intentions,   beliefs,
anticipations,  expectations and similar  expressions  concerning  future events
contained in this report constitute  "forward looking  statements" as defined in
the Private Securities  Litigation Reform Act of 1995. As with any future event,
there  can  be no  assurance  that  the  events  described  in  forward  looking
statements  made in this report will occur or that the results of future  events
will not vary materially from those described in the forward looking  statements
made in this report.  Important  factors that could cause the  Company's  actual
performance and operating  results to differ materially from the forward looking
statements  include,  but are not  limited to,  changes in the general  level of
economic  activity in both  domestic  and  international  markets  served by the
Company;  competition in the cooling tower industry and the  introduction of new
products by  competitors;  delays in refining the  Company's  manufacturing  and
construction techniques;  cost overruns on particular projects;  availability of
capital  sufficient to support the Company's level of activity;  and the ability
of the  Company  to  implement  its  business  strategy,  including  timely  and
efficient  production of its products and  utilization  of the new OKC plant and
equipment.

                                       20


<PAGE>



Item 7.   Financial  Statements

         The  financial  statements  required  by this item begin at page F-1 of
this report.

Item 8.  Changes In and Disagreements With Accountants on Accountin
and Financial Disclosure.

         None.


                                    PART III

Items 9 through 12 of Part III of this Form 10-KSB are incorporated by reference
from the Company's proxy statement to be filed on or before March 30, 2000.

                                       21


<PAGE>




Item 13. Exhibits and Reports on Form 8-K

         a.     The following exhibits have been filed as part of this report:

  Exhibit No.      Description

     3.11          Amended and Restated  Certificate of  Incorporation  of Tower
                   Tech, Inc.

     3.21          Amended Bylaws of Tower Tech, Inc.

     3.31          Amendment to Bylaws

     4.17          Form of 10% Subordinated Convertible Debenture

     4.2           Omitted

     4.31          Form of Stock Certificate

     4.4           Omitted

     4.5           Omitted

     4.10          Omitted

     10.1-3        Promissory  Note between Tower Tech,  Inc., and Local Federal
                   Bank, dated June 24, 1998.

     10.2-9        Loan  Agreement  between  Tower Tech,  Inc.,  and the City of
                   Oklahoma City, dated September 8, 1997.

     10.3-9        Form of Deferral  Agreement  between  Tower Tech,  Inc.,  and
                   Chickasha Bank & Trust, dated June 16, 1999.

     10.4-6        Loan  Agreement   between  Tower  Tech,  Inc.,  and  Oklahoma
                   Industries Authority dated October 1, 1997.


     10.5-7        Form of  Debenture  Purchase  Agreement  among  the  Company,
                   Taglich  Brothers,  D'Amadeo  Wagner & Company,  Incorporated
                   and various lenders.

     10.6-9        Promissory  Note  between  Tower Tech,  Inc.  and  Electrical
                   Constructors, dated May 8, 1996


                                       22
<PAGE>

     10.7-9        Promissory  Note  between  Tower Tech,  Inc.,  as Maker,  and
                   Electrical  Constructors,  as Payee,  dated May 8, 1997,  and
                   amendment extending maturity date.

     10.8-9        Promissory  Note between  Tower Tech,  Inc.,  and  Electrical
                   Constructors,  dated March 25, 1997, and amendment  extending
                   maturity date.

     10.9-11       Master  Lease  Agreement  between  Tower Tech,  Inc.  and HPM
                   Corporation, dated June 16, 1999.

     10.10-1       U. S. Patent No. 5,143,657  entitled FLUID DISTRIBUTOR issued
                   September 1, 1992

     10.11-1       U. S. Patent No. 5,152,458 entitled AUTOMATICALLY  ADJUSTABLE
                   FLUID DISTRIBUTOR issued October 6, 1992

     10.12-1       U. S. Patent No.  5,227,095  entitled  MODULAR  COOLING TOWER
                   issued July 13, 1993

     10.13-1       Exclusive  License  Agreement by and between Harold D. Curtis
                   and Tower Tech, Inc.

     10.14-1       Assignment by and between Harold D.  Curtis, as Assignor, and
                   Tower Tech, Inc., as Assignee

     10.15-1       Assignment of Invention  Contained in PCT  Application by and
                   between Harold D. Curtis, as Assignor,  and Tower Tech, Inc.,
                   as Assignee

     10.16-1       Assignment  of Patent by and between  Harold D.  Curtis,  as
                   Assignor,  and Tower Tech, Inc., as Assignee,  of Patent No.
                   5,227,095

     10.17-4        1993 Stock Option Plan, as amended.


     10.18-11       Loan  Agreement  between  Tower Tech,  Inc. and People First
                    Bank dated December 7, 1999.

     10.19-6        Water Line  Agreement  between the City of Oklahoma City and
                    Tower Tech, Inc. dated November 1997.



                                       23
<PAGE>


     10.20-6        Master Security Agreement between CIT Group/Equipment
                    Financing, Inc. and Tower Tech, Inc. dated October 31, 1997.

     10.21-11       Modification  and  Extension  Agreement  between Tower Tech,
                    Inc.  and First  United Bank and Trust  Company,  dated June
                    17, 1999.

     10.22-11       Commercial   Mortgage,    Security   Agreement,    Financing
                    Statement and  Assignment of Rents between Tower Tech,  Inc.
                    and First  United  Bank and Trust  Company,  dated  June 17,
                    1999.

     10.23-11       Commercial  Promissory  Note  between  Tower Tech,  Inc. and
                    First United Bank and Trust Company, dated June 17, 1999.

     10.24-2        Promissory  Note between Tower Tech,  Inc. and Local Federal
                    Bank, dated June 10, 1998

     10.25-2        Promissory  Note between Tower Tech,  Inc. and Local Federal
                    Bank, dated February 18, 1998

     10.26-10       Promissory  Note dated as of December 4, 1998 to the Company
                    from Aggreko Inc.

     10.27-10       Noncompetition  Agreement  dated  as  of  December  4,  1998
                    between the Company, Harold D. Curtis and Aggreko Inc.

     10.28-10       License  Agreement  dated as of December 4, 1998 between the
                    Company and Aggreko Inc.

     10.29-10       Supply  Agreement  dated as of December 4, 1998  between the
                    Company and Aggreko Inc.

     10.30-5        Asset  Purchase  Agreement  dated  as of  December  4,  1998
                    between the Company and Aggreko Inc.

     10.31-11       Agreement  and Plan of  Dissolution  between the Company and
                    J-Tech Enterprises dated April 30, 1999.

     10.32-11       Security   Agreement   between  Tower  Tech,  Inc.  and  HPM
                    Corporation dated June 16, 1999.

     10.33-12       Security   Agreement   between  Tower  Tech,  Inc.  and  HPM
                    Corporation dated November 30, 1999.

                                       24

<PAGE>

     10.34-12       Master Lease  Agreement  between  Tower Tech,  Inc. and U.S.
                    Bancorp dated August 4, 1999.

     10.35-12       Lease  Agreement  between Tower Tech, Inc. and JACOM Leasing
                    dated September 22, 1999.

     10.36-12       Secured  Promissory  Note between  Tower Tech,  Inc. and the
                    City of Oklahoma City dated November 2, 1999.

     10.37-12       Mortgage  between Tower Tech,  Inc. and the City of Oklahoma
                    City dated November 2, 1999.

     10.38-12       Loan  Agreement  between  Tower Tech,  Inc.  and the City of
                    Oklahoma City dated November 2, 1999.

     10.39-12       Security  Agreement between Tower Tech, Inc. and the City of
                    Oklahoma City dated November 2, 1999.

