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

                                FORM 10-K

[ X ]     Annual report under Section 13 or 15(d) of the Securities
          Exchange Act of 1934 for the fiscal year ended: December 31, 2000
                                                          -----------------

[   ]     Transition report under Section 13 or 15(d) of the Securities
          Exchange Act of 1934 for the transition period from ___________
          to __________

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

                     GLOBAL WATER TECHNOLOGIES, INC.
          -----------------------------------------------------
         (Exact name of registrant as specified in its charter)

          Delaware                                         84-1148204
-------------------------------                       -------------------
(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:
                     $0.0006 Par Value Common Stock
                     ------------------------------
                            (Title of Class)

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-K 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-K or any amendment to
this Form 10-K.  [ X ]

Aggregate market value of voting stock held by non-affiliates as of April 11,
2001:  $1,667,199

Shares of Common Stock, $0.0006 par value, outstanding as of April 11, 2001:
 5,990,048

Documents incorporated by reference:  See index on pages 43 - 45

<PAGE>
                            TABLE OF CONTENTS
                                                                     Page
                                                                     ----

PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Item 1.  Description of Business . . . . . . . . . . . . . . . . . . . .3

Item 2.  Description of Property . . . . . . . . . . . . . . . . . . . 14

Item 3.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 15

Item 4.  Submission of Matters to a Vote of Security Holders . . . . . 15

PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Item 5.  Market Price of the Registrant's Common Stock and
Related Security Holder Matters. . . . . . . . . . . . . . . . . . . . 16

Item 6.  Selected Financial Data . . . . . . . . . . . . . . . . . . . 17

Item 7.  Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . . . 18

Item 7A. Quantitative and Qualitative Disclosures About Market Risk. . 31

Item 8.  Financial Statements. . . . . . . . . . . . . . . . . . . . . 31

Item 9.  Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . . . . . . . . 31

PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Item 10.  Directors and Executive Officers, Promoters and
Control Persons; Compliance With Section 16(a) of the Exchange Act . . 32

Item 11.  Executive Compensation . . . . . . . . . . . . . . . . . . . 34

Item 12.  Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . . . . . . . . . 40

Item 13.  Certain Relationships and Related Transactions . . . . . . . 41

Item 14.  Exhibits, Financial Statements and Reports on Form 8-K . . . 43



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<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.

                                FORM 10-K

                       FORWARD-LOOKING STATEMENTS

     This Annual Report on Form 10-K 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 18 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, manufacturing and supply
of cooling towers to power plants, as well as other process 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 outsourcing of cooling water 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 "GWTRD."  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, Mitsubishi, Mobil, Texaco, Bechtel, Fluor Daniel and other
large corporations around the world.

     We custom design industrial water cooling towers for our customer base
generally in a competitive bid job award process.  We provide value
engineering and specific water cooling tower designs to our customers.
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

                                   -3-
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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 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 proprietary
information and know-how is enhanced by key and 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 industries with available water that generate heat in their
process utilize water cooling towers in their operations.  Accordingly,
water cooling towers are vital to the continuing

                                   -4-
<PAGE>
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 $20,000,000 for a 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 customers.  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 through PSI can be subdivided into two
main sub-segments: international water cooling towers and domestic water
cooling towers.  For the year ended December 31, 2000, the domestic tower
revenue recognition represented approximately 81.1% of our revenues, and
international tower revenue represented approximately 18.9%.  Based upon
our current backlog of business and current outstanding bid activity, we
believe that future revenue recognition for 2001 will approximate 2000
percentages for international and

                                   -5-
<PAGE>
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 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.

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<PAGE>
     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.

     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, decreasing noise levels and sound pollution.

     During the year, the Company performed a demonstration of fire
criteria tests for Factory Mutual Research certification for a line of its
cooling tower products.  This certification allows customers to forego
sprinkler system installations and may result in lower capital and
operating costs for the Company's product.  The Company received the final
report in February of 2001 from Factory Mutual Research showing that the
product line had successfully completed the fire criteria tests.

     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.

                                   -7-
<PAGE>
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, we believe 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.

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.  One employee as of
December 31, 2000 staffed this facility.  We plan to continue research and
refinement programs at this facility; however, we have no fixed research
and development budget.  For the fiscal years ended December 31, 2000, 1999
and 1998, we expended $24,320, $30,618 and $232,657 respectively, for
research and development.

TOTAL WATER TREATMENT SERVICE PROGRAM

     During fiscal 1998, we began offering clean water technology services
to HVAC 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.

     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 discharge pollutants.  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.

