SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---

FORM 10-QSB

(MARK ONE)

|(X) | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE        SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------------

| | For the
quarterly period ended June 30, 2001, or
| | ------------------------------------------------

|(  ) | TRANSACTION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE        SECURITIES EXCHANGE ACT OF 1934
|---- | ------------------------------------------------------------------------------------------------

| | For the
transition period from  to
| | ----------------------------------

Commission File Number 0-19622

WTC Industries, Inc. (Exact Name of Registrant as Specified in its
Charter)

|Delaware                     | 38-2308668         
|---------------------------- | -------------------
|(State or Other Jurisdiction | (IRS Employer      
|of Incorporation)            | Identification No.)

1000 Apollo Road, Eagan, Minnesota 55121-2240
(Address of Principal Executive Offices) (Zip Code)

(651) 554-3140
(Issuers Telephone Number)

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
required for the past 90 days. Yesx No .

APPLICABLE ONLY TO CORPORATE ISSUERS

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

1,491,398 shares of Common Stock as of July 24, 2001

Transitional Small Business Disclosure
Format (check one):
 Yes ; No x

1

WTC INDUSTRIES, INC. AND SUBSIDIARIES

INDEX

| |  | PAGE
| |  | ----

|PART I. | FINANCIAL
INFORMATION
|------- | ---------------------

|Item 1. | Financial
Statements:
|------- | ---------------------

| | Condensed Consolidated Unaudited Balance Sheet
      June 30, 2001 and Audited Balance Sheet      December 31, 2000 | 3
| | ------------------------------------------------------------------------------------------------------------------- | -

| | Condensed Consolidated Unaudited Statements of Operations
      Three Months Ended June 30, 2001 and 2000 | 4
| | --------------------------------------------------------------------------------------------------------- | -

| | Condensed Consolidated Unaudited Statements of Operations
      Six Months Ended June 30, 2001 and 2000 | 5
| | ------------------------------------------------------------------------------------------------------- | -

| | Condensed Consolidated Unaudited Statements of Cash Flows
      Six Months Ended June 30, 2001 and 2000 | 6
| | ------------------------------------------------------------------------------------------------------- | -

| | Notes to Condensed
Consolidated Unaudited Financial Statements | 7
| | -------------------------------------------------------------- | -

|Item 2. | Managements
Discussion and Analysis of Financial Condition
      and Results of Operations | 10
|------- | ------------------------------------------------------------------------------------------- | --

|PART II. | OTHER
INFORMATION
|-------- | -----------------

|Item 6. | Exhibits and
Reports on Form 8-K | 14
|------- | -------------------------------- | --

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WTC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS

|ASSETS                                              | (Unaudited)June 30,2001 | December 31,2000
|--------------------------------------------------- | ----------------------- | ----------------
|                                                    |                         |                 
|CURRENT ASSETS                                      |                         |                 
|Cash                                                |                         |                 
|Accounts receivable                                 |                         |                 
|Inventories (Note 3)                                |                         |                 
|Prepaid expenses and other                          |                         |                 
|                                                    |                         |                 
|TOTAL CURRENT ASSETS                                |                         |                 
|                                                    |                         |                 
|PROPERTY AND EQUIPMENT                              |                         |                 
|Less accumulated depreciation                       |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 
|OTHER ASSETS                                        |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 
|LIABILITIES AND STOCKHOLDERS DEFICIT               |                         |                 
|                                                    |                         |                 
|CURRENT LIABILITIES                                 |                         |                 
|Note payable to bank                                |                         |                 
|Current maturities of long-term debt                |                         |                 
|Accounts payable                                    |                         |                 
|Customer deposits                                   |                         |                 
|Accrued interest payable                            |                         |                 
|Accrued expenses - other                            |                         |                 
|                                                    |                         |                 
|TOTAL CURRENT LIABILITIES                           |                         |                 
|                                                    |                         |                 
|LONG-TERM LIABILITIES                               |                         |                 
|Long-term debt, net of current maturities           |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 
|STOCKHOLDERS  DEFICIT (Note 4)                     |                         |                 
|Common stock                                        |                         |                 
|Additional paid-in capital                          |                         |                 
|Receivable from officer on issuance of common stock |                         |                 
|Accumulated deficit                                 |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 
|                                                    |                         |                 

See notes to consolidated condensed unaudited financial statements.