     21.1-12        Tower Tech, Inc. subsidiaries

     23.1-12        Consent of PricewaterhouseCoopers LLP



           1      Incorporated  by reference  from the same numbered  exhibit to
                  Registration  Statement  No.  33-69574-FW,  as filed  with the
                  Commission on September 29, 1993, and as amended.

           2      Incorporated  by reference  from the same numbered  exhibit t
                  Form 10-QSB for the quarter ended May 31, 1998.

           3      Incorporated  by reference  from the same  numbered  xhibit to
                  Form 10-QSB for the quarter ended August 31, 1998.

           4      Incorporated  by reference from the same numbered  exhibit to
                  Registration  Statement No.  333-07337 on Form S-8.

           5      Incorporated by reference from exhibit number 99.1 to Form 8-K
                  filed December 18, 1998.

           6      Incorporated by reference from the same numbered  exhibit to
                  Form 10-KSB for the year ended November 30, 1997.

           7      Incorporated  by reference  from the same numbered  exhibit to
                  Form 10-QSB for the quarter ended May 31, 1997.

           8      Incorporated  by reference  from the same numbered  exhibit to
                  Registration Statement No. 333-36501,  Form S-3, as filed with
                  the Commission on September 26, 1997.

                                       25
<PAGE>
           9      Incorporated  by reference  from the same numbered  exhibit to
                  Form 10-QSB for the quarter ended August 31, 1997.

           1      Incorporated  by reference from the same numbered  exhibit to
                  Form 8-K filed December 18, 1998.

           11     Incorporated  by reference  from the same numbered  exhibit t
                  10-QSB for the quarter  ended August 31, 1999.

           12     Filed herewith.

       b.         The Company has not filed any reports on Form 8-K during the
                  last quarter of 1999.




                                       26


<PAGE>



                                   SIGNATURES

       In  accordance  with  Section  13 or  15(d)  of  the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                   TOWER TECH, INC.


                          By:      ss/HAROLD CURTIS

                                   Harold Curtis, Chief Executive Officer

       In accordance  with the  requirements  of the Securities  Exchange Act of
1934,  this  registration  statement was signed by the following  persons in the
capacities and on the dates stated.

SIGNATURE                 TITLE                                           DATE

ss/HAROLD CURTIS          Chief Executive Officer Director        March 14, 2000
----------------
Harold Curtis             (Principal Executive Officer)

ss/ROBERT BRINK           President                               March 14, 2000
---------------
Robert Brink              (Principal Operating Officer)

ss/CHARLES D. WHITSITT    Chief Financial Officer                 March 14, 2000
----------------------
Charles D. Whitsitt       (Principal  Financial Officer and
                           Principal Accounting Officer)

ss/LINCOLN WHITAKER             Director                          March 14, 2000
-------------------
Lincoln E. Whitaker

ss/LEON POAG                    Director                          March 14, 2000
------------
Leon Poag



                                       27


<PAGE>






                                TOWER TECH, INC.

                              FINANCIAL STATEMENTS

                                      INDEX

                                                                            Page

Report of Independent Accountants                                            F-2



Financial Statements:

    Balance Sheets as of November 30, 1999 and 1998                          F-3


    Statements of Operations for the years ended
                  November 30, 1999 and 1998                                 F-5



    Statements of Stockholders' Equity (Deficit) for the years ended
                  November 30, 1999 and 1998                                 F-6



    Statements of Cash Flows for the years ended
                  November 30, 1999 and 1998                                 F-7



Notes to Financial Statements                                                F-9










                                       F-1

<PAGE>

Report of Independent Accountants

To the Board of Directors and Stockholders of
 Tower Tech, Inc.


In our opinion,  the accompanying  balance sheets and the related  statements of
operations, stockholders' equity (deficit) and cash flows present fairly, in all
material respects, the financial position of Tower Tech, Inc. (the "Company") at
November 30, 1999 and 1998 and the results of its  operations and its cash flows
for the years then ended,  in conformity with  accounting  principles  generally
accepted in the United States. 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 of these
statements  in  accordance  with auditing  standards  generally  accepted in the
United  States,  which  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,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.

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  has  experienced  recurring  net losses and
negative  cash  flow from  operations  in  fiscal  1999 and 1998,  has a working
capital  deficit of  $14,623,196  at November 30, 1999 and is not in  compliance
with financial covenants  contained in certain debt agreements.  Included in the
working capital deficit  is the Company's  operating line of credit ($6,304,748
outstanding  at  November  30,  1999) and  $6,000,000  Convertible  Subordinated
Debentures,  which come due in June 2000. These matters raise  substantial doubt
about the Company's ability to continue as a going concern.  Management's  plans
in regard to these matters are described in Note 2. The  accompanying  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

PricewaterhouseCoopers LLP
Oklahoma City, Oklahoma

March 7, 2000
                                       F-2

<PAGE>

Tower Tech, Inc.

Balance Sheets

                                                        As of November 30,
                                                  1999                   1998
                                Assets

<TABLE>
<CAPTION>

<S>                                         <C>                     <C>
Current assets:
Cash                                        $    251,895             $    3,798
Accounts receivable, net of allowance
  of $800,000 and $275,000, respectively       2,794,116              4,678,685
Accounts receivable, affiliate                       -                  432,216
Notes receivable, current                      1,514,519                238,621
Receivables from officers and employees           60,806                 32,261
Costs in excess of billings and estimated
  earnings on uncompleted contracts               85,120                437,207
Inventory                                      7,447,926              5,468,702
Restricted assets                                157,613                158,794
Prepaid expenses                                 108,041                176,430
Deferred tax asset                                   -                2,674,530
                                            ------------            ------------
        Total current assets                  12,420,036             14,301,244

Property, plant and equipment,  net           18,506,712             16,630,165
Rental fleet, net                                    -                6,789,217
Patents, net                                     232,715                230,327
Goodwill, net of accumulated amortization
  of $11,614                                     421,165                    -
Notes receivable, non-current, net of
  unamortized discount of $19,833 and
  $39,669, respectively                          503,086                489,443
Other assets                                     379,588                616,335
                                           -------------          --------------
        Total assets                       $  32,463,302          $  39,056,731
                                           =============          ==============

</TABLE>

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

                                       F-3

<PAGE>

Tower Tech, Inc.

Balance Sheets, continued

                                                        As of November 30,
                                                     1999               1998
<TABLE>
<CAPTION>

<S>                                            <C>                <C>

      Liabilities and Stockholders'Equity (Deficit) Current liabilities:

Current portion of long-term debt               $ 17,787,578       $ 11,029,319
Current portion of obligations under
   capital lease                                     231,620            166,683
Accounts payable                                   7,153,514          5,092,629
Book overdraft                                           -              235,319
Accrued liabilities                                1,069,897          1,030,692
Interest payable                                     505,315            501,530
Customer deposits                                    295,308            135,446
                                                  ----------         -----------
      Total current liabilities                   27,043,232         18,191,618
                                                  ----------         -----------
Deferred tax liability                                   -              359,422
                                                  ----------         -----------
Long-term debt, net of current portion             7,349,061         15,832,228
                                                  ----------         -----------
Obligations under capital lease, net
   of current portion                                615,728            154,751
                                                  ----------         -----------
Liability for equity share of investment                 -               78,946
                                                  ----------         -----------
Commitments and Contingencies
   (Notes 9, 10, 16 and 17)

Stockholders' equity (deficit):
Preferred stock, $.001 par value; 2,000,000
    shares authorized; no shares issued and
    outstanding at November 30, 1999 and 1998            -                  -

