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, 1998

     [ ] 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:
Title of each class -- 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 for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X No ____

       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 issuer's revenues for its most recent fiscal year.  $21,044,304.


<PAGE>



       State  the   aggregate   market   value  of  the  voting  stock  held  by
non-affiliates  computed by  reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days.  (See  definition  of  affiliate in Rule 12b-2 of the Exchange
Act).  $6,012,216  based on 2,004,072  shares at $3.00 per share,  the last sale
price of the Common  Stock on February 25, 1999.  (For  purposes of  calculating
this amount only,  all the directors  and executive  officers of the issuer have
been treated as affiliates.)

                         (ISSUERS INVOLVED IN BANKRUPTCY
                     PROCEEDING DURING THE PAST FIVE YEARS)

     Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes No ----- -----

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

       State the number of shares outstanding of each of the issuer's classes of
common  equity,  as of the  latest  practicable  date.  3,576,311  shares  as of
February 25, 1999.

                       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,
1999.

       Transitional Small Business Disclosure Format (check one). Yes    No  X 





















                                       -2-


<PAGE>


                                TABLE OF CONTENTS

     Part I                                                 PAGE
 
Item 1.       Business. . . . . . . . . . . . . . . . . . . . . .  4

 Item 2.       Properties. . . . . . . . . . . . . . . . . . . . . 10

 Item 3.       Legal  Proceedings. . . . . . . . . . . . . . . . . 10

 Item 4.       Submission of Matters to a Vote of Security Holder. 10

                                     Part II

 Item 5.       Market for Registrant's Common Equity and Related
               Stockholder  Matters. . . . . . . . . . . . . . . . 11

 Item 6.       Management's Discussion and Analysis of Financial
               Condition and Results of Operations. . . . . . . .  11

 Item 7.       Financial  Statements.  . . . . . . . . . . . . . . 18

 Item 8.       Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure. . . . . . . . .18

                                    Part III

 Items 9 - 12. Incorporated by reference from the Company's prox
               statement to be filed on or before March 30, 1999 . 19


                                     Part IV

 Item 13.      Exhibits and Reports on Form 8-K . . . . . . . . . . 20

               Financial  Statements . . . . . . . . . . . . . . . .F-1

               Index to Exhibits.  . . . . . . . . . . . . . . . . .25












                                       -3-


<PAGE>


                                     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 reduces many of the deficiencies  common to conventional design 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  low-boy  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.

       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.

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.




                                       -4-

       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 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.

       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,  most factory  assembled units are forced draft towers
and  interconnection  of some models of such towers  exacerbates  recirculation,
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 plastic 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.


                                       -5-
       Management  believes that a problem with many cooling towers manufactured
today arises from water  distribution  nozzles which 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  problem,  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  up to two feet 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 gear boxes, 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 air stream and is protected  from the natural  elements
by the cooling  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 network 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.  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.

                                       -6-


<PAGE>


       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 foot module.  The individual module capacities range from 50 nominal tons
to  approximately  1,000 nominal tons,  or  approximately  150 GPM to 3,000 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 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,  petro-chemical  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.

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."

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.
                                       -7-


<PAGE>


Product Design and Research and Development

       The  Company  spent  $1,810,985,  $667,222,  $386,474,  and  $108,183  on
research  and  development  during  fiscal  years  1998,  1997,  1996 and  1995,
respectively.  A  significant  portion  of the 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 Company is continuously evaluating its products and
manufacturing  methods.  The Company has not developed any significant  products
other  than  the 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 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.  The Company  also
pre-casts  most of the  concrete  component  parts  of its TTCT  Series  modular
concrete cooling towers.

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,  and  management  believes that the Company's  relationships  with its
suppliers are good.

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 opened  direct
offices or entered into 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 Spain,  Peru,
New Zealand,  Australia, and the United Kingdom. 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 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.
                                       -8-
Warranties and Customer Service

       The Company  provides a limited  warranty on its products.  In 1998,  the
Company  incurred  $671,267  of expenses to  retrofit  and  service  towers,  as
compared to $426,699 during fiscal 1997. 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
1998 is approximately 5%.

       A number of the  Company's  competitors  manufacture  and market  cooling
towers which use fiberglass  and other  composite  materials,  PVC cellular fill
media and other  construction  and design  refinements  which are similar to the
TTEF Series cooling tower.  Several  competitors  manufacture  factory assembled
fiberglass  cooling towers,  including units which can be connected in a series.
Management believes that its TTEF Series cooling tower offers 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, 1998, the Company had 125 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.










                                       -9-


<PAGE>


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  its   manufacturing  and  assembly
operations as well as interim 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  20,000 square feet
is under  construction  on the site and should be completed  in March 1999.  The
Company  will move its  general  headquarters  to this new  facility  when it is
completed.  The Oklahoma Industries Authority ("OIA") partially financed the new
manufacturing plant through an industrial revenue bond issuance in the amount of
$4,405,000.  Management  estimates  the  Company's  total  investment in the new
manufacturing  facility will be $11.5  million,  including $6.0 million to equip
the facility.  For  additional  information  about the 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's facilities also include approximately 20 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  two  one-story  office  buildings  having
approximately  6,500  square  feet.  The  Company  plans to  lease or sell  this
property.

       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.

Item 3.  Legal Proceedings

       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.

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.









                                      -10-


<PAGE>


                                     PART II

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

       The Company's Common Stock is traded  over-the-counter  and 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>  

       Quarter Ended                  High             Low

       February 28, 1996              7 5/8             4
       May 31, 1996                   10 1/4            6 7/8
       August 31, 1996                12 1/2            8 3/8
       November 30, 1996              15                9 1/8
       February 28, 1997              11 1/4            10
       May 31, 1997                   9 5/8             8
       August 31, 1997                9 3/8             7 3/8
       November 30, 1997              8 5/8             7
       February 28, 1998              7 1/4             6 1/4
       May 31, 1998                   6 7/8             6 1/8
       August 31, 1998                5 1/2             4 1/2
       November 30, 1998              3 4/5             3 1/2
</TABLE>

       On February 25, 1999, the last sale price of the Common Stock as reported
by NASDAQ was $3.00 per share.  On February 25, 1999,  the Common Stock was held
of record by 55  holders.  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 has been in the  conventional  cooling tower  business  since
1985, which consists of  constructing,  repairing and upgrading forced draft and
induced  draft wood  cooling  towers and selling  spare  parts for  conventional
cooling  towers.  In 1991, the Company began  developing its TTMT Series cooling
tower,  and the Company  shifted its emphasis  from  conventional  cooling tower
projects to developing the TTMT Series cooling tower.  The Company began selling
prototypes  of its modular  cooling  tower in 1991 and continued to sell modules
during the  development  stage of the  product.  Development  of the TTMT Series
cooling tower was largely completed during 1994. To signify that the Company has
redesigned and is now  manufacturing  the main components of the modular cooling
tower,  the Company changed the "TTMT"  designation to "TTEF".  The Company also
developed the TTCT Series  concrete  cooling tower during 1995. This product was
introduced to the market in 1995. The Company also sells

                                      -11-


<PAGE>


cooling tower  components,  cooling tower accessory  equipment,  and Fre-Dox(TM)
water treatment equipment;  and during FY 1998 and FY 1997 rented cooling towers
to customers.  Additionally,  the Company  develops  technology  for the cooling
tower industry and markets that  technology  either directly  through  licensing
agreements or in the form of its products.