                                   -8-
<PAGE>
     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 employs technologically advanced equipment
that comprehensively addresses scale, micro biofouling, corrosion and
filtration of suspended solids.  The combination of these leading edge
technologies 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 method of reducing scale
deposited from the water inside the pipes.  This system, based on eight
patented technologies held by the inventor, delivers electric charges
through the water passing inside a pipe from a device that 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 that can then be filtered
out of the water flow.  Our total water management program also offers a
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
water flow and to react quickly to control the system as required.

     We are marketing 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 market on the basis of long term
service, rather than selling technology or equipment.  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 2000, we had invested approximately $1,442,000 in start-up and
related expenses leading to the AWT treatment service program.  We
initiated service under our first contract that commenced in June 1999.
Our initial contract was with a Midwest utility and is for

                                   -9-
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a five-year term.  The customer is paying monthly fees from which we are
recovering the initial investment over a relatively short period, providing
an example of the higher margin anticipated from this new business segment.
A second system was sold in the second half of 2000 to a medical facility
on the eastern seaboard.  Similar to the first system, there is an ongoing
service arrangement with this operation.

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 typical for efficiency to be reduced 20% to 30% after five to ten years
of operation due to poor maintenance and operation.

     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 systems, equipment, supplies and water treatment programs
needed for the servicing, recruiting, training and managing the operational
manpower required under each project.  We are not aware of any other
competitors that 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.  These products and
services are all incorporated into one monthly fee over a long-term time
frame.  We anticipate that our customers will view these service contracts
as a

                                  -10-
<PAGE>
long-term solution that will result in significant revenue improvement and
substantial cost savings for their operations.

     GWS is pursuing contracts with several major electric utilities.  We
believe that with the combination of the service and equipment elements
noted previously, we can provide our customers with enhanced operations
which could lead to the electrical utilities being able to generate
additional megawatts in their system.

INTERNATIONAL OPERATIONS

     Our international operations account for a material portion of our
business activities.  Financial information regarding our international
operations appears in Note 17 to the accompanying audited financial
statements included in Item 14 of this Annual Report on Form 10-K.  There
are certain risks that are present in performing operations in foreign
countries, which include foreign policy, foreign relations with the United
States, governmental laws and regulations, governmental intervention,
cultural aspects and foreign currency issues.  There are no circumstances
of which we are currently aware that would have a material adverse effect
on our international operations.

GOVERNMENTAL REGULATION

     We are 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.

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.

                                  -11-
<PAGE>
     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 Betz-Dearborn, which is a publicly traded
company.  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.  Most 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.

SEGMENTS

     Financial information regarding the segments appears in Note 17 to the
accompanying audited financial statements included in Item 14 of this
Annual Report on Form 10-K.

EMPLOYEES

     As of December 31, 2000, we employed 94 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 87 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.

CUSTOMERS

     We did not have a major customer accounting for more than 10% of our
revenues for the year ended December 31, 2000. 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

                                  -12-
<PAGE>
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. 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 one customer accounting for approximately
25.7% of our backlog as of December 31, 2000.  Our current backlog at
December 31, 2000 is $34,258,116 compared to $20,846,108 in 1999.  We
expect that all of this backlog will be recognized as revenue over the next
twelve months.

     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 than 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 expired on April 14, 2001.

     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 4,356,375
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 "GWTRD."  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.

                                  -13-
<PAGE>
     Each share of Series A Preferred Stock converted into 4.83 shares of
Common Stock on March 10, 2000 when we attained gross annual sales of
$67,952,967, within the time period outlined in the initial reorganization
agreement.  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 converted into 597,684 shares of Common Stock.

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 $20,000 monthly, reducing
our net monthly rent to approximately $33,500. During 2000, we paid GK
Holdings, Inc. $642,456 for this office lease.

     In November of 2000, Mr. Kast sold his ownership interest in the
building to an unaffiliated entity.

     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 $7,380 per month.  The lease terminates in January
of 2002.  This facility is utilized 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.

                                  -14-
<PAGE>
     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 2000, 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.

     Psychrometric Systems, Inc. is a defendant in a lawsuit filed on or
about September 28, 2000 by a subcontractor in the Commonwealth Courts of
Puerto Rico alleging breach of contract emanating from a project PSI
performed for the Puerto Rico Electric Power Authority.  The suit seeks
damages in the amount of $450,000.  PSI has denied the allegations of the
plaintiff and has filed a counterclaim against the plaintiff in the amount
of $950,000 associated with the cost of completion of the project after the
plaintiff defaulted and was terminated for cause under its contract with PSI.
PSI has also filed suit against the subcontractors bonding company for the
recovery of its damages associated with the costs of completing the
subcontractors work on the project.  To date, no trial date has been set and
discovery has not yet occurred.  While PSI feels very strong in its position,
there is no definitive time frame for the completion of this litigation and
no assurances can be given on its outcome.

