U.S. SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549

                               FORM 10-KSB

[ X ]     Annual report under Section 13 or 15(d) of the Securities
          Exchange Act of 1934 [Fee Required] for the fiscal year ended:
          December 31, 1999
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[   ]     Transition report under Section 13 or 15(d) of the Securities
          Exchange Act of 1934 [No Fee Required] for the transition period
          from ___________ to __________

COMMISSION FILE NUMBER:  33-37513-D
                         ----------

                     GLOBAL WATER TECHNOLOGIES, INC.
                     -------------------------------
             (Name of small business issuer in its charter)

          Delaware                                         84-1148204
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(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                        Identification No.)

                       1767 Denver West Boulevard
                         Golden, Colorado 80401
                         ----------------------
                (Address of principal executive offices)
                               (Zip Code)

Issuer's telephone number:  (303) 215-1100
                            --------------

Securities to be registered under Section 12(b) of the Act:  None
                                                             ----

Securities registered under Section 12(g) of the Act:  None
                                                       ----

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 at least the past 90 days.  Yes   X    No
                                    -----     -----

Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B contained herein, and will not 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 ]

Issuer's revenues for its most recent fiscal year:  $67,952,967
                                                    -----------

Aggregate market value of voting stock held by non-affiliates as of
March 17, 1999:  $41,848,594
                 -----------

Shares of Common Stock, $0.00001 par value, outstanding as of March 21,
1999:  344,215,360
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Documents incorporated by reference:  None
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<PAGE>
                            TABLE OF CONTENTS
                                                                     Page
                                                                     ----
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
     Item 1.  Description of Business. . . . . . . . . . . . . . . . . .3
     Item 2.  Description of Property. . . . . . . . . . . . . . . . . 13
     Item 3.  Legal Proceedings. . . . . . . . . . . . . . . . . . . . 14
     Item 4.  Submission of Matters to a Vote of Security Holders. . . 14

PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
     Item 5.  Market Price of the Registrant's Common Stock and
               Related Security Holder Matters.. . . . . . . . . . . . 15
     Item 6.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations.. . . . . . . . . . 16
     Item 7.  Financial Statements.. . . . . . . . . . . . . . . . . . 28
     Item 8.  Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure.. . . . . . . . . . 28

PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
     Item 9.  Directors and Executive Officers, Promoters and
               Control Persons; Compliance With Section 16(a) of
               the Exchange Act. . . . . . . . . . . . . . . . . . . . 29
     Item 10.  Executive Compensation. . . . . . . . . . . . . . . . . 31
     Item 11.  Security Ownership of Certain Beneficial Owners
                    and Management.. . . . . . . . . . . . . . . . . . 36
     Item 12.  Certain Relationships and Related Transactions. . . . . 37
     Item 13.  Exhibits, Financial Statements and Reports on
                    Form 8-K.. . . . . . . . . . . . . . . . . . . . . 39









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<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.

                               FORM 10-KSB

                       FORWARD-LOOKING STATEMENTS

     This Annual Report on Form 10-KSB contains forward-looking statements
that describe our anticipated financial results and growth based on our
plans and assumptions.  Important information about the basis for these
plans and assumptions and certain factors that may cause our actual results
to differ materially from these statements is discussed in this report and
contained in "Management's Discussion and Analysis of Financial Condition
and Results of Operations" beginning on page 16 below.

                                 PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

     Global Water Technologies, Inc. ("GWT"), through our wholly owned
subsidiary, Psychrometric Systems, Inc. ("PSI"), provides process cooling
water primarily through the design, engineering and project management of
cooling towers to industrial and manufacturing clients worldwide.  Applied
Water Technologies, Inc. ("AWT"), another subsidiary of GWT, provides our
customers with proprietary environmentally sound water treatment systems
and services which are designed to meet the growing need for water
purification and re-use worldwide.  Global Water Services, Inc. ("GWS"),
another wholly owned subsidiary of GWT, provides total cooling water
solutions and service programs to our customer base, including cooling
water systems and water treatment services.  Global Water Technologies,
Inc. trades over-the-counter bulletin board under the symbol "GWTR."
Except as otherwise noted, all references to GWT also include our three (3)
subsidiaries.

     We primarily market our products and services worldwide to the
following industries:  electric power utilities; process (such as
agricultural, industrial and pharmaceutical process industries);
petrochemical; chemical; heating, ventilation and air-conditioning
("HVAC"); manufacturing; pulp & paper and other industries utilizing water
cooling towers.  Typical customers include companies such as Archer Daniels
Midland, Amoco, Illinois Power, Mitsubishi, Mobil, Texaco, Bechtel, Fluor
Daniel and other large corporations around the world.

     We custom design industrial water cooling towers for our customer base
in a competitive bid job award process.  We provide value engineering and
specific water cooling tower designs to our customer base.  Although
influenced by many factors, we believe competitive pricing is one of the
main criteria for job awards.  Based on customer requirements, we design
water cooling towers using structural members manufactured from wood,
fiberglass and concrete.  Light manufacturing of wooden and fiberglass
structural components is done at our facilities for selected jobs prior to
treatment procedures.  Component parts are subcontracted and ordered from
various suppliers to be shipped directly to the job site.  For domestic
projects, crews that we

                                   -3-
<PAGE>
manage or independent subcontractors erect the water cooling tower in the
field.  The field erection normally takes between four to six weeks for the
typical two to three cell cooling tower. The erection at foreign job sites
is usually outside of the scope of our responsibility.  From contract award
to final completion of the structure, a typical project will last four to
six months.

     From time to time, we may have projects that exceed the 10% revenue
threshold for defining a major customer.  Because each project is awarded
independently from other projects, we do not believe that the completion of
the contractual arrangements with any major customer that may arise will
have a material adverse effect on our revenues.

     We utilize proprietary software products and know-how to design and
estimate costs for potential projects. Although not copyrighted or
patented, we believe that the proprietary information is integral to our
ability to accurately and reliably design water cooling towers to meet the
desired specifications and to estimate job costs. This know-how is
augmented by key knowledgeable employees.

     PSI was named as one of America's 50 Hottest New Small Businesses by
ENTREPRENEUR magazine in early 1996, achieving a ranking of #30 within the
group of 50.  The Small Business Administration named PSI "The Small
Business Exporter of the Year" in 1997 for Region VIII, which includes
Colorado.  In June 1998 GWT's President and Chief Executive Officer, George
Kast, was named an Entrepreneur of the Year for the Rocky Mountain Region.
Mr. Kast received top honors in the category of "High-Tech Manufacturing
and Design."

THE WATER COOLING TOWER MARKET

     Water cooling towers are designed to reject heat from process
operations into the atmosphere through evaporation and direct heat
transfer.  Hot water is pumped to the top of the cooling tower and
distributed over the fill media through various nozzle apertures.  The fill
media is designed to maximize the air/water interface to improve the
efficiency of the heat rejection.  As the air comes into contact with the
hot water from the process, some water evaporates causing a reduction in
heat for the remaining water.  Fans placed on the top of the tower cause
air to be drawn in from the sides and the bottom of the tower in an induced
draft design.  The induced draft air flow cools the water through direct
contact and through evaporation.  The evaporated water, now in the form of
steam, is ejected through the fan stacks at the top of the tower.  The
cooler water at the bottom of the tower in the basin, is then re-circulated
back into the process where it again absorbs heat until the entire process
is repeated.  Cooling towers have been used in process industries for
nearly 100 years.

     Most process industries with available water that generate heat in the
process utilize water cooling towers in their operations.  Accordingly,
water cooling towers are vital to the continuing operation of these
facilities and are considered critical pieces of the plant and equipment.
In fact, these processes cannot continue to operate without cooling towers
or some other more expensive means to reject heat from these facilities.
Water cooling towers can range in price from $10,000 for a small 600 gallon
per minute ("GPM") or 250 ton HVAC facility to over $10,000,000 for a

                                   -4-
<PAGE>
heavy industrial or utility customer needing capacities of 300,000 GPM.
GPM is the standard unit of measurement in the industrial water cooling
tower segment, while HVAC usage denominates capacity in nominal cooling
tons.  One ton of cooling is approximately equivalent to 2.5 - 3.0 GPM
under humid environmental conditions.

     The water cooling tower market can be subdivided into two main
segments, facilities using pre-packaged or factory assembled units and
plants employing field erected cooling towers.  Industrial water cooling
towers are usually stand alone, separate facilities while factory assembled
units often are placed on top of office buildings or in close proximity to
the heat source adjacent to the building.  Factory assembled cooling towers
are shipped directly to the end user as a completed unit and installed on
site with minimal additional fabrication.  These units are typically sold
to HVAC and light to medium industrial users.  Cooling towers for HVAC
applications are normally sized from approximately 30 to 500 nominal tons.
Larger tonnages are obtained from either sequencing a number of factory
assembled units or constructing small field erected units on site.  Field
erected cooling towers are constructed on site and are utilized by larger
HVAC applications, medium and heavy industrial and utilities.  Heavy
industrial users require water cooling towers sized from 10,000 to 100,000
GPM and some utility applications range up to 300,000 GPM.

     Accurate information about the water cooling tower industry is
difficult to obtain since many cooling tower manufacturers are either
privately held and do not divulge market information or are divisions of
very large public entities.  Furthermore, many existing cooling tower
companies operating in the U.S. are owned by foreign entities where
reporting requirements are substantially different from U.S. provisions.
Limited market information is available from the U.S. Department of
Commerce, public SEC information, commissioned private studies and internal
intelligence sources.  Based on this limited information and management's
evaluation of the market, management estimates that the total annual United
States water cooling tower market ranges from $500 million to $700 million,
and that the total annual worldwide market ranges from $1.5 billion to $2.0
billion.

PRODUCT LINE

     The market we currently serve can be subdivided into two main sub-
segments: international water cooling towers and domestic water cooling
towers.  For the year ended December 31, 1999, the domestic tower revenue
recognition represented approximately 88.5% of our revenues, and
international tower revenue represented approximately 11.5%.  Based upon
our current backlog of business and current outstanding bid activity, we
believe that future revenue recognition for 2000 will approximate 1999
percentages for international and domestic revenues.  Within each of these
main sub-segments, the product line can be further divided into new cooling
towers and retrofits and repairs of existing towers.

     NEW WATER COOLING TOWERS.  New water cooling tower project
opportunities come from two major sources: a worldwide network of
independent manufacturers representatives and internal sales personnel.
Although some projects arise from past sales relationships with

                                   -5-
<PAGE>
customers, most projects are awarded independently.  In addition to our
direct sales activities, we market new water cooling towers in a number of
ways, including sponsorship of  trade shows, direct mail solicitation and
advertising in various trade publications.  We are presently developing a
compact disk ("CD"), which will portray our products using interactive
illustrations and animation.  This CD will be distributed to engineering
firms, manufacturers and specialized mailing lists in the industrial water
cooling tower market.  We also maintain web pages on the worldwide web at
http://www.gwtr.com and http://www.psicoolingtowers.com.

     Bids on new water cooling tower projects typically range from $50,000
to $12,000,000 per project.  Although we have bid on larger projects, the
majority of our projects fall within this range.

     Although there is no typical bidding process, normally the customer or
a customer's agent describes the operating performance requirements of the
tower.  Our personnel assemble a value engineering plan for the given heat
load configuration and a cost estimate for the materials, labor, and
ancillary equipment to meet the specific performance criteria for the
facility.  Many factors affect the cost calculation, including water
quality, environmental conditions, operating details, local building
requirements, structural materials needed, local labor conditions and other
factors which affect the cost components of the cooling tower.  Some
projects may be awarded to the low bidder, while others may have other
performance factors as the prime criteria for contract award.

     At the time the job is awarded, final terms and conditions are
negotiated including on-site dates, contract terms and conditions,
financial performance, warranties and other factors defining the rights and
obligations of the parties.  Normal payment terms include payment upon
completion of the customer engineering package which is followed by
additional payments upon completion or partial completion of the material
procurement/manufacturing phase and, if applicable, the erection phase.  We
recognize contract revenues using the percentage-of-completion method,
based primarily on contract costs incurred to date compared with total
estimated contract costs.  Contracts on some water cooling towers
arrangements which have both new and retrofit components are segmented
between types of services, and accordingly, gross margin related to each
activity is recognized as those separate services are rendered.  Changes to
total estimated contract costs and to contract revenues via change orders
are recognized in the period in which they are determined and the costs are
incurred.  In addition, a provision is made for the entire amount of future
estimated losses, if any, on contracts in progress in the period in which
such losses are determined.

     Cost components for new cooling towers include hardware, structural
components, water distribution system, heat transfer media, air movement
equipment (fans, drive shafts, gearboxes etc.), fanstacks, labor, tools,
and freight.  Most of the material requirements are purchased from
independent outside vendors, custom fabricated for the specific project
requirements and shipped directly to job sites.  We fabricate some wooden
and fiberglass structural materials and other components at leased facilities.

                                   -6-
<PAGE>
     The customer will often require a thermal performance test and
verification as part of the documentation on tower performance.  Either our
personnel or independent third parties perform these tests. Historically,
these performance tests have shown that our products consistently meet or
exceed performance design specifications.  In addition to the performance
tests described above, we provide a limited warranty on our products to be
free from material defects for 12 months from start-up or 18 months from
shipment, whichever occurs first. Additionally, we have passthrough
warranties from our sub-vendors for various components utilized in our
cooling towers.  We believe that there are no significant warranty issues
from products placed in service since inception.

     We have installed environmental friendly plume-abated towers in Japan
and the United States.  Plume abatement features increase the selling price
of the facilities and provides additional customer benefits, such as
reduced impact to surrounding deciduous trees and reduction in potential
liability caused by condensing water and ice in winter driving conditions.
In addition to plume abatement, we have also successfully installed sound
abated towers which decrease noise levels and sound pollution.

     RETROFIT MARKET.   In the retrofit or repair market, we have bid on
projects ranging from $5,000 to $5,000,000.  We expect to bid on projects
in excess of this range in the future as opportunities may arise.
Normally, the customer selects options from a list of possible repair
scopes for the existing water cooling tower retrofit project.  In
approximately 75% of the projects we bid on, a portion of the work scope is
based upon a time and material unit price.  Most retrofit projects do not
require drawings or extensive engineering work. Profit is recognized on a
percentage-of-completion basis.

     Retrofit projects could have significant change orders as compared to
the total price of the contract.  Change orders from retrofit projects
arise due to the uncertainty surrounding the job scope at the time of the
bid.  Often, existing towers are operating when job walkthroughs are
performed to determine the scope of the repairs necessary.  Other damaged
areas in need of repair can only be observed and retrofitted after the crew
has begun their retrofit work and the damaged area is exposed for observation.

SUPPLIERS, VENDORS AND SPARE PARTS

     We utilize selected vendors for our sub-component requirements.  In a
limited number of cases, specific manufacturers have worked in conjunction
with us to supply components to customers under common marketing programs.
Because we have access to a broad number of suppliers which we work with on
a regular basis, management believes that the customer can achieve economic
benefits by utilizing our buying power when component spare parts are
needed.  We rely upon the suppliers and vendors to manufacture components
to our specifications.  We have not experienced any significant delays in
obtaining parts and components for our products, and we believe that our
relationships with our suppliers are good and that the material
availability is adequate.

                                   -7-
<PAGE>
PRODUCT RESEARCH, DESIGN AND DEVELOPMENT

     We lease a facility in Coeur d'Alene, Idaho, for our research and
development requirements.  We are evaluating various technologies related
to water cooling towers, heat rejection rates, water reuse, disinfection,
water treatment and product design at this facility.  The facility was
staffed by one employee as of December 31, 1999.  We plan to continue
research and refinement programs at this facility but we have no fixed
research and development budget.  For the fiscal years ended December 31,
1999, 1998 and 1997, we expended $30,618 and $232,657, and $147,895
respectively, for research and development.

TOTAL WATER TREATMENT SERVICE PROGRAM

     During fiscal 1998, we  began offering clean water technology services
to water cooling tower customers through our wholly owned subsidiary
Applied Water Technologies, Inc. ("AWT"), a Nevada corporation.
Historically, water used in cooling towers has been treated with chemicals
to prevent or inhibit the formation of scale, bacteria, algae and corrosion
at substantial expense.  Build-up of the chemicals used in treating the
water causes operating inefficiency and necessitates periodic shut-downs
for cleaning.  Disposal of the contaminated water poses environmental
compliance issues for our customers.  AWT's clean water technology replaces
the need for hazardous chemicals, increases operating efficiency, reduces
water use by increasing cycling levels and increases the time between shut-
downs for cleaning.  It also dramatically reduces the costs associated with
water discharge.  Retrofits or total cooling water packages are available.

     We believe this environmentally sound approach to the treatment of
process cooling water offers many benefits to our customers including
reduction in water use, reduced liability from employees' handling of
hazardous chemicals and reduction of pollutants being discharged.  We will
integrate the environmentally sound water treatment service with our other
products to bring a total solution to our existing and future customers.
We believe that this integrated "solutions" approach will be attractive to
our customer base and will result in longer term contracts with potentially
higher profit margins.

     This full service program is intended to enhance our water cooling
tower historic business segment by adding scale and corrosion control,
filtration and micro-organism and algae control which enable us to
guarantee our customers cold, clean water at fixed cost over long-term
periods of time.  We believe that our total water management program will
provide us a competitive advantage because other water treatment
competitors do not offer cooling towers and our cooling tower competitors
do not generally offer water treatment services.

     AWT's "AquaPhysics" program offers a series of non-chemical treatment
technologies, coupled with on-site monitoring and service, to provide a
proven environmentally sound approach to cooling water management.  The
three-phased AquaPhysics systems will employ technologically advanced
equipment that comprehensively addresses scale, micro biofouling, corrosion
and filtration of suspended solids.  The combination of these leading edge
technologies

                                   -8-
<PAGE>
results in clean, cold water for optimum cooling efficiency and recycling
without the use of storage and handling of hazardous chemicals.