Common stock, $.001 par value; 10,000,000
    shares authorized; 3,576,311 outstanding
    at November 30, 1999 and 1998                      3,577              3,577

Capital in excess of par                           8,278,561          8,278,561

Accumulated deficit                              (10,826,857)        (3,842,372)
                                                 ------------        -----------

Total stockholders' equity (deficit)              (2,544,719)         4,439,766
                                                 ------------        -----------

Total liabilities and stockholders
     equity (deficit)                           $  32,463,302     $  39,056,731
                                                =============     ==============
</TABLE>

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

                                       F-4

<PAGE>

Tower Tech Inc.
Statements of Operations

                                              For the years ended November 30,
                                                     1999              1998
<TABLE>
<CAPTION>

<S>                                             <C>                <C>

Revenues:
Tower sales                                      $ 11,708,898       $ 9,235,101
Concrete tower construction                         1,220,050         5,716,664
Tower rentals                                          31,239         5,462,758
Other tower revenue                                 1,015,048           629,781
                                                 ------------       ------------

Total tower revenue                                13,975,235        21,044,304
                                                 ------------       ------------

Cost and expenses:
Cost of goods sold and constructed                 16,429,004        17,594,126
General and administrative                          2,869,824         3,033,369
Selling expenses                                    1,442,531         1,989,322
Research and development                            2,491,157         1,810,985
                                                 ------------       ------------

Total costs and expenses                           23,232,516        24,427,802
                                                 ------------       ------------

Loss from operations                               (9,257,281)       (3,383,498)
                                                 ------------       ------------

Other income (expense):
Interest, net                                      (2,088,917)         (899,066)
Miscellaneous                                         133,706            20,190
Gain on sale of property, equipment
    and rental fleet                                6,537,438               -
Income (loss) on investee company                      21,205           (78,946)
                                                 ------------        -----------

Total other income (expense)                        4,603,432          (957,822)
                                                 ------------        -----------

Loss before income taxes                           (4,653,849)       (4,341,320)

Income tax benefit (expense)                       (2,330,636)        1,670,088
                                                 ------------        -----------

Net loss                                         $ (6,984,485)     $ (2,671,232)
                                                 =============     =============

Weighted average shares outstanding - basic         3,576,311         3,556,010
                                                 =============     =============

Net loss per common share - basic                $      (1.95)     $      (0.75)
                                                 =============     =============

Weighted average shares outstanding - diluted       3,576,311         3,556,010
                                                 =============     =============

Net loss per common share - diluted              $      (1.95)      $     (0.75)
                                                 =============     =============
</TABLE>

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

                                       F-5

<PAGE>

Tower Tech Inc.

Statements of Stockholders' Equity (Deficit)

                                                For the years ended November 30,

                                                     1999                1998
<TABLE>
<CAPTION>

<S>                                             <C>                <C>

Common stock

------------
Balance at beginning of period                   $     3,577         $    3,527

Exercise of warrants                                     -                   50
                                                 -----------         -----------

Balance at end of period                               3,577              3,577
                                                 -----------         -----------

Capital in excess of par
------------------------
Balance at beginning of period                     8,278,561          8,066,403

Exercise of warrants                                     -              212,158
                                                 -----------         -----------

Balance at end of period                           8,278,561          8,278,561
                                                 -----------         -----------

Accumulated deficit:
-------------------
Balance at beginning of period                    (3,842,372)        (1,171,140)

Net loss                                          (6,984,485)        (2,671,232)
                                                 ------------        -----------

Balance at end of period                         (10,826,857)        (3,842,372)
                                                 ------------        -----------

     Total stockholders'equity (deficit)        $  2,544,719)      $  4,439,766
                                                =============      =============


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

</TABLE>

                                       F-6

<PAGE>

Tower Tech Inc.
Statements of Cash Flows

                                                For the years ended November 30,

<TABLE>
<CAPTION>

<S>                                            <C>                <C>
                                                    1999               1998
Cash flows from operating activities:

Net loss                                        $ (6,984,485)      $ (2,671,232)
Adjustments to reconcile net loss to
    net cash used in operating activities:
Depreciation and amortization                      1,239,047            971,390
Gain on sale of property, equipment
    and rental fleet                              (6,537,438)               -
Bad debt expense                                     596,057            546,125
Equity share of (income) loss of investee            (21,205)            78,946
Deferred income taxes                              2,330,636         (1,670,088)
Payments on trade note receivable                     60,459            199,932
Decrease in accounts receivable                    1,359,870            515,594
Decrease (increase) in accounts
   receivable, affiliate                              17,215           (104,921)
Decrease in costs in excess of billings              352,087            282,240
(Increase) decrease in receivables for
    officers and employees                           (28,545)            37,286
Increase in inventory                             (1,971,379)        (2,441,047)
Decrease (increase) in prepaid expenses               68,389            (47,156)
Decrease in other assets                             554,159            381,580
Increase in accounts payable                       2,057,708          2,831,400
Increase (decrease) in accounts
    payable, affiliate                                26,583            (10,577)
(Decrease) increase in accrued liabilities            (1,463)           612,644
Increase in customer deposits                        159,862             21,413
Decrease in income tax payable                           -              (29,101)
                                                  -----------        -----------

Net cash used in operating activities             (6,722,443)          (495,572
                                                  -----------        -----------

Cash flows from investing activities:

Cash paid for acquisition, net                       (99,096)               -
Purchase of property and equipment                (2,293,768)        (6,868,872)
Decrease in restricted assets                          1,181              1,673
Additions to rental fleet                                -           (5,012,935)
Increase in patent costs                             (18,753)           (32,011)
Proceeds from sale of rental operation            12,150,000                -
                                                  -----------        -----------

Net cash provided by (used in)
    investing activities                           9,739,564        (11,912,145)
                                                  -----------       ------------

Cash flows from financing activities:

proceeds from borrowings, net of costs             22,175,727         32,917,003
(Decrease) increase in book overdraft               (235,319)            41,320
Repayments of long-term debt and capital
   lease obligations                             (24,709,432)       (21,310,970)
Proceeds from exercise of warrants                       -              212,208
                                                 ------------       ------------

Net cash (used in) provided by financing
   activities                                     (2,769,024)        11,859,561
                                                  -----------       ------------

Net increase (decrease) in cash                      248,097           (548,156)

Cash at beginning of year                              3,798            551,954
                                                  -----------        -----------

Cash at end of year                               $  251,895         $    3,798
                                                  ===========        ===========
</TABLE>

                                                                       continued

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

                                       F-7

<PAGE>

Tower Tech Inc.
Statements of Cash Flows, continued

                Supplemental Disclosure of Cash Flow Information

     Cash paid for  interest  during the years ended  November 30, 1999 and 1998
was $2,207,944 and $1,831,306, respectively.

      Supplemental Schedule of Non-Cash Investing and Financing Activities

     The Company  acquired certain  property,  plant and equipment under capital
lease obligations of $736,533 and $176,358 for the years ended November 30, 1999
and 1998, respectively.

     The Company  acquired certain real estate and  improvements,  and property,
plant and  equipment  during  1999 and 1998 by  executing  notes  payable in the
aggregate amount of $42,176 and $418,658, respectively.

     In  1999,  the  Company  sold  its  rental  assets  for  $13,500,000,  with
$12,150,000 paid in cash and a note receivable for the remaining $1,350,000. See
Note 8.