3

WTC INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS(Unaudited)

|                                              | Three months ended June 30,
|--------------------------------------------- | ---------------------------
|
|                                              |                            
|NET SALES                                     |                            
|                                              |                            
|COST OF GOODS SOLD                            |                            
|                                              |                            
|                                              |                            
|GROSS PROFIT                                  |                            
|                                              |                            
|EXPENSES                                      |                            
|Selling, general and administrative           |                            
|Research and development                      |                            
|                                              |                            
|                                              |                            
|                                              |                            
|                                              |                            
|INCOME (LOSS) FROM OPERATIONS                 |                            
|                                              |                            
|NONOPERATING (INCOME) EXPENSE                 |                            
|Interest expense                              |                            
|Loss on disposal of fixed assets              |                            
|                                              |                            
|                                              |                            
|                                              |                            
|                                              |                            
|NET INCOME (LOSS)                             |                            
|                                              |                            
|                                              |                            
|PER COMMON SHARE DATA  BASIC & DILUTED       |                            
|                                              |                            
|EARNINGS (LOSS) PER SHARE  BASIC             |                            
|                                              |                            
|EARNINGS (LOSS) PER SHARE  DILUTED           |                            
|                                              |                            
|                                              |                            
|WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING |                            
|BASIC                                         |                            
|                                              |                            
|DILUTED                                       |                            
|                                              |                            

See notes to consolidated condensed unaudited financial statements.

4

WTC INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS(Unaudited)

|                                              | Six months ended June 30,
|--------------------------------------------- | -------------------------
|
|                                              |                          
|NET SALES                                     |                          
|                                              |                          
|COST OF GOODS SOLD                            |                          
|                                              |                          
|                                              |                          
|GROSS PROFIT                                  |                          
|                                              |                          
|EXPENSES                                      |                          
|Selling, general and administrative           |                          
|Research and development                      |                          
|                                              |                          
|                                              |                          
|                                              |                          
|                                              |                          
|INCOME (LOSS) FROM OPERATIONS                 |                          
|                                              |                          
|NONOPERATING (INCOME) EXPENSE                 |                          
|Interest expense                              |                          
|Loss on disposal of fixed assets              |                          
|                                              |                          
|                                              |                          
|                                              |                          
|                                              |                          
|NET INCOME (LOSS)                             |                          
|                                              |                          
|                                              |                          
|PER COMMON SHARE DATA  BASIC & DILUTED       |                          
|                                              |                          
|EARNINGS (LOSS) PER SHARE  BASIC             |                          
|                                              |                          
|EARNINGS (LOSS) PER SHARE  DILUTED           |                          
|                                              |                          
|                                              |                          
|WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING |                          
|BASIC                                         |                          
|                                              |                          
|DILUTED                                       |                          
|                                              |                          

See notes to consolidated condensed unaudited financial statements.

5

WTC INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS(Unaudited)