     The total water management program offers a proprietary method of
reducing scale deposited from the water inside the pipes.  This system,
based on eight patented technologies, delivers electric charges through the
water passing inside a pipe from a device which is easily fitted around the
outside of the pipe.  The electric charges in the system cause a solenoid
induced molecular agitation which precipitates the calcium carbonate in
water causing it to clump into sizes which can then be filtered out of the
water flow.  Our total water management program also offers a proprietary
method of microbiological control through an ionization process which kills
bacteria and algae utilizing a silver anode.  Filtration to remove
suspended solids and insoluble crystals and corrosion control will be
provided by purchasing standard products produced by many suppliers.
Finally, the total water management program includes a remote monitoring
system, which permits us to monitor the temperature and condition of the
waterflow and to react quickly to control the system as required.

     We plan to market our non-chemical treatment service primarily by
targeting customers with buildings or other facilities with an HVAC focus
and to those who recognize the benefits and have requirements for
environmental compliance and safety.  We plan to market on the basis of
guaranteeing an end result, rather than selling technology or equipment,
and providing a long-term guarantee for clean and healthy water.  The
AquaPhysics based program will also be shown to save valuable water
resources, with the systems able to cycle the same water up to
approximately eight times, as opposed to other chemical based systems which
may require water for a once through basis or up to a maximum of three or
four cycles before it has to be purged.

     Through 1999, we had invested approximately $400,000 in start-up and
related expenses leading to the AWT treatment service program.  We
initiated service under our first contract which commenced in June 1999.
Our initial contract is with Commonwealth Edison and is for a five-year
term.  Our treatment program serves a closed loop system with HVAC towers
and associated piping and systems to cool nuclear fuel after the fuel has
been taken out of service at that major Illinois utility's Zion nuclear
power plant.  The customer will pay a monthly fee from which we will
recover our initial investment over a relatively short period, providing an
example of the higher margin anticipated from this new business segment.

GWS WATER SERVICE PROGRAM

     Based on years of experience in design, constructing and maintaining
water cooling towers, we have continued to develop improved products to
assist our customers with efficient removal of heat from their process
systems.  We typically design and construct towers that exceed the bid
specifications provided by its customers for thermal water treatment.
Nevertheless, it is natural for all materials used in constructing water
cooling towers and the impact of water itself to cause reductions in
efficiency as time progresses, particularly if not properly maintained.  It
is not unusual for efficiency to be reduced 20% to 30% after five to ten
years of operation.

                                   -9-
<PAGE>
     During fiscal 1999, through our wholly owned subsidiary Global Water
Services, Inc. ("GWS"), a Nevada corporation, we began offering total
cooling water management services, including operating and maintenance
services to water cooling tower customers.  Traditionally, cooling towers
experience a degradation in thermal heat performance over the life of the
tower.  This decrease in operating performance is due mainly to a shortfall
in preventive maintenance practices by cooling tower operators.  Because of
reductions in water cooling tower efficiency, other plant operations are
adversely affected, leading to a reduction in plant output, a decrease in
production yields and/or a decline in product quality.  These
inefficiencies may lead to an adverse impact on plant profitability due to
the lack of sufficient cooling water for the facility.

     Through our wholly owned subsidiary GWS, we address this customer need
through our proprietary long-term service arrangement which provides total
water cooling management services to customers.  We believe this approach
to the water cooling tower user's industries will lower overall costs,
improve efficiencies and provide increased profitability to our customers.
We believe that synergies with AWT and PSI will provide many opportunities
to improve profitability and increase our market share as these service
arrangements are developed over the next few quarters.

     GWS assumes full responsibility, with the approval of our customers,
for selecting all the systems, equipment, supplies and water treatment
program needed for the serviceing, recruiting, training and managing the
operational manpower required under each project.  We are not aware of any
other companies which provide such a full service program in our industry.
We anticipate structuring and pricing our contracts to provide us with
increased gross margins as compared to our traditional water cooling tower
construction business.

     We believe that GWS' services will differentiate it from competitors
as a result of the scope of the equipment, services, technology, systems
and water treatment bundled into one service package, all for a monthly fee
over a long-term period.  We anticipate that our customers will view these
service contracts as a long-term solution which will result in significant
revenue improvement and substantial cost savings.

     Although GWS currently has no contracts in place, we are pursuing
contracts with several major electric utilities and other industrial
companies utilizing water cooling towers.

GOVERNMENTAL REGULATION

     We are is subject to the requirements of a number of federal, state
and local laws, such as the federal Occupational Safety and Health Act
("OSHA") in the erection and manufacturing of the cooling towers, the
Department of Transportation ("DOT"), the Federal Aviation Administration
("FAA"), the Environmental Protection Agency ("EPA") and various state
regulatory agencies. We endeavor to comply with all state and federal laws
and believe that we are in compliance with all  federal, state and local
regulations applicable to our business, including environmental regulations.

                                  -10-
<PAGE>
COMPETITION

     The market for water cooling towers is extremely competitive
worldwide.  There are approximately 10 manufacturers of new industrial
water cooling towers in the United States.  There are approximately 15
regional companies providing retrofits and repair services.  Our primary
competitors internationally consist of the same competitors with which we
compete in the United States.  Additionally, there are 10-15 companies
which compete regionally on an international basis with our products and
services.

     The two largest competitors on a worldwide basis are the Marley
Cooling Tower Co., a division of United Dominion Industries Limited based
in the United States, and Hamon Cooling Towers, a division of the Hamon
Group of Belgium.  Collectively, these two companies account for
approximately 40% of the worldwide industrial water cooling tower market.

     A number of our competitors are substantially larger in size than we
are and have greater financial, operating and other resources.  Many of
these competitors have been in business for a number of years and are well
established in the industry.

     In addition, a number of the aforementioned competitors manufacture
and market water cooling towers employing fiberglass, wood and concrete
materials which are similar to our products.  Management believes that our
products provide superior value to our customers through service,
performance and operating efficiencies. There can be no assurance that
competitors will not develop and produce products which are comparable or
superior to our product line.

     In the area of water treatment services, we compete with, among
others, Nalco Chemical Co. and Hercules, which are publicly traded
companies.  Market estimates vary extensively for the size of the worldwide
water treatment market, but various sources estimates that the total size
may approach $300 billion worldwide.  All of our competitors in the water
treatment market are substantially larger in size than we are, and have
greater financial, operating and other resources.  These competitors have
been in business for a number of years and are well established in the industry.

EMPLOYEES

     As of December 31, 1999, we employed 100 full time individuals in the
fields of engineering, management, marketing, accounting, finance,
drafting, design, project management, law and administrative support
throughout our operations.  There were 72 individuals at our corporate
headquarters in Golden, Colorado.  We utilize an employment service
organization to provide field personnel for our projects where the erection
of the tower is within our scope of work.  These crews have ranged from
approximately 30 to 170 individuals and fluctuates in accordance with the
total number of projects requiring field installation at any given time.
Only crews on selected jobs where union representation is mandatory are
subject to a collective bargaining agreement.  We believe that relations
with our employees are good.

                                  -11-

<PAGE>
CUSTOMERS

     We had a major customer which accounted for more than 10% of our
revenues for the year ended December 31, 1999.  This customer accounted for
$26.8 million in recognized revenue during 1999 or 39.8% of our total 1999
revenue.  We had a major customer accounting for 13.9% of our revenues for
the year ended December 31, 1998.  We did not have a major customer
accounting for more than 10% of our revenues for the year ended December
31, 1997. From time to time, we may have projects that exceed the 10%
revenue threshold for defining a major customer.  Because each project is
awarded independently from other projects, management does not believe that
the completion of the contractual arrangements with any major customer that
may arise will have a material adverse effect on us.

     We have experienced seasonality in the business over the past few
years.  In general, the fourth calendar quarter of the year has experienced
higher revenues and higher operating income that the other calendar
quarters.  Management attributes most of this to cooling tower projects
following the warmer summer months and to end-of-the-year capital budgets
of customers.

BACKGROUND

     GWT was incorporated under the name Fi-Tek VI, Inc. ("Fi-Tek") in the
State of Delaware on July 12, 1990, for the primary purpose of seeking out
acquisitions of properties, businesses or merger candidates, without
limitation as to the nature of the business operations or geographic area
of the acquisition candidate.  In October 1992, Fi-Tek completed an initial
public offering, receiving proceeds of $160,000 from the sale of 8,042,500
units, consisting of Common Stock and Class A and Class B Warrants
(collectively, the "Warrants"). Fi-Tek's offering was subject to the
Colorado Securities Act, which required the placement into escrow of 80% of
the net proceeds of the offering ($93,714) until the completion of a
transaction or series of transactions whereby at least 50% of the gross
proceeds received from the sale of shares in the offering was committed for
use in one or more specific lines of business.  The escrow condition had
not been satisfied as of the fourth anniversary of the initial public
offering, and accordingly, Fi-Tek distributed those funds pro rata to those
persons who were owners of the shares of Common Stock purchased in the
offering.  The expiration date of the Warrants which were included in the
units sold in the public offering have been extended past their original
expiration date, and will now expire April 14, 2001, unless extended.

     On September 25, 1997, Fi-Tek VI and PSI consummated an Agreement and
Plan of Reorganization whereby Fi-Tek VI acquired all of the issued and
outstanding common shares of PSI in exchange for the issuance of
261,382,500 shares of Common Stock and 1,000,000 shares of a newly-
authorized Series A non-voting preferred stock ("Series A Preferred
Stock").  Subsequent to the reverse acquisition with PSI, we changed our
name from Fi-Tek to Global Water Technologies, Inc. to reflect our focus on
the growing water-related market opportunities.  The trading symbol for our
Common Stock was also changed to "GWTR."  Fi-Tek accounted for the
transaction as a reverse acquisition under the purchase method of
accounting.  The fiscal year of Fi-Tek was changed from June 30 to December
31 to correspond to the fiscal year of PSI.

                                  -12-
<PAGE>
     Each share of Series A Preferred Stock is convertible into 290 shares
of Common Stock upon attainment of gross annual sales of $60,000,000, but
only if such annual sales is reported not later than the due date of the
Annual Report on Form 10-K for the fiscal year ending in 2002, and is
subject to redemption at a price of $0.0001 per share in the event the
required sales level is not attained.  Our revenues for the fiscal year
ended December 31, 1999, exceeded $60 million.  Accordingly, at the time of
filing this Annual Report on Form 10-KSB with the Securities and Exchange
Commission, the outstanding shares of Series A Preferred Stock will convert
into Common Stock on the basis of 290 shares of Common Stock for each one
share of Series A Preferred Stock.  See ITEM 12. TRANSACTIONS WITH
MANAGEMENT, below, for information relating to George A. Kast's exchange of
his Series A Preferred Stock for the same number of shares of a newly
created non-voting Series C Preferred Stock.  The remaining 123,659 shares
of Series A Preferred Stock outstanding convert into 35,861,110 shares of
Common Stock on the date this 10-KSB is filed with the Securities and
Exchange Commission.

ITEM 2.  DESCRIPTION OF PROPERTY.

     Effective March 10, 1998, GWT and George A. Kast, President and CEO,
entered into a triple-net lease for a portion of a 36,740 square foot
office building in Golden, Colorado, for our expanding office space
requirements.  The lease required that we pay rent at a rate of $21,454
per month for the 34-month lease.  Gross operating expenses for the
building approximated $20,000 per month, of which Mr. Kast was personally
responsible for the payment of approximately $5,000 per month, which was
paid by us during 1998.  At December 31, 1998, GWT recorded a note
receivable from Mr. Kast in the amount of $47,766 (principal and interest
at 8% per annum) related to the operating costs of the facility for which
Mr. Kast is responsible.  This note was repaid during 1999.

     The lease also provided Mr. Kast with the option to purchase the
building in which GWT's principal offices are located on or before December
31, 2000.  During December 1999, Mr. Kast, through an affiliated entity, GK
Holdings, Inc., exercised his option. On December 31, 1999, GWT and GK
Holdings entered into a ten year lease of the building, commencing January
1, 2000.  The triple-net lease requires monthly rental payments of $53,538
per month.  Management believes that the terms of the lease are no less
favorable to GWT than comparable office space in the geographical area in
which our offices are located. GWT subleases the garden level of the
building to several unaffiliated entities at varying monthly rentals.  Non-
related third parties pay rent of approximately $12,600 monthly, reducing
our net monthly rent to approximately $40,900.

     From January through March 15, 1998, our principal offices were
located in Lakewood, Colorado, and consisted of approximately 12,260 square
feet of office space which was occupied pursuant to a 60-month lease with
an unaffiliated entity, which expired on October 31, 1999.  During 1999, we
entered into an agreement with an unaffiliated entity to occupy these
premises and relieve us from our former obligation under the lease.

     We lease approximately 17,700 square feet from an unaffiliated entity
in Denver, Colorado, for $6,642 per month.  The lease terminates in January
of 2001.  This facility is utilized

                                  -13-
<PAGE>
for light structural fabrication, component storage and centralized
warehousing for tools and equipment.  We believe that the lease on this
facility can be renewed and/or additional space secured without substantial
economic implications.

     We also lease a 5,000 square foot research and development facility in
Coeur d'Alene, Idaho, from Mr. Kast. The facility is subject to a lease
which terminates September 30, 2001.  The lease terms obligate us to a
monthly payment of $1,238.  During 1999, we paid Mr. Kast $14,856 for this
facility.

     Management believes that our insurance policies provide adequate
coverage for the contents at all facilities.  The lessor of each of our
leased facilities is responsible for the building structure itself.  We
could have material adverse consequences if our facilities were destroyed
by fire or other disaster.

ITEM 3.  LEGAL PROCEEDINGS.

     We are not a party to any legal proceedings which management believes
to be material, and there are no such proceedings which are known to be
contemplated for which we anticipate a material risk of loss.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     Our 1999 Annual Meeting of Shareholders was held on June 30, 1999.
Information concerning the matters considered and approved by the
shareholders, and the vote thereon, was reported in our Quarterly Report on
Form 10-QSB for the quarter ended June 30, 1999.









                                  -14-
<PAGE>
                                 PART II

ITEM 5.  MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS.

MARKET INFORMATION

     The following table sets forth the high and low bid prices for the
GWT's Common Stock for the past two years.  The quotations reflect inter-
dealer prices, with retail mark-up, mark-down or commissions, and may not
represent actual transactions.  The information presented has been derived
from the National Quotation Bureau, Inc. Library.

                                                 High           Low
                                                 Bid            Bid
                                                 ---            ---
                    1998 Fiscal Year
                    ----------------

                    First Quarter                $.135          $.03

                    Second Quarter               $.135          $.06

                    Third Quarter                $.065          $.04

                    Fourth Quarter               $.05           $.035

                    1999 Fiscal Year
                    ----------------

                    First Quarter                $.09           $.05

                    Second Quarter               $.13           $.09

                    Third Quarter                $.145          $.10

                    Fourth Quarter               $.10           $.06

     On March 17, 2000, the last reported bid and asked prices for the
Common Stock were $0.54 and $0.56, respectively.  There is no public market
for the Class A and Class B Warrants.

HOLDERS

     On March 1, 2000, our Common Stock was held by 73 shareholders of record.

DIVIDENDS

     We have not paid cash dividends on our Common Stock and have
historically retained earnings for use in our business. The payment of
dividends is within the discretion of our Board of Directors and depends in
part upon our earnings, capital requirements, debt covenants and financial
condition.  We do not anticipate paying dividends in the foreseeable future.

                                  -15-
<PAGE>
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

GENERAL

     Historically, our core business has been the design, sale, manufacture
and construction of industrial water cooling towers, repairs and
maintenance in the retrofit of existing industrial water cooling towers and
cooling tower components for these and similar facilities. We primarily
market our products and services worldwide to the following industries:
electric power utilities; process (such as agricultural, industrial and
pharmaceutical process industries); petrochemical; chemical; heating,
ventilation and air-conditioning ("HVAC"); manufacturing; pulp & paper and
other industries utilizing water cooling towers.  Typical customers include
companies such as Archer Daniels Midland, Amoco, Commonwealth Edison,
Mitsubishi, Mobil, Texaco, Bechtel, Fluor Daniel and other large
corporations around the world.

     We derive revenue from the following principal sources:  new water
cooling tower sales, retrofits to existing water cooling tower repair
projects and spare parts and supplies to existing cooling tower customers.
We custom design and construct wooden, fiberglass and concrete towers for
our customers worldwide.

     We recognize revenues using the percentage-of-completion method, based
primarily on contract costs incurred to date compared with total estimated
contract costs.  Contracts on selected projects where there are both repair
and new tower components are segmented between the two distinct phases and
accordingly, gross margin related to each activity is recognized as those
separate phases are completed using the percentage-of-completion method,
based primarily on contract costs incurred to date compared with total
estimated contract costs.  Changes to total estimated contract costs and to
contract revenues via change orders are recognized in the period in which
they are determined.  In addition, a provision is made for the entire
amount of future estimated losses, if any, on contracts in progress in the
period in which such losses are determined.

     In November 1998, the Board of Directors approved the decision to
change, retroactive to January 1, 1998, our application of the percentage
of completion method of accounting for revenues and costs of long-term
contracts related to new water cooling towers.

     Under the previous method, we recognized a predetermined percentage of
its profits on new cooling towers upon the attainment of certain project
milestones, specifically the completion and delivery of certain engineering
drawings and specifications.  Under the current method, we will recognize
profits on all phases of the project, including engineering, in the ratio
that costs incurred to date bear to total estimated costs.  Management
believes that the new method is preferable for financial statement and
backlog disclosure related to revenues and gross profit.  In addition, we
believe that the new method should improve the comparability of our
financial statements with those of other companies which use a cost-to-cost
comparison approach of percentage of completion.