     PSI has also filed a lawsuit on December 29, 2000 against Consorcio
Azucarero Escorpion S.A. de CV (hereinafter CAZE) in Jefferson County
District Court of Colorado alleging breach of contract in the engineering
and supply of cooling towers to CAZE.  To date, the complaint has yet to be
served and the parties are in settlement discussions.  PSI seeks in excess
of $4,000,000 from CAZE and to date has not allowed the finished manufactured
product to be exported to Mexico by CAZE.

     PSI has various other contingent assets on its books resulting from
claims and commitments incident to its ordinary course of business.
Management believes that these items will be favorably resolved and, based
upon the advice of counsel, will be sufficient such that these
contingencies will not have a materially adverse effect on the financial
position of the Company.

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

     Our 2000 Annual Meeting of Shareholders was held on June 28, 2000.
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, 2000.

                                  -15-
<PAGE>
                                 PART II

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

MARKET INFORMATION

     Our common stock is currently traded in the over-the-counter market.
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 values have been restated on a pro-forma
basis to reflect the reverse stock split of 1 for 60 effective as of June 30,
2000.

                                                High            Low
                                                 Bid            Bid
                                                 ---            ---
     1999 Fiscal Year
     ----------------

     First Quarter                              $5.40          $3.00

     Second Quarter                             $7.80          $5.40

     Third Quarter                              $8.70          $6.00

     Fourth Quarter                             $6.00          $3.60

     2000 Fiscal Year
     ----------------

     First Quarter                             $39.60          $3.60

     Second Quarter                            $19.80          $5.70

     Third Quarter                              $6.45          $3.99

     Fourth Quarter                             $4.06          $0.94


     On June 30, 2000, GWT's Common Stock was split 1 for 60 so that
holders as of the record date received one share of common stock for each
60 shares previously held. On April 11, 2001, the last reported bid and
asked prices for the Common Stock were $1.01 and $1.12, respectively.
There is no public market for the Class A and Class B Warrants.

HOLDERS

     On April 11, 2001, our Common Stock was held by 70 shareholders of record.

                                  -16-
<PAGE>
DIVIDENDS

     We have not paid cash dividends on our Common Stock during the two
most recent fiscal years 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.

ITEM 6.  SELECTED FINANCIAL DATA

     The following table sets forth the Selected Consolidated Financial
Data for the Company. Such data is derived from and should be read in
conjunction with the Company's Consolidated Financial Statements and the
notes thereto incorporated into this report and Management's Discussion and
Analysis of Financial Condition and Results of Operations. These historical
results do not necessarily indicate future results.

Statement of Operations: All amounts in thousands except per share data
<TABLE>
<CAPTION>

                                                            YEARS ENDED DECEMBER 31,
                                   -------------------------------------------------------------------------
                                      2000           1999             1998           1997(3)        1996(3)
                                      ----           ----             ----           ----           ----
<S>                                  <C>            <C>              <C>            <C>            <C>
Revenue                              $50,228        $67,953          $34,734        $18,697        $16,521
Operating expenses:
  Cost of Sales                       49,065         60,852           27,816         13,547         12,655
  Selling, general and
    administrative                     4,926          4,939            4,762          4,031          3,130
  Research & development                  25             30              233            149            130
                                     -------        -------          -------        -------        -------
Total operating expenses:             54,016         65,821           32,811         17,727         15,915

Income (loss) from operations         (3,788)         2,132            1,923            971            606

Interest & other income (expense)         58           (261)            (156)          (126)          (145)

Net income (loss) including the
  effect of a change in
  accounting principle                (2,165)         1,285              981            571            306
Cumulative effect of a change
  in accounting principle                 --             --              754             --             --
                                     -------        -------          -------        -------        -------
Net income (loss) available for
  common shareholders                $(2,165)       $ 1,285          $   227        $   571        $   306
                                     =======        =======          =======        =======        =======
Net income (loss) per share:
  Basic - before acct. change        $(0.372)       $ 0.231          $ 0.200        $ 0.127        $ 0.072
Cumulative effect of acct. change         --                          (0.154)            --             --
                                     -------        -------          -------        -------        -------
Basic (2) income (loss) per
  share available for common         $(0.372)       $ 0.231          $ 0.046        $ 0.127        $ 0.072
                                     =======        =======          =======        =======        =======
</TABLE>