     On April 30, 1999,  the Company  acquired Tower Tech  Southeast.  (See Note
13). In accordance with the agreement,  Tower Tech received the following assets
and assumed the following liabilities:

Cash                                           $           904
Accounts receivable                            $        71,358
Inventory                                      $         7,845
Accounts Payable                               $         3,177
Other current liabilities                      $        44,453



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

                                       F-8

<PAGE>

Tower Tech Inc.
Notes to Financial Statements

  1.   Summary of Significant Accounting Policies

       General

       Tower Tech,  Inc. (the  "Company")  has been in the business of building,
       repairing and upgrading  conventional water cooling towers since 1985. In
       1991,  the Company  began  developing a new line of modular water cooling
       towers made primarily of fiberglass ("TTMT Series"). In 1993, the Company
       began  production  of the  TTMT  Series  cooling  tower,  which  has been
       introduced into both the air conditioning and industrial  segments of the
       cooling tower market.  Compact  design of the modules  permits them to be
       factory assembled, inventoried for immediate shipment, easily transported
       and  quickly  installed.  In 1995,  the  Company  introduced  a  concrete
       water-cooling tower, which is constructed using the TTMT technology.  The
       concrete   towers,   which  are   constructed   using  tilt-up   concrete
       construction  methods at the  customer's  location,  are sold under fixed
       price  contracts.  In 1996, the Company began marketing its technology by
       entering  into  licensing  agreements  with  international  cooling tower
       companies.  In 1998 and continuing into 1999, the Company  redesigned its
       towers and changed the TTMT designation to "TTEF".  Additionally,  during
       this time, the Company began to manufacture  substantially  all component
       parts for its  towers,  which  were  previously  purchased  from  outside
       suppliers.

       Revenue and cost recognition

       Revenue  from  tower  sales  is  recognized  as  towers  are  shipped  to
       customers.

       Revenues and costs under fixed price  contracts for the  construction  of
       concrete towers are recognized on the percentage of completion method and
       are recorded based upon a ratio of costs incurred to date on the contract
       to total estimated costs.  Contract costs include material,  direct labor
       and other direct costs  related to contract  performance.  Changes in job
       conditions,  estimated  profitability and final contract  settlements may
       result in revisions to cost and income,  and are recognized in the period
       in which the revisions are determined. Provisions for estimated losses on
       uncompleted contracts, if any are made in the period in which such losses
       are determined.

       Rental  towers were rented  under  short-term  or  month-to-month  rental
       agreements and revenue was recognized  when earned.  See Note 8 - Sale of
       Rental Operations.

       Revenues from licensing  agreements are recognized when a  non-cancelable
       contract is signed  specifying  a fixed  non-refundable  fee, the related
       technology   materials  are  delivered  and  the  licensee  has  obtained
       government  approval,  when required.  License fees are included in other
       operating revenue.  The Company had no revenue from licensing  agreements
       in 1999 and 1998.

                                       F-9

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

  1.   Summary of Significant Accounting Policies, continued

       Cash and cash equivalents

       For purposes of the  statement of cash flows,  the Company  considers all
       short-term investments with a maturity of three months or less to be cash
       equivalents.

       Inventory

       Inventory is stated at the lower of cost or market. Cost is determined on
       a first-in, first-out basis.

       Property, plant and equipment

       Property,  plant and equipment is recorded at cost.  Depreciation  (which
       includes  amortization  of assets under  capital  leases) is provided for
       using the  straight-line  method over the  estimated  useful lives of the
       assets as follows:

       Buildings and plant improvements                     7-40  years
       Shop equipment                                       5-10  years
       Office furniture and equipment                       3-10  years
       Molds and dies                                       7-10  years
       Trucks and vehicles                                  5     years
       Assets under capital lease                           5-10  years

       Repairs and maintenance  charges,  which do not increase the useful lives
       of assets, are charged to expense as incurred.

       Interest costs incurred on borrowed funds during a period of construction
       are capitalized as a component of the costs of construction of qualifying
       assets.

       Patents

       Costs  associated  with obtaining  patents are  capitalized and amortized
       from the date granted over the life of the patents (17 years).

       Goodwill

       Goodwill  represents  the excess of cost over the fair value of  tangible
       net assets  acquired  and is being  amortized  over 20 years,  subject to
       impairment  write-offs  determined by underlying cash flows.  Goodwill is
       periodically  reviewed for impairment  whenever  facts and  circumstances
       indicate that the carrying amount may not be recoverable.

       Debt issue costs

       Other assets relate  primarily to costs  associated  with the issuance of
       debt  obligations.  Debt issue costs are being amortized over the life of
       the related debt obligations.

                                      F-10

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

  1.   Summary of Significant Accounting Policies, continued

       Warranty costs

       The Company's  products are sold with various limited warranty terms. The
       Company provides, by a current charge to cost of goods sold, an amount it
       estimates will be needed to cover future warranty  obligations for towers
       sold during the year.  The  estimated  liability  for  warranty  costs is
       included in accrued liabilities in the accompanying balance sheets.

       Income taxes

       The Company  accounts for income taxes in  accordance  with  Statement of
       Financial  Accounting  Standards No. 109,  "Accounting  for Income Taxes"
       (FAS 109).  FAS 109  requires  deferred tax  liabilities  or assets to be
       recognized   for  the   anticipated   future  tax  effects  of  temporary
       differences  that arise as a result of the  differences  in the  carrying
       amounts  and  tax  basis  of  assets  and   liabilities,   and  for  loss
       carryforwards and tax credit carryforwards.

       Research and development

       Costs  associated  with  research  and  development  of new and  improved
       products are charged to expense as incurred.

       Income (loss) per common share

       Net income  (loss) per common  share is  computed  based on the  weighted
       average number of shares of common stock outstanding plus dilutive common
       equivalent shares arising from the issuance of warrants and options.

       Use of 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 dates of the
       financial  statements  and the  reported  amounts of revenue and expenses
       during the  reporting  periods.  Actual  results  could differ from those
       estimates.

       Estimates  are used  when  accounting  for  construction  contracts,  the
       allowance for doubtful  accounts and warranty  reserve.  It is reasonably
       possible  that  actual  results  could  differ   significantly  from  the
       estimates in the near term.

       Fair value of financial instruments

       The Company's  financial  instruments  consist primarily of cash and cash
       equivalents, restricted assets and debt instruments. Fair value estimates
       have been determined by the Company,  using available market  information
       and appropriate valuation  methodologies.  These estimates are subjective
       in nature, involve uncertainties and matters of significant judgment, and
       therefore cannot be determined with precision.

                                      F-11

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

  1.   Summary of Significant Accounting Policies, continued

       Fair value of financial instruments, continued

       The carrying value of cash and cash equivalents and restricted  assets is
       considered to be representative  of their respective fair values,  due to
       the short  maturity of these  instruments.  Based on the borrowing  rates
       currently  available  to the  Company  for loans with  similar  terms and
       average  maturities,  the fair market value of  long-term  debt and notes
       payable approximates their carrying value.

       Concentration of credit risk

       Financial  instruments,  which potentially  subject the Company to credit
       risk, consist of cash and cash equivalents, accounts receivable and notes
       receivable,  some of which are from international  companies. The Company
       maintains   its  cash   balances   in  high  credit   quality   financial
       institutions.  From time-to-time, the Company's cash and cash equivalents
       may exceed  federally  insured limits  although  management  believes any
       possible credit risk is minimal.

       The  Company  sells  cooling   towers  and  related  parts  to  customers
       throughout   the  U.S.  and  enters  into   licensing   agreements   with
       international  companies.  The  Company  extends  credit  based  upon  an
       evaluation  of the  customer's  financial  condition,  generally  without
       requiring collateral. Exposure to losses on accounts receivable and notes
       receivable  is  principally   dependent  on  each  customer's   financial
       condition and economic  conditions in countries  where they operate.  The
       Company monitors its exposure for credit losses and maintains  allowances
       for anticipated losses.