       The Company derives revenue from the following  principal  sources:  TTEF
Series  cooling tower sales;  TTCT Series cooling tower  construction  projects;
modular cooling tower rentals; other tower revenue consisting of parts sales and
service,  accessory  equipment sales, water treatment equipment sales; and other
operating  revenue  consisting  of fees for the  licensing of its  technology to
others, primarily internationally. TTEF Series cooling towers typically are sold
on a bid basis and revenue is  generally  recognized  when towers are shipped to
customers.  TTCT Series concrete  cooling tower projects are typically sold on a
fixed-price  basis.  Revenue and related  costs for TTCT  Series  cooling  tower
projects are recognized under the percentage of completion method of accounting.
Rental towers were rented under  short-term  or  month-to-month  agreements  and
revenue was  recognized  when earned.  Revenues from  licensing  agreements  are
recognized  when  a  non-cancelable   contract  is  signed  specifying  a  fixed
non-refundable licensing fee, technology materials are delivered to the licensee
and governmental approval has been obtained when required.

Results of Operations

     Twelve  Months  Ended  November  30, 1998  Compared to Twelve  Months Ended
     November 30, 1997

         For the twelve  months ended  November 30, 1998,  total tower  revenues
increased to $21,044,304 from $18,690,454 for the comparable period in the prior
year. During the current twelve month period, 44 percent of total tower revenues
was derived from sales of 275 modular  fiberglass  cooling towers, 27 percent of
total tower revenues was derived from design and construction of the TTCT Series
concrete  cooling  towers,  26 percent of total tower  revenues was derived from
rental of  modular  fiberglass  cooling  towers,  and 3 percent  of total  tower
revenues was derived from other tower revenue.  In the  comparable  twelve month
period in 1997, 65 percent of total tower revenues was derived from sales of 317
modular  cooling  towers,  19 percent of total tower  revenues  was derived from
design and  construction of modular  concrete  towers,  7 percent of total tower
revenues was derived  from rental of modular  cooling  towers,  and 9 percent of
total tower  revenues  were  derived from other tower  revenue.  The decrease in
tower sales  revenue for 1998 is due not only to the decrease in the quantity of
units sold but also to the sales of smaller capacity,  less expensive units. The
decrease  in the  number of units  sold is due  primarily  to the  delays in the
completion and occupancy of the Oklahoma City manufacturing  plant combined with
delays  in the  delivery  of the  manufacturing  equipment  and  tooling.  It is
estimated  that these delays will have a negative  impact through second quarter
1999.  The  increase in concrete  tower  revenues is due to the  increase in the
number and size of jobs completed and in process.  The increase in tower rentals
is due mainly to one rental  contract for 80 of the  Company's  largest  modular
fiberglass  cooling towers in the third quarter of 1998.  Other tower revenue is
down from the previous  year due to the same reasons that tower sales  decreased
combined with less sales of  proprietary  parts to  licensees.  No new licensing
agreements  were  finalized in 1998 although  negotiations  are  continuing  for
agreements for Spain,  Peru,  New Zealand,  Australia,  and the United  Kingdom.
Other operating revenue for the twelve months ended November 30, 1997,  consists
of technology  transfer  fees which were  realized as a result of  international
license  agreements  with Tecno Procesos  Industriales  covering the Republic of
Mexico.  These  technology  transfer fees  demonstrate the Company's  ability to
capitalize  on the  technology  it develops . The Company is in the  business of
developing  technology  for  the  cooling  tower  industry  and  marketing  that
technology,  either  directly  or in the form of  products  such as its  modular
cooling towers.
                                      -12-


<PAGE>


       The Company's cost of goods sold and constructed  during the twelve-month
period  ended  November  30, 1998 was  $17,594,126  or 84 percent of total tower
revenues, as compared to $13,842,816 or 74 percent, during the comparable period
in 1997.  Overall  margin  decreased as a result of concrete  cooling tower cost
overruns on certain jobs and lower  margins  incurred in the modular  fiberglass
cooling  tower  line due to the  additional  costs  associated  with the  plant,
equipment and tooling  delays.  However,  these  decreases in margin were mostly
offset by an increase in rental  revenues,  which is a higher margin  operation.
Included in the cost of goods sold for the twelve month  period  ended  November
30,  1998,  is $671,267 to retrofit and service  towers  previously  sold.  This
compares to retrofit and warranty costs of $426,699 during the fiscal year ended
November 30, 1997.  The Company has a complete  quality  control system in place
which management believes will control such expenditures in future periods.

         The  twelve-month  period ended November 30, 1998 reflected an increase
in general and administrative  expenses from $1,703,896 in 1997 to $3,033,369 in
1998.  The  increase is due mainly to the  addition of office  staff and related
expenses,  additional  expenses related to the OKC facility,  and an increase in
bad debt expense. Selling expenses increased from $1,309,292 to $1,989,322.  The
increase is due to increased sales and marketing  efforts for both cooling tower
lines, water treatment  equipment,  accessory  equipment and rental towers. This
includes  an  increase  in sales staff and  expenses  related  primarily  to the
opening of direct domestic and international sales offices.  Due to the downturn
in certain  international  economies,  the  Company  has taken  steps to curtail
expenses in those areas.  Management expects the overall increased investment in
selling  expenses  to have a  continued  positive  impact on  revenues in future
periods.

         Research and  development  expenses  increased  from $667,222 in fiscal
1997 to $1,810,985 in fiscal 1998. A significant  portion of the increase in R &
D costs is related to the  redesign of the TTMT Series  tower to the TTEF Series
tower in order to lower future  production costs. With the redesign of the tower
combined with  manufacturing  of component parts in-house,  management  believes
that the Company has  positioned  itself to grow its share of the cooling  tower
market.  With the lower production  costs,  management  believes that it will be
able to lower prices to its customers and, at the same time,  increase  margins.
Management  expects to continue to conduct  research to develop  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 1998 expenditures.

         The  Company's  loss from  operations  for the year ended  November 30,
1998, was $3,383,498 as compared to income from operations of $2,027,723 for the
prior year.  The Company's net loss was  $2,671,232  compared to a net income of
$2,062,951 for the year ended November 30, 1997.

         The Company recognized an income tax benefit of $1,670,088 for the year
ended  November 30, 1998,  compared to an income tax benefit of $615,919 for the
comparable  period in 1997. 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.  Management has determined that, based
on the Company's  ability to generate  taxable income in two  consecutive  years
(1997 and 1996),  and the gain from the sale of the rental operation in December
1998,  it is more likely than not that the Company will realize the net deferred
tax assets.

                                      -13-


<PAGE>



       As of February 1, 1999, the Company's  estimated  backlog of $6.9 million
includes two contracts for TTCT Series modular  concrete cooling towers totaling
$1.6 million.  One concrete  tower  contract is scheduled for  completion in the
second  quarter of 1999 and the remaining  contract is projected to be completed
in the fourth  quarter of 1999.  Estimated  backlog for the TTEF Series  modular
cooling  towers is $5.3  million.  $2.2  million is  scheduled  for  delivery in
February 1999, with the balance  scheduled for delivery in the second quarter of
fiscal year 1999.