                                  -17-
<PAGE>
                           [Item 6 Continued]
Balance sheet data:
<TABLE>
<CAPTION>
                                                               AS OF DECEMBER 31,
                                   -------------------------------------------------------------------------
                                      2000           1999             1998           1997           1996
                                      ----           ----             ----           ----           ----
STATEMENT OF OPERATIONS DATA:
<S>                                  <C>            <C>              <C>            <C>            <C>
Cash & cash equivalents              $   565        $   707          $ 1,751        $   119        $    61
Total assets                          35,762         25,264           15,008          8,202          6,171
Total debt                            31,997         21,518           13,509          7,200          5,793
Total stockholders equity              3,765          3,746            1,499          1,002            378


Other financial data:
EBITDA   (1)                          (3,428)         2,353            2,110            990            706
Net cash provided (used) in:
  Operating activities                (1,504)        (3,459)             304            484            636
  Investing activities                (1,439)          (256)             (52)          (191)          (270)
  Financing activities                 2,801          2,671            1,381           (236)          (330)
</TABLE>

(1)  EBITDA consists of net income before the cumulative effect of change
in accounting principle plus income taxes, interest, depreciation and
amortization.
(2)  Basic and fully diluted income (loss) per share were identical except
in 1999 where the fully diluted income per share was $0.230.
(3)  Prepared under the previous method of accounting. Under this method,
we recognized a predetermined percentage of our profits on new cooling
towers upon the attainment of certain project milestones, specifically the
completion and delivery of certain engineering drawings and specifications.
See REVENUE AND COST RECOGNITION in Note 1 to the accompanying audited
financial statements included in Item 14 of this Annual Report on Form 10-K

ITEM 7.   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.

                                  -18-
<PAGE>
     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 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.

     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-K 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
is contained below and in "Important Factors That May Affect Future
Results" beginning on page 25 below.

                                  -19-
<PAGE>
YEAR ENDED DECEMBER 31, 2000 AS COMPARED TO YEAR ENDED DECEMBER 31, 1999

     Total revenues were derived from engineering, equipment, installation,
retrofits and spare parts of cooling towers, AWT's clean water technology
services and GWS' water service program.  For the year ended December 31,
2000, total revenue decreased 26.1% to $50,228,084 as compared to
$67,952,967 for the year ended December 31, 1999.  International revenues
comprised 18.9% of total revenues in 2000 versus 11.5% of total revenues in
1999, with such increase resulting from several significant international
jobs in our total bookings mix.  AWT and GWS, although both contributing to
overall revenues, were not material to the total revenue recognized during 2000.

     Contracts awarded ("bookings") during 2000 increased 8.5% to
$67,042,288 from $61,774,341 in 1999.  These amounts included international
bookings of $10,962,252 in 2000 (16.4% of total) and $8,269,087 in 1999
(13.4% 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 increased from $20,846,108 at December 31,
1999, to $34,258,116 at December 31, 2000.  Three contracts were cancelled
by customers during the year ended December 31, 2000.

     Our cost of sales decreased 19.4% from $60,851,840 in 1999 to
$49,065,300 in 2000.  As a percentage of revenues, cost of sales increased
from 89.5% in 1999 to 97.7% in 2000. The absolute decrease in cost of sales
resulted from a 26.1% decrease in corresponding revenues, additional cost
allocations from selling, general and administrative expenses to projects
and a decrease in overall gross margins due to competitive forces.
Management believes significant price pressure from competitors will
continue to be an industry force in the future.  However, due to increased
customer demand in many industries, including the electrical power market,
pricing pressures may decrease over the next eighteen months.

     Selling, general and administrative expenses decreased 0.3% from
$4,938,947 in 1999 to $4,926,055 in 2000.  As a percentage of revenues,
these expenses increased from 7.3% in 1999 to 9.8% in 2000.  As a
percentage of new bookings which increased 8.5%, these expenses decreased
from 8.0% in 1999 to 7.3% in 2000.  Management has taken several steps
including personnel reductions and the related costs to decrease budgeted
costs in the selling, general and administrative area for 2001. During
2000, AWT and GWS collectively increased selling, general and
administrative expenses by approximately $1.3 million.

     Research and development costs decreased 20.6% to $24,320 in 2000 from
$30,618 in 1999.  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 loss, based
on the explanations noted above, decreased from an income of $2,131,562 to
an operating loss of $3,787,591 in 2000.

                                  -20-
<PAGE>
     Other income and expense primarily consisted of interest income net of
interest expense, which increased to $57,554 in 2000 from an expense of
$260,665 in 1999, related to our various debt financings and interest
income from a delinquent contract.  Income taxes (benefit) decreased from
$566,115 with an effective tax rate of 30.3% in 1999 to a benefit of
$(1,578,974) with an effective tax rate of 42.3% in 2000.  Management
believes that it is more likely than not that this benefit will be
recognized over the next 24 months, therefore no reserve was deemed necessary.