2.     Going Concern and Management's Plans

       The Company has experienced  recurring net losses in fiscal 1999 and 1998
       of $6,984,485 and $2,671,232, respectively, has a working capital deficit
       of  $14,623,196  at  November  30,  1999  and is not in  compliance  with
       financial   covenants  contained  in  certain  of  its  debt  agreements.
       Additionally,  as a result of unforeseen  design and structural  problems
       encountered with the Company's new design of cooling towers,  the Company
       incurred significant warranty and research and development expenses,  and
       production  was  ceased  for 42 days  during  1999.  As a  result  of the
       liquidity  problems caused by these factors,  the Company has been unable
       to pay its materials  suppliers  when amounts  become due.  Consequently,
       several  suppliers  have sued the Company for  nonpayment  and others now
       require payment for materials on a cash in advance basis, which compounds
       the Company's cash flow problems. Included in the working capital deficit
       are significant amounts of debt, including the operating line of credit

                                      F-12

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

 2.    Operations and Management's Plans, continued

       ($6,304,748  outstanding at November 30, 1999) and $6,000,000 Convertible
       Subordinated  Debentures,  which  come  due  through  June  2000.  Recent
       operating results bring into question whether such amounts can be paid in
       accordance   with  their  terms  or   refinanced.   These  matters  raise
       substantial  doubt  about the  Company's  ability to  continue as a going
       concern.

       Management  has developed a new business plan and strategy to address the
       Company's current financial  situation and recent financial  performance.
       The objective of the plan,  if  successfully  implemented,  is to restore
       liquidity,  secure  additional  working capital,  return the Company into
       compliance with debt  covenants,  restore  financial  strength and reduce
       debt.

       In February 2000, the Company  presented a restructuring  proposal to its
       trade creditors,  debenture holders and other debt holders.  The proposal
       asks  for  extensions  of  certain  debt  owed  by the  Company  and  for
       concessions from trade creditors,  including  deferral of amounts due. It
       is not yet known whether or not the Company's  creditors  will accept the
       proposal.  The  Company  continues  to  negotiate  with its lenders in an
       attempt to extend  amounts  due and waive  noncompliance  with  financial
       covenants.

       The Company has  retained an  investment  banker to review its  financial
       alternatives  and to seek  additional  sources of  capital,  which  could
       include  refinancing debt. The accompanying  financial  statements do not
       include any adjustments relating to the recoverability and classification
       of asset carrying amounts or the amount and classification of liabilities
       that might  result  should the  Company be unable to  continue as a going
       concern.

3.     Contract Receivables

       Contract receivables consist of the following at November 30:

                                                       1999            1998
<TABLE>
<CAPTION>

<S>                                              <C>           <C>
Completed contracts, including retainage          $   641,432   $     224,917

Contracts in progress:
Current accounts                                       51,175         612,330
Retainage                                              11,826         377,467
                                                  -----------    --------------

                                                  $   704,433    $  1,214,714
                                                  ===========    ==============
</TABLE>

       Contract   receivables  are  included  in  accounts   receivable  in  the
accompanying balance sheets.

                                      F-13

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

4.   Costs in Excess of Billings and Estimated Earnings on Uncompleted Contracts

       The following is a summary of costs and estimated earnings on uncompleted
projects at November 30:

                                                        1999            1998
<TABLE>
<CAPTION>

<S>                                               <C>             <C>

Cost incurred on uncompleted projects              $  109,924      $  3,716,410
Estimated earnings                                     93,454           565,132
                                                   ----------      ------------

                                                      203,378         4,281,542
Less: Billings to date                               (118,258)       (3,844,335)
                                                   -----------     ------------

                                                    $  85,120      $    437,207
                                                   ===========     =============
</TABLE>

  5.   Inventories

       Inventories consist of the following at November 30:

                                                       1999              1998
<TABLE>
<CAPTION>

<S>                                         <C>               <C>

Raw materials                                $     5,617,180   $      4,234,498
Work in progress                                     548,254            731,992
Finished goods                                     1,282,492            502,212
                                             ---------------   -----------------

                                             $     7,447,926   $      5,468,702
                                             ===============   =================

</TABLE>

                                      F-14

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

  6.   Restricted Assets

       Restricted  assets consist of investments held by a trustee in connection
       with  financing  obtained  to  fund  construction  of the  Company's  new
       manufacturing  and office  facilities.  See Note 9. Amounts  required for
       obligations  classified  as current  liabilities  are reported in current
       assets.  Investments are stated at cost, which  approximates  market. The
       composition  of  restricted  assets at  November  30, is set forth in the
       following table:

                                                        1999             1998
<TABLE>
<CAPTION>

<S>                                                <C>              <C>

Under bond induenture agreements - held by trustee:

Cash and cash equivalents                           $     682        $    1,698
U.S. Treasury Notes                                   156,931           157,096
                                                    ----------       ----------

Total restricted assets                             $  157,613       $  158,794
                                                    ----------       ----------
                                                    ----------       ----------

</TABLE>

  7.   Property, Plant and Equipment

       Following is a summary of property, plant and equipment at November 30:

                                                     1999              1998
<TABLE>
<CAPTION>

<S>                                           <C>               <C>

Building and plant improvements                $   9,704,473     $   1,833,830
Shop equipment                                     4,725,481           781,607
Office furniture and equipment                       954,549           977,260
Molds and dies                                     3,123,003         1,436,062
Trucks and vehicles                                   35,357            30,180
Assets under capital lease                         1,511,670           732,993
Construction in progress                              12,467        11,297,609
Capitalized interest                               1,328,120         1,451,049
                                                ------------       ------------

                                                  21,395,120        18,540,590

Accumulated depreciation                          (2,634,670)       (1,718,212)
Accumulated depreciation, capital leases            (253,738)         (192,213)
                                                -------------      ------------

                                               $  18,506,712     $  16,630,165
                                            =================  =================

</TABLE>

                                      F-15

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

7.     Property, Plant and Equipment, continued

       Depreciation  of  property,  plant and  equipment,  and rental  fleet was
       $1,023,625  and $718,201 for the years ended  November 30, 1999 and 1998,
       respectively,  of which  $707,192  and  $483,678 was included in costs of
       good sold and constructed.

  8.   Sale of Rental Operations

       In December  1998,  the Company  consummated  the sale of its  industrial
       cooling tower rental operations (the "Rental Operations") to Aggreko Inc.
       an unrelated  party,  for  $13,500,000,  with $12,150,000 paid in cash at
       closing and the remaining  $1,350,000  paid by delivery of Aggreko Inc.'s
       promissory note (the "Note").  The Note bears interest at 1% above prime.
       The  outstanding  principal  balance of the Note,  together  with accrued
       interest, was paid in December 1999. The assets sold included the modular
       cooling tower rental  fleet,  other rental fleet  equipment,  and certain
       assets used in the operation of the Rental Operations.  Accordingly,  the
       Company  recorded a pre-tax  gain of  $6,688,670.  Proceeds  were used to
       reduce debt and for working capital.

       In connection with the sale of assets described  above,  Aggreko Inc. the
       Company,  and Harold D. Curtis,  the Company's Chief  Executive  Officer,
       entered into a Noncompetition  Agreement.  The  Noncompetition  Agreement
       generally  prohibits  the Company  and Mr.  Curtis  from  conducting  any
       business in  competition  with the Rental  Operations,  as well as hiring
       certain  of the  Company's  prior  employees  who  worked  in the  Rental
       Operations.