Liquidity and Capital Resources

       At  November  30,  1998,  the Company  had a working  capital  deficit of
$3,890,374. Pro forma working capital at November 30, 1998, considering the sale
of the Company's rental operations, as described below, was $6,725,000.  Working
capital at November 30, 1997 was $6,904,910. The Company's cash flow provided by
(used in) its operating,  investing and financing activities during fiscal years
1998 and 1997 are as follows:
<TABLE>
<CAPTION>

                                   1998                      1997
                                   ----                      ----
<S>                            <C>                        <C> 

Operating activities            ($495,572)                 ($571,023)
Investing activities           ($11,912,145)              ($3,695,164)
Financing activities            $11,859,561                $3,967,809
</TABLE>

       In 1998,  the Company used capital of  $5,012,935  to increase the rental
tower fleet. 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,  it
will enable the Company to better manage  inventory levels and reduce costs when
the new  manufacturing  facility is fully  operational  and efficient.  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, 1998, costs
in excess of billings and earnings on  uncompleted  contracts  were  $437,207 as
compared to costs in excess of billings and  estimated  earnings on  uncompleted
contracts  of $719,447 at November  30, 1997.  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.  However, in an effort
to control  costs and profits on future  concrete  cooling tower  projects,  the
Company will utilize precast panels in lieu of "tilt-up" on site construction.

       Scheduled  principal  payments on capital leases will total $166,683 over
the next twelve  months.  In addition,  $11,029,319  of principal  payments will
become due on the Company's  debt during the next twelve  months.  Such payments
are  expected to be  satisfied  primarily  from the  proceeds of the sale of the
rental operations.




                                      -14-


<PAGE>


       Substantially  all of the Company's planned capital  expenditures  during
1999 will be related to the  completion  of the new  manufacturing  facility and
construction  of the new office  facility  in south  Oklahoma  City.  Management
estimates the Company's total investment in the new manufacturing  facility will
be $11.5 million,  including $6.0 million to equip the facility.  As of November
30,  1998,  the Company had  incurred  approximately  $9 million  related to the
manufacturing  facility.  Construction of the new office facility is expected to
be completed in March 1999. At November 30, 1998, construction expenditures were
$1.1 million. The manufacturing facility includes equipment to allow the Company
to produce parts used in the modular  cooling  towers which have been  purchased
from outside vendors.  Management  believes that product costs can be reduced by
producing  these parts  in-house.  However,  the Company has  incurred,  and may
continue to incur, unforeseen costs and production problems, particularly in the
short term, in finalizing the bringing of these processes  in-house and becoming
efficient at manufacturing.

       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 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.  A debt service
reserve  fund of  $157,000  was also set aside from the bond  proceeds.  The OIA
holds a mortgage on the facility to collateralize the bond indebtedness.

       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 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.

       In September  1997,  the Company  entered into a loan  agreement with the
City of  Oklahoma  City  under  which 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, 1998, all of these funds had
been  advanced to the  Company.  Initially  the loan bears  interest at 20 basis
points above the LIBOR rate,  adjusted  monthly,  and  interest  only is payable
quarterly.  When HUD provides  permanent  financing,  the interest  rate becomes
fixed at the rate  charged by HUD to the City and  principal  and  interest  are
payable  quarterly  based  on an  eight-year  amortization  period.  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.

       Effective  December 31, 1997, the Company  entered into a $3,500,000 line
of  credit   agreement  with  a  financial   institution   for  working  capital
requirements and completion of the Company's  manufacturing facility in Oklahoma
City.  This line was  increased  to  $8,500,000  to help fund  increases  in the
Company's  rental  fleet.  The  outstanding  balance at  November  30,  1998 was
$8,333,721.  Interest was payable monthly at a variable rate of two basis points
over national prime rate. The agreement is  collateralized  by certain  accounts
receivable,  inventory,  rental fleet and patents. This credit facility was paid
off in December 1998 with proceeds from the sale of the rental operations.
                                      -15-


<PAGE>


       The  Company  has a line of credit  at  Chickasha  Bank in the  amount of
$400,000 for short-term  cash flow needs,  of which $330,000 was  outstanding at
November 30, 1998. This line of credit matures April 1, 1999 and has an interest
rate of 10%.

       In April 1998, the Company  finalized a $2,000,000  construction loan for
the Oklahoma City office facility which is expected to cost  approximately  $2.4
million.  The loan  matures in April 1999 and bears  interest  at 9.75%  payable
monthly.  At November  30,  1998,  $1,069,813  was  outstanding.  The Company is
negotiating  with the lender to increase  this loan to $2.4  million and convert
this loan to permanent financing when construction is complete.

       In December  1998,  the company  consummated  the sale of its  industrial
modular  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,  is
due and payable 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.  Due to the sale of the Rental  Operations,
the private  placement  of 10%  Convertible  Debentures  that was in progress at
August 31, 1998, was cancelled.  The Company expects to record a pre-tax gain of
approximately $6.7 million in the first quarter of fiscal 1999.

       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.

       In December  1998, the Company  entered into a $4,000,000  line of credit
agreement  with  a  financial  institution  for  working  capital  requirements.
Interest is payable monthly at a variable rate of 1.5% over national prime. This
line of credit matures in January 2000. This credit  facility is  collateralized
by certain accounts  receivable,  inventory and general  intangibles,  and as of
February 23, 1999, $3.3 million was outstanding.

       Management recognizes that the Company is highly leveraged and that while
financial  leverage  can  increase  the  Company's  return  on  equity,  it also
increases  the risk  presented  to  equity  owners  of the  Company.  Management
believes that the proceeds from the sale of the Rental Operations  combined with
the  $4,000,000  line of credit  will  provide  sufficient  capital  to fund the
Company's  requirements  for the next four  quarters.  However,  the Company has
positioned  itself to aggressively  grow revenues,  and accordingly,  increasing
accounts  receivable and inventory  levels would require  additional  financing.
However,  there  can be no  assurance  that the  Company  will be able to obtain
additional  financing,  and failure to do so would curtail the Company's growth
and operating results.

                                      -16-


<PAGE>


Year 2000 Compliance

     More than  twenty  months ago the  Company  developed a plan to address the
Year 2000 (Y2K) issue. The plan consists of the following steps and is ongoing:

     Testing of all computer  equipment,  plant production  equipment,  hardware
     and/or software.

     Upgrading or replacing,  as needed, any component found
     to not be Y2K compliant.

     Contacting our vendors, customers and business partners to ensure that they
     are also addressing the Y2K issue. And, if any are found to not be 
     addressing the Y2K issue, establish alternative sources for those goods
     and/or services supplied by the non-Y2K compliant party.