                                  -16-
<PAGE>
     As a result of this change, to which our independent public accounting
firm concurs, we recorded a one-time extraordinary charge to income as of
January 1, 1998. The amount of this charge, amounting to $754,296 net of
the related tax effect of $593,119, was reflected as a cumulative effect of
a change in an accounting principle on our income statement for 1998.

FORWARD-LOOKING STATEMENTS

     This Annual Report on Form 10-KSB contains forward-looking statements
that describe our anticipated financial results and growth based on our
plans and assumptions.  Important information about the basis for these
plans and assumptions and certain factors that may cause our actual results
to differ materially from these statements is discussed in this report and
contained below and in "Important Factors That May Affect Future Results"
beginning on page 22 below.

YEAR ENDED DECEMBER 31, 1999 AS COMPARED TO YEAR ENDED DECEMBER 31, 1998

     Total revenues were derived from engineering, equipment, installation,
retrofits and spare parts of cooling towers and AWT's clean water
technology services.  For the year ended December 31, 1999, total tower
revenue increased 95.6% to $67,952,967 as compared to $34,734,340 for the
year ended December 31, 1998.  International revenues comprised 11.5% of
total revenues in 1999 versus 15.1% of total revenues in 1998, with such
decrease resulting from an increased proportion of domestic projects in the
total revenue mix.  AWT did not appreciably contribute to the increase in
revenues during 1999.

     Contracts awarded ("bookings") during 1999 increased 16.2% to
$61,774,341 from $53,142,019 in 1998.  These amounts included international
bookings of $8,269,087 in 1999 (13.4% of total) and $3,470,882 in 1998
(6.5% of total).  Management believes that foreign opportunities will
continue to play an important role in future periods.  The increase in
bookings awarded is due to an overall increase in the average dollar amount
of the contract awarded and increased selling expenses to take advantage
of market opportunities.  Backlog decreased from $27,155,058 at December
31, 1998, to $20,846,108 at December 31, 1999.

     Our cost of sales increased 118.7% from $27,816,337 in 1998 to
$60,851,840 in 1999.  As a percentage of revenues, cost of sales increased
from 80.1% in 1998 to 89.5% in 1999. The absolute increase in cost of sales
resulted from a 95.5% increase in corresponding revenues, additional cost
allocations from selling, general and administrative expenses to projects
and a loss on one large project which added approximately $1,482,000 of
additional costs in excess of originally anticipated profit or 2.2% of the
above percentage of revenue amount.  Management believes significant price
pressure from competitors will continue to be an industry force in the
future.  Due to significant competition, there can be no assurance that we
can maintain its profit margins in the future.

     Selling, general and administrative expenses increased 3.7% from
$4,762,328 in 1998 to $4,938,947 in 1999.  As a percentage of revenues,
these expenses decreased from 13.7% in 1998 to 7.3% in 1999.  As a
percentage of new bookings which increased 16.2%, these expenses

                                  -17-
<PAGE>
decreased from 9.0% in 1998 to 8.0% in 1999.  Management believes that the
investment in selling resources will continue to have a positive impact on
the increase in bookings and the recognition of the related revenues for
future periods.

     Research and development costs decreased 86.8% to $30,618 in 1999 from
$232,657 in 1998.  These costs include the research and development
facility in Idaho.  The expenses associated with our diversification effort
into water treatment and water purification and the expenses for our new
Global Water Services and AWT subsidiaries are reflected in cost of sales
and selling, general and administrative categories above.

     Operating income, based on the explanations noted above, increased
10.7% from $1,923,218 or 5.5% of revenues in 1998 to $2,131,562 or 3.1% of
revenues in 1999.  Operating income would have increased to approximately
$3,600,000 or 5.3% of 1999 revenues if the large project described above
had achieved its original anticipated profit.

     Other income and expense primarily consisted of interest expense,
which increased 71.5% to $266,548 in 1999 from $157,520 in 1998, related to
our various debt financings.  Income taxes decreased from $777,569 with an
effective tax rate of 44% in 1998 to $566,115 with an effective tax rate of
30.3% in 1999.

     Our net income before the cumulative effect of change in accounting
principle and preferred stock dividend increased 31.7% from $989,309 in
1998 to $1,304,782 in 1999.  Both basic and fully diluted income per share
increased from $0.001 in 1998 to $0.004 in 1999.

     Our export sales were $7,818,880 and $5,241,036 for the fiscal years
1999 and 1998, respectively.  Management believes that the importance of
the international segment will continue to grow as our revenue base
expands.  During 1999, AWT and GWS did not materially impact the results of
operations described above.

YEAR ENDED DECEMBER 31, 1998, AS COMPARED TO YEAR ENDED DECEMBER 31, 1997

     Our total revenues were derived from engineering, equipment,
installation, retrofits and spare parts of water cooling towers.  For the
year ended December 31, 1998, total tower revenue increased 85.8% to
$34,734,340 as compared to $18,697,292 for the year ended December 31,
1997.  International revenues comprised 15.1% of total revenues in 1998
versus 20.2% in 1997, with such decrease resulting from an increased
proportion of domestic projects in the total revenue mix.

     Our contracts awarded ("bookings") during 1998 increased 119.9% to
$53,142,019 from $24,163,772 in 1997.  These amounts included international
bookings of  $3,470,882 in 1998 (6.5% of total) and $8,749,532 in 1997
(36.2% of total).  The amount in 1997 included a contract of $4.2 million
removed from the backlog in 1998.  The increase in bookings awarded is due
to an overall increase in the number of projects won, an increase in the
average dollar amount of the contract awarded and increased selling
expenses to take advantage of market opportunities.

                                  -18-
<PAGE>
Backlog increased from $11,606,245 at December 31, 1997 to $27,155,058 at
December 31, 1998.

     Our cost of sales increased 105.3% from $13,547,484 in 1997 to
$27,816,337 in 1998.  As a percentage of revenues, cost of sales increased
from 72.5% in 1997 to 80.1% in 1998. The absolute increase in cost of sales
resulted from a 85.8% increase in corresponding revenues and additional
cost allocations from selling, general and administrative expenses to
project costs related to the accounting change described above.  Management
believes these additional allocations more accurately reflect the personnel
resources expended directly due to project requirements.

     Our selling, general and administrative expenses increased 18.1% from
$4,031,159 in 1997 to $4,762,328 in 1998.  As a percentage of revenues,
these expenses decreased from 21.6% in 1997 to 13.7% in 1998.  The
additional project allocations described above are the main reason for the
decrease as a percentage of revenues.  As a percentage of new bookings
which increased 119.9%, these expenses decreased from 16.7% in 1997 to 9.0%
in 1998.  In support of greater bookings, the overall increase in selling,
general and administrative expense primarily occurred in two areas.  The
first was in personnel related costs, primarily from an increase in number
of staff.  The second occurred in such areas as travel related to
international sales opportunities and increased participation in national
and international trade shows and additional facility costs.  Management
believes that the increases in selling expenses will continue to have a
positive impact on the increase in bookings and the recognition of the
related revenues for future periods.

     Our research and development costs increased 57.3% to $232,657 in 1998
from $147,895 in 1997.  These costs include the research and development
facility in Idaho and the expenses associated with our diversification
effort into water treatment and water purification.

     Operating income, based on the explanations noted above, increased
98.1% from $970,754 or 5.2% of revenues in 1997 to $1,923,218 or 5.5% of
revenues in 1998.

     Other income and expense primarily consisted of interest expense,
which increased 28.0% to $157,520 in 1998 from $123,072 in 1997, related to
our various debt financings.  Income taxes increased from $273,878 with an
effective tax rate of 32.4% in 1997 to $777,569 with an effective tax rate
of 44% in 1998.

     Net income before the cumulative effect of change in accounting
principle and preferred stock dividend increased 73.3% from $570,982 in
1997 to $989,309 in 1998.  Both basic and fully diluted income per share
decreased from $0.002 in 1997 to $0.001 in 1998.

     Our export sales were $5,247,569 and $3,777,426 for the fiscal years
1998 and 1997, respectively.  Management believes that the importance of
the international segment will continue to grow as our revenue base expands.

                                  -19-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 1999, we had working capital of $4,940,336 as compared
to working capital of $1,941,495 at December 31, 1998.  The working capital
increase is mainly due to a net increase in accounts receivable, retainage
receivables and work-in-process due to increased revenue volume offset by
a corresponding increase in accounts payable and accrued liabilities from
December 31, 1998 to December 31, 1999.  Our cash flow provided by and used
in its operating, investing and financing activities are summarized as follows:

                                            Year Ended December 31
                                    --------------------------------------
                                         1999          1998         1997
                                         ----          ----         ----

     Operating activities           $(3,458,803)   $  303,953   $  484,098
     Investing activities              (255,797)      (52,255)    (191,172)
     Financing activities             2,670,565     1,380,714     (235,627)
                                    -----------    ----------   ----------
     Net decrease/increase in cash  $(1,044,035)   $1,632,412   $   57,699
                                    ===========    ==========   ==========

     Our capital requirements for continuing operations consist of general
working capital needs, increased lease obligations as described in ITEM 2.
DESCRIPTION OF PROPERTY, scheduled payments on debt obligations and capital
expenditures.  We anticipate that our operating activities in the future
will provide cash even though the investment in receivables, inventory and
costs and estimated earnings in excess of billings is expected to increase
as sales volume increases.  The decrease in cash during 1999 from operating
activities was funded by an additional equity infusion from our private
placement of a net $962,425 and additional bank financing.  Subsequent to
December 31, 1999, we have received an additional $676,800 from the
exercise of outstanding "C" Warrants.  We try to minimize our investment in
these working capital components, but as sales and backlogs increase,
management believes that these investments will also increase.

     We believe that with the exercise of outstanding warrants, additional
debt financing and the conversion of working capital into cash, we will
have sufficient cash resources for continuing operations and to fund
expansion opportunities.

     We have certain financing agreements with existing customers that
extend beyond twelve months.  Management believes that these arrangements
can be sold to independent financial institutions to convert the assets
into cash.  Some of these existing assets are included in the working
capital amounts described above.  GWT has established long-term financing
arrangements to fund our expansion into new business opportunities.
Although each potential project will be evaluated on a case-by-case basis,
we believe that our existing relationships with significant funding sources
along with the financial strength of the potential customers will qualify
for long-term financing for our product line expansion in GWS and AWT.  We
believe that the future capital requirements for AWT and GWS in light of
these third party financing arrangements will be funded through operations.

                                  -20-
<PAGE>
     Scheduled principal payments on term loans will total $1,935,394
during the fiscal year ended December 31, 2000, with Norwest Bank and other
financial institutions.  A portion of the term loans outstanding are
guaranteed by the Small Business Administration and subjects us to certain
financial covenants.  These covenants include minimum net worth
requirements, limitations on capital withdrawals and collateral claims on
substantially all of our assets.  The total amount of the Small Business
Administration guaranteed term loan outstanding at December 31, 1999, was
$320,210.  Principal payments of $7,917 plus interest on the outstanding
balance is due and payable each month.  Interest is calculated at the prime
rate of interest plus one percent.  The prime rate will change periodically
as economic conditions in the general economy fluctuate.  At December 31,
1999, the interest rate for all financing which bear interest rates at 1.0%
over prime was 9.5%.  The bank has the right to accelerate payment on any
or all of the principal outstanding if the financial covenants are not
maintained.  If the bank exercised this right, it would have a material
adverse effect on us and our financial position.  As of December 31, 1999,
all financial covenants have been maintained.

     In September 1999 we secured a refinancing on our Export-Import line
of credit, bringing our total line up to $2,000,000.  This line bears
interest at 1.0% above the prime rate and is guaranteed by the Export-Import
Bank of the United States.  In March 2000, we secured an additional
$500,000 domestic line of credit maturing in June of 2000 which also bears
interest at 1.0% over prime.

     We have a revolving line of credit with a bank in the amount of
$2,300,000, including the additional line of credit mentioned above, of
which $1,725,000 was outstanding at December 31, 1999.  The interest rate
on the line of credit is tiered as follows:  6.69% on the first $770,000
and 9.5% on the remaining portion and bears no annual commitment fee.  The
line of credit in the amount of $1,800,000 is due January 15, 2001.  The
line of credit and the SBA term loan above are secured by cash collateral
of $773,233 at December 31, 1999, pledged by Michael A. Kast, one of our
directors.  As compensation for pledging the cash collateral, we pay
additional interest to Michael A. Kast.  See ITEM 12. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS.  Management believes that our short-term debt can
be refinanced at comparable or better terms when the debt becomes due.

     We have various loans secured by company vehicles.  At December 31,
1999, the total amount outstanding was $74,574 for these bank obligations.
The short-term principal payments obligations for the fiscal year ended
December 31, 2000, will be $34,794 for these loans.

     In total, as of December 31, 1999, we had outstanding loans from
commercial lenders of $3,924,784 and had $138,000 outstanding in letters of
credit.  The unused availability under the line-of-credit as of this date
was $107,000.

     We have various options, warrants and other securities outstanding
which, if fully exercised, could generate approximately $5.8 million of
additional equity.  Through March 17, 2000, $676,800 has been received from
the exercise of these securities which are currently in the money.

                                  -21-
<PAGE>
EFFECT OF INFLATION AND FOREIGN CURRENCY EXCHANGE

     We have not experienced material unfavorable effects on our results of
operations due to currency exchange fluctuations with our foreign customers
or material unfavorable effects upon our results of operations as a result
of domestic inflation.  Our policy on firm contracts denominated in
currencies other than the U.S. dollar is to hedge the net receipts through
the foreign exchange markets.

NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 1998, the FASB issued FAS 133, Accounting for Certain
Derivative Instruments and Certain Hedging Activities, which establishes
accounting and reporting standards for all derivative instruments,
including certain derivative instruments embedded in other financial
instruments (collectively referred to as derivatives), and for hedging
activities.  FAS 133 requires that an entity measure all derivatives at
fair value and recognize those derivatives as either assets or liabilities
on the balance sheet.  The change in a derivative's fair value is generally
to be recognized in current period earnings.  However, if certain
conditions are met, a derivative may be specifically designated as a hedge
of an exposure to changes in fair value, variability of cash flows, or
certain foreign currency exposures.  Based on the hedge designation,
special hedge accounting rules allow the derivative's change in value to be
recognized either in current period earnings, together with the offsetting
change in value of the risk being hedged, or, to the extent the hedge is
effective, in comprehensive income and subsequently reclassified into
earnings when the hedged item affects earnings.

     FAS 133, as amended by FAS 137, is effective for all fiscal years
beginning after June 15, 2000 (calendar year 2001), with early adoption
permitted.  We do not use derivatives for trading or speculative purposes.
With respect to other derivatives, mainly foreign exchange contracts, used
as hedges of its assets, liabilities and commitments, we would have a gain
of $25,177 as of December 31, 1999, on a foreign currency forward exchange
contract designated as a hedge against a contract denominated in Canadian
dollars.  Since the receivable on this contract has not yet been recorded,
the gain would be classified in comprehensive income under FAS 133.

IMPORTANT FACTORS THAT MAY AFFECT FUTURE RESULTS

     The following are some of the factors that could affect our future
results.  They should be considered in connection with evaluating forward-
looking statements contained in this Annual Report on Form 10-KSB and
otherwise made by us or on our behalf, because these factors could cause
actual results and conditions to differ materially from those projected in
forward-looking statements.

WE MAY NEED ADDITIONAL CAPITAL IN 2000

     We anticipate that we may need additional capital during calendar year
2000 to develop and market our products as our business grows.  Our planned
expansion into new business areas

                                  -22-
<PAGE>
will also require substantial financial funding.  There can be no assurance
that we will be able to secure funding sources. If we were not able to
obtain additional funding when it was required, it could have a material
adverse effect on our business prospects.

OUR GROWTH MAY BE LIMITED IF OUR BANKING CAPACITY IS NOT INCREASED

     We depend on banking lines of credit to fund our short-term cash
requirements.  The expansion into new businesses along with our increased
level of activity could require us to seek additional credit lines or
expand our existing banking credit lines.  Although we believe that we are
able to expand our banking facilities with a number of different financial
institutions, there can be no assurance that such an expansion will occur
or on terms acceptable to us.  The failure to expand our current credit
lines could have a material adverse effect on our ability to grow our business.

OUR PROFIT MARGINS COULD DECREASE IF WE ARE NOT PRUDENT IN MANAGING OUR PROJECTS

     In the past, a majority of our projects have been fixed-price
contracts.  The cost estimates for these projects are formulated during the
bidding process.  Many factors are included in the cost estimates,
including material costs, labor rates, labor productivity, freight
estimates, seasonal inefficiencies, contingencies, engineering and
miscellaneous supplies.  Although we consider our ability to estimate costs
to be good, any unanticipated costs could adversely affect the job's
overall profitability.

WE RELY ON OUTSIDE VENDORS FOR EQUIPMENT AND SUPPLIES

     Our policy on suppliers and vendors is to obtain at least two
qualified sources where possible to supply the components for our water
cooling tower products.  Qualifying criteria include quality components,
price, delivery flexibility, manufacturing scheduling and payment terms. We
presently use primarily one major supplier for certain cooling tower
components; however, other suppliers of these components are available.  We
believe that if necessary, similar economic terms could be negotiated with
other qualified suppliers.  If we were unable to acquire any of these
components, it would adversely affect our ability to complete projects on
a timely basis, which could have an adverse effect on our business.