     Our net loss before the cumulative effect of change in accounting
principle and preferred stock dividend decreased from income of $1,304,782
in 1999 to a loss of $(2,151,063) in 2000.  Basic income (loss) per share
decreased from $0.231 in 1999 to $(0.372) in 2000 while fully diluted
income (loss) per share decreased from .230 in 1999 to $(0.372) in 2000.

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. Our export sales were $7,818,880 and $5,247,569 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. 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.

                                  -21-
<PAGE>
     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 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. During 1999, AWT and GWS did not materially impact the results of
operations described above.

     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.


LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 2000, we had working capital of $1,316,991 as compared
to working capital of $4,940,336 at December 31, 1999.  The working capital
decrease is mainly due to a net increase in deferred tax assets, income
taxes receivable, accounts payable, the classification of debt into current
liabilities and long term lease receivables. Our cash flow provided by and
used in its operating, investing and financing activities are summarized as
follows:

                                  -22-
<PAGE>
<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                 -----------------------------------------------
                                                     2000             1999              1998
                                                     ----             ----              ----
     <S>                                         <C>              <C>               <C>
     Operating activities                        $(1,503,972)     $(3,458,803)      $   303,953
     Investing activities                         (1,439,228)        (255,797)          (52,255)
     Financing activities                          2,801,203        2,670,565         1,380,714
                                                 -----------      -----------       -----------
     Net (decrease) increase in cash             $  (141,997)     $(1,044,035)      $ 1,632,412
                                                 ===========      ===========       ===========
</TABLE>

     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 next
twelve months will provide cash.  The decrease in cash during 2000 from
operating activities was funded by an additional equity infusion from the
exercise of outstanding "C" warrants and employee stock options.  We
attempt to minimize our investment in these working capital components, but
as sales and backlogs increase, management believes that these investments
will also increase.  Working capital includes approximately $2.2 million in
completed and unapproved construction change orders incurred in the
ordinary course of business that we believe are collectible from current
pending change orders in excess of $4.2 million.  Working capital also
includes approximately $765,000 in various agreed upon backcharges,
insurance claims (certain of which were settled after year-end) and
expected rebates from vendors.

     We believe that with the conversion of working capital into cash and
either additional debt or equity funding, we will have sufficient cash
resources for continuing operations.

     We have certain financing agreements with existing customers that
involve payment in kind for existing obligations.  Management believes that
these arrangements can be sold to independent institutions to convert the
assets into cash within twelve months.  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 as well as already completed reductions in
force, will provide the necessary liquidity for continuing operations.

     Scheduled principal payments on term loans will total $4,827,763
during the fiscal year ended December 31, 2001, with Wells Fargo 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

                                  -23-
<PAGE>
December 31, 2000, was $224,609.  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, 2000, the interest rate for all
financing which bear interest rates at 1.0% over prime was 10.5%.  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 our
financial position.  As of December 31, 2000, all financial covenants have
been maintained.

     In February 2000, we secured a refinancing on our $2,000,000 Export-
Import line of credit.  This line bears interest at 1.0% above the prime
rate and is guaranteed by the Export-Import Bank of the United States.  The
total amount outstanding on this line was $1,855,988 as of December 31, 2000.

     We have a revolving line of credit with a bank in the amount of
$2,800,000, of which $2,450,000 was outstanding at December 31, 2000.  The
interest rate on the line of credit is tiered as follows:  6.69% on the
first $770,000 and 10.5% on the remaining portion and bears no annual
commitment fee.  The line of credit is due April 30, 2001. We have had
discussions with the bank on the renewal of the line of credit and we
anticipate that it will be renewed. The line of credit and the SBA term
loan above are secured by cash collateral of $807,914 at December 31, 2000,
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 terms when the debt becomes due.

     We have various loans secured by company vehicles.  At December 31,
2000, the total amount outstanding was $297,166 for these bank obligations.
The short-term principal payment obligations for the fiscal year ended
December 31, 2001, will be $83,375 for these loans.

     In total, as of December 31, 2000, we had outstanding loans from
commercial lenders of $4,827,763 and had $144,000 outstanding in letters of
credit.  The unused availability under the line-of-credit as of this date
was $350,000.

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.

                                  -24-
<PAGE>
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.
As of December 31, 2000, we do not have any derivative contracts outstanding.