Accordingly,   the  Company  has  upgraded  its  accounting   systems  and  main
application  software  to  the  latest  versions  available  from  the  software
developers at a cost of approximately  $100,000.  Each of these various software
developers  has stated  that the  version(s)  of  software  to which the Company
upgraded is or will be Y2K compliant.  Any computer equipment,  plant production
equipment,  hardware or software found to not be Y2K compliant has been, or will
be  upgraded  or  replaced  as needed in order to  insure  uninterrupted  normal
operation of production  and office  processes.  As a result of our Y2K plan and
information  furnished  to us by our  business  partners,  the Company  does not
expect to be materially affected by the Y2K problem.

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.

Earnings Per Share

       In  February  1997,  the  financial  Accounting  Standards  Board  issued
Statement of Financial  Accounting  Standards  No. 128,  Earning Per Share ("FAS
128"). FAS 128 changes the computation, presentation and disclosure requirements
for 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.  FAS 128 is effective for financial
statements  issued for periods  ending  after  December  15,  1997 and  requires
restatement  of all prior  period  earnings per share  amounts.  The Company has
adopted FAS 128 and restated 1997 earnings per share with only a minimal impact.

                                      -17-              


<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 Accounting and
         Financial Disclosure.

         None.












































                                      -18-


<PAGE>


                                    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, 1999.















































                                      -19-


<PAGE>


                                     PART IV
Item 1. Exhibits

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

     Exhibit No.     Description

     3.1-1           Amended and Restated  Certificate of Incorporation of Tower
                     Tech, Inc.

     3.2-1           Amended Bylaws of Tower Tech, Inc.

     3.3-1           Amendment to Bylaws

     4.1-7           Form of 10% Subordinated Convertible Debenture

     4.2             Omitted

     4.3-1           Form of Stock Certificate

     4.4             Omitted

     4.5-8           Form of Placement Agent Warrants

     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  Loan  Agreement  between Tower  Tech,  Inc.,  and
                     Chickasha Bank & Trust, dated September 22, 1997.

     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

                                      -20-
<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         Promissory  Note between Tower Tech, Inc., and People First
                     Bank, dated December 7, 1998.

     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, 1998.

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

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

                                      -21-


<PAGE>


     10.21-2         Promissory Note between Tower Tech, Inc. and  Southwestern
                     Bank & Trust Company, dated April 30, 1998.

     10.22-2         Business  Loan  Agreement   between  Tower  Tech,  Inc. and
                     Southwestern Bank & Trust Company, dated April 30, 1998

     10.23-2         Commercial  Security Agreement between Tower Tech, Inc. and
                     Southwestern Bank & Trust Company, dated April 30, 1998

     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           Omitted

     10.32           Omitted

     21.1-11         Tower Tech, Inc. subsidiaries

     23.1-11         Consent of PricewaterhouseCoopers LLP






                                      -22-


<PAGE>

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 to Form 10-QSB 
     for the quarter  ended May 31, 1998. 
3    Incorporated by reference from the same numbered  exhibit 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.
9    Incorporated  by reference  from the same  numbered exhibit to Form  10-QSB
     for  the  quarter  ended  August  31,  1997.
10   Incorporated by reference from the same numbered  exhibit to Form 8-K filed
     December 18, 1998. 11 Filed herewith.



b.   The company filed a report on Form  8-K on December 18, 1998.















                                      -23-


<PAGE>


                                   SIGNATURES

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

                                TOWER TECH, INC.


                                By: 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 1, 1999
-------------
Harold Curtis                 (Principal Executive Officer)

ss/ROBERT BRINK               President                            March 1, 1999
------------
Robert Brink                  (Principal Operating Officer)

ss/CHARLES D. WHITSITT        Chief Financial Officer              March 1, 1999
-------------------
Charles D. Whitsitt           (Principal  Financial Officer
                              and Principal Accounting Officer)

ss/LINCOLN E. WHITAKER         Director                            March 1, 1999
-------------------
Lincoln E. Whitaker

ss/LEON POAG                   Director                            March 1, 1999
---------
Leon Poag
















                                      -24-


<PAGE>

                         INDEX TO FINANCIAL STATEMENTS
                                                                         PAGE
Report of Independent Accountants. . . . . . . . . . . . . . . . . . .   F-2


Balance Sheets as of November 30, 1998 and 1997. . . . . . . . . . . .   F-3


Statements of Operations for the years ended November 30, 1998
      and November 30, 1997. . . . . . . . . . . . . . . . . . . . . .   F-4


Statements of Stockholders' Equity for the years ended November 30, 1998
      and  November 30, 1997. . . . . . . . . . . . . . . . . . . . . .  F-5


Statements of Cash Flows for the years ended November 30, 1998
      and November 30, 1997. . . . . . . . . . . . . . . . . . . . . . . F-6


Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . .   F-8




































                                       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 and cash flows present fairly, in all material
respects,  the financial  position of Tower Tech, Inc., at November 30, 1998 and
1997 and results of its  operations and its cash flows for the years then ended,
in conformity with generally  accepted  accounting  principles.  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
generally accepted auditing standards 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.



PricewaterhouseCoopers LLP
Oklahoma City, Oklahoma
February 19, 1999
























                                       F-2


<PAGE>


                                Tower Tech, Inc.
                                 Balance Sheets
                                                          November 30,
                                                   1998                   1997
                                             -----------------------------------
<TABLE>
<CAPTION>

<S>                                            <C>                 <C>                                                  
Assets
Current assets:
    Cash                                       $    3,798           $   551,954
    Accounts receivable, net of allowance of
      $275,000 and $172,645 respectively        4,678,685             5,740,404
    Accounts receivable, affiliate                432,216               327,295
    Notes receivable, current                     238,621               208,624
    Receivables from officers and employees        32,261                69,547
    Costs in excess of billings and estimated
      earnings on uncompleted contracts           437,207               719,447
    Inventory                                   5,468,702             3,027,656
    Restricted assets, current                    158,794               160,468
    Prepaid expenses                              176,430               129,273
    Deferred tax asset                          2,674,530                67,147
                                              -------------        -------------

      Total current assets                     14,301,244            11,001,815

Property, plant and equipment, net             16,630,165             9,604,258
Rental fleet, net                               6,789,217             2,023,738
Patents, net                                      230,327               213,092
Notes receivable, non-current, net of
      unamortized discount of $39,669             489,443               719,371
Deferred tax asset                                   -                  577,873
Other assets                                      616,335               716,258
                                             --------------        -------------

          Total assets                        $39,056,731           $24,856,405
                                              ===========            ===========

Liabilities and Stockholders' Equity Current liabilities:

    Current maturities of long-term debt      $11,029,319           $  439,308
    Current portion of obligations under
      capital lease                               166,683              129,079
    Accounts payable                            5,092,629            2,261,228
    Accounts payable, affiliate                      -                  10,577
    Book overdraft                                235,319              193,999
    Accrued liabilities                         1,030,692              601,039
    Interest payable                              501,530              318,540
    Customer deposits                             135,446              114,034
    Income tax payable                               -                  29,101
                                              --------------      --------------

Total current liabilities                      18,191,618             4,096,905
                                              ------------         -------------

Deferred tax liability                            359,422                  -     
                                              --------------       -------------

Long-term debt, net of current maturities      15,832,228            13,688,803
                                              ------------          ------------

Obligations under capital lease, net of
      current maturities                          154,751              171,907
                                              ------------          ------------