|                                                        | Six months ended June 30,
|------------------------------------------------------- | -------------------------
|
|                                                        |                          
|OPERATING ACTIVITIES                                    |                          
|Net income (loss)                                       |                          
|Adjustments to reconcile net loss to net cash           |                          
|used by operating activities:                           |                          
|Depreciation                                            |                          
|Amortization                                            |                          
|Loss on disposal of fixed assets                        |                          
|Noncash consulting services                             |                          
|Accretion of long-term debt discount                    |                          
|Changes in operating assets and liabilities:            |                          
|Accounts receivable                                     |                          
|Inventories                                             |                          
|Current and other assets                                |                          
|Accounts payable                                        |                          
|Accrued expenses                                        |                          
|                                                        |                          
|Net cash provided by (used in) in operating activities  |                          
|                                                        |                          
|                                                        |                          
|INVESTING ACTIVITIES                                    |                          
|Note receivable from officer                            |                          
|Purchases of property and equipment                     |                          
|                                                        |                          
|Net cash used in investing activities                   |                          
|                                                        |                          
|                                                        |                          
|FINANCING ACTIVITIES                                    |                          
|Proceeds from (payments to) bank                        |                          
|Proceeds from issuance of common stock                  |                          
|Payments on long-term obligations                       |                          
|                                                        |                          
|Net cash provided by (used in) financing activities     |                          
|                                                        |                          
|                                                        |                          
|NET DECREASE IN CASH AND CASH EQUIVALENTS               |                          
|                                                        |                          
|CASH AND CASH EQUIVALENTS:                              |                          
|Beginning of period                                     |                          
|                                                        |                          
|                                                        |                          
|End of period                                           |                          
|                                                        |                          
|                                                        |                          
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION       |                          
|Cash paid during the period for interest                |                          
|                                                        |                          
|                                                        |                          
|SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND        |                          
|FINANCING ACTIVITIES                                   |                          
|Common stock issued on conversion of debt               |                          
|Bank financing converted to promissory note to chairman |                          
|Common stock issued for payment of rent                 |                          
|Equipment financed through capital leases               |                          

See notes to consolidated condensed unaudited financial statements.

6

WTC INDUSTRIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

|1. | Description
of Business and Managements Plans Regarding Operating Losses and Liquidity
|-- | ---------------------------------------------------------------------------------------

Business  WTC Industries, Inc., (the
Company) designs, manufactures, and markets water filtration and
purification products for the potable water market. The potable water market
includes residential, commercial, and food service. The Companys
filtration products remove or reduce many undesirable contaminants found in
water including lead, chlorine, cryptosporidium, giardia, bad taste and odor. In
addition, the Company has a family of purification products that have the added
benefit of devitalizing or removing bacteria, viruses, and parasites with the
use of the Companys proprietary PentaPure® iodinated resin technology.

Consumer demand is driven both by the consumers desire to
improve the taste and quality of their drinking water and by heightened concerns
of regulatory agencies. Recent outbreaks of cryptosporidium and giardia cyst
and, in some cases, bacteria and virus contamination, have raised the health
concerns of consumers in the U.S. and other major developed countries. Third
world countries drinking water quality has been found to be severely
inadequate.

The Company anticipates accelerated growth in coming years based
on the following growth strategies:

New product development and technology integration for the
OEM market. The Company has developed high value-added products for three
major OEM customers. The Company anticipates that it will continue to grow
market share by providing products that it believes are superior in design,
function and quality. Increasing sales to the OEM market will enable the Company
to continue to explore new filtration and purification technologies and invest
in new product development.

Continued improvement in operating efficiencies. The
Company believes it can improve gross profit margins by improving production
capabilities and efficiencies. The Company is in the process of implementing new
manufacturing automation to increase both production capacity and quality while
reducing labor costs. Management anticipates the new automation will be fully
operational by the end of the third quarter in 2001.

Going Concern  The accompanying financial
statements have been prepared on a going-concern basis which contemplates the
realization of assets and the satisfaction of liabilities and commitments in the
normal course of business. On June 30, 2001, the Company has a deficiency in
working capital of $6,598,523 and an

7

accumulated deficit of $17,819,516. The significant increase
in the working capital deficiency is due to the
reclassification from long term to short term of approximately $5,700,000 in
debt that matures in May 2002. These factors, among others, indicate that the
Company may not be able to continue as a going concern for a reasonable period
of time. Management believes that the Companys projected improvement in
profitability, collection of accounts receivable and available sources of
liquidity through bank financing and other sources are sufficient to meet
current and anticipated requirements for the foreseeable future.