       Additionally,  in connection with the sale of assets described above, the
       Company and Aggreko Inc.  entered into a License  Agreement  and a Supply
       Agreement.  The License  Agreement  grants to Aggreko  Inc. an  exclusive
       license to use for a limited  time period the patents  trademarks,  trade
       names and other proprietary rights related to the Rental Operations.  The
       Supply Agreement describes the terms upon which the Company has agreed to
       sell to Aggreko  Inc.,  and Aggreko Inc. has agreed to purchase  from the
       Company,  all modular cooling tower units and replacement parts necessary
       for future operations of the Rental Operations.

                                      F-17

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

  9.   Long-Term Debt

       The following is a summary of long-term debt at November 30:

                                                       1999             1998
<TABLE>
<CAPTION>

<S>                                               <C>              <C>

10% Convertible Subordinated Debentures

("Debentures") as discussed below.                 $ 6,000,000      $ 6,000,000

Oklahoma Industries Authority Revenue Bonds, Series 1996, principal and interest
are payable  quarterly on January 1, April 1, July 1 and October 1;  interest at
an average rate of 7.28%,  final payment is due October 1, 2007;  collateralized
by the Company's  right,  title and interest in the real estate  comprising  the
Company's manufacturing facility, along with all building, structures,  fixtures
and  improvements on said real estate;  bonds are eligible for early  redemption
subject to

certain restrictions.                                3,705,000        4,035,000

Notes payable to a company; principal payments of $1,500,000 and $500,000 due on
June 14, 2000, interest at bank prime plus 3% (11.50% at November 30, 1999), and
a fixed rate of 13%,  respectively;  collateralized by a first lien and right of
assignment on

certain patents.                                     2,000,000        2,000,000

Line of credit with a bank for $400,000; monthly principal and interest payments
of $5,000 with final  payment due December 6, 2000;  interest at a floating rate
(10% at November 30,

1999); collateralized by real estate.                  373,577          330,000

Note payable to a bank.                                    -             86,706

Note payable to a bank; semi-annual payments of principal and interest of $1,577
with final  payment due  September,  2000;  interest at a floating  rate (10% at
November 30, 1999)

collateralized by real estate.                          52,612           62,944

Note payable to a lending  institution;  monthly principal and interest payments
of  $13,651   with  final   payment  due  July  9,  2004;   interest  at  9.25%;
collateralized by certain

equipment.                                           1,440,389        1,681,663

Notes payable to an  institution;  monthly  principal  and interest  payments of
$977, with final payment due November 4, 2017; interest at 7.72%  collateralized
by certain

improvements.                                          114,524          117,062

Construction  loan  payable  to a bank  of  $2,000,000;  monthly  principal  and
interest  payments of $17,127 with final payment due June 14, 2002;  interest at
bank prime plus .5% (9.00% at November 30, 1999); collateralized

by real estate.                                      1,993,232        1,069,813


</TABLE>

                                      F-18

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

  9.   Long-Term Debt, continued

                                                      1999               1998
<TABLE>
<CAPTION>

<S>                                               <C>              <C>

Line of credit with a bank.                             -             8,333,721

Note payable to a bank.                                 -               900,000

Note payable to an individual.                          -               500,000

Line of credit;  principal  due November  10,  2003,  interest at LIBOR plus .2%
(5.5125% at November 30, 1999); collateralized by real

estate.                                           1,250,000           1,250,000

Line of credit;  principal due November 2, 2000,  interest at 6% due May 2, 2000
and upon maturity; collateralized by real estate, accounts receivable and

inventory.                                        1,150,000                 -

Line of credit with a bank; principal due June 1, 2000, interest payable monthly
at bank prime plus 2% (10.5% at November 30, 1999);  collateralized  by accounts
receivable,

inventory and certain notes receivable.           6,304,748                 -

Various notes payable to financial
institutions; principal and interest due
monthly; collateralized by vehicles and
equipment.                                          752,557             494,638
                                                -------------       ------------
                                                 25,136,639          26,861,547

Current portion                                 (17,787,578)        (11,029,319)
                                                -------------       ------------

Long-term debt, net                            $  7,349,061       $  15,832,228
                                               =============      ==============

</TABLE>

Principal  amounts  maturing  on  long-term  debt for each year is as follows at
November 30, 1999:

<TABLE>
<CAPTION>

<S>                             <C>
2000                             $     17,787,578
2001                                    1,039,980
2002                                    2,768,735
2003                                      624,255
2004                                      619,056
Thereafter                              2,297,035
                                 -----------------
                                  $    25,136,639

                                 =================

</TABLE>

                                      F-19

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

  9.   Long-Term Debt, continued

       The  Company  issued the  Debentures  during  the third  quarter of 1997,
       yielding net proceeds of  approximately  $5,467,000.  The Debentures bear
       interest at 10 percent, which is payable semiannually, and mature on June
       10, 2000. The principal  balance of each  Debenture is  convertible  into
       shares  of common  stock at a price of $8.75  per share at the  option of
       each  Debenture  holder or at the option of the  Company  if the  closing
       price of the common stock is at least 175% of the conversion price for 20
       of  30  consecutive   trading  days  and  certain  other  conditions  are
       satisfied.

       Some  of  the  debt  agreements  contain  financial   covenants  such  as
       maintaining  minimum  tangible  net  worth  and  subjective  acceleration
       clauses.  The Company was not in compliance with the financial  covenants
       as of November 30, 1999 and  therefore  the entire  amount of the debt in
       non  compliance  relating  to such  agreements  has  been  classified  as
       current.  The  Company  has  also  classified  all  debt  ($14,065)  with
       subjective acceleration clauses in current portion of long-term debt.

10.Obligations under Capital Leases

       The Company leases certain equipment under capital lease agreements.  The
       equipment  leases have  original  terms  ranging from 3 to 5 years.  Most
       equipment  leases have purchase  options at the end of the original lease
       term.  Future  minimum  payments  by  year  and  in the  aggregate  under
       noncancellable  capital  leases  consist of the following at November 30,
       1999:

<TABLE>
<CAPTION>

               <S>                           <C>

                2000                          $ 264,047
                2001                            253,418
                2002                            227,745
                2003                            134,431
                2004                             86,336
                                           ------------------

Total minimum lease payments                    965,977
Amount representing interest                   (118,629)
                                           ------------------

Present value of net minimum lease payments     847,348

Current portion                                (231,620)
                                           ------------------
                                              $ 615,728

                                           ==================


</TABLE>

                                      F-20

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

11.Retirement Plan

       Effective June 8, 1990,  the Company  implemented  the Tower Tech,  Inc.,
       401(k)  Retirement Plan (the "Plan"),  a voluntary,  contributory  401(k)
       savings  plan.  The Plan  currently  permits  employees of the Company to
       commence  participation  in the Plan as of the first  January 1 or July 1
       following the  completion of twelve months of service and the  attainment
       of 18 years of age. Participants may make tax-deferred contributions from
       their compensation  during each year, subject to statutory limits imposed
       under  Section  401(k)  and other  applicable  sections  of the  Internal
       Revenue Code of 1986, as amended.  The Plan provides for a  discretionary
       matching  contribution by the Company  although none was made in 1999 and
       1998.  The matching  contribution,  if any, is allocated to  participants
       based on a percentage of participant's eligible contributions compared to
       total   eligible   contributions.    Eligible   contributions   are   the
       participant's contributions not to exceed 6% of compensation.