Liability for equity share of investment           78,946                  -     
                                             --------------        -------------

Commitments and Contingencies (Notes 6, 8,
      9, 12, and 16) Stockholders' equity:
Preferred stock, $.001 par value; 2,000,00
      shares authorized; no shares issued
      and outstanding at November 30, 1998
      and 1997                                       -                     -
Common stock,  $.001 par value; 10,000,000
      shares authorized; 3,576,311 and
      3,526,311outstanding at November 30,
      1998 and 1997, respectively                   3,577                3,527
Capital in excess of par                        8,278,561            8,066,403
Accumulated deficit                            (3,842,372)          (1,171,140)
                                              -------------        -------------

       Total stockholders' equity               4,439,766             6,898,790
                                              -------------        -------------

       Total liabilities and stockholders'
          equity                              $39,056,731           $24,856,405
                                              ===========            ===========

</TABLE>

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


                                       F-3


<PAGE>


                                Tower Tech, Inc.
                            Statements of Operations
                                                      Year Ended
                                                      November 30,
                                          1998                        1997
<TABLE>
<CAPTION>
<S>                                  <C>                          <C>  
                                     -------------------------------------------
Revenues:
    Tower sales                       $  9,235,101                 $12,127,978
    Concrete tower construction          5,716,664                   3,596,569
    Tower rentals                        5,462,758                   1,214,403
    Other tower revenue                    629,781                   1,751,504
                                      -------------                 ------------

           Total tower revenue          21,044,304                  18,690,454

    Other operating revenue                   -                        860,495
                                       ------------                -------------

           Total revenue                21,044,304                  19,550,949
                                       -----------                  ------------

Costs and expenses:
    Cost of goods sold and
      constructed                       17,594,126                  13,842,816
    General and administrative           3,033,369                   1,703,896
    Selling expenses                     1,989,322                   1,309,292
    Research and development             1,810,985                     667,222
                                       ------------                -------------

           Total costs and expenses     24,427,802                  17,523,226
                                       ------------                -------------

           (Loss)income from
           operation                    (3,383,498)                  2,027,723
                                       -------------                ------------

Other income (expense):
    Interest, net                         (899,066)                    (646,947)
    Miscellaneous                           20,190                       66,256
    Equity share of loss before
      taxes of investee company            (78,946)                        -      
                                       --------------              -------------

           Total other income (expense)   (957,822)                    (580,691)
                                       -------------               -------------

(Loss) income before income taxes        (4,341,320)                 1,447,032

Income tax benefit                        1,670,088                    615,919
                                        ------------               -------------

Net (loss) income                       $(2,671,232)               $ 2,062,951
                                         ===========                 ===========

Weighted average shares outstanding -
     basic                                3,556,010                  3,420,378
                                        ============                ============

Net (loss) income per common share -
      basic                             $     (0.75)               $      0.60
                                       ==============               ============

Weighted average shares outstanding -
      fully diluted                        3,556,010                 3,538,113
                                         ============               ============

Net (loss) income per common share -
      fully diluted                     $     (0.75)               $      0.58
                                       =============                ============

</TABLE>


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







                                       F-4


<PAGE>


                                Tower Tech, Inc.
                       Statements of Stockholders' Equity

  <TABLE>
<CAPTION>

                                                    Year Ended
                                                       November 30,
                                                 1998                   1997
                                           -------------------------------------
<S>                                         <C>                   <C>  

Common stock
Balance at beginning of period             $      3,527           $      3,371
    Exercise of warrants and options                 50                    156
                                           --------------          -------------

Balance at end of period                          3,577                  3,527
                                           ---------------         -------------

Capital in excess of par
Balance at beginning of period                8,066,403              7,187,948
    Exercise of warrants and options            212,158                878,455
                                            -------------          -------------

Balance at end of period                      8,278,561              8,066,403
                                             ------------           ------------

Accumulated deficit
Balance at beginning of period               (1,171,140)             (3,234,091)
    Net (loss) income                        (2,671,232)              2,062,951
                                            ------------            ------------

Balance at end of period                     (3,842,372)             (1,171,140)
                                             -----------             -----------

Total stockholders' equity                  $ 4,439,766            $ 6,898,790
                                             ===========             ===========

</TABLE>






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
























                                       F-5


<PAGE>

<TABLE>
<CAPTION>

                                Tower Tech, Inc.
                            Statements of Cash Flows
                                                          Year Ended
                                                          November 30,
                                                   1998                1997
<S>                                           <C>                  <C>  
                                            ------------------------------------
Cash flows from operating activities:
   Net (loss) income                          $ (2,671,232)       $  2,062,951
   Adjustments to reconcile net (loss)
        income to net cash used in
        operating activities:
      Depreciation and amortization                971,390             677,839
      Bad debt expense                             546,125             150,000
      Equity share of loss of investee              78,946                -
      Deferred tax benefit                      (1,670,088)           (645,020)
      Increase in notes receivable                    -               (840,495)
      Payment on note receivable                   199,932              37,500
      (Increase) decrease in accounts
         receivable                                515,594          (1,313,136)
      Increase in accounts receivable,
         affiliate                                (104,921)             (2,865)
      (Increase) decrease in costs in excess
         of billings                               282,240            (247,731)
      (Increase) decrease in receivables 
         from officers & employees                  37,286             (20,680)
      Increase in inventory                     (2,441,047)           (108,392)
      Increase in prepaid expenses                 (47,156)           (100,819)
      (Increase) decrease in other assets          381,580             (14,003)
      Increase (decrease) in accounts payable    2,831,400            (293,514)
      Increase (decrease) in accounts payable,
         affiliate                                 (10,577)             10,577
      Increase in accrued liabilities              612,644              62,744
      Increase (decrease) in customer deposits      21,413             (15,080)
      Increase (decrease) in income tax payable    (29,101)              29,101
                                                -------------        -----------

Net cash used in operating activities             (495,572)           (571,023)
                                                -------------        -----------

Cash flows from investing activities:
   Purchases of property and equipment          (6,868,872)         (6,041,602)
   Decrease in restricted assets                     1,673           3,785,680
   Additions to rental fleet                    (5,012,935)         (1,372,109)
   Increase in patent costs                        (32,011)            (67,133)
                                               --------------      -------------

Net cash used in investing activities          (11,912,145)         (3,695,164)
                                               ------------         ------------

Cash flows from financing activities:
   Proceeds from borrowings, net of costs       32,917,003          12,319,554
   Increase in book overdraft                       41,320             193,999
   Repayments of long-term debt and capital
      lease obligations                        (21,310,970)         (9,424,355)
   Proceeds from exercise of options and
      warrants                                      212,208            878,611
                                               -------------       -------------

Net cash provided by financing activities        11,859,561          3,967,809
                                                ------------        ------------

Net decrease in cash                               (548,156)          (298,378)

Cash at beginning of year                           551,954            850,332
                                               -------------        ------------

Cash at end of year                            $      3,798         $  551,954
                                              ==============        ============

</TABLE>

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









                                       F-6


<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, 1998 and 1997 was
$1,831,306 and $760,656, respectively.