The Company has significantly improved its financial performance
compared to prior years. For the three month period ended June 30, 2001, the
Company had net income of $446,382 compared to a net loss of $195,402 in 2000.
In addition, cash provided from operating activities was $251,839 in 2001
compared to cash used in operating activities of $661,535.

Managements plans for the Company to continue as a going
concern include (a) increasing sales to the domestic OEM water filtration
market, (b) continuing improvement in the Companys production processes
and quality controls to increase gross profit margins, (c) continuing research
and development efforts for new filtration and disinfection products for the
potable water treatment market, and (d) securing additional long and short term
sources of liquidity through debt financing and/or new equity. There is no
assurance whatsoever that these plans will be successful.

The condensed consolidated unaudited financial statements do not
include any adjustments related to the recoverability and classification of
recorded asset amounts or the amounts and classifications of liabilities that
might be necessary should the Company be unable to continue as a going concern.

|2. | Basis
of Presentation
|-- | ---------------------

The accompanying condensed consolidated unaudited financial
statements of WTC Industries, Inc. and Subsidiary have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission, and reflect all adjustments, consisting of normal
recurring accruals, which are, in the opinion of management, necessary for a
fair presentation of financial position, results of operations, and cash flows
for the periods shown. These statements are condensed and do not include all
information required by generally accepted accounting principles. It is
recommended that these financial statements be read in conjunction with the
Companys audited financial statements and notes thereto for the year ended
December 31, 2000, which are included in the Companys Annual Report on
Form 10-KSB.

8

|3. | Inventories
|-- | -----------

|Inventories consist of the following: | June 30, 2001 | December 31, 2000
|------------------------------------- | ------------- | -----------------
|                                      |               |                  
|Raw Materials                         |               |                  
|Work-in-process                       |               |                  
|Finished Goods                        |               |                  
|                                     
|                                      |               |                  
|                                     

The increase in inventory is due to increases in raw materials
to support the increased OEM sales volume. The total inventory reserve as of
June 30, 2001 and December 31, 2000 is approximately $430,000 and $533,000,
respectively.

|4. | Common
and Preferred Stock
|-- | --------------------------

Common Stock  At June 30, 2001 and December 31,
2000, the Company had 15,000,000 shares of $.10 par value common stock
authorized, with 1,491,398 and 1,480,198, respectively, shares issued and
outstanding.

Preferred Stock  At June 30, 2001 and December 31,
2000, there were 2,000,000 shares of the Companys 9 percent convertible,
cumulative, nonvoting, $1 par value preferred stock authorized with no shares
outstanding.

|5. | Commitments
and Contingencies
|-- | -----------------------------

Minimum Purchase Commitment  The Company has an
agreement with a supplier that expires in June 2002 under which the Company is
obligated to purchase a minimum of $172,500 annually of its cyst filter
requirements for certain of its products. The Company has accrued the remaining
estimated commitment not likely to be fulfilled under this contract. At June 30,
2001 and December 31, 2000, $467,000 and $443,500, respectively, was included in
current liabilities.

Arrangements with Suppliers  The Company utilizes
the services of an independent contractor to manufacture iodinated resin that is
incorporated into some of the Companys products. Certain techniques used
to manufacture the iodinated resins were developed by and are the property of
the supplier. Under the terms of an agreement, the Company has agreed that if it
elects to buy iodinated resin from an outside vendor, it will buy iodinated
resin only from this supplier. The supplier has agreed to sell the iodinated
resin only to the Company and one other party. The other party does not compete
with the Company in any of its product applications.

|6. | Related-Party
Transactions
|-- | --------------------------

The Tapemark Company (Tapemark), of West Saint Paul,
Minnesota, provides labels for the Companys products. Mr. Robert C. Klas, Sr., the
Companys CEO, Chairman and largest stockholder, is also the Chairman of the Board
of Tapemark. During the three and six month periods ended June 30, 2001, the Company paid
Tapemark approximately a total of $47,000 and $66,000, respectively, compared to $19,000
and $32,000, respectively, in 2000.