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-K 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 WILL NEED ADDITIONAL CAPITAL IN 2001

     We anticipate that we may need additional capital during calendar year
2001 to develop and market our products as our business grows.  Our planned
expansion into new business areas 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 level of
activity will require us to seek additional credit lines or expand our
existing banking credit lines.  Although we believe that we may be able to
expand our banking facilities with a number of different financial
institutions, there can

                                  -25-
<PAGE>
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.

RAPID GROWTH, 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;

     *    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

                                  -26-
<PAGE>
     *    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.

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

                                  -27-
<PAGE>
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 was 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, 2000, we did not have a major customer
accounting for more than 10% of our revenues.  We had a major customer
accounting for 39.8% and 13.9% of our revenues for the year ended December
31, 1999 and 1998, respectively. We have one major project included in our
backlog which represents approximately 25.6% of our total backlog for 2001.
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.

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.

                                  -28-
<PAGE>
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 invest in the Company.

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

     We presently have 5,990,048 shares of Common Stock outstanding.  Of
this amount, 4,424,603 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 registered 500,000 shares of Common
Stock, which may be issued under our 1998 Stock Option Plan.  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 .  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.

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 GWT own approximately 74% 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.

                                  -29-
<PAGE>
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 19,123,509
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 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. 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 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Market risk generally represents the risk of loss that may result from
the potential change in the value of a financial instrument as a result of
fluctuations in interest rate and foreign exchange rate risk as discussed below.

                                  -30-
<PAGE>
     Interest Rate Risk.  We have current debt outstanding under a line of
credit and a term loan of $4,530,597 at December 31, 2000.  The credit
facility bears interest at 1% above prime and $4.3 million will mature and
be due in April of 2001.  If we are required to obtain a replacement line
of credit at higher interest rates, an increase in rates of 1% would
increase our estimated annual interest expense by approximately $45,000 on the
amount of borrowings outstanding under our credit lines at December 31, 2000.

     Foreign Exchange Rate Risk.  Foreign exchange rate risk arises from
the possibility that changes in foreign exchange rates will impact the
value of financial instruments or contract prices for work performed for
our foreign customers.  We are at risk that the exchange rate may fluctuate
in a way that negatively impacts the revenues that we are entitled to
receive from a particular customer.  As of April 11, 2001, the currency
creating foreign risk for us is the Canadian dollar.

ITEM 8.  FINANCIAL STATEMENTS.

     The Financial Statements set forth on pages F-1 to F-22 of this Report
are incorporated herein by reference.

ITEM 9.  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,
2000, 1999 and 1998 were audited by Comiskey and Company, P.C.  There were
no disagreements between us and our principal independent accountants,
Comiskey and Company, P.C.



                                  -31-
<PAGE>
                                PART III

ITEM 10.  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    44   Chief Executive Officer and             1993
                       Chairman of the Board

Martin E. Hout    45   Chief Financial Officer and             1998
                       Treasurer

Gary L. Brown     44   Secretary, General Counsel and a        1996
                       Director

Michael A. Kast   45   Director                                1999


Robert L. Koch    48   Director                                1999

G. Edward Powell  64   Director                                2000


     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 involved 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

                                  -32-
<PAGE>
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.

     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.

     G. EDWARD POWELL was with Price Waterhouse for approximately 35 years,
during which time he held a managing partner position for 12 years for the
Houston office, until retirement in 1994.  Mr. Powell was responsible for
the organization and management of the firms NAFTA Business Center in
Houston, the focal point for all Price Waterhouse client interaction with
Mexican investment activities.  Since his retirement, he has become
associated with several emerging and middle market businesses, both
privately and publicly owned, as an investor, officer and/or director.

BOARD COMMITTEES

     The Board of directors established an audit committee in November of
2000.  Mr. Powell and Mr. Koch are the two members of the committee.  We do
not have a compensation committee.

SIGNIFICANT EMPLOYEES

     The following employees make a significant contribution to our business:

     STEVE D. ADAMS, age 40, 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.

                                  -33-
<PAGE>
     WILLIAM W. HOWARD, age 43, 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 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(f) of Regulation S-K during the past five years.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     Section 16(a) of the Securities Exchange Act of 1934 requires our
officers and directors and persons who own more than 10% of GWT's
outstanding common stock to file reports of ownership with the Securities
and Exchange Commission.  Officers, directors and greater than 10%
shareholders are required by SEC regulations to furnish us with copies of
all Section 16(a) forms they file.  To our knowledge, during and for GWT's
fiscal year ended December 31, 2000, there were no directors, officers or
more than 10% shareholder of GWT that failed to timely file a Form 3, Form
4 or Form 5.