Supplemental Schedule of Non-Cash Investing and Financing Activities

The Company  acquired  certain  property,  plant and equipment  under capital
lease obligations of $176,358 and $49,427 for the years ended November 30, 1998
and 1997, respectively.

The Company acquired certain real estate and  improvements,  and property, plant
and equipment during 1998 and 1997 by executing notes payable in the aggregate
amount of $418,658 and $139,219, respectively.

































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








                                       F-7


<PAGE>


Tower Tech, Inc.
Notes to Financial Statements

1.     General and 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.  The Company has also built
cooling  towers  based on the TTMT Series  modules  which the Company  rents for
short-term  or emergency  use to customers.  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, the Company
changed the TTMT designation to "TTEF" to signify the redesign of its towers.

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 is recognized when earned.

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  government  approval  has been  obtained  by the
licensee, when required. License fees are included in other operating revenue.

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:



                                       F-8


<PAGE>


Notes to Financial Statements, continued

1.     General and Summary of Significant Accounting Policies, continued

Property, plant and equipment, continued

         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).

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.

Warranty costs

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.





                                       F-9


<PAGE>


Notes to Financial Statements, continued

1.     General and Summary of Significant Accounting Policies, continued

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, 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  and  involve
uncertainties  and matters of  significant  judgment,  and  therefore  cannot be
determined with precision.

The  carrying   value  of  cash  and  cash   equivalents  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.
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.


Reclassifications

Certain  November  30,  1997  amounts  have been  reclassified  to conform  with
November 30, 1998 presentation.












                                      F-10


<PAGE>


Notes to Financial Statements, continued

2.       Contract Receivables

Contract receivables consist of the following at November 30:

                                                 1998                  1997
                                          --------------------------------------

  Completed contracts, including retainage    $ 224,917             $  419,904
  Contracts in progress:
      Current accounts                          612,330                190,141
      Retainage                                 377,467                 59,411
                                             ------------           ------------

                                             $1,214,714             $  669,456
                                            ============            ============

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

3.   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:

                                           1998                    1997
                                       ----------------     ------------------

   Cost incurred on uncompleted projects    $ 3,716,410            $ 2,010,501
   Estimated earnings                           565,132                 22,356
                                            ------------           -------------

                                              4,281,542              2,032,857
   Less:  Billings to date                   (3,844,335)            (1,313,410)
                                             -----------           -------------

                                           $    437,207           $    719,447
                                            ============            ============


4.     Inventories

Inventories consist of the following at November 30:

                                       1998                            1997
                               -------------------------------------------------

       Raw materials                $ 4,234,498                    $ 2,070,717
       Work in process                  731,992                        476,498
       Finished goods                   502,212                        480,441
                                   -------------                   -------------

                                    $ 5,468,702                    $ 3,027,656
                                    ===========                      ===========

















                                      F-11


<PAGE>


Notes to Financial Statements, continued

5.     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 6. 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:

                                                    1998               1997
                                               ---------------------------------

 Under bond indenture agreements--held by trustee:
 Cash and cash equivalents                        $   1,698         $    1,917
 U.S. Treasury Notes                                157,096            158,551
                                                 ------------       ------------

 Total restricted assets                            158,794            160,468

 Amount required for current liabilities           (158,794)          (160,468)
                                                ------------        ------------

 Noncurrent restricted assets                    $     -             $    -     
                                               =============        ============


6.     Property, Plant and Equipment

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

                                          1998                          1997
                                 -----------------------------------------------

    Building and plant improvements    $  1,833,830               $  1,824,683
    Shop equipment                          781,607                    767,798
    Office furniture and equipment          977,260                    663,122
    Molds and dies                        1,436,062                  1,274,782
    Trucks and vehicles                      30,180                      9,744
    Assets under capital lease              732,993                    556,633
    Construction in progress             11,297,609                  5,554,826
    Capitalized interest                  1,451,049                    380,304
                                        ------------               -------------

                                         18,540,590                 11,031,892

        Accumulated depreciation         (1,718,212)                (1,292,965)
        Accumulated depreciation, 
          capital leases                   (192,213)                  (134,669)
                                       -------------               -------------

                                        $16,630,165                $ 9,604,258
                                        ===========                 ===========

Construction in progress consists primarily of construction on the Company's new
manufacturing  facility in south Oklahoma City,  Oklahoma.  The new facility has
been  partially  financed  through an  industrial  revenue bond  issuance by the
Oklahoma Industries Authority in the original amount of $4,405,000. See Note 8.

Depreciation of property, plant and equipment, and rental fleet was $718,201 and
$586,062 for the years ended November 30, 1998 and 1997, respectively,  of which
$483,678 and $425,872 was included in costs of good sold and constructed.





                                      F-12


<PAGE>


Notes To Financial Statements, Continued

7.    Rental Fleet

The  Company  has a fleet  of TTEF  Series  modular  cooling  towers  which  are
available for lease under short-term and month-to-month  agreements.  The rental
fleet is depreciated using the straight-line  method over estimated useful lives
of 7 to 10 years.  Following  is a summary of the rental  fleet and  accumulated
depreciation at November 30:
                                               1998                    1997
                                         ---------------------------------------

         Rental fleet                     $ 7,361,623              $ 2,386,687
         Accumulated depreciation            (572,406)                (362,949)
                                           ------------             ------------

                                          $ 6,789,217              $ 2,023,738
                                           ===========               ===========

The rental division was sold subsequent to November 30, 1998.  See Note 18.

8.       Long-Term Debt

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

                                                     1998               1997
                                                    ----------------------------

      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.    4,035,000        4,335,000

      Line of credit payable to an individual;
      credit limit of $2,000,000; principal and
      interes  due May 31, 1998; interest rate of
      13%; collateralized by accounts receivable,
      inventory, equipment, and personal guarantee
      of the Company's C.E.O.and his wife.                -             499,507

      Notes payable to an individual; principl
      payments of $1,500,000 and $500,000 due
      on June 14, 2000, respectively; interest at
      bank prime + 3% (10.75% at November 30,
      1998), and fixed  rate at 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; 
      principal and interest due April 1, 1999;
      interest at a floating  rate (10% at
      November 30, 1998); collateralized by real
      estate.                                          330,000          251,625

      Note payable to a bank; 35 monthly payments
      of principal and interest of $1,557 with 
      remaining  principal due September 1999;
      interest at a floating rate (10% at
      November 30, 1998); collateralized by real
      estate.                                           86,706           96,223

      Note payable to a bank; semi-annual payments
      of principal and interest of $1,557 with 
      final payment due September, 2000; interest
      at a floating rate (10% at November 30, 1998);
      collateralized by real estate.                    62,944           71,879



                                      F-13


<PAGE>


Notes To Financial Statements, Continued

8.       Long-Term Debt, continued
                                                         1998            1997
                                                     ---------------------------

    Note payable to a lending institution;
    principaland interest  payments of
    $13,651 with final payment due July 9,
    2004; interest at 9.25%; 
    collateralized by certain equipment.              1,681,663         731,890

    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.                               117,062         119,219

    Construction loan payable to a bank of
    $2,000,000;  principal and interest due
    April 14, 1999;  interest at bank prime
    plus 1% (8.75% at November 30, 1998);
    collateralized by real estate.                    1,069,813            -