       Participants  in  the  Plan  are at  all  times  fully  vested  in  their
       contributions and in the earnings attributable to their contributions and
       become fully vested in Company  contributions  made on their behalf after
       seven years of service. The Plan permits withdrawals during employment in
       the event of proven  financial  hardship.  In the case of  termination of
       employment,  disability,  or death, a  participant's  account  balance is
       distributed to the participant (or his  beneficiary) in either a lump sum
       or part lump sum and part  installments  depending  on the  participant's
       vested balance.

12.Income Taxes

       The  benefit  (expense)  provision  for income  taxes for the years ended
November 30 are comprised of the following:

                                                    1999              1998
<TABLE>
<CAPTION>

<S>                                           <C>               <C>

Current:
Federal                                        $         -       $         -
                                               --------------    ---------------

Deferred:
Federal                                            (1,998,023)        1,431,745
State                                                (332,613)          238,343
                                                --------------    --------------

Total deferred                                     (2,330,636)        1,670,088
                                                --------------    --------------

Income tax benefit (expense)                    $  (2,330,636)    $   1,670,088
                                               ===============    ==============

</TABLE>

                                      F-21

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

12.Income Taxes, continued

       The following is a  reconciliation  of the statutory  federal  income tax
rate to the Company's effective income tax rate:

                                                    1999            1998
<TABLE>
<CAPTION>

<S>                                                <C>              <C>

Statutory federal income tax rate                    34 %            34%
Change in valuation allowance                       (87)             -
Other                                                 3               4
                                                  ---------        ---------

Effective income tax rate                           (50)%            38%
                                                  =========        =========

</TABLE>

       Deferred tax  liabilities  and assets at November 30 are comprised of the
following:

                                                     1999              1998
<TABLE>
<CAPTION>

<S>                                               <C>              <C>

Deferred tax liabilities:
Depreciation                                     $    698,687       $   359,422
Workers' compensation                                     -              21,712
                                                  -----------       ------------

Total deferred tax liability                          698,687           381,134
                                                  -----------       ------------

Deferred tax assets:
Accounts receivable allowance                         317,280           109,065
Warranty reserve                                      237,960            79,320
Other                                                  39,660           120,313
Net operating loss carryforward                     4,186,238         2,387,544
                                                  -----------         ----------

Total deferred tax assets before valuation
    allowance                                       4,781,138         2,696,242

Valuation allowance for deferred tax assets        (4,082,451)              -
                                                  ------------      ------------

Total deferred tax asset                              698,687         2,696,242

Net deferred tax asset                           $        -       $   2,315,108
                                                 =============     =============


</TABLE>

                                      F-22

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

12.Income Taxes, continued

       FAS 109 requires that the Company record a valuation allowance when it is
       more likely than not that some  portion or all of the deferred tax assets
       will not be realized. The ultimate realization of the deferred income tax
       assets depends on the Company's  ability to generate  sufficient  taxable
       income in the future.  In the fourth  quarter of fiscal 1999,  management
       determined  that,  based on the Company's  inability to generate  taxable
       income in 1999 and 1998, it is more likely than not that the Company will
       not  realize the net  deferred  tax  assets.  Therefore,  the a valuation
       allowance was established against the net deferred tax asset.

       At November 30, 1999, the Company had a net operating  loss  carryforward
       (NOL) for regular tax purposes of approximately  $10,500,000  expiring in
       2009 to 2019. The ability of the Company to utilize the NOL  carryforward
       to reduce future  income taxes may be limited upon  occurrence of certain
       capital stock  transactions  during any three-year period resulting in an
       aggregate ownership change of more than 50%.

13.    Related Party Transactions

       R&B  Enterprises  ("R&B"),  an affiliate of Lincoln E.  Whitaker who is a
       director of the Company,  is an independent sales  representative for the
       Company.  As a sales  representative,  R&B  purchases  products  from the
       Company  for resale and sells  products  as an agent for the Company on a
       commission  basis.  During  1999 and  1998,  R&B  purchased  $52,950  and
       $16,760,  respectively,  of products from the Company and earned  $44,587
       and $14,255 respectively, in commissions.

       On December 29, 1995,  Tower Tech entered into a joint venture  agreement
       with J-Tech Enterprises, Inc. ("J-Tech"), to form Tower Tech SE ("TTSE").
       The original joint venture gave TTSE the sole and exclusive  right to use
       certain Tower Tech technology in Alabama,  Florida and Georgia.  On April
       30, 1999, Tower Tech entered into an agreement and plan of dissolution to
       acquire J-Tech's  interest and dissolve the joint venture.  The aggregate
       purchase price of $430,677 was comprised of $100,000 in cash and $330,677
       of net receivables  owed to the Company by TTSE. Tower Tech also received
       all cash, accounts receivable and inventory, and assumed accounts payable
       and other  current  liabilities  of TTSE.  The  transaction  resulted  in
       $398,200,  which is being  amortized  on a  straight-line  basis  over 20
       years.

                                      F-23

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

14.Net Earnings (Loss) Per Share

       Financial  Accounting  Standards No. 128,  Earnings Per Share ("FAS 128")
       requires  presentation  of "basic" and "diluted"  earnings per share,  as
       defined,  on the  face of the  income  statement  for all  entities  with
       complex capital structures.  Options and warrants to purchase 424,156 and
       371,356  shares of common stock at a weighted  average price of $6.84 and
       $6.93 were  outstanding  during the period  ended  November  30, 1999 and
       1998,  respectively,  but were not included in the computation of diluted
       EPS because the effect of these outstanding options and warrants would be
       antidilutive.

15.Stockholders' Equity (Deficit)

       At November 30, 1999, and 1998, the Company had outstanding  warrants and
       options allowing the holders to purchase a total of approximately 424,156
       and 371,356  shares,  respectively,  of the Company's  Common Stock at an
       average  price of $6.84 and $6.93 per share,  respectively,  expiring  at
       various periods through July 2007. These warrants and options were issued
       in  conjunction  with the  initial  public  offering,  various  financing
       agreements with unrelated individuals and the Company's stock option plan
       (see Note 16).  Warrants for 50,000 shares of common stock were exercised
       at an average exercise price of $4.50 during 1998. No options or warrants
       were exercised during 1999.

16.Stock Option Plan

       In October  1997,  the Company  amended the Tower Tech,  Inc.  1993 Stock
       Option Plan (the  "Plan").  Under the Plan,  the Company is authorized to
       issue up to 500,000 shares of common stock pursuant to stock options. The
       Plan is administered by a committee consisting of at least two members of
       the  Board  of  Directors  who  are not  employees  of the  Company.  The
       committee has not established a fixed formula for awarding  options under
       the Plan.  Options  under the Plan can be in the form of incentive  stock
       options  or   nonqualified   stock   options.   The  exercise  price  for
       nonqualified  stock options issued under the Plan may be for more or less
       than the fair market  value of the common  stock at the time an option is
       granted.  The exercise price for incentive stock options must be equal to
       the fair  market  value of the common  stock at the time the  options are
       granted.  There have been no stock options  issued with an exercise price
       less than the market price of common  stock at the date of issuance.  All
       stock  options  granted  through  1999  have  terms of ten years and vest
       incrementally 20% each year.

                                      F-24

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

16.Stock Option Plan, continued

       Vested  options may be exercised  after five years of  employment or upon
       termination  from the Company.  The Company has elected to follow APB No.
       25, Accounting for Stock Issued to Employees and related  Interpretations
       in accounting  for the Plan.  Under APB No. 25,  compensation  expense is
       recognized for the  difference  between the option price and market value
       on the  measurement  date. No  compensation  expense has been  recognized
       because the exercise price of the stock options  equaled the market price
       of the underlying stock on the date of grant.