WE ARE EXPERIENCING RAPID GROWTH, WHICH MAY STRAIN OUR RESOURCES

     Our goal is to increase sales through our current product line and to
expand our business into new and complimentary markets, including our water
treatment service program, water cooling service program and new marketing
strategies.  We also may acquire other companies which have businesses
which complement or may expand our business.  Such expansion could

     *    place a significant burden on our existing resources;

                                  -23-
<PAGE>
     *    may require us to implement additional operating, manufacturing
          and financial controls and improve coordination among marketing,
          engineering, manufacturing and finance functions;

     *    increase our capital expenditures;

     *    hire additional personnel; and

     *    require us to install additional reporting and management
          information systems for order processing, production, monitoring,
          inventory control and financial reporting.

There can be no assurance that we would be able to successfully manage any
substantial expansion of our business, including attracting and retaining
qualified personnel.  A failure to do so could have a material adverse
effect on our operating results.

OUR BUSINESS COULD BE AFFECTED BY DECLINING GENERAL BUSINESS CONDITIONS OR
A DECLINING DEMAND FOR COOLING WATER

     Although we believe that we are somewhat insulated because of the
breadth and large number of diverse industries utilizing cooling water, the
diverse international markets where we compete and the competitive nature
of our products, we cannot guarantee that the overall business climate will
remain favorable.  Many factors influence our customer's ability to
purchase needed cooling water capital equipment, including overall economic
levels of activity, interest rates and other factors affecting their
business.  We cannot guarantee that overall cooling water demand will
increase or stay the same in the future.  If the demand for cooling water
decreases, it could have a material adverse effect on our sales and
profitability.

OUR INTERNATIONAL BUSINESS COULD BE ADVERSELY AFFECTED BY POLITICAL, SOCIAL
AND ECONOMIC CONDITIONS IN THE COUNTRIES IN WHICH WE DO BUSINESS

     We have in the past engaged in projects in the Pacific Rim, North
America, South America, Asia and Europe and other parts of the world. Our
operations are subject to certain risks, such as changes in United States
or foreign government regulatory policies, local political and economic
developments, currency fluctuations, exchange controls, royalty and tax
increases, retroactive tax claims, expropriation, import and export
regulations and other laws and policies of the United States affecting
foreign trade, investment and taxation.  In addition, in the event of any
disputes arising from foreign operations, we may be subject to the
exclusive jurisdiction of foreign courts and may not be successful in
subjecting foreign persons or entities to the jurisdiction of the courts in
the United States. We attempt to mitigate these various risk elements
through letters of credit, limiting job scope, currency risk management,
using local subcontractors and other methods to limit our exposure. We
cannot guarantee, however, that we will be able to manage these risk
elements successfully.

                                  -24-
<PAGE>
WE HAVE EXPERIENCED SEASONAL FLUCTUATIONS IN OUR REVENUES, WHICH MAY AFFECT
OUR FINANCIAL RESULTS

     We have experienced some seasonality in our business over the last few
years.  In general, the fourth calendar quarter of the year has experienced
higher revenues and higher operating income than the other calendar
quarters. We attribute some of this increase to cooling water projects
following the warmer summer months and to end of the year capital budgets
of customers.  We believe that some of this seasonality in recognizing
project revenues will be eliminated by the change in our accounting policy
in 1998 with respect to recognizing revenues;  however, we cannot guarantee
that quarterly revenues will not vary significantly.

WE ARE A YOUNG COMPANY SO WE HAVE ONLY A LIMITED OPERATING HISTORY WITH
WHICH YOU CAN EVALUATE OUR BUSINESS AND PRODUCTS

     Our operating history dates back to the start-up of PSI in January
1993.  As such, we are subject to many of the risks common to enterprises
with a limited operating history, including potential under-capitalization,
limitations with respect to personnel, financial and other resources and
limited customers and revenues. Our likelihood of success must be
considered in light of the problems, expenses, difficulties, complications
and delays frequently encountered in connection with the development and
marketing of large systems.

WE MAY BE ADVERSELY AFFECTED BY GOVERNMENT REGULATION

     Our products and services are subject to regulations adopted by
governmental authorities, including but not limited to OSHA, the DOT, the
EPA and various state governmental agencies.  Government regulations can be
burdensome and may result in delays and expense to us.  In addition,
modifications to regulations could adversely affect the timing and cost of
new products and services we introduce.  Failure to comply with applicable
regulatory requirements can result in, among other things, operating
restrictions and fines.

FROM TIME TO TIME, WE PROVIDE SERVICE TO CUSTOMER(S) WHO REPRESENT MORE
THAN 10% OF OUR REVENUE, THE LOSS OF WHICH COULD ADVERSELY AFFECT OUR
REVENUE AND PROFITABILITY

     For the year ended December 31, 1999, we had a major customer
accounting for 39.8% of our revenues.  We had a major customer accounting
for 13.9% of our revenues for the year ended December 31, 1998.  We did not
have a major customer accounting for more than 10% of our revenues for the
year ended December 31, 1997.  We have one major project included in our
backlog which represents approximately 17% of our total backlog for 2000.
From time to time, we may have projects that exceed the 10% revenue
threshold for defining a major customer.  Because each construction project
is awarded independently from other projects, we do not believe that the
completion of the contractual arrangements with any major customer that may
arise will have a material adverse effect on us.

                                  -25-
<PAGE>
WE HAVE SIGNIFICANT COMPETITION IN OUR BUSINESS SEGMENTS

     There is substantial competition in all aspects of the cooling water
industry and water treatment market. Many of our competitors have been in
business longer than we have and have substantially greater personnel,
financial resources and established customer bases available to them than
we do. We cannot guarantee that we will be able to continue to compete with
these competitors successfully.  Competition from these competitors for the
projects we bid on could diminish our revenues and profitability.

WE DEPEND ON A SMALL NUMBER OF KEY EXECUTIVES AND OUR BUSINESS COULD SUFFER
IF WE LOST THEM

     We employ a small group of skilled individuals to accomplish our
strategic business plan. We believe our performance is substantially
dependent on the continued employment and performance of our senior
management, including George A. Kast, (Chief Executive Officer of GWT),
Gary L. Brown (President of PSI and General Counsel of GWT), Michael A.
Kast (Senior Vice President of PSI), Martin E. Hout (Chief Financial
Officer), Steven D. Adams (Vice President of Applications of PSI) and
William W. Howard (Vice President of Engineering of PSI).  None of these
individuals are currently subject to employment agreements or employee non-
compete agreements. If we fail to retain the services of one or more of
these persons, our business could suffer significantly. We maintain key-man
insurance on the life of George A. Kast.

WE DO NOT ANTICIPATE PAYING DIVIDENDS

     We do not anticipate paying any cash dividends on our Common Stock for
the foreseeable future.  We expect that future earnings, if any, will be
used to finance our growth. Accordingly,  no one seeking dividend income
from an investment should exercise their Warrants.

FUTURE SALES BY EXISTING SHAREHOLDERS COULD DEPRESS THE MARKET PRICE OF OUR
COMMON STOCK

     Giving effect to the automatic conversion of Series A preferred stock
into 35,861,110 shares of Common Stock upon the filing of this Annual
Report on Form 10-KSB, we presently have outstanding 344,215,360 shares of
Common Stock.  Of this amount, 266,717,963 shares are "restricted
securities" under the Securities Act subject to restrictions on the timing,
manner and volume of sales of such shares. In addition, we intend to
register 30,000,000 shares of Common Stock which may be issued under our
1998 Stock Option Plan and 17,693,500 of Common Stock underlying our
outstanding Class A and Class B Warrants.  Currently there is only a
limited public market for our Common Stock and we cannot guarantee that
this market will continue or be available for the sale of Common Stock
acquired upon exercise of the Warrants.  We cannot predict if future sales
of our Common Stock, or the availability of our Common Stock for sale, will
adversely affect the market price for our Common Stock or our ability to
raise capital by offering equity securities.

                                  -26-
<PAGE>
OUR OFFICERS AND DIRECTORS EXERCISE SIGNIFICANT CONTROL OVER OUR AFFAIRS,
WHICH COULD RESULT IN THEIR TAKING ACTIONS WITH WHICH OTHER SHAREHOLDERS DO
NOT AGREE

     The officers and directors of GTR own approximately 77% of our
outstanding Common Stock.  Since cumulative voting has not been authorized
by our Certificate of Incorporation, this concentration of control means
that the officers and directors will be able to elect all of the directors
of Global Water.  Our officers and directors also will be able to shape our
policies and procedures, to determine if and when any dividends are paid,
and to determine the circumstances under which we may be sold or merged,
along with other important corporate decisions.

IT MAY BE DIFFICULT FOR A THIRD PARTY TO ACQUIRE OUR COMPANY, AND THIS
COULD DEPRESS OUR STOCK PRICE

     Our Board of Directors has the authority to issue up to 18,123,409
additional shares of Preferred Stock and to determine the price and the
terms (including preferences and voting rights) of those shares without
shareholder approval.  Although we have no current plans to issue
additional shares of Preferred Stock, any such issuance could:

     *    have the effect of delaying, deterring or preventing a change in
          control of our company;

     *    discourage bids for our Common Stock at a premium over the market
          price; or

     *    adversely affect the market price of, and the voting and other
          rights of the holder of, our Common Stock.

     We are subject to certain Delaware laws that could have the effect of
delaying, deterring or preventing a change in control of the Company.  In
addition, certain provisions of our Certificate of Incorporation and By-Laws,
and the significant amount of Common Stock held by our officers and directors,
could together have the effect of discouraging potential takeover attempts or
making it more difficult for shareholders to change management.

OUR STOCK PRICE MAY EXPERIENCE PRICE AND VOLUME FLUCTUATIONS WHICH MAY MAKE
IT HARDER TO RESELL YOUR SHARES AND FOR US TO ATTRACT SUPPORT FOR OUR STOCK

     While our Common Stock is listed for trading on the OTC Bulletin
Board, our stock has traded in only small volumes and has been subject to
volatility in the price.  No assurance can be given that a more active
market will develop or that a shareholder will be able to liquidate his/her
investment without considerable delay, if at all.  Even should a more
active market develop, the price may remain volatile.  Factors such as
those discussed in this "Important Factors That May Affect Future Results"
section may have a significant impact upon the market price of our stock.

     Due to the price of our stock, many brokerage firms may not be willing
to effect transactions in the our securities, particularly because low-priced
securities are subject to a

                                  -27-
<PAGE>
Securities and Exchange Commission rule that imposes additional sales
practice requirements on broker-dealers who sell low-priced (generally
those below $5 per share) securities.  While the shareholders of the
Company have granted the Board of Directors the authority to effect a
reverse split of our currently outstanding Common Stock, not to exceed
1-for-100, no decision has yet been made with regard to effecting a reverse
split.  Even if a reverse split is effected, there can be no assurance that
the price for our Common Stock will exceed $5.00 per share.  Consequently,
unless and until the market price for our Common Stock increases
significantly, brokerage firms may be reluctant to trade our Common Stock.

ITEM 7.  FINANCIAL STATEMENTS.

     The Financial Statements set forth on pages F-1 to F-23 of this Report
are incorporated herein by reference.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     Our principal independent accountants did not resign or decline to
stand for re-election nor were they dismissed during our three most recent
fiscal years.  Our financial statements for the years ended December 31,
1999, 1998 and 1997 were audited by Comiskey and Company, P.C.  There were
no disagreements between us and our principal independent accountants,
Comiskey and Company, P.C.









                                  -28-
<PAGE>
                                PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

     Information with respect to our directors, executive officers and key
employees is set forth below.  Service with GWT prior to September 1997 was
rendered to PSI.

NAME              AGE  POSITION                     OFFICER OR DIRECTOR SINCE
----              ---  --------                     -------------------------

George A. Kast    42   Chief Executive Officer and             1993
                       Chairman of the Board

Martin E. Hout    44   Chief Financial Officer and Treasurer   1998

Gary L. Brown     43   Secretary, General Counsel and a        1996
                       Director

Michael A. Kast   43   Director                                1999


Rovert L. Koch    46   Director                                1999


     Certain biographical information with respect to our directors and
executive officers is set forth below.

     GEORGE A. KAST founded PSI in 1993 and was an officer and director of
PSI until 1997, when PSI merged with Fi-Tek VI, Inc. and became GWT.  Prior
to forming PSI, from 1983 to 1992, Mr. Kast was the vice-president of
GEA/Thermal-Dynamic Towers, Inc. ("TDT"), Lakewood, Colorado, where he was
responsible for all marketing activities and directly experienced in design
and project management of cooling towers, including the design and creation
of the pultruded fiberglass structural cooling towers.

     MARTIN E. HOUT was PSI's and then GWT's controller and planning
officer from 1995 to 1998, when he  became the Chief Financial Officer.
Prior to his association with PSI, he was the president of International
Consulting Associates, Inc., Lakewood, Colorado, from 1994 to 1995, and
from 1993 to 1994, a financial officer at GAC Technologies, a manufacturing
subsidiary of Golden Aluminum Co., a subsidiary of ACX Technologies, Inc.,
Golden, Colorado.  From 1985 to 1993, he held various financial positions
with Golden Aluminum Co.  Mr. Hout received a B.A. degree from the
University of Illinois in 1979 and a M.B.A. degree in international finance
from the University of Denver in 1991.  He has been a certified public
accountant in Colorado and Illinois.

                                  -29-
<PAGE>
     GARY L. BROWN was Chief Operating Officer and General Counsel of PSI
in 1996 and became an officer of GWT 1997.  From 1993 to 1996, he was
general counsel for Fischbach Corporation, which  included Fischbach &
Moore, Natkin & Company, Ficon Corporation and Fischbach Power Services,
among others.  Prior to joining the Fischbach companies, Mr. Brown was
engaged in private practice for ten years with the firm of Gorsuch, Kirgis,
Campbell, Walker & Grover in Denver, Colorado.  Mr. Brown received a B.S.J.
degree from the University of Kansas in journalism in 1979 and a J.D.
degree from Washburn University in 1983.

     MICHAEL A. KAST was the director of projects and a director of PSI
from 1993 to 1997.  From 1983 to 1992, he was the founder and president of
TDT.  He is responsible for all of our business activities including labor,
construction, erection, reconstruction and new towers.

     ROBERT L. KOCH has been the Manufacturing Operations Leader for Allied
Signal Aerospace from 1997 to the present.  From 1994 to 1996, he was the
manager of New Product Engineering for LORI, Inc., and from 1996 to 1997,
the Vice President of Operations for HaddComm International.

BOARD COMMITTEES

     The Board presently has no audit/systems committee nor a compensation
committee.

SIGNIFICANT EMPLOYEES

     The following employees make a significant contribution to our business:

     STEVE D. ADAMS, age 38, was the director of applications and projects
at TDT from 1992 to 1994. Prior to joining TDT, he was the product manager
for new tower and engineering manager at Custodis-Ecodyne, Inc., Santa
Rosa, California from 1988 to 1992.  Mr. Adams joined PSI in 1994 and is
currently vice president-applications.  His responsibilities include new
tower design, estimating and testing.  He received a B.S. degree in
chemical engineering from the University of Missouri in 1983.

     MARK W. FESLER, age 39, joined us in March 1999.  A Certified Public
Accountant, Mr. Fesler is Controller for GWT and each of its subsidiaries.
His previous positions included Tax Manager of Gart Sports, Tax Analyst for
Coleman Company, and from 1987 to 1996, Tax Manager of Fishbach
Corporation, the nation's second largest mechanical and electrical
contractor.  Mr. Fesler received a B.S. degree in accounting from the
University of Nebraska in 1983 and a M.B.A. degree from the University of
Colorado in Denver in1994.  He is a member of the Colorado Society of
Certified Public Accountants and The American Institute of Certified Public
Accountants.

     WILLIAM W. HOWARD, age 42, was structural design manager for TDT from
1990 to 1993 when he joined PSI.  In 1991, he was the committee chairman
for the Redwood, Douglas Fir and Fastener Specifications Standards
committee of the Cooling Tower Institute.  As vice president of

                                  -30-
<PAGE>
engineering of PSI, his responsibilities include the analysis and design of
all structural members and joints, proposal reviews, project engineer and
directing new tower project managers.  He received a B.S. degree in
architectural engineering, structures from the University of Colorado in 1982.

FAMILY RELATIONSHIPS

     The following family relationships exist between and among our
officers and directors:  George A. Kast and Michael A. Kast are brothers,
and Gary L. Brown and Robert L. Koch are related by marriage to George A.
Kast and Michael A. Kast.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

     No officer, director, significant employee, promoter or control person
of the Company has been involved in any event of the type described in Item
401(d) of Regulation S-B during the past five years.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     Not applicable.

ITEM 10.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

     The following table sets forth information regarding compensation paid
to our CEO and the other executive officers who received in excess of
$100,000 of salary and bonus from GWT during the year ended December 31, 1999:







                                  -31-
<PAGE>
<TABLE>
<CAPTION>
                                                      Long-Term
                                                  Compensation Awards
                                                  -------------------
                    Annual Compensation ($$)      Restricted
Ne and              ------------------------        Stock     Options        Other
Position            Year    Salary     Bonus       Awards(4)  & SARs(4)   Compensation
--------            ----    ------     -----       ------     ------      -------------

<S>                 <C>    <C>         <C>           <C>        <C>         <C>
George A. Kast,     1999   $225,000         -0-      -0-        632,600     $ 14,856(1)
President and Chief 1998   $172,500    $ 75,137      -0-          -0-       $ 14,856(1)
Executive Officer   1997   $166,438    $  7,023      -0-          -0-       $ 13,618(1)

Gary L. Brown,      1999   $180,000    $ 40,000      -0-        463,100         -0-
General Counsel     1998   $145,000    $ 25,137      -0-          -0-           -0-
                    1997   $125,000    $ 25,000      -0-          -0-           -0-

Michael A. Kast,    1999   $156,667         -0-      -0-        413,500     $137,567(3)
Vice President of   1998   $145,000    $ 25,137      -0-          -0-       $ 48,784(3)
PSI                 1997   $104,000    $  2,000(2)   -0-          -0-       $ 48,784(3)

Martin E. Hout,     1999   $110,000    $ 12,500      -0-        562,500          -0-
Chief Financial     1998   $ 73,461    $  2,500      -0-          -0-            -0-
Officer             1997   $ 63,000    $  2,036      -0-          -0-            -0-
</TABLE>
__________________________

(1)  Represents rental payments made to Mr. Kast for the Coeur d'Alene
     research and development center.
(2)  PSI issued Mr. Kast 1,020 shares of PSI's common stock (which was
     exchanged for 13,089,518 shares of our common stock and 50,059 shares
     of GWT's preferred stock) as a bonus upon his employment by PSI.
(3)  Represents interest on certificates of deposit pledged as security for
     GWT's line of credit.