    Line of credit with a bank; principal
    and interest due June 30, 1999, interest
    at bank prime plus 2% (9.75% at November
    30, 1998); collateralized by certain accounts
    receivable, inventory, rental fleet and 
    patents.  Paid off in December 1998.  See
    Note 18.                                          8,333,721            -

    Note payable to a bank; principal and interest
    due February 16, 1999 at 9%; collateralized
    by inventory.                                       900,000            -

    Note payable to an individual; principal and
    interest due upon maturity on December 7, 
    1998, interest at 16.8% and is uncollateralized.    500,000            -

    Line of  credit;  principal  due  November 10,
    2003, interest at LIBOR plus .2% (5.5125% at
    November 30, 1998) collateralized by real estate. 1,250,000            -

    Various  notes payable to financial institutions; 
    principal and interest due monthly;
    collateralized by vehicles and equipment.           494,638          22,768
                                                    ------------     -----------
                                                     26,861,547      14,128,111

   Current portion                                  (11,029,319)       (439,308)
                                                    ------------     -----------


       Long-term debt, net                          $15,832,228     $13,688,803
                                                    ===========      ===========


Principal  amounts  maturing  on  long-term  debt for each year is as follows at
November 30, 1998:

              1999                                  $11,029,319
              2000                                    9,065,982
              2001                                      965,304
              2002                                    1,036,129
              2003                                    1,046,834
              Thereafter                              3,717,979
                                                    -------------

                                                    $26,861,547

                                      F-14


<PAGE>


Notes To Financial Statements, Continued

8.     Long-Term Debt, continued

The  Debentures  were  issued by the Company  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 tangible net
worth  restrictions.  The Company was either in  compliance  with  covenants  or
related debt was paid subsequent to November 30, 1998.

9.     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 noncancelable capital leases
consist of the following at November 30, 1998:

       1999                                                     $  182,069
       2000                                                         68,360
       2001                                                         53,012
       2002                                                         37,747
       2003                                                          8,872
                                                                 ------------

        Total minimum lease payments                               350,060
        Amount representing interest                               (28,626)

              Present value of net minimum lease payments          321,434

        Current portion                                           (166,683)

                                                                 $  154,751

10.      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. 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.  The Company has not made any
contributions to the Plan.




                                      F-15


<PAGE>


Notes To Financial Statements, Continued

11.    Income Taxes

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

                                                  1998                  1997
                                           -------------------------------------
    Current provision:
       Federal                              $      -             $      29,101
                                            ---------------        -------------
    Deferred benefit:
       Federal                                 (1,569,883)            (552,976)
       State                                     (100,205)             (92,044)
                                              -------------         ------------

          Total deferred benefit               (1,670,088)            (645,020)
                                               ------------          -----------

      Income tax benefit                      $(1,670,088)         $  (615,919)
                                              ============           ===========

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

                                                         1998            1997
                                                     ---------------------------

      Statutory federal income tax rate                  (34%)           34%
      Utilization of net operating loss carryforwards      -            (29%)
      Change in valuation allowance                        -            (52%)
      Other                                              ( 4%)            4%    
                                                     ------------    ---------

             Effective income tax rate                   (38%)          (43%)

Deferred  tax  liabilities  and  assets
at  November  30 are  comprised  of the
following:
                                                      1998               1997
                                               ---------------------------------
     Deferred tax liabilities:
         Depreciation                             $   359,422      $   289,743
         Workers' compensation                         21,712           40,984
                                                  ------------      ------------

         Total deferred tax liability                 381,134          330,727
                                                  ------------       -----------

     Deferred tax assets:
         Accounts receivable allowance                109,065           68,471
         Warranty reserve                              79,320           39,660
         Other                                         88,058            7,848
         Net operating loss carryforward            2,387,544          827,513
         AMT credit                                    32,255           32,255
                                                   -----------      ------------

         Total deferred tax assets before
            valuation allowance                     2,696,242          975,747
         Valuation allowance for deferred tax
            assets                                       -                -   
                                                   -----------       -----------

         Total deferred tax asset                   2,696,242           975,747
                                                   -----------       -----------

                         Net deferred tax asset    $2,315,108        $  645,020
                                                   ==========         ==========


At November 30, 1998,  the Company had a net operating loss  carryforward  (NOL)
for regular tax purposes of approximately $6,000,000 expiring in 2009 to 2011.

                                      F-16


<PAGE>


Notes To Financial Statements, Continued

11.    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 1997,  Management  determined  that,  based on the
Company's  ability to generate taxable income in two consecutive years (1996 and
1997), it is more likely than not that the Company will realize the deferred tax
assets.  Therefore,  the valuation allowance previously  established against the
net deferred tax asset was reversed in 1997. Management has also determined that
based on the sale of the rental  operations in December  1998, it is more likely
than not that the Company will realize the deferred tax assets in 1998. See Note
18.

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%.

12.    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 1998
and 1997, R&B purchased $16,760 and $29,086,  respectively, of products from the
Company and earned $14,255 and $7,872 respectively, in commissions.

In December  1995,  the Company  executed a Joint Venture  Agreement with J-Tech
Enterprises,  Inc.  ("J-Tech"),  a Florida  corporation  to market the Company's
products in Alabama,  Florida and Georgia.  The Company received a 50% ownership
interest in the joint venture, Tower Tech-Southeast ("TTSE"), for contributing a
license to use its  technology.  J-Tech  contributed a computer system valued at
$5,000 and $35,000 cash. The Company's investment in TTSE is being accounted for
using the equity  method of  accounting,  although the Company did not record an
amount for their initial contribution of technology. The Company and J-Tech have
agreed to share equally in all profits and losses.  Accordingly,  Tower Tech has
recognized a loss of $78,946 as of November 30, 1998, for 50% of the accumulated
losses of TTSE. The agreement  contains a buyout option  allowing the Company to
purchase the ownership interest of J-Tech under certain  conditions.  Sales made
to TTSE  amounted to $790,276  and  $741,240  during  fiscal year 1998 and 1997,
respectively.

The following  represents  the  summarized  unaudited  financial data of TTSE at
November 30:

                                           1998                       1997
                                    --------------------------------------------
        Balance sheet data
        Assets                         $   455,672                 $   531,307
        Liabilities                    $   533,564                 $   463,002
        (Deficit) equity               $  ( 77,892)                $    68,305




                                           1998                       1997
                                    --------------------------------------------

        Statement of operations data
        Sales                          $ 1,306,675                 $ 1,172,410
        Cost of Sales                    1,015,555                     814,797
        Other expenses                     441,558                     356,649
                                      -------------                -------------

        Net (loss) income             $   (150,438)                $       964
                                      =============               ==============