9

|7. | Income
Taxes
|-- | ------------

No income tax provision has been included in the accompany
statement of operations due to the existence and utilization of the net
operating loss carryforwards.

Item 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Overview

Going Concern. The accompanying financial statements have
been prepared on a going-concern basis which contemplates the realization of
assets and the satisfaction of liabilities and commitments in the normal course
of business. On June 30, 2001, the Company has a deficiency in working capital
of $6,598,523 and an accumulated deficit of $17,819,516. The significant
increase in the working capital deficiency is due to the reclassification from
long term to short term of approximately $5,700,000 in debt that matures in May
2002. These factors, among others, indicate that the Company may not be able to
continue as a going concern for a reasonable period of time. The Company has
significantly improved its financial performance compared to prior years. For
the three month period ended June 30, 2001, the Company had net income of
$446,382 compared to a net loss of $195,402 in 2000. In addition, cash provided
from operating activities was $251,839 in 2001 compared to cash used in
operating activities of $661,535 in 2000.

Managements plans for the Company to continue as a going
concern include (a) increasing sales to the domestic OEM water filtration
market, (b) continuing improvement in the Companys production processes
and quality controls to increase gross profit margins, (c) continuing research
and development efforts for new filtration and disinfection products for the
potable water treatment market, and (d) securing additional long and short term
sources of liquidity through debt financing and/or new equity. There is no
assurance whatsoever that these plans will be successful.

The Company is evaluating its available options to raise
capital. These options include, but are not limited to, private placements of
new debt financing or equity securities to accredited investors, registered
offerings of the Companys common stock and strategic partnership or joint
venture arrangements. In addition, the Company will evaluate the possibility of
converting to equity some or all of its outstanding short term and long term
debt. There is no assurance that the Company will be able to obtain additional
financing, or that the terms of any such financing will be acceptable to the
Company. If the Companys efforts to raise additional capital are not
successful, the Companys operations may be negatively impacted. However,
Management believes that the Companys projected improvement in
profitability, collection of accounts receivable and available sources of
liquidity through bank financing and other sources are sufficient to meet
current and anticipated requirements for the foreseeable future.

10

The condensed consolidated unaudited financial statements do not
include any adjustments related to the recoverability and classification of
recorded asset amounts or the amounts and classifications of liabilities that
might be necessary should the Company be unable to continue as a going concern.

Results of Operations

Three and six months ended June 30, 2001 compared to the
three and six months ended June 30, 2000

Net Sales. For the three month period ended June 30,
2001, the Company had record net sales of $5,033,750, an increase of 157% from
2000 sales of $1,958,131. For the six month period ended June 30, 2001, the
Company had record total net sales of $9,193,210, an increase of 192% from 2000
sales of $3,144,284. The significant increase in sales is due to increased sales
to the OEM appliance market for both original equipment and replacement filters.
The Companys two largest OEM customers accounted for $8,218,736 or 89.4%
of total net sales for the first six months of 2001, compared to $2,336,934 or
74.0% of total net sales for the same period in 2000.

International sales represented approximately 5.0% of total net
sales for the first six months of 2001 compared to 13.0% in 2000.

Gross Profit. For the three and six month periods ended
June 30, 20001, the Company recognized a gross profit of $1,230,223 and
$2,231,535, respectively, representing 24.4% and 24.3% of total net sales,
respectively. During the same periods in 2000, the Company recognized a gross
profit of $506,542 and $843,862, respectively, representing 25.9% and 26.8% of
total net sales respectively. The decrease in gross profit, as a percentage of
total net sales, is primarily due to higher labor and material costs associated
with the manufacture of new products to support the increased sales to the OEM
market. The Company is currently implementing new automation and is continuing
to explore innovative methods to reduce its costs of manufacturing.