COMPENSATION OF DIRECTORS

     Outside members of the Board of Directors are compensated in their
capacities as Board Members in the amount of $5,000 for each quarterly
meeting attended.  They may also participate in our Stock Option Plan.
Other members of the Board of Directors are not compensated in their
capacities as Board members.  However, we reimburse all of its officers,
directors and employees for accountable expenses incurred on behalf of GWT.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

     None of our officers presently have employment agreements with GWT.

1998 STOCK OPTION PLAN

     On May 20, 1998, we adopted the 1998 Stock Option Plan (the "Plan")
which provides for the issuance of options to purchase up to 30,000,000
shares of Common Stock to our employees, officers, directors and
consultants and those of our subsidiaries.  The Plan was ratified

                                  -32-
<PAGE>
by our shareholders at our Annual Meeting of Shareholders on June 30, 1998.
As of December 31, 1999, 4,968,800 options have been awarded to GWT
employees which vest over the next four years.  Unless sooner terminated,
the Plan will expire on May 31, 2008.

     The purposes of the Plan are to encourage stock ownership by our
employees, officers, directors and consultants so that they may acquire or
increase their proprietary interest in GWT, to (i) induce qualified persons
to become our employees, officers or consultants; (ii) compensate our
employees, officers, directors and consultants for past services to GWT;
and (iii) encourage such persons to become employed by or remain in the
employ of or otherwise continue their association with GWT and to put forth
maximum efforts for the success of our business.

     The Plan states that it is not intended to be the exclusive means by
which GWT may issue options or warrants to acquire its Common Stock, stock
awards or any other type of award.  To the extent permitted by applicable
law, we may issue any other options, warrants or awards other than pursuant
to the Plan without shareholder approval.

     The Plan is administered by a Committee consisting of the Board of
Directors or Compensation Committee, if  appointed.  At its discretion, the
Committee may determine the persons to whom options may be granted and the
terms thereof.  As noted above, the Committee may issue options to the Board.

     The terms of any options granted under the Plan are not required to be
identical as long as they are not inconsistent with the express provisions
of the Plan.  In addition, the Committee may interpret the Plan and may
adopt, amend and rescind rules and regulations for the administration of
the Plan.

     Options may be granted as incentive stock options ("Incentive
Options") intended to qualify for special treatment under the Internal
Revenue Code of 1986, as amended (the "Code"), or as non-qualified stock
options ("Non-Qualified Options") which are not intended to so qualify.
Only employees of GWT are eligible to receive Incentive Options. The period
during which options may be exercised may not exceed ten years. The
exercise price for Incentive Options may not be less than 100% of the fair
market value of the Common Stock on the date of grant; except that the
exercise price for Incentive Options granted to persons owning more than
10% of the total combined voting power of the Common Stock may not be less
than 110% of the fair market value of the Common Stock on the date of grant
and may not be exercisable for more than five years.  The exercise price
for Non-Qualified Options may not be less than 85% of the fair market value
of the Common Stock on the date of grant.  The Plan defines "fair market
value" as the last sale price of GWT's Common Stock as reported on a
national securities exchange or on the NASDAQ or, if the quotation for the
last sale reported is not available for GWT's Common Stock, the mean
between the highest bid and lowest asked prices of GWT's Common Stock as
reported by NASDAQ or on the electronic bulletin board or, if none, the
National Quotation Bureau, Inc.'s "Pink Sheets" or, if such quotations are
unavailable, the value determined by the Committee or the Board of
Directors in accordance with its discretion in making a bona fide, good
faith determination of fair market value.

                                  -33-
<PAGE>
     The Plan contains provisions for proportionate adjustment of the
number of shares issuable upon the exercise of outstanding options and the
exercise price per share in the event of stock dividends, recapitalization
resulting in stock splits or combinations or exchanges of shares.

     In the event GWT is the surviving corporation in any merger or
consolidation, the holder of any option or award granted under the Plan
shall have the right to exercise such option (at its then current Option
Price) or award for the kind and amount of shares of stock subject to the
option or award prior to the merger or consolidation.  All options and
awards granted under the Plan will terminate in the event of a dissolution
or liquidation of GWT not involving a transaction with another company as
described below.

     In the event of shareholder approval of (i) a merger or consolidation
in which GWT is not the surviving entity (except for a change of domicile),
(ii) the sale, transfer or other disposition of all or substantially all
GWT's assets and the complete liquidation or dissolution of GWT or (iii)
any reverse merger in which GWT is the surviving entity but in which the
holders of more than 50% of the total voting securities of GWT are held by
a person or persons different from those who held such securities
immediately prior to such merger, the Committee may provide for the
automatic acceleration of one or more of the outstanding options or awards.
Upon the consummation of such a transaction, all options shall, to the
extent not previously exercised, terminate and cease to be outstanding.

     Except as otherwise provided under the Plan, an option may not be
exercised unless the recipient then is an employee, officer or director of
or consultant to GWT or a subsidiary of or parent of GWT, and unless the
recipient has remained continuously as an employee, officer or director of
or consultant to GWT since the date of grant of the option.

     If an option holder ceases to be an employee, officer or director of,
or consultant to, GWT or one of its subsidiaries (other than by reason of
death or permanent disability), other than for cause, the holder may
exercise any options or Stock Appreciation Rights ("SARs") that are vested
but unexercised on the date his or her service is terminated until the
earlier of (i) 90 days after the date of termination of service, or (ii)
the expiration date of the options or SARs.  However, termination of
employment at any time for cause immediately terminates all options or SARs
held by the terminated employee.  If termination is by reason of
disability, however, the holder may exercise his or her options or SARs
until the earlier of (i) 12 months after the termination of service, or
(ii) the expiration of the term of the option or SAR. If the holder dies
while in service to GWT, the holder's estate or successor by bequest or
inheritance may exercise any options or SARs that the holder was entitled
to exercise on the date of his or her death at any time until the earlier
of (i) the period ending three months after the holder's death, or (ii) the
expiration of the term of the option or SAR.

     Options granted under the Plan are not transferable other than by will
or by the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, or the rules thereunder.

                                  -34-
<PAGE>
Options may be exercised, during the lifetime of the recipient, only by the
recipient and thereafter only by his legal representative.

     The Committee may suspend, terminate, modify or amend the Plan, except
that, without shareholder approval, the Board may not (i) increase the
maximum number of shares of Common Stock subject to the Plan (except in the
case of certain organic changes to GWT), (ii) reduce the exercise price at
which options may be granted or the exercise price for which any
outstanding options may be exercised, (iii) extend the term of the Plan,
(iv) change the class of persons eligible to receive options or awards
under the Plan, or (v) materially increase the benefits accruing to
participants under the Plan.  In addition, the Committee or the Board may
not, without the consent of the optionholder, take any action that
disqualifies any option previously granted under the Plan for treatment as
an Incentive Stock Option or which adversely affects or impairs the rights
of the optionholder of any outstanding option.  Notwithstanding the
foregoing, the Board may amend the Plan from time to time as it deems
necessary in order to meet the requirements of any amendments to Rule 16b-3
under the Securities Exchange Act without the consent of the shareholders
of GWT.

     SARs will entitle the recipient to receive a payment equal to the
appreciation in market value of a stated number of shares of Common Stock
from the price on the date the SAR was granted or became effective to the
market value of the Common Stock on the date first exercised or
surrendered.  The Committee or the Board may determine such other terms,
conditions or limitations, if any, on any Awards granted pursuant to the Plan.

OPTION GRANTS IN FISCAL 1999

     The following table sets forth certain information regarding options
to purchase shares of Common Stock issued to the named executive officers
during the fiscal year ended December 31, 1999.

                          OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
                        Number of         Percent of
                          Shares         Total Options    Per Share
                        Underlying        Granted to       Exercise      Expiration
     Name           Options Granted(1) Employees in 1999    Price           Date
     ----           ------------------ -----------------    -----           ----
     <S>                   <C>                <C>           <C>          <C>
     George A. Kast        632,600            12.7%         $0.08        March 8, 2004
     Gary L. Brown         463,100             9.3%         $0.08        March 8, 2004
     Michael A. Kast       413,500             8.3%         $0.08        March 8, 2004
     Martin E. Hout        562,500            11.3%         $0.08        March 8, 2004
</TABLE>
________________________
(1)  The exercise price of each option is 114% of the fair market value as
     measured by the closing price of our Common Stock on the date the
     option was granted.  The exercise price is payable in cash.

                                  -35-
<PAGE>
YEAR-END OPTION VALUES

     No options were exercised by the named executive officers during the
fiscal year ended December 31, 1999.  The following table provides
information on option values of such officers' unexercised options at
December 31, 1999:

                         YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
                                           Number of Securities
                                               Underlying                Value of Unexercised
                  Shares                   Unexercised Options           In-the-Money Options
                 Acquired                   at Fiscal Year-end         at Fiscal Year end($)(2)
                    on       Value      ---------------------------- ----------------------------
Name             Exercise  Realized(1)   Exercisable   Unexercisable   Exercisable   Unexercisable
----             -------- -----------   -----------   --------------  -----------   -------------
<S>                 <C>       <C>        <C>            <C>              <C>           <C>
George A. Kast      0         0          126,520        506,080          -             -
Gary L. Brown       0         0           92,620        370,480          -             -
Michael A. Kast     0         0           82,700        330,800          -             -
Martin E. Hout      0         0          112,500        450,000          -             -
</TABLE>
________________________
(1)  Market value of the underlying shares on the date of exercise less the
     option exercise price.
(2)  Market value of shares covered by in-the-money options on December 31,
     1999, less the option exercise price.  Options are in the money if the
     market value of the shares covered thereby is greater than the option
     exercise price.  At December 31, 1999, none of the options were in the
     money.

LONG-TERM INCENTIVE PLANS

     We have no long term incentive plans other than its 1998 Stock Option Plan.

REPORTING ON REPRICING OF OPTIONS/SARS

     Not applicable.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth certain information known to us with
respect to the beneficial ownership of our Common Stock as of the date
hereof by (i) each director and executive officer of the Company, (ii) all
executive officers and directors of the Company as a group, and (iii) all
persons known by us to beneficially own more than 5% of our Common Stock.
The address of each of the executive officers is c/o Global Water
Technologies, Inc., 1767 Denver West Boulevard, Golden, Colorado 80401.

                                  -36-
<PAGE>
Name and Address
of Shareholder               Shares Beneficially Owned (1)    Percent of Class
--------------               -----------------------------    ----------------

George A. Kast                        228,328,898(2)                 66.0%

Gary L. Brown                          11,225,717(3)                  3.3%

Michael A. Kast                        27,767,028(4)                  8.0%

Martin E. Hout                            225,000(5)                  (6)

Robert L. Koch                             10,000                     (6)
7330 East 66th Court
Tulsa, OK 74133

All Directors and Executive           267,556,643                    77.3%
  Officers as a group (5 persons)
__________________________

(1)  The persons and entities named in the table have sole voting and
     dispositive power with respect to all shares shown as beneficially
     owned by them. The number of shares of Common Stock outstanding on
     March 21, 2000, was 344,215,360 and includes 35,861,110 shares of
     Common Stock which became outstanding as a result of the automatic
     conversion of outstanding Class A Preferred Shares upon the filing of
     this report.  The calculation of percentages is based upon the number
     of shares of Common Stock issued and outstanding on such date, plus
     shares of Common Stock subject to options held by the respective
     persons on March 8, 2000, and exercisable within 60 days thereafter.
     The Series A Preferred Stock converts into Common Stock upon the
     filing of this Annual Report on Form 10-KSB on the basis of 290 shares
     of Common Stock to each one share of Series A Preferred Stock.
(2)  Includes options to purchase 253,040 shares of Common Stock at $0.08
     per share granted on March 8, 1999, pursuant to our 1998 Stock Option
     Plan, which are currently exercisable.
(3)  Includes 5,806,670 shares of Common Stock upon conversion of Series A
     Preferred Stock and options to purchase 185,240 shares of Common Stock
     at $.08 per share granted on March 8, 1999, pursuant to our 1998 Stock
     Option Plan, which are currently exercisable.
(4)  Includes 14,517,110 shares of Common Stock upon conversion of Series
     A Preferred Stock and options to purchase 165,400 shares of Common
     Stock at $.08 per share granted on March 8, 1999, pursuant to our 1998
     Stock Option Plan, which are currently exercisable.
(5)  Represents options to purchase 225,000 shares of Common Stock at $.08
     per share granted on March 8, 1999, pursuant to our 1998 Stock Option
     Plan, which are currently exercisable.
(6)  Negligible.

CHANGES IN CONTROL

     There are no understandings, arrangements or agreements known by
management at this time which would result in a change in control of the
Company.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Michael A. Kast has pledged certificates of deposit in the amount of
$773,233 to a bank to secure a credit line for PSI.  In consideration for
such pledge, PSI agreed to pay Michael A. Kast interest at $8,131 per
month.  The total amount of interest we paid to Michael A. Kast was

                                  -37-
<PAGE>
$48,784, $48,784 and $137,567 for the years ended December 31, 1997, 1998
and 1999, respectively.

     George A. Kast has personally guaranteed our obligations
(approximately $1,776,000 and $3,855,000 as of December 31, 1998 and 1999,
respectively) with financial institutions, including our SBA term loan.  In
addition, as of December 31, 1998 and 1999, Mr. Kast had personally
guaranteed approximately $16,600,000 and $13,500,000, respectively, of our
obligations with bonding companies.

     We lease a facility from George A. Kast in Coeur d'Alene, Idaho, for
our research and development requirements.  The terms of the lease call for
payments of $1,238 per month through September of 2001.

     In March 1998, we entered into a lease with George A. Kast for a
portion of a 36,740 square foot office building in Golden, Colorado, for
our principal offices.  The lease required us to pay rent at a rate of
$21,454 per month for the 34-month lease.  Gross operating expenses for the
building during this period approximated $20,000 per month, of which Mr.
Kast was personally responsible for the payment of approximately $5,000 per
month, which was paid by us.  In December 1998, Mr. Kast signed a note
payable to us in the amount of $47,766, related to the operating costs of
the building for which Mr. Kast was responsible.  The note bears interest
at 8% per annum and matured September 30, 1999.  This note was repaid in
installments during 1999.

     During December 1999, Mr. Kast, through an affiliated entity, GK
Holdings, Inc., exercised his option to purchase the office building in
which our principal offices are located.  On December 31, 1999, we entered
into a ten year lease of the building, commencing January 1, 2000, with GK
Holdings .  The triple-net lease requires monthly rental payments of
$53,538 per month.  We believe that the terms of the lease are no less
favorable to us than comparable office space in the area of our offices.
We sublease the garden level of the building for approximately $12,600 per
month to unaffiliated entities at varying monthly rentals.

     On August 13, 1998, we designated 1,000 shares of the authorized but
unissued Preferred Stock as Series B non-voting and non-convertible
Preferred Stock.  Each share of Series B Preferred has a redemption value
of $1,000 per share, and a dividend rate of $80 (8%) per share. We can
redeem the shares of Series B Preferred subject to certain minimum equity
provisions.  We issued 250 shares of Series B Preferred Stock to George A.
Kast in consideration of a cash payment of $250,000.

     In February 2000, George A. Kast, who held 876,341 shares of Series A
Preferred Stock, agreed to return his shares of Series A Preferred Stock to
us in exchange for 876,341 shares of a newly created non-voting Series C
Preferred Stock.  Mr. Kast's 876,341 shares of Series A Preferred stock
would have automatically converted into 254,138,890 shares of Common Stock
upon the filing of our Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1999 with the Securities and Exchange Commission. The
Series C Preferred Stock will

                                  -38-
<PAGE>
automatically convert into shares of Common Stock on a one-for-290 basis
upon a "change in control" of GWT.

     A "change in control" is deemed to occur:

     *    on the date any individual, entity or group acquires the
          beneficially ownership of 30% or more of the then outstanding
          shares of Common Stock or the then outstanding voting securities
          of GWT entitled to vote generally in the election of directors;

     *    on the date the individuals who constitute the Board of Directors
          on February 11, 2000 (the "Incumbent Board"), cease to constitute
          at least a majority of the members of the Board; provided that
          any person becoming a director subsequent to February 11, 2000,
          whose appointment, election or nomination for election by GWT's
          shareholders was approved by a vote of a least a majority of
          directors then comprising the Incumbent Board shall be considered
          as though such person was a member of the Incumbent Board;

     *    on the date of consummation of a merger, consolidation,
          recapitalization, sale or disposition or all or a substantial
          portion of GWT's assets; provided, however, that a change in
          control shall not occur if consummation of the transaction
          results in at least 50% of the voting power immediately after the
          transaction being beneficially owned by at least 50% of the
          holders of outstanding voting securities immediately prior to the
          transaction, with the voting power of each such continuing holder
          relative to other such continuing holders not substantially
          altered in the transaction; or

     *    on the date GWT files a Current Report or proxy statement with
          the Securities and Exchange Commission disclosing that a change
          in control has or may have occurred or may occur pursuant to any
          then-existing contract or transaction.