       In  1995,  the  FASB  issued  FASB  Statement  No.  123  "Accounting  for
       Stock-Based  Compensation"  ("SFAS 123") which,  if fully  adopted by the
       Company,  would change the methods the Company applies in recognizing the
       cost of the Plan. Adoption of the cost recognition provisions of SFAS 123
       is optional  and the  Company has elected not to adopt these  provisions.
       However, the Company is required by SFAS 123 to provide the following pro
       forma  disclosures  as  if  the  Company  adopted  the  cost  recognition
       provisions of SFAS 123 with respect to the Plan.

       Pro forma  information  regarding  net income and  earnings  per share is
       required  by FAS No. 123 and has been  determined  as if the  Company had
       accounted  for its employee  stock options under the fair value method of
       the Statement. The fair value for these options was estimated at the date
       of grant using a  Black-Scholes  option  pricing model with the following
       weighted-average assumptions for fiscal 1999 and 1998:

<TABLE>
<CAPTION>

<S>                                        <C>           <C>

 Assumption                                 1999          1998

Expected Term                               6.00          6.00
Expected Volatility                         45.88%        45.13%
Expected Dividend Yield                     0%            0%
Risk-Free Interest Rate                     N/A           5.50%

</TABLE>

       The  Black-Scholes  option  valuation  model  was  developed  for  use in
       estimating  the fair  value of  traded  options,  which  have no  vesting
       restrictions and are fully  transferable.  In addition,  option valuation
       models require the input of highly subjective  assumptions  including the
       expected  stock price  volatility.  Because the Company's  employee stock
       options have characteristics significantly different from those of traded
       options,  and because  changes in the subjective  input  assumptions  can
       materially affect the fair value estimate,  in management's  opinion, the
       existing models do not  necessarily  provide a reliable single measure of
       the fair value of its employee stock options.

                                      F-25

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

16.Stock Option Plan, continued

       The Company's pro forma information follows for November 30:

                                               1999               1998
<TABLE>
<CAPTION>

<S>                                     <C>                <C>

Net loss as reported                     $   (6,984,485)    $    (2,671,232)
Pro Forma                                    (7,124,074)         (2,701,459)
Loss per share as reported                        (1.95)              (0.75)
Pro forma                                         (1.99)              (0.76)

</TABLE>

       A summary of the status of the Company's stock options as of November 30,
       1999 and November 30,  1998,  and the changes  during the years ending on
       those dates is presented below:

                   1999                           1998
-----------------------------------    -----------------------------
<TABLE>
<CAPTION>

       <S>               <S>           <S>            <S>
                         Weighted                      Weighted
        # Shares         Average       # Shares        Average
     of Underlying       Exercise     of Underlying    Exercise
        Options           Prices        Options         Prices
--------------------   ------------   --------------   --------------
        <C>            <C>            <C>            <C>
         301,785        $  6.50        214,094        $  6.66
               -              -        124,700           6.25
               -              -              -              -
          (5,760)          6.25         29,329           6.61
          (5,440)          6.25          7,680           6.25
      ---------------               --------------
         312,985           6.49        301,785           6.50

     ================               ==============
         172,062           6.43        103,750           6.40
</TABLE>


       The weighted-average  fair value of options granted during the year ended
       November 30, 1998 was $2.72. No options were granted in 1999.

       The  following   table   summarizes   information   about  stock  options
       outstanding at November 30, 1999:

<TABLE>
<CAPTION>

                          Options Outstanding           Options Exercisable

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

<S>                <S>          <S>        <S>          <S>         <S>
                   Number       Wgtd. Avg. Wgtd. Avg.   Number      Wgtd. Avg.
   Range of       Outstanding   Remaining   Exercise  Exercisable    Exercise
 Exercise Prices  at 11/30/99  Contr. Life   Price    at 11/30/99     Price
----------------  -----------  -----------  --------  -----------   -----------
<C>                <C>           <C>        <C>        <C>             <C>
$6.25 to $8.25      298,780       6.63       $6.36      166,380         $6.33
$9.00 to $10.00      14,205       7.64       $9.27        5,682         $9.27
---------------    ---------     ------      ------     --------       --------
$6.25 to $10.00     312,985       6.67       $6.49      172,062         $6.43
                  ==========                         ============

</TABLE>

                                      F-26

<PAGE>

Tower Tech Inc.

Notes to Financial Statements, continued

17.      Commitments and Contingencies

       Included  in cost of  goods  sold and  constructed  for the  years  ended
       November 30, 1999 and 1998 are $1,622,422 and $671,267,  respectively, of
       expense to retrofit and service towers  previously  sold. The Company has
       recorded  a  liability  for  estimated  warranty  costs of  $600,000  and
       $200,000 at November 30, 1999 and 1998, respectively. Management believes
       the warranty reserve is sufficient to cover future warranty costs.

       The Company is a defendant  in a lawsuit  filed  December  14, 1999 which
       alleges that the Company,  through one of its  licensees,  sold defective
       towers to the  plaintiff  and the Company  refuses to correct the alleged
       defects. The plaintiff is seeking damages in excess of $3.5 million, plus
       continuing  losses  and  punitive  damages.  The  Company  is  vigorously
       defending the allegations and has filed an answer denying the plaintiff's
       claims.  Since discovery has not been conducted on the case, a reasonable
       judgement  cannot be made as to the likely outcome or estimated  loss, if
       any, resulting from this case.

       In 1998,  the Company  entered into a settlement  agreement in connection
       with litigation with a customer that required a final settlement  payment
       of $100,000 on December 15, 1999.  The Company is currently in default on
       the final  payment.  Under the terms of the  settlement  agreement,  upon
       default,  a consent  judgement  may be entered  against  the  Company for
       $250,000.  At November 30, 1999, the Company had $100,000  accrued and is
       currently negotiating with the plaintiff in settlement of the matter.

       The Company is a defendant in certain other litigation  related primarily
       to  default  of  payments  on  trade  accounts  and  employment  matters.
       Management is of the opinion that liabilities, if any, arising from these
       actions  will not  have a  material  effect  on the  Company's  financial
       position.

18.Licensing Agreements

       The Company has entered  into  certain  license  agreements  with various
       international  cooling tower companies.  The license agreements grant the
       licensees an exclusive, nontransferable right and license to manufacture,
       develop and promote  cooling  towers,  using the Company's  technology in
       specified  regions,   such  as  Mexico,   India,  South  Africa  and  the
       Mediterranean  area.  Under the agreements,  the Company earns an initial
       fixed,  nonrefundable  technology  transfer  fee  upon  delivery  of  the
       technology materials.  No fees were earned during the year ended November
       30, 1999 and 1998. Pursuant to certain agreements,  the Company will earn
       continuing  royalties for all Licensed Products promoted by the licensee,
       although no such royalties have been earned through November 30, 1999.

       The agreements  with two  international  cooling tower companies give the
       Company an option to purchase  49% of a company set up to market  cooling
       towers using the TTEF  technology in specified  regions.  At November 30,
       1999, the Company has not exercised these options.

Tower Tech Inc.

Notes to Financial Statements, continued

19.Subsequent Events

       Effective December 1999 the Company entered into a $1.1 million lease for
       equipment.  The term of the lease is 36  months  with  monthly  payments,
       beginning in December  1999, of $25,000.  At the end of the lease term or
       any time during the lease,  the Company can  purchase the  equipment  for
       $516,097.

       In March  2000,  Tower Tech sold the  Chickasha  manufacturing  plant for
       $434,937, which resulted in a loss of approximately $144,000. The loss is
       included in the  November  30, 1999 income  statement  in gain on sale of
       property, equipment and rental fleet.

                                      F-27