Operating Expenses. Selling, general, and administrative
expenses for the three and six month periods ended June 30, 2001 were $511,216
and $1,013,914, respectively, representing 10.2% and 11.0% of total net sales,
respectively. For the same periods in 2000, selling, general and administrative
expenses were $389,982 and $793,725, respectively, representing 19.9% and 25.2%
of total net sales, respectively. The increase in selling, general, and
administrative expenses is primarily due to higher employee headcount,
professional fees and expenses related to moving to larger production
facilities.

11

Research and development costs were slightly higher for the
first six months in 2001 than in 2000 due to new product development for the OEM
market. The Company anticipates that research and development spending will
remain at current levels for the remainder of 2001 as the Company pursues new
OEM opportunities in the U.S. market.

Nonoperating Activity. Interest expense was $100,264 and
$209,517, respectively, for the three and six month period ending June 30, 2001.
During the same periods in 2000, interest expense was $83,004 and $114,564,
respectively. The increase is attributed to an increase in debt financing for
the investment in new equipment and working capital needs for the OEM market.

Liquidity and Capital Resources

The Companys working capital requirements during the first
six months of 2001 were met principally by cash provided from operations of
$251,839, proceeds from bank borrowings of $100,000 and proceeds from the
issuance of common stock of $35,000. As of June 30, 2001, the Company had a
working capital deficit (total current liabilities in excess of total current
assets) of $6,598,523 compared with a working capital deficit of $1,261,128 as
of December 31, 2000. The significant increase in the working capital deficiency
is due to the reclassification from long term to short term of approximately
$5,700,000 in debt that matures in May 2002. Management believes that the
Companys projected improvement in profitability, collection of accounts
receivable and available sources of liquidity through bank financing and other
sources are sufficient to meet current and anticipated requirements for the
foreseeable future.

For the six month period ended June 30, 2001, cash decreased
$89,939, primarily due to cash used in investing activities of $248,354 and cash
used by financing activities of $93,424, which was essentially offset by cash
provided by operations of $251,839. Cash provided by operations included the net
income of $571,133 along with an increase in accounts payable of $949,084,
partially offset by increases in accounts receivable of $621,400, inventory of
$887,501 and other current assets of $23,140. Net cash used by investing
activities primarily consisted of purchases of property and equipment of
$248,904. Net cash used by financing activities included payments on long-term
debt obligations of $228,424, partially offset by proceeds from bank borrowings
of $100,000 and proceeds from issuance of common stock of $35,000.

For the six month period ended June 30, 2000, cash decreased
$9,854, primarily due to cash used in operating activities of $661,535 and cash
used in investing activities of $783,297, which was essentially offset by cash
provided by financing activities of $1,434,978. Significant cash uses by
operating activities included increases in accounts receivable of $923,961 and
inventory of $200,754, partially offset by increases in accounts payable of
$728,620 and accrued expenses of $133,662. Net cash used by investing activities
consisted primarily of purchases of property and equipment of $783,297. Net cash
provided by financing activities included bank loans totaling $1,250,000 and the
issuance of Company common stock of $257,500, partially offset by payments on
long-term debt of $72,522.

12

On June 30, 2001, advances outstanding on the Companys
revolving line of credit were $700,000 of the total revolving credit line of
$1,400,000.

The Company has an agreement with a supplier that expires in
June 2002 under which the Company is obligated to purchase a minimum of $172,500
annually of its cyst filter requirements for certain of its products. Through
June 30, 2001, the Company has paid a total of $246,000 of its total estimated
contract obligation of $862,500. During 2001, the Company anticipates it will
pay approximately $467,000, which represents the remaining obligation for 1999,
2000 and 2001. Failure of the Company to perform under this agreement could have
a significant negative impact on the Companys financial resources.

The Company estimates that, for the remainder of 2001, it will
have working capital needs of approximately $500,000 to fund its operations and
approximately $250,000 to fund capital expenditures needs for office and
manufacturing equipment. The Company expects that these needs will be funded
through cash provided from operations and existing availability on the
Companys revolving credit facility.