ITEM 13.  EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.

(a)  The following documents are filed as a part of this Form 10-KSB:

     Consolidated Financial Statements of Global Water Technologies, Inc.:

     Report of Independent Certified Public Accountants

     Consolidated Balance Sheets--December 31, 1999, 1998 and 1997

     Consolidated Statements of Operations--Years ended December 31, 1999,
     1998 and 1997

                                  -39-
<PAGE>
     Consolidated Statements of Stockholders' Equity--Years ended December 31,
     1999, 1998 and 1997

     Consolidated Statements of Cash Flows--Years ended December 31, 1999,
     1998 and 1997

     Notes to Consolidated Financial Statements--December 31, 1999, 1998
     and 1997

     Exhibits required to be filed are listed below and, except where
     incorporated by reference, immediately follow the Financial Statements.

Exhibit
Number    Description
------    -----------

3.1       Certificate of Incorporation, dated July 12, 1990 (1)

3.2       Certificate of Designations of Preferred Stock, filed September 25,
          1997(4)

3.3       Certificate of Amendment to the Certificate of Incorporation,
          filed November 5, 1997(4)

3.4       Bylaws (2)

3.5       Amendment to the Bylaws, dated September 12, 1997(4)

3.6       Certificate of Amendment to the Designation of Preferred Stock
          (Series B), filed with the State of Delaware on December 29, 1998. (6)

3.7       Certificate of Designations of Preferred Stock (Series C), filed
          with the State of Delaware on February 24, 2000. (8)

10.1      Plan and Agreement or Reorganization, dated September 12, 1997,
          between the Registrant and Psychrometric Systems, Inc. (3)

10.2      Lease Agreement, dated September 21, 1994, between Psychrometric
          Systems, Inc. and Golden Hill Partnership (4)

10.3      Lease Agreement, dated December 27, 1996, between Psychrometric
          Systems, Inc. and N. R. Petry Co.(4)

10.4      Lease Agreement, dated October 1, 1996, between George A. Kast
          and Psychrometric Systems, Inc. (4)

10.5      Sublease Agreement, dated March 10, 1998, by and between The
          Coleman Company, Inc., Global Water Technologies, Inc. and George
          A. Kast (4)

                                  -40-
<PAGE>
10.6      1998 Stock Option Plan (6)

10.7      Registration Rights Agreement dated as of July 12, 1999 (7)

10.8      Real Property Lease, dated December 30, 1999, between GK
          Holdings, Inc. and Global Water Technologies, Inc.(7)

18        Letter, dated November 19, 1998, from Comiskey & Company, P.C.
          re: change in accounting principles (5)

21        Subsidiaries of the Company

27        Financial Data Schedule
________________________
(1)  Filed as Exhibit 3.1 to the Registrant's Registration Statement on
     Form S-18 (No. 33-37513-D) and incorporated herein by reference.
(2)  Filed as Exhibit 3.2 to the Registrant's Registration Statement on
     Form S-18 (No. 33-37513-D) and  incorporated herein by reference.
(3)  Filed as Exhibit 10.1 to the Registrant's Annual Report on Form 10-KSB
     for the fiscal year ended June 30, 1997, and incorporated herein by
     reference.
(4)  Filed as an Exhibit of the same number to the Registrant's Annual
     Report on Form 10-KSB for the fiscal year ended December 31, 1997, and
     incorporated herein by reference.
(5)  Filed as an Exhibit of the same number  to the Registrant's Quarterly
     Report on Form 10-QSB for the quarter ended September 30, 1998, and
     incorporated herein by reference.
(6)  Filed as an Exhibit of the same number  to the Registrant's Annual
     Report on Form 10-KSB for the fiscal year ended December 31, 1998, and
     incorporated herein by reference.
(7)  Filed as an Exhibit of the same number to the Registrant's
     Registration Statement on Form SB-2 (No. 333-89857), and incorporated
     herein by reference.
(8)  Filed as an Exhibit of the same number to the Registrant's Current
     Report on Form 8-K, dated February 24, 2000, and incorporated herein
     by reference.


(b)  During the quarter ended December 31, 1999, no Current Reports on Form
     8-K were filed by us.

(c)  Required exhibits are attached hereto or are incorporated by reference
     and are listed in Item 13(a)(3) of this Report.

(d)  Required financial statements are attached hereto and are listed in
     Item 13 of this Report.

                                  -41-
<PAGE>
                               SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.

Date:  March 21, 2000              GLOBAL WATER TECHNOLOGIES, INC.

                                   By/s/ George A. Kast
                                     -----------------------------------
                                   George A. Kast, Chairman of the Board

     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Signatures               Title                              Date
----------               -----                              ----

/s/ George A. Kast       President, Chief Executive         March 21, 2000
------------------------ Officer, (Principal Executive
George A. Kast           Officer) and Chairman of the Board


/s/ Martin E. Hout       Chief Financial Officer            March 21, 2000
------------------------ (Principal Financial Officer)
Martin E. Hout


/s/ Gary L. Brown        Secretary and Director             March 21, 2000
------------------------
Gary L. Brown


/s/ Michael A. Kast      Director                           March 21, 2000
------------------------
Michael A. Kast


/s/ Robert C. Koch       Director                           March 21, 2000
------------------------
Robert C. Koch



                                  -42-
<PAGE>
                      INDEX TO FINANCIAL STATEMENTS
                      -----------------------------

            GLOBAL WATER TECHNOLOGIES, INC. AND SUBSIDIARIES


Report of Comiskey and Company, P.C. Independent Certified
Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . .F-2

Consolidated Statements of Operations For Years Ended
     December 31, 1999, 1998 and 1997. . . . . . . . . . . . . . . . .F-3

Consolidated Balance Sheets As of December 31, 1999, 1998
     and 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-4

Consolidated Statements of Cash Flows For Years Ended
     December 31, 1999, 1998 and 1997. . . . . . . . . . . . . . . . .F-5

Consolidated Statements of Stockholders' Equity For the Years ended
     December 31, 1999, 1998 and 1997. . . . . . . . . . . . . . . . .F-6

Notes to Consolidated Financial Statements December 31, 1999, 1998
     and 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-7









                                   F-1
<PAGE>
           REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors
Global Water Technologies, Inc.

We have audited the consolidated balance sheets of Global Water
Technologies, Inc. as of December 31, 1999 and 1998, and the related
consolidated statements of operations, cash flows, and stockholders' equity
for each of the years ended December 31, 1999, 1998 and 1997.  These
financial statements are the responsibility of our management.  Our
responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards 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.  An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as, evaluating
the overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects the consolidated financial position of Global
Water Technologies, Inc. as of December 31, 1999 and 1998, and the
results of its operations, cash flows, and changes in stockholders' equity
for each of the years ended December 31, 1999, 1998 and 1997, in conformity
with generally accepted accounting principles.

Denver, Colorado
February 18, 2000

                                   COMISKEY & COMPANY
                                   PROFESSIONAL CORPORATION









                                   F-2
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
          For the Years Ended December 31, 1999, 1998 and 1997


<TABLE>
<CAPTION>
                                                     1999             1998              1997
                                                     ----             ----              ----
<S>                                              <C>              <C>               <C>
Net revenues:
  United States                                  $ 60,134,087     $ 29,486,771      $ 14,919,866
  International                                     7,818,880        5,247,569         3,777,426
                                                 ------------     ------------      ------------
    Total revenues                                 67,952,967       34,734,340        18,697,292
                                                 ------------     ------------      ------------
Costs and expenses:
  Cost of sales                                    60,851,840       27,816,137        13,547,484
  Selling, general and administrative               4,938,947        4,762,328         4,031,159
  Research and development                             30,618          232,657           147,895
                                                 ------------     ------------      ------------
    Total costs and expenses                       65,821,405       32,811,122        17,726,538
                                                 ------------     ------------      ------------

Operating income                                    2,131,562        1,923,218           970,754

Other income (expense):
  Interest expense, net                               266,548          157,520           123,072
  Other, net                                            5,883            1,180             2,822
                                                 ------------     ------------      ------------

Income before income taxes                          1,870,897        1,766,878           844,860

Income taxes                                          566,115          777,569           273,878
                                                 ------------     ------------      ------------

Net income before preferred dividend                1,304,782          989,309           570,982

Preferred stock dividend                               20,000            7,640                 -
                                                 ------------     ------------      ------------
Net income (including the effect of a change in
 accounting principle for 1998)                     1,284,782          981,669           570,982
Cumulative effect of a change in an accounting
  principle--net of $593,119 of
  related tax effect                                        -          754,296                 -
                                                 ------------     ------------      ------------

Net income available for common shareholders     $  1,284,782     $    227,373      $    570,982
                                                 ============     ============      ============

Income per share:
  Basic weighted average shares outstanding       334,155,087      294,251,063       270,014,801
  Basic income per share--prior to accounting
   change                                        $      0.004     $      0.003      $      0.002
  Cumulative effect of accounting change                    -           (0.002)                -
                                                 ------------     ------------      ------------
  Basic income per share available for common    $      0.004     $      0.001      $      0.002
                                                 ============     ============      ============

  Fully diluted weighted average shares
   outstanding                                    334,558,354      294,251,063       270,126,740
  Fully diluted income/share-prior to acct
   change                                        $      0.004     $      0.003       $     0.002
  Cumulative effect of accounting change                    -           (0.002)                -
                                                 ------------     ------------      ------------
  Fully diluted income per share                 $      0.004     $      0.001      $      0.002
                                                 ============     ============      ============
</TABLE>

The accompanying notes are an integral part of the financial statements

                                   F-3
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
                       CONSOLIDATED BALANCE SHEETS
                 As of December 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
                                                     1999             1998              1997
                                                     ----             ----              ----
<S>                                              <C>              <C>               <C>
ASSETS
------
Current assets:
  Cash and cash equivalents                      $    707,264     $  1,751,299      $    118,887
  Trade accounts receivable, net of allowance
    for doubtful accounts of $136,029, $134,169
    and $50,000, respectively                      11,210,659        8,205,563         3,937,645
  Other receivables                                   358,861          111,365            16,097
  Costs and estimated earnings in excess of
     billings on uncompleted contracts             10,968,967        3,623,538         2,695,782
  Income taxes receivable                                   -           60,960            34,995
  Inventories                                         888,102          318,458           380,128
  Prepaid expenses                                    279,459          164,304           126,031
                                                 ------------     ------------      ------------
      Total current assets                         24,413,312       14,235,487         7,309,565
                                                 ------------     ------------      ------------

Property and equipment, net                           768,821          625,309           604,578
Intangibles, net of amortization                       30,242           41,246            52,250
Deposits                                               51,555          106,020            13,086
Restricted assets, certificate of deposit                   -                -           222,836
                                                 ------------     ------------      ------------
                                                 $ 25,263,930     $ 15,008,062      $  8,202,315
                                                 ============     ============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
  Current maturities of long-term debt           $  1,935,394     $  1,036,159      $    137,865
  Accounts payable                                 13,718,901        7,366,472         4,685,568
  Accrued liabilities                               1,916,508        1,884,950           638,821
  Billings in excess of costs and estimated
     earnings on uncompleted contracts              1,304,863        1,686,168           499,594
  Income taxes payable                                586,793          213,611                 -
  Deferred income taxes                                10,517          106,632           123,778
                                                 ------------     ------------      ------------
      Total current liabilities                    19,472,976       12,293,992         6,085,626
                                                 ------------     ------------      ------------

Long-term debt                                      1,989,390        1,137,076           923,958
Deferred income taxes                                  55,368           78,005           190,417

Stockholders' equity:
  Preferred stock, $0.00001 par value, 20,000,000
    shares authorized; 1,000,000 shares issued
    and outstanding; stated at redemption value
    of $0.0001                                            100              100               100
  Preferred stock, no par, 1,000 shares authorized;
    250 shares issued and outstanding as of
    December 31, 1999 and 1998 only; stated at
    redemption value of $1,000                        250,000          250,000                 -
  Common stock, $0.00001 par value; 800,000,000
    shares authorized; 308,354,250, 294,854,250
    and 294,050,000 shares issued and outstanding,
    respectively                                        3,083            2,948             2,940

  Capital in excess of par value                    1,504,208          541,918           522,624
  Retained earnings                                 1,988,805          704,023           476,650
                                                 ------------     ------------      ------------
      Total stockholders' equity                    3,746,196        1,498,989         1,002,314
                                                 ------------     ------------      ------------
                                                 $ 25,263,930     $ 15,008,062      $  8,202,315
                                                 ============     ============      ============
</TABLE>

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

                                   F-4
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
            For Years Ended December 31, 1999, 1998 and 1997



<TABLE>
<CAPTION>
                                                     1999             1998              1997
                                                     ----             ----              ----
<S>                                              <C>              <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income available for common shareholders:  $  1,284,782     $    227,373      $    570,982
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
      Depreciation                                    204,852          174,712           142,223
      Amortization                                     11,004           11,004             2,750
      (Gain) Loss on disposition of fixed assets       (1,392)          31,883                 -
      Increase (decrease) in deferred income taxes:  (118,752)        (129,558)          308,059
      (Increase) decrease in working capital:
        Trade accounts receivable                  (3,005,096)      (4,267,918)         (934,717)
        Other receivables                            (295,262)         (47,502)           36,337
        Costs and estimated earnings in excess of
          billings on uncompleted contracts        (7,345,429)        (927,756)         (709,619)
        Income taxes receivable                        60,960          (25,965)          (34,995)
        Inventories                                  (569,644)          61,670          (216,312)
        Prepaid expenses                             (115,155)         (38,273)          (14,184)
        Deposits                                       54,465          (92,934)           (3,990)
        Accounts payable                            6,352,429        2,680,903           984,669
        Income taxes payable                          373,182          213,611          (167,513)
        Accrued liabilities                            31,558        1,246,129           173,793
        Billings in excess of costs and estimated
          earnings on uncompleted contracts          (381,305)       1,186,574           347,015
                                                 ------------     ------------      ------------
          Net cash provided by (used in)
          operating activities                     (3,458,803)         303,953           484,498
                                                 ------------     ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net change in certificate of deposit                      -          222,836           (11,467)
  Purchase of property and equipment                 (323,563)        (227,325)         (174,705)
  Proceeds from sales of assets                        20,000                -                 -
  Purchase of intangibles                                   -                -            (5,000)
  Issuance of stockholder loan                         47,766          (47,766)                -
                                                 ------------     ------------      ------------
    Net cash (used in) investing activities          (255,797)         (52,255)         (191,172)
                                                 ------------     ------------      ------------

CASH FLOW FROM FINANCING ACTIVITIES:
  Lines-of-credit draws                             9,481,000        3,954,476           656,270
  Lines-of-credit paydowns                         (7,494,000)      (3,156,476)         (759,537)
  Issuance of common stock                            962,425           19,302             5,604
  Issuance (redemption) of preferred stock                  -          250,000            (2,000)
  Proceeds from issuance of debt                            -          496,378                 -
  Repayment of debt                                  (278,860)        (182,966)         (135,964)
                                                 ------------     ------------      ------------
    Net cash provided by (used in) financing
     activities                                     2,670,565        1,380,714          (235,627)
                                                 ------------     ------------      ------------

NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS                                       (1,044,035)       1,632,412            57,699
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR        1,751,299          118,887            61,188
                                                 ------------     ------------      ------------
CASH AND CASH EQUIVALENTS, END OF YEAR           $    707,264     $  1,751,299      $    118,887
                                                 ============     ============      ============
</TABLE>

Supplemental cash flow disclosures--The effect of a certain $50,000 non-cash
financing transaction related to a non-compete agreement for common
stock in the Company was excluded from the consolidated cash flows for the
year ended December 31, 1997.  Cash paid for interest was $395,183,
$167,420 and $141,598 for the years ended December 31, 1999, 1998 and 1997,
respectively.  Cash paid for income taxes was $37,565 and $176,547 for the
year ended December 31, 1999 and 1998, respectively.  Purchases of property
using debt totaled $43,410 for the year ended 1999.