                                      F-17


<PAGE>


Notes To Financial Statements, Continued

13.   Net Earnings (Loss) Per Share

      In  February  1997,  the  Financial   Accounting  Standards  Board  issued
      Statement of Financial  Accounting  Standards No. 128,  Earnings Per Share
      ("FAS  128").  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.  FAS 128 is effective for
      financial statements issued for periods ending after December 15, 1997 and
      requires  restatement of all prior period earnings per share amounts.  The
      Company has adopted FAS 128 and has  restated all prior  periods.  FAS 128
      requires a reconciliation  of the numerators and denominators of the basic
      and diluted EPS  computations.  Options and  warrants to purchase  371,356
      shares  of  common  stock  at a  weighted  average  price  of  $5.79  were
      outstanding  during  the  period  ended  November  30,  1998  but were not
      included  in the  computation  of diluted  EPS because the effect of these
      outstanding options would be antidilutive. A reconciliation for the period
      ended November 30, 1997 is as follows:

                                            Income        Shares   Per Share
                                         (Numerator) (Denominator)   Amount   
  For the period ended November 30, 1997:


Basic EPS
  Income available to common stockholders   $2,062,951    3,420,378    $ .60  

Effect of dilutive securities
  Employee stock options and warrants              -           117,735       
                                             ----------       ---------
Diluted EPS
  Income available to common stockholders
    and assumed conversions                 $2,062,951    3,538,113    $.58
                                            ----------    ---------    ----
14.    Stockholders' Equity

At November 30, 1998, and 1997, the Company had outstanding warrants and options
allowing  the holders to purchase a total of  approximately  371,356 and 344,065
shares, respectively, of the Company's Common Stock at an average price of $5.79
and $6.81 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 15).  Warrants  for 50,000 and  150,000
shares of common stock were exercised at an average  exercise price of $4.50 and
$5.88 during 1998 and 1997, respectively.

15.    Stock Option Plan

In October 1997, the Company amended the Tower Tech, Inc. 1993 Stock Option Plan
(the "Plan"). Under the Plan, up to 500,000 shares of common stock may be issued
pursuant to the  exercise of 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 during 1998 and
1997 have a term of ten  years  and vest  incrementally  20% each  year.  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 its employee
stock  options.  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.


                                      F-18


<PAGE>


Notes To Financial Statements, Continued

15.      Stock Option Plan, continued

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
1998 and 1997, respectively:  interest rates (zero-coupon U.S. government issues
with a remaining  life equal to the  expected  term of the options) of 5.50% and
6.12%;  dividend  yields of 0.0% and 0.0%;  volatility  factors of the  expected
market  price  of  the  Company's  common  stock  of  45.13%  and  43.95%;   and
weighted-average expected life of the options of six years.

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.

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

                                               1998                  1997
                                      ------------------------------------------

  Net (loss) income as reported           $ (2,671,232)            $ 2,062,951
  Pro forma                               $ (2,701,459)            $ 2,006,279
  (Loss) earnings per share as reported   $ (.75)                  $ 58
  Pro forma                               $ (.76)                  $.57

For  purposes  of the pro forma  disclosures,  the  estimated  fair value of the
options is amortized to expense over the options' vesting period,  which is five
years.  Because the Company's  stock options vest  generally over five years and
additional  awards are typically made each year, the above pro forma disclosures
are not likely to be  representative  of the effects on pro forma net income for
future  years.  A summary of the  Company's  stock  option  activity and related
information follows for November 30:

                                         1998                      1997
                                ------------------------------------------------

                                  Options   Weighted Avg. Options  Weighted Avg.
                                           Exercise Price         Exercise Price

  Outstanding - Beginning of year  210,894    $ 6.67      210,880       $ 6.28
  Granted                          124,700      6.25       34,894         8.75
  Exercised                          -          -          (5,120)        6.25
  Forfeited                        (33,809)     6.61      (29,760)        6.46
                                  ---------               ---------
  Outstanding - End of year        301,785      6.50       210,894        6.67
                                  ========                ========
  Exercisable - End of year        103,705      6.40        83,175        6.25
                                  ========                =========


The following table summarizes  information  about stock options  outstanding at
November 30, 1998:

                                         Weighted Avg.
      Range of             Number          Remaining             Weighted Avg.
  Exercise Prices       Outstanding     Contractual Life        Exercise  Price 
------------------     ---------------  ----------------        ----------------
$  6.25 - $  8.25         287,850             7.67                   $  6.37
$  9.00 - $10.00           14,705             8.64                   $  9.27
$  6.25 - $10.00          301,785             7.71                   $  6.50

                                      F-19


<PAGE>


Notes To Financial Statements, Continued

16.    Commitments and Contingencies

Included in cost of goods sold and  constructed for the years ended November 30,
1998 and 1997 are $671,267 and  $426,699,  respectively,  of expense to retrofit
and service  towers  previously  sold.  The Company has recorded a liability for
estimated warranty costs of $200,000 and $100,000 at November 30, 1998 and 1997,
respectively.  Management  believes the warranty  reserve is sufficient to cover
future warranty costs.

The Company is a defendant in certain litigation arising in the normal course of
business.  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 and results of operations.

17.    Licensing Agreements

During 1997, the Company  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,  Southeast Asia, South America, 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. Fees earned during the year ended November 30, 1997 totaled $860,495.
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, 1998.

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, 1998, the Company has not
exercised these options.

18.    Subsequent Events

Effective December 7, 1998, the Company entered into a $4,000,000 line of credit
agreement  with  a  financial  institution  for  working  capital  requirements.
Interest  is  payable  monthly  at a rate of one and a half  basis  points  over
National Prime. All outstanding  principal and unpaid interest is due January 7,
2000. The agreement is collateralized  by accounts  receivable,  inventory,  and
general  intangibles and contains certain  financial  covenants such as tangible
net worth requirements.

In  December  1998,  the  Company   consummated   the  sale  of  certain  assets
constituting  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 bears
interest  at 1% above  prime.  The  outstanding  principal  balance of the note,
together with accrued  interest,  is due and payable  December 1999. The Company
also entered into a long-term strategic alliance with Aggreko and will receive a
three percent royalty for the rental of technology.  Proceeds will be used for a
reduction in short-term  debt and for working  capital.  The Company  expects to
record a pre-tax  gain of  approximately  $6.7  million in the first  quarter of
fiscal 1999.

The following  unaudited  selected condensed pro forma balance sheet information
summarizes  the balance sheet effect of the sale and pay-off of the bank line of
credit as though the transactions had occurred on November 30, 1998 (in 000's):

                                               Historical             Pro forma
                                                                     (Unaudited)
                                             -----------------------------------

     Current assets                            $  14,301              $  16,792
     Property, plant and equipment, ne            23,420                 16,631
     Total assets                                 39,057                 34,719
     Current liabilities                          18,192                 10,067
     Stockholders' equity                          4,440                  8,427


                                      F-20


<PAGE>


                                INDEX TO EXHIBITS
                                                                           Page
10.9    Promissory Note between Tower Tech, Inc. and People First Bank
        dated December 7, 1998. . . . . . . . . . . . . . . . . . . . . .   E-1
              . . . . .
10.18   Loan Agreement between Tower Tech, Inc. and People First Bank
        dated December 7, 1998. . . . . . . . . . . . . . . . . . . . . .   E-2
              . . . .
21.1    Tower Tech, Inc. subsidiaries. . . . . . . . . . . . . . . . . . .  E-3

23.1    Consent of PricewaterhouseCoopers LLP. . . . . . . . . . . . . . .  E-4
              . . . . . .












































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