Foreign Currency Effects

Foreign currency exchange rate fluctuations have reduced the
demand for the Companys products in Asian and Eastern Europe markets. The
Company anticipates this trend to continue during the remainder of 2001.

Effects of Inflation

The Company believes that during 2001 and 2000 inflation has not
had a material impact on the Companys business.

Recent Accounting Pronouncements

In July, 2001 FAS 141, Business Combinations, and FAS 142 Goodwill and
Other Intangible Assets, were issued. These pronouncements provide that all business
combinations initiated after June 30, 2001 be accounted for using the purchase method and
that goodwill be reviewed for impairment rather than amortized, beginning on January 1, 2002.
The Company does not believe that the adoption of these pronouncements will have a material
effect on its existing operations. Any business combination transactions in the future would
be accounted for under this new guidance.

Notification Regarding Forward Looking Information

Except for historical information contained herein, certain
statements are forward looking statements that involve risks and uncertainties,
including, but not limited to, the results of financing efforts and sufficiency
of working capital requirements, product demand and market acceptance risks,
customer mix, the effect of economic conditions, the impact of competitive
products and pricing, product development, commercialization and technological
difficulties, supply constraints or difficulties, and actual purchases under
agreements. The actual results that the Company achieves may differ materially
from these forward-looking statements due to such risks and uncertainties.
Readers are urged to carefully review and consider the various disclosures made
by the Companys other filings with the Securities and Exchange Commission
that advise interested parties of the risks and uncertainties that may effect
the Companys financial condition and results of operations.

13

PART II. OTHER INFORMATION

Item 2. Changes in Securities

On January 31, 2001 the Company issued 11,200 shares of Common
Stock to Tapemark Company in a private placement. The shares were issued upon
exercise of a stock option held by Tapemark that had been issued in payment for
rent. The exercise price was $3.125 per share. There were no underwriters or
placement agents involved in this issuance and no commissions were paid. The
shares were issued to a single person who acquired them for investment for its
own account. Based on these facts the Company relied upon the exemption provided
by Section 4(2) of the Securities Act of 1933, as amended.

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

The Company held its annual meeting of
shareholders on May 16, 2001. The shareholders present in person or by proxy voted to
re-elect the current members of the Board of Directors. Each nominee received the number
of votes indicated below. There were no broker non-votes with respect to the election of
directors.

|                   |           |         
|------------------ | --------- | --------
|Nominee            | Votes For | Withheld
|Robert C. Klas, Sr | 1,033,862 | 0       
|Biloine W. Young   | 1,033,862 | 0       
|John A. Clymer     | 1,033,862 | 0       
|Robert C. Klas, Jr | 1,033,862 | 0       
|Ronald A. Mitsch   | 1,033,862 | 0       

The shareholders also ratified the selection of McGladrey &
Pullen, LLP as the Companys independent auditors for 2001 by a vote of
1,033,862 shares in favor, zero shares against, zero shares abstaining and zero
shares as broker non-votes.

The shareholders also ratified an amendment to the
Companys 1996 Stock Plan by a vote of 1,033,862 shares in favor, zero
shares against, zero shares abstaining and zero shares as broker non-votes.

Item 6. Exhibits and Reports on Form 8-K

The following documents are filed as part of the report:

| | (a) | Exhibits.
| | --- | ---------

| |  | No exhibits
are filed with this report.
| |  | ---------------------------------------

| | (b) | Reports
on Form 8-K.
| | --- | --------------------

| |  | No reports
on Form 8-K were filed during the second quarter of 2001.
| |  | --------------------------------------------------------------------

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SIGNATURES

In accordance with the
Exchange Act, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

|Dated: July 24, 2001 | WTC Industries, Inc.        
|-------------------- | ----------------------------
|                     |                             
|                     | By:  /s/ Robert C. Klas, Sr.
|                     | Robert C. Klas, Sr.         
|                     | Chief Executive Officer     
|                     |                             
|                     | By:  /s/ Gregory P. Jensen  
|                     | Gregory P. Jensen           
|                     | Chief Financial Officer     

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