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

                                   F-5
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
          For the Years ended December 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>

                                      Preferred Stock                           Capital in  Retained
                  Preferred Stock       Series a & B          Common Stock      Excess of   Earnings
                  Shares   Amount   Shares      Amount    Shares        Amount  Par Value   (Deficit)     Total
                  -------------------------------------------------------------------------------------------------
<S>                <C>     <C>     <C>         <C>       <C>           <C>      <C>        <C>          <C>
BALANCE,
JANUARY 1, 1997      50    $5,000   1,000,000  $    100  261,382,500   $ 2,614 $  464,346   $  (94,332)  $  377,728

Redemption of
preferred stock,
September 24, 1997  (50)   (5,000)       ---        ---          ---       ---      3,000          ---       (2,000)

Stock deemed issued
in reverse
acquisition,
September 25, 1997  ---       ---        ---        ---   32,042,500       320      5,284          ---        5,604

Stock issued for non-
compete Agreement,
December 15, 1997   ---       ---        ---        ---      625,000         6     49,994          ---       50,000

Net income          ---       ---        ---        ---          ---       ---        ---      570,982      570,982
                   ----    ------  ---------   --------  -----------   ------- ----------   ----------   ----------

BALANCE,
DECEMBER 31, 1997   ---    $  ---  1,000,000   $    100  294,050,000   $ 2,940 $  522,624   $  476,650   $1,002,314

Issuance of
Series B
preferred stock
August 13, 1998     ---       ---        250    250,000          ---       ---        ---          ---      250,000

Stock issued
October 7, 1998     ---       ---        ---        ---      804,250         8     19,294          ---       19,302

Net income
available for
common              ---       ---        ---        ---          ---       ---        ---      227,373      227,373
                   ----    ------  ---------   --------  -----------   ------- ----------   ----------   ----------

BALANCE
DECEMBER 31, 1998   ---    $  ---  1,000,250   $250,100  294,854,250   $ 2,948  $ 541,918   $  704,023   $1,498,989

Stock issued
September 29, 1999  ---       ---        ---        ---   13,500,000       135    962,290          ---      962,425

Net income
available for
common              ---       ---        ---        ---          ---       ---        ---    1,284,782    1,284,782
                   ----    ------  ---------   --------  -----------   ------- ----------   ----------   ----------
BALANCE,
DECEMBER 31, 1999   ---    $  ---  1,000,250   $250,000  308,354,250   $ 3,083 $1,504,208   $1,988,805   $3,746,196
                   ====    ======  =========   ========  ===========   ======= ==========   ==========   ==========
</TABLE>


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

                                   F-6
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


1.   SIGNIFICANT ACCOUNTING POLICIES

COMPANY HISTORY
---------------
Global Water Technologies, Inc. ("GWT") was incorporated in the state of
Delaware on July 12, 1990 under its predecessor name of Fi-Tek VI, Inc. and
became a public company in 1992.  Until September 25, 1997, GWT was
considered a development stage company which had not engaged in any
business other than organizational efforts, raising capital and
investigating business opportunities.

On September 25, 1997, GWT and Psychrometric Systems, Inc. ("PSI")
consummated an Agreement and Plan of Reorganization whereby GWT acquired
all of the issued and outstanding common shares of PSI in exchange for the
issuance of 261,382,500 shares of GWT's Common Stock and 1,000,000 shares
of a newly-authorized Series A non-voting preferred stock ("Preferred
Stock").  Each share of Preferred Stock is convertible into 290 shares of
Common Stock upon attainment of gross annual sales of $60,000,000 for GWT
and its subsidiaries (the "Company"), but only if such annual sales goal is
reported not later than the due date of the Company's Annual Report on Form
10-K for the fiscal year ending in 2002, and is subject to redemption by
the Company at a price of $0.0001 per share in the event the required sales
level is not attained.  The Company has accounted for the transaction as a
reverse acquisition under the purchase method of accounting.  The fiscal
year of the Company was changed from June 30 to December 31 to correspond
to the fiscal year of PSI.

GWT, through its wholly owned subsidiary, PSI, is in the business of
designing, selling, manufacturing and building new industrial water cooling
towers and in retrofitting existing industrial water cooling towers and
cooling tower components.  PSI is the main operating entity of GWT and
represents approximately 100% of its revenue.

GWT, through another wholly owned subsidiary, Applied Water Technologies,
Inc. ("AWT") is in the business of providing environmentally sound water
treatment services to the cooling tower market.  Global Water Services,
Inc., another wholly owned GWT subsidiary, is in the business of providing
total cooling water management services to cooling tower customers.

On November 5, 1997, and subsequent to its reverse merger with PSI, GWT
changed its name from Fi-Tek VI, Inc. to Global Water Technologies, Inc. to
reflect the Company's focus on the growing water-related market
opportunities.  The Company's trading symbol was also changed to "GWT" on
that date.

                                   F-7
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


BASIS OF PRESENTATION
---------------------
As a result of the reverse merger referred to in the above "Company
History," the consolidated financial statements through September 25, 1997
reflect only the operations of PSI.  Subsequent to that date, the
consolidated financial statements include the financial statements of
Global Water Technologies, Inc. and its wholly owned subsidiaries including
PSI.  All significant intercompany accounts and transactions have been
eliminated in consolidation.

REVENUE AND COST RECOGNITION
----------------------------
The Company recognizes revenues on service contracts when the services are
rendered.

On November 11, 1998, the Board of Directors approved the Company's
decision to change, retroactive to January 1, 1998, its application of the
percentage of completion method of accounting for revenues and costs of
long-term contracts related to new cooling towers which is the Company's
primary market.

Under the previous method, the Company recognized a predetermined
percentage of its profits on new cooling towers upon the attainment of
certain project milestones, specifically the completion and delivery of
certain engineering drawings and specifications.  Management believes that
the new method is preferable for financial statement and backlog disclosure
related to revenues and gross profit.  In addition, the Company believes
that the new method should improve the comparability of its financial
statements with those of other companies which use a cost-to-cost
comparison approach of percentage of completion.

As a result of this change, to which the Company's independent public
accounting firm concurs, the Company recorded a one-time extraordinary
charge to income as of January 1, 1998.

Contract costs include all direct materials, subcontract costs, labor costs
and those indirect costs related to contract performance.  Selling, general
and administrative costs are charged to expenses as incurred.

The aggregate of costs incurred and income recognized in excess of related
billings on uncompleted contracts is shown as a current asset, and the
aggregate of billings in excess of related costs incurred and income
recognized on uncompleted contracts is shown as a current liability.

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
the disclosure of contingent assets and liabilities at the date of

                                   F-8
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those estimates.

INCOME PER SHARE
----------------
The Company adopted FASB Statement No. 128 "Earnings Per Share" retroactive
to January 1, 1996.  Income per basic share is computed on the basis of the
weighted average number of common shares outstanding for the respective
periods.  Fully diluted income per share was computed using the treasury
stock method on the basis of the weighted average number of common shares
after giving effect to all dilutive potential common shares that were
outstanding during the respective periods. On December 31, 1999, there were
3,018,760 warrants and options that were considered dilutive securities.
As of December 31, 1998, there were no existing dilutive common shares.
Only 804,250 options, which were exercised in October 1998, were considered
dilutive for the year ending December 31, 1997.

INCOME TAXES
------------
Deferred tax assets and liabilities are recognized for the expected future
tax consequences of events that have been recognized in the Company's
consolidated financial statements and tax returns.  The company files a
consolidated tax return for federal and for most state jurisdictions.

Effective January 1, 1996, the Company filed for a change in accounting
methods.  The new tax method, percentage-of-completion, is the same as used
for financial statement purposes.  In accordance with IRS regulations, the
deferred income as of December 31, 1995, is being recognized over a four-year
period for tax purposes.  The deferred income from the change in method will
be fully recognized by December 31, 1999.  The Company also depreciates its
property and equipment on an accelerated method for income tax purposes.  A
provision for deferred taxes on these timing differences has been recorded.

During 1997, the Company established a Foreign Sales Corporation ("FSC") in
the United States Virgin Islands.  The wholly owned subsidiary will be used
as a commission agent on eligible foreign sales.  The eligible sales which
qualify for FSC treatment will generate permanent tax differences for the
Company.

CASH EQUIVALENTS
----------------
The Company considers all liquid investments with a maturity of three
months or less at the date of purchase to be cash equivalents.  At December
31, 1999 and 1998, cash equivalents included $254,175 and $441,133,
respectively, in amounts restricted to the payment of vendor obligations on
specific projects.

                                   F-9
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


INVENTORY VALUATION
-------------------
Inventory is stated at the lower of cost (first-in, first-out method) or
market value.  The inventory consists primarily of parts and structural
materials for use on specific future jobs.

ADVERTISING
-----------
The Company expenses costs for advertising in the period in which the
advertising first takes place. Advertising costs charged to expense totaled
$408,402, $319,805 and $308,708 for the years ended December 31, 1999, 1998
and 1997, respectively.

PROPERTY AND EQUIPMENT
----------------------
The principal categories of equipment include office furniture and
equipment, vehicles, machinery and equipment and leasehold improvements.
Significant additions and improvements are capitalized.  Maintenance and
repairs are expensed as incurred.  Depreciation of property and equipment
is determined principally on the straight-line method over the estimated
useful lives of the assets.

INTANGIBLES
-----------
Intangible assets relate to a non-compete agreement and goodwill, both of
which are amortized over a five year period.

CONCENTRATIONS OF RISK
----------------------
Financial instruments that potentially subject the Company to credit risk
consist principally of cash equivalents and trade accounts receivable.  The
Company maintains minimum cash balances which are partially covered by FDIC
insurance and which are maintained in accounts held by major banks and
financial institutions in the United States.  As is customary in the
industry and where appropriate, the Company often grants uncollateralized
credit to its customers, which include all sizes of companies operating in
a broad range of industries.  In order to mitigate its credit risk, the
Company continually evaluates the credit worthiness of its customers and,
where appropriate, strives to obtain appropriate collateral.

From time to time, the Company may have projects that exceed the 10%
revenue threshold for defining a major customer.  Because each project is
awarded independently from other projects, management does not believe that
the completion of the contractual arrangements with any major customer that
may arise will have a material adverse effect on the Company.  For the year
ending December 31, 1999, the Company had a major customer accounting for
39.8% of revenues.  The Company had a major customer accounting for 13.9%
of its revenues for the year ended December 31, 1998, but did not have a
major customer accounting for more than 10% of its revenues for the year
ended December 31, 1997.  Additionally, the Company has one major

                                  F-10
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


project with one customer included in its December 31, 1999, backlog which
represents approximately 17% of its total backlog.

RECLASSIFICATIONS
-----------------
Certain amounts as of or for the years ended December 31, 1997 and 1998
have been reclassified to conform with the December 31, 1999, presentation.

2.   PROPERTY AND EQUIPMENT

The following is a summary of property and equipment as of December 31,
1999, 1998 and 1997:

                                         1999          1998        1997
                                         ----          ----        ----
   Office furniture and equipment    $  893,132    $  623,383    $509,819
   Machinery and equipment              224,120       192,646     178,092
   Vehicles                             213,098       209,307     186,455
   Leasehold improvements                39,610        29,729      53,394
                                     ----------    ----------    --------
                                     $1,369,960    $1,055,065    $927,760
   Less accumulated depreciation        601,139       429,756     323,182
                                     ----------    ----------    --------
   Property and equipment, net       $  768,821    $  625,309    $604,578
                                     ==========    ==========    ========

3.   STOCKHOLDERS' EQUITY

COMMON AND PREFERRED STOCK
The Company History section of Note 1 discussed the reverse merger between
Global Water Technologies, Inc. and Psychrometric Systems, Inc.  In regard
to stockholders' equity, the effect of the reverse merger resulted in the
restatement of the Common Stock, Preferred Stock and the capital in excess
of par value as if the merger had taken effect on the first day of the
presented financial statements.  Prior to the merger, PSI's own preferred
stock was redeemed.

As of the date of the merger, the authorized shares of the Company's Common
Stock and Preferred Stock was 500,000,000 and 20,000,000 shares,
respectively.  As a consequence of the merger, the previous PSI
shareholders held 261,382,500 shares of the Company's Common Stock and
1,000,000 shares of the Preferred Stock; the previous GWTR shareholders
held 32,042,500 shares of the Company's Common Stock.

On August 13, 1998, the Company authorized the issuance of 1,000 shares of
Series B Preferred Stock with a redemption value of $1,000 per share.  On
that date 250 shares were issued to George A. Kast, the Company's CEO and
principal shareholder, for a cash contribution of $250,000.

                                  F-11
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


Such shares pay, out of funds legally available for that purpose, a
cumulative dividend at the rate of $80.00 per annum payable quarterly.  The
shares have no voting rights but do have certain rights upon liquidation or
dissolution.  The Company has the right to call such shares only after the
consolidated net worth of the Company, after giving full effect to the
call, is equal to or in excess of $3,000,000.

On February 22, 2000, the Company authorized the issuance of 876,341 shares
of Series C Preferred Stock at no par and zero redemption value.  These
shares were issued in exchange for 876,341 shares of Series A Preferred
Stock.  The Series A Preferred Stock would have converted into 254,138,890
upon the filing of the Company's 10-KSB for the fiscal year ended December
31, 1999.  The Series C Preferred Stock will automatically convert into
Common stock at a ratio of 290:1 upon a change in control of the Company.
The remaining 123,659 shares of Series A Preferred Stock will convert into
35,861,110 upon the filing of this report.

On November 4, 1997, the Company increased the authorized shares of Common
Stock to 800,000,000 shares.  On December 15, 1997, the Company issued
625,000 shares of Common Stock relating to a non-compete agreement.  On
October 7, 1998, the Company issued 804,250 shares of Common Stock related
to an outstanding option.

On September 29, 1999, the Company concluded its Private Placement with the
issuance of 13,500,000 shares, a corresponding 13,500,000 Class C warrants,
1,350,000 underwriter warrants (Class C) and an option to acquire an
additional 1,350,000 shares and warrants.  Gross proceeds were $1,080,000
while net proceeds after fees, commissions and expenses were $962,425.  The
Class C warrants are exercisable at $0.158 per share and expire on February 18,
2002.

WARRANTS AND OPTIONS
--------------------
Immediately prior to the merger, the shareholders of GWT held warrants to
acquire the Company's Common Stock.  There are 8,042,500 Class A warrants
exercisable at 12 cents per share and 8,042,500 Class B warrants
exercisable at 20 cents per share.  Such warrants, which were scheduled to
expire on April 14, 2000, have been extended to April 14, 2001.

An investment banking house, which assisted in the Company's initial public
offering in 1992, holds 804,250 Class A warrants and 804,250 Class B
warrants.  The option on common stock and Class A and Class B warrants was
exercised at 2.4 cents per share on October 7, 1998.  The Class A warrants
and Class B warrants are exercisable at 12 cents per share and 20 cents per
share, respectively.

                                  F-12
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


COMPREHENSIVE INCOME
--------------------
The Company has no items requiring separate disclosure pursuant to Statement
of Financial Accounting Standards No. 130, Reporting Comprehensive Income.

5.   EMPLOYEE STOCK OPTIONS

On May 20, 1998, the Company adopted the 1998 Stock Option Plan (the
"Plan") which provides for the issuance of options to purchase up to
30,000,000 shares of Common Stock to employees, officers, directors and
consultants of the Company and its subsidiaries.  The Plan was ratified by
the Company's shareholders at the Company's Annual Meeting of Shareholders
on June 30, 1998. Management granted 4,968,800 options to employees on
March 8, 1999.

The Company granted the aforementioned stock options to employees at a
strike price of $0.08 per share when the Company's stock traded at $0.07.
The options vest to employees in the following manner: 20% immediately and
20% each year over the next four years measured from the grant date.  If an
employee leaves the Company for any reason prior to the shares being
vested, then the remaining non-vested shares are forfeited.  No options
were exercised during the year.

OPTION ACTIVITY
---------------
               Outstanding at January 1, 1999                -0-
               Granted March 8, 1999                   4,968,800
               Forfeited                                (348,480)
                                                       ---------
               Outstanding at December 31, 1999        4,620,320
                                                       =========

               Exercisable at December 31, 1999          993,760
                                                       =========

Under FAS 123, Accounting for Stock Based Compensation, the measurement of
fair value utilizing an option pricing model at the date of grant is based
upon, among other criteria, the applicable exercise price, the current
stock value, the estimated exercise date of the options, the vesting
schedule, the estimated forfeitures, the risk-free rate of return, the
volatility of the stock underlying the options and adjustments to the above
pertaining to specific Company circumstances.  The fair value of the above
employee stock options utilizing a Black-Scholes option pricing model is
$121,855.  The assumptions underlying the calculation of the fair value was
a 75% volatility, a risk-free rate of return of 5.5% over the life of the
options, a forfeiture rate of 10% per year and an exercise of options after
the stock is vested.  These amounts have not been reflected in income since
the Company is accounting for stock based compensation in accordance with
APB-25.

                                  F-13
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


The pro-forma effect of utilizing the fair value based accounting to
measure stock based compensation would be the following:

                                                           1999
                                                           ----
               Pro-form net income                     $1,197,555
               Pro-forma basic income per share            $0.004
               Pro-forma fully diluted income per share    $0.004

6.   BACKLOG

The following 1999 schedule summarizes changes in backlog on contracts
during the years ended December 31, 1999, 1998 and 1997.  Backlog
represents the amount of revenue the Company expects to realize from work
to be performed on uncompleted contracts.

<TABLE>
<CAPTION>
                                             1999           1998           1997
                                             ----           ----           ----
   <S>                                    <C>            <C>            <C>
   Backlog, beginning of year             $27,155,058    $11,606,245    $ 6,139,765
   Adjustment due to accounting change              -      1,036,272              -
   Contract removed in 1998                         -     (3,885,000)             -
   New contracts during year               61,774,341     53,142,019     24,163,772
   Contract revenues earned during the
    year                                  (68,083,291)   (34,744,478)   (18,697,292)
                                          -----------    -----------    -----------
   Backlog, end of year                   $20,846,108    $27,155,058    $11,606,245
                                          ===========    ===========    ===========
</TABLE>

Included in the above 1998 backlog amounts are $1,507,778 recognized under
Letters of Intent.  This is consistent with standard industry practices for
the Company's main business line.

7.    LONG-TERM OPERATING LEASES

Effective March 10, 1998, the Company and George A. Kast, President and
CEO, entered into a triple-net lease for a portion of 36,740 square foot
office building in Golden, Colorado, for the Company's expanding office
space requirements. The lease required the Company to pay rent at a rate of
$21,454 per month for the 34-month lease.  Gross operating expenses for the
building approximated $20,000 per month, of which Mr. Kast was personally
responsible for the payment of approximately $5,000 per month, which
was paid by the Company.  As of December 31, 1998, the Company had
recorded a note receivable from Mr. Kast related to the operating costs of
the facility for which Mr. Kast was responsible for $47,766.  This note
bears interest at 8% per annum and was due no later than September 30, 1999.
This note was repaid in installments during 1999 and the Company received
the last payment on October 6, 1999.

                                  F-14
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


During December 1999, Mr. Kast, through an affiliated entity, GK Holdings,
Inc., exercised his option to purchase the office building in which GWT's
principal offices are located.  On December 31, 1999, GWT and GK Holdings
entered into a ten-year lease of the building, commencing January 1, 2000.
The triple-net lease requires monthly rental payments of $53,538 per month.
The Company believes that the terms of the lease are no less favorable to
GWT than comparable office space in the area of our offices.  GWT subleases
the garden level of the building for approximately $12,600 per month to
unaffiliated entities at varying monthly rentals.  All of the subleases
have terms of twelve months or less.

The Company had a 60-month lease for its former office space in Lakewood,
CO, for approximately $14,519 per month, and which expired in October 1999.
Subsequent to December 31, 1998, the Company entered into an agreement with
an unaffiliated entity to occupy its former office location. This third
party has entered into an agreement with the lessor to release the Company
from any future obligation on the aforementioned lease.  The Company also
has a 60 month lease with a stockholder for a research and testing facility
located in Idaho, for $1,238 per month, and which expires on September 30,
2001.  The Company leases approximately 17,700 square feet from an
unaffiliated entity on a month-to-month basis in Denver, Colorado, which is
utilized for light structural fabrication, component storage and
centralized warehousing for tools and equipment.  The Company signed a
12-month lease for this facility with renewal options in January of 2000.

The following is a schedule by year of future minimum lease payments
required under these leases:

               2000                          $  657,312
               2001                             653,598
               2002                             642,456
               2003                             642,456
               2004                             642,456
               Thereafter                     3,212,280
                                             ----------

               In the aggregate              $6,450,558
                                             ==========

Rent expense totaled $377,443, $450,171 and $243,272 for the years ended
December 31, 1999, 1998 and 1997, respectively.

                                  F-15
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


8.   LONG- AND SHORT-TERM DEBT

The Company has negotiated a line of credit with Norwest Bank totaling
$1,800,000.  The line-of-credit is secured by a stockholder's personal
certificates of deposit of $773,233 and certain business assets.  The line
of credit has a tiered rate of 6.69% on the first $770,000 and 9.5% on the
remaining portion and matures on January 15, 2001.

In March of 2000, the Company negotiated a line of credit with Norwest Bank
totaling $500,000. This line of credit has an interest rate of 9.5% and is
due in June of 2000.

The Small Business Administration guarantee of certain term debts subjects
the Company to financial covenants including a minimum net worth,
limitations on capital withdrawals and the personal guarantee of George A.
Kast, President and CEO.  The Company was in compliance with all covenants
as of December 31, 1999, 1998 and 1997.  The Export Import Bank of the
United States guarantee of certain debts subjects the Company to collateral
requirements on eligible foreign receivables and inventories.  The Company
was in compliance with all requirements as of December 31, 1999.  The
international line of credit matures on September 15, 2000.

The following is a summary of the future maturities of debt for the years
ending December 31:

               2000                          $1,935,394
               2001                           1,832,921
               2002                             103,747
               2003                              44,131
               2004                               8,591



                                  F-16
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


The following is a summary of the long- and short-term debt as of December
31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                             1999          1998           1997
                                             ----          ----           ----
<S>                                       <C>           <C>            <C>
Norwest Bank, Lakewood, CO:
  --Line-of-credit--domestic              $1,725,000    $  750,000     $  745,000
  --Line-of-credit--international;
      guaranteed to 90% of the outstanding
      balance by the Export/Import bank
      of the United States secured by
      eligible accounts receivable and
      inventories, interest at 1% above
      prime                                1,805,000       793,000            ---
  --Small Business Administration 90%
      guaranteed loan--payable in monthly
      installments of $8,334 plus interest
      at 1.0% above prime rate; secured by
      furniture and equipment, inventory,
      accounts receivable and assignment
      of  life insurance policy                  596       109,423        199,841
  --Small Business Administration 90%
      guaranteed loan--payable in monthly
      installments of $7,917 plus interest
      at 1.0% above prime rate; secured by
      furniture and equipment, inventory,
      accounts receivable and assignment of
      life insurance policy                  319,614       423,310            ---
First Interstate Bank--payable in monthly
  installments of $912, including interest
  at 9.5%; secured by a vehicle                  ---        23,505         31,741
Ford Motor--payable in monthly installments
  of $893, including interest at 8.49%,
  secured by a vehicle                        42,244
GMAC--various--payable in monthly
  installments ranging from $361 to $577,
  including interest ranging from 9.75% to
  10.75%; secured by seven vehicles           32,330        73,997         85,241
                                          ----------    ----------     ----------
                                           3,924,784     2,173,235      1,061,823

  Less current maturities included in
   current liabilities                     1,935,394     1,036,159        137,865
                                          ----------    ----------     ----------
  Net long-term debt                      $1,989,390    $1,137,076     $  923,958
                                          ==========    ==========     ==========
</TABLE>

                                  F-17
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


9.   INCOME TAXES

The components of the net deferred tax liability at December 31, 1999, 1998
and 1997 are as follows:

<TABLE>
<CAPTION>
                                             1999           1998           1997
                                             ----           ----           ----
     <S>                                  <C>            <C>            <C>
     Deferred tax liabilities:
       Deferred revenue under section 481 $       --     $  150,574     $  277,556
       Property and equipment                 61,685         68,006         26,639
       Other                                  15,000         10,000         25,000
                                          ----------     ----------     ----------
         Total deferred tax liabilities   $   76,685     $  228,580     $  329,195
                                          ==========     ==========     ==========

     Deferred tax assets:
       Accounts receivable allowance      $   10,800     $   43,943     $   15,000
                                          ----------     ----------     ----------
         Total deferred tax assets        $   10,800     $   43,943     $   15,000
                                          ----------     ----------     ----------
         Net deferred tax liabilities     $   65,885     $  184,637     $  314,195
                                          ==========     ==========     ==========
</TABLE>

The provision for income taxes consisted of the following at December 31,
1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                             1999           1998           1997
                                             ----           ----           ----
     <S>                                  <C>            <C>            <C>
     Income taxes currently payable       $  686,557     $  313,324     $  130,627
     Deferred income taxes                  (228,763)      (129,558)       143,251
     Increase (decrease) in other, net        (1,690)           684             --
     Tax effect of accounting change              --        593,119             --
                                          ----------     ----------     ----------
       Income tax expense                 $  566,115     $  777,569     $  273,878
                                          ==========     ==========     ==========
</TABLE>

The differences between the federal income tax rate of 34% and the
Company's effective tax rate were as follows:

<TABLE>
<CAPTION>
                                             1999           1998           1997
                                             ----           ----           ----
     <S>                                  <C>            <C>            <C>
     Taxes at the U.S. statutory rate     $  636,105     $  600,739     $  287,253
     State income taxes,
       net of federal income tax benefit      37,044         58,307         25,543
     Foreign sales corporation              (175,270)       (31,827)       (48,243)
     Non-deductible items                     39,411         10,780          9,325
     Adjustment in effective tax rate
        estimates for timing differences      34,025        129,076             --
     Prior year under (over) accrual--net     (5,200)        10,494             --
                                          ----------     ----------     ----------
        Provision for income taxes        $  566,115     $  777,569     $  273,878
                                          ==========     ==========     ==========
</TABLE>

                                  F-18
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


10.  COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Uncompleted contracts at December 31, 1999, 1998 and 1997, are summarized
as follows:

<TABLE>
<CAPTION>
                                             1999           1998           1997
                                             ----           ----           ----
     <S>                                  <C>            <C>            <C>
     Costs incurred to date               $53,062,731    $20,040,123    $ 9,858,349
     Gross profit recognized to date        7,342,093      4,136,042      4,499,694
                                          -----------    -----------    -----------
     Total costs plus gross profit to
      date                                $60,404,824    $24,176,165    $14,358,043
     Billings to date                      50,740,720     22,238,795     12,161,855
                                          -----------    -----------    -----------
                                          $ 9,664,104    $ 1,937,370    $ 2,196,188
                                          ===========    ===========    ===========
</TABLE>

The above amounts are included in the accompanying balance sheets under the
following captions:

<TABLE>
<CAPTION>
                                             1999           1998           1997
                                             ----           ----           ----
     <S>                                  <C>            <C>            <C>
     Costs and estimated earnings in
       excess of billings on uncompleted
       contracts                          $10,968,967    $ 3,623,538    $ 2,695,782
     Billings in excess of costs and
       estimated earnings on uncompleted
       contracts                            1,304,863      1,686,168        499,594
                                          -----------    -----------    -----------
                                          $ 9,664,104    $ 1,937,370    $ 2,196,188
                                          ===========    ===========    ===========
</TABLE>

11.  CERTIFICATES OF DEPOSITS--PLEDGED

The certificate of deposit, with an outstanding balance at December 31,
1997 of $222,836 was pledged as security on the company's line-of-credit
agreement with Norwest Bank--Lakewood.  During 1998, the Company was
released of its collateral requirement on this certificate of deposit.

12.  ACCRUED LIABILITIES

The accrued liabilities consist of the following as of December 31, 1999,
1998 and 1997:

<TABLE>
<CAPTION>
                                             1999           1998           1997
                                             ----           ----           ----
     <S>                                  <C>            <C>            <C>
     Payroll taxes payable                $   78,876     $  101,940     $    6,175
     Accrued commissions payable             810,690        779,038        398,484
     Accrued salaries and vacations          272,174        395,938        122,036
     Sales tax payable                       524,129         95,489         57,097
     Accrued workers compensation                  -         98,297         19,652
     Other accrued liabilities               230,639        414,248         35,377
                                          ----------     ----------     ----------
                                          $1,916,508     $1,884,950     $  638,821
                                          ==========     ==========     ==========
</TABLE>

                                  F-19
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


13.  LITIGATION AND CLAIMS

The Company has a series of unapproved change order requests pending
against a customer for a project completed in 1999.  Discussions and
negotiations with this customer concerning these change order requests are
ongoing.  The customer has offered to settle the amount for less than the
Company's requests.  The Company believes that a favorable resolution of
this matter will occur and will not be materially detrimental to the
Company's financial condition.

There are no other litigation or claim matters which the Company believes
are material.  The Company believes it has appropriate reserves for these
and other unanticipated claims.

14.  401(k) PLAN

On July 1, 1996, the Company implemented a 401(k) savings plan.  The
current plan covers all full time employees over the age of 21 who have
completed six months of service to the Company.  The Company may contribute
to the plan upon the Board of Directors' discretion.  For the years ended
December 31, 1999, 1998 and 1997, the Company did not make any
contributions to the plan.

15.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of the Company's debt at December 31, 1999, 1998 and
1997, approximate their fair value, since the interest rate charged per the
agreements is similar to the Company's current borrowing rate.

From time to time, the Company enters into financial instruments with off-
balance sheet risk to hedge future cash flows from firm contracts in non-
dollar denominated currencies.  As of December 31, 1998 and 1997, the
Company did not have any financial instruments with off-balance sheet risk.
The Company's policy is to hedge these firm contracts where possible with
forward foreign exchange contracts.  These forward contracts are executed
through the Company's banking relationships.

On November 5, 1999, the Company entered into a forward Foreign Exchange
sales contract that was outstanding as of December 31, 1999, in the amount
of 1,000,000 CAD to be delivered on May 31, 2000, for $677,507 USD.  This
financial instrument is designated as a hedge against a firm contract for
Canadian dollars to be delivered in the Company's ordinary course of
business. The Company has not yet adopted FAS 133, Accounting for Certain
Derivative Instruments and Certain Hedging Activities.  The market value of
a similar financial instrument as of December 31, 1999, was approximately
$652,330, an unrealized gain of $25,177.

                                  F-20
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


Based on a volatility of 5.8% for Canadian dollar exchange rate vis-a-vis
the U.S. dollar, a 95% confidence interval for the remaining time on the
financial instrument would equate to a contract range of $579,450 to
$725,210 over the remaining life of the instrument.

16.  RELATED PARTY TRANSACTIONS

A stockholder has pledged two personal certificates of deposit in the
amount of $773,233 as security for the Company's line-of-credit.  For the
years ended December 31, 1999, 1998 and 1997, the Company authorized fees
of $137,567, $48,784, and $48,784, respectively, to the stockholder for
this pledge.  These amounts are included in interest expense.

The Company leases a research and testing facility from a stockholder with
monthly payments of $1,238.  For the years ended December 31, 1999, 1998
and 1997, the Company incurred $14,856 for each year in rent expense for
the research and testing facility.  These amounts are included in research
and development expense.

Effective March 10, 1998, the Company and George A. Kast, President and
CEO, entered into a triple-net lease for a 36,740 square foot office
building in Golden, Colorado, for the Company's expanding office space
requirements.  The lease requires the Company to pay rent at a rate of
$21,454 per month for the 34-month lease.  Gross operating expenses for the
building approximate $20,000 per month, of which Mr. Kast is personally
responsible for the payment of approximately $5,000 per month, which has
been paid by the Company.  As of December 31, 1998, the Company has
recorded a note receivable from Mr. Kast related to the operating costs of
the facility for which Mr. Kast is responsible for $47,766.  This note
bears interest at 8% per annum and is due no later than September 30, 1999.
The note was repaid in installments during 1999.

17.  BUILDING PURCHASE/LEASE

During December 1999, Mr. Kast, through an affiliated entity, GK Holdings,
Inc., exercised his option to purchase the office building in which GWT's
principal offices are located.  On December 31, 1999, GWT and GK Holdings
entered into a ten-year lease of the building, commencing January 1, 2000.
The triple-net lease requires monthly rental payments of $53,538 per month.
The Company believes that the terms of the lease are no less favorable to
GWT than comparable office space in the area of our offices.  GWT subleases
the garden level of the building for approximately $12,600 per month to
unaffiliated entities at varying monthly rentals.

                                  F-21
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


18.  BUSINESS SEGMENT DATA

In June 1997 the Financial Accounting Standards Board issued Statement No.
131 "DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION"
(FAS 131).  The Company adopted FAS 131 effective January 1, 1998.

The Company's primary business is the design, sale, manufacture and
building of new industrial cooling towers and in retrofitting existing
industrial cooling towers and cooling tower components for both the
international and domestic markets.  All of its operations are within the
United States.  Based on risks, financial resources, profitability and
internal resources consumed, management has determined that the most
relevant segment information is international and domestic transactions.

The Company's export sales were $7,818,880, $5,241,036 and $3,777,426 for
the Fiscal years 1999, 1998 and 1997, respectively.  The following schedule
summarizes the segmentation of the international and domestic business
segments for the years ended December 31, 1999, 1998 and 1997.

                BUSINESS SEGMENT STATEMENTS OF OPERATIONS
          For the Years Ended December 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
                                               1999
                                               ----

                               DOMESTIC    INTERNATIONAL   OTHER        TOTAL
                               --------    -------------   -----        -----
<S>                            <C>           <C>          <C>          <C>
Revenues                       $60,134,087   $7,818,880   $       --   $67,952,967
Costs                           56,813,958    4,037,882    4,969,565    65,821,405
Segment profit (loss)            3,320,129    3,780,998   (4,969,565)    2,131,562
Assets                          17,994,559    5,711,489    1,557,882    25,263,930
</TABLE>


<TABLE>
<CAPTION>
                                               1998
                                               ----

                               DOMESTIC    INTERNATIONAL   OTHER        TOTAL
                               --------    -------------   -----        -----
<S>                            <C>           <C>          <C>          <C>
Revenues                       $29,493,304   $5,241,036   $       --   $34,734,340
Costs                           23,254,112    4,562,025    4,994,985    32,811,122
Segment profit (loss)            6,239,192      679,011   (4,994,985)    1,923,218
Assets                          10,408,904    1,420,197    3,178,961    15,008,062
</TABLE>

                                  F-22
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 1999, 1998 and 1997


<TABLE>
<CAPTION>
                                               1997
                                               ----

                               DOMESTIC    INTERNATIONAL   OTHER        TOTAL
                               --------    -------------   -----        -----
<S>                            <C>           <C>          <C>          <C>
Revenues                       $14,919,866   $3,777,426   $        -   $18,697,292
Costs                           10,979,212    2,568,272    4,179,054    17,726,538
Segment profit (loss)            3,940,654    1,209,154   (4,179,054)      970,754
Assets                           5,599,402    1,034,025    1,568,888     8,202,315
</TABLE>

19.  SUBSEQUENT EVENTS

On February 24, 2000, the Company announced that revenues would exceed
sixty million in fiscal year 1999 which would trigger the conversion of
outstanding Series A Preferred Stock.  Concurrently, the Company announced
that George Kast had exchanged his Series A Preferred Stock for Series C
Preferred Stock.  Subsequent to the announcement, the Company's stock price
has experienced considerable trading activity and has traded as high as
$0.74 per share.  At the current pricing levels for the Company's stock,
all of the outstanding warrants and options previously discussed are
"in-the-money."  Through March 17, 2000, the Company has received $676,800
in the exercise of outstanding C warrants and placement agent options.

20.  CHANGE IN ACCOUNTING

On November 11, 1998, the Board of Directors approved the Company's
decision to change, retroactive to January 1, 1998, its application of the
percentage of completion method of accounting for revenues and costs of
long-term contracts related to new cooling towers which is the Company's
primary market.  The pro-forma annual net income and earnings per share are
as follows assuming a retroactive application of the accounting change for
the years ended December 31, 1998 and 1997:

                                                  1998         1997
                                                  ----         ----
     Pro-forma amounts assuming retroactive
     application of accounting change:
       Net income (loss)                       $981,669     $(31,973)

       Basic income per share                    $0.003      $(0.000)
                                                 ======      ========

       Fully diluted income per share            $0.003      $(0.000)
                                                 ======      ========

                                  F-23