ITEM 11.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

     The following table sets forth information regarding compensation paid
to our CEO and the other executive officers that received in excess of
$100,000 of salary and bonus from GWT during the year ended December 31, 2000:

                                  -34-
<PAGE>
<TABLE>
<CAPTION>
                                                      Long-Term
                                                  Compensation Awards
                                                  -------------------
                    Annual Compensation ($$)      Restricted
Name &              ------------------------        Stock     Options        Other
Position            Year    Salary     Bonus       Awards     & SAR's     Compensation
--------            ----    ------     -----       ------     -------     -------------

<S>                 <C>    <C>         <C>           <C>        <C>         <C>
George A. Kast,     2000   $225,000       -0-        -0-          8,334     $657,312(1)
President and Chief 1999   $225,500       -0-        -0-         10,544     $ 14,856(1)
Executive Officer   1998   $172,500    $ 75,137      -0-          -0-       $ 14,856(1)

Gary L. Brown,      2000   $180,000       -0-        -0-          9,600         -0-
General Counsel     1999   $180,000    $ 40,000      -0-          7,719         -0-
                    1998   $145,500    $ 25,137      -0-           -0-          -0-

Michael A. Kast,    2000   $180,000        -0-       -0-          9,600     $137,567(2)
Vice President of   1999   $156,667        -0-       -0-          6,892     $137,567(2)
PSI                 1998   $145,000    $ 25,137      -0-           -0-      $ 48,784(2)

Martin E. Hout,     2000   $119,808    $ 12,500      -0-          5,867          -0-
Chief Financial     1999   $110,000    $ 12,500      -0-          9,375          -0-
Officer             1998   $ 73,461    $  2,500      -0-           -0-           -0-
</TABLE>
__________________________

(1)  Represents rental payments made to Mr. Kast for the Coeur d'Alene
     research and development center and the rental payments to GK Holdings
     for the Company's primary office building.
(2)  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 our 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 500,000 shares
of Common Stock to our employees, officers, directors and consultants and
those of our subsidiaries.  The Plan was ratified by our shareholders at
our Annual Meeting of Shareholders on June 30, 1998.  As of December 31,

                                  -35-
<PAGE>
2000, 195,351 options have been awarded to GWT employees, 2,157 options
have been exercised and 24,427 have been forfeited.  There are 160,767
options 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.

                                  -36-
<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.

                                  -37-
<PAGE>
     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. 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 2000

     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, 2000.

                          OPTION GRANTS IN 2000

<TABLE>
<CAPTION>
                        Number of         Percent of
                          Shares         Total Options    Per Share
                        Underlying        Granted to       Exercise      Expiration
     Name           Options Granted(1) Employees in 2000    Price           Date
     ----           ------------------ -----------------    -----           ----
     <S>                   <C>                <C>           <C>          <C>
     George A. Kast        8,334              7.4%          $7.50        February 9, 2005
     Gary L. Brown         9,600              8.5%          $7.50        February 9, 2005
     Michael A. Kast       9,600              8.5%          $7.50        February 9, 2005
     Martin E. Hout        5,867              5.2%          $7.50        February 9, 2005
     G. Edward Powell      8,000              7.1%          $1.08        Nov. 22,    2005
</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.

                                  -38-
<PAGE>
YEAR-END OPTION VALUES

     No options were exercised by the named executive officers during the
fiscal year ended December 31, 2000.  The following table provides
information on option values of such officers' unexercised options at
December 31, 2000:

                         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          5,885          12,993           -             -
Gary L. Brown       0         0          5,008          12,311           -             -
Michael A. Kast     0         0          4,678          11,814           -             -
Martin E. Hout      0         0          4,924          10,318           -             -
G. Edward Powell    0         0          1,600           6,400           -             -
</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,
     2000, 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, 2000, none of the options were in the
     money.

LONG-TERM INCENTIVE PLANS

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

REPORTING ON REPRICING OF OPTIONS/SARS

     Not applicable.

PERFORMANCE TABLE

     The performance table compares the annual change in the Company's
cumulative total Shareholder return on its Common Stock during a period
commencing on September 25, 1997, the date the Company's stock began publicly
trading, and ending on December 31, 2000 as measured by dividing the
difference between the Company's share price at the end and the beginning of
the measurement period; by the share price at the beginning of the
measurement period, with the cumulative total return of each of: (a) the
Nasdaq Composite Index (Nasdaq); and (b) last year's industry Peer Group as
measured by the Russell 2000.  All amounts assume a $100 investment on
September 25, 1997.  It should be noted that the Company has not paid any
dividends on its Common Stock, and no dividends are included in the
presentation of the Company's performance.  The stock price performance on
the table below is not necessarily indicative of future price performance.

              COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
                   GLOBAL WATER TECHNOLOGIES INC.,
                  NASDAQ, AND THE RUSSELL 2000 INDEX

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
TOTAL RETURN ANALYSIS
                                9/26/97        12/31/97       12/31/98       12/31/99       12/31/00
-----------------------------------------------------------------------------------------------------
<S>                            <C>            <C>            <C>            <C>            <C>
Global Water Technologies      $  100.00      $   54.55      $   40.91      $   77.27      $   18.96
-----------------------------------------------------------------------------------------------------
Russell 2000                   $  100.00      $   97.25      $   93.90      $  112.32      $  107.60
-----------------------------------------------------------------------------------------------------
Nasdaq Composite               $  100.00      $   94.01      $  131.27      $  243.62      $  147.90
-----------------------------------------------------------------------------------------------------
</TABLE>


                                  -39-
<PAGE>
ITEM 12.  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.


Name and Address
of Shareholder               Shares Beneficially Owned (1)    Percent of Class
--------------               -----------------------------    ----------------

George A. Kast                           3,794,394(2)                    62.9%

Gary L. Brown                              188,314(3)                     3.1%

Michael A. Kast                            468,005(4)                     7.8%

Martin E. Hout                               7,973(5)                     0.1%

Robert L. Koch                                 167                           (6)
7330 East 66th Court
Tulsa, OK 74133

G. Edward Powell                             1,600(7)                        (6)
45 W. Broad Oaks
Houston, TX 77056

All Directors and Executive Officers     4,460,453                       74.0%
  as a group (6 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
     April 11, 2000, was 5,990,048.  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 April 11, 2001, and exercisable within 60
     days thereafter.
(2)  Includes options to purchase 6,327 shares of Common Stock at $4.80 per
     share granted on March 8, 1999, and 3,334 shares of Common Stock at
     $7.50 per share granted on February 9, 2000 pursuant to our 1998 Stock
     Option Plan, which are currently exercisable.
(3)  Includes options to purchase 4,632 shares of Common Stock at $4.80 per
     share granted on March 8, 1999, and 3,840 shares of Common Stock at
     $7.50 per share granted on February 9, 2000 pursuant to our 1998 Stock
     Option Plan, which are currently exercisable.
(4)  Includes options to purchase 4,137 shares of Common Stock at $4.80 per
     share granted on March 8, 1999, and 3,840 shares of Common Stock at
     $7.50 per share granted on February 9, 2000 pursuant to our 1998 Stock
     Option Plan, which are currently exercisable.
(5)  Includes options to purchase 5,625 shares of Common Stock at $4.80 per
     share granted on March 8, 1999, and 2,348 shares of Common Stock at
     $7.50 per share granted on February 9, 2000 pursuant to our 1998 Stock
     Option Plan, which are currently exercisable.
(6)  Negligible.
(7)  Includes options to purchase 1,600 shares of Common Stock at $1.08 per
     share granted on November 22, 2000 pursuant to our 1998 Stock Option
     Plan, which are currently exercisable.

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.

                                  -40-
<PAGE>
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Michael A. Kast has pledged certificates of deposit in the amount of
$807,914 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
$137,567, $137,567 and $48,784 for the years ended December 31, 2000, 1999
and 1998, respectively.

     George A. Kast has personally guaranteed our obligations
(approximately $4,530,000, $3,855,000, $1,776,000 and as of December 31,
2000, 1999 and 1998, respectively) with financial institutions, including
our SBA term loan.  In addition, as of December 31, 2000, 1999 and 1998,
Mr. Kast had personally guaranteed approximately $8,900,000, $13,500,000
and $16,600,000 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 $20,000 per month to
unaffiliated entities at varying monthly rentals.  Mr. Kast sold his
interest in the facility to an unaffiliated entity in November of 2000.

     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.

                                  -41-
<PAGE>
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.  We redeemed
100 shares of Series B Preferred Stock from Mr. Kast in April of 2000.

     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 4,235,648 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 automatically convert into shares of Common
Stock on a one-for-4.83 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.

                                  -42-
<PAGE>
ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.

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

     Consolidated Financial Statements of Global Water Technologies, Inc.:

     Report of Independent Certified Public Accountants

     Consolidated Statements of Operations--Years ended December 31, 2000,
     1999 and 1998

     Consolidated Balance Sheets--December 31, 2000, 1999 and 1998

     Consolidated Statements of Stockholders' Equity--Years ended December 31,
     2000, 1999 and 1998

     Consolidated Statements of Cash Flows--Years ended December 31, 2000,
     1999 and 1998

     Notes to Consolidated Financial Statements--December 31, 2000, 1999
     and 1998

     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)

                                  -43-
<PAGE>
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)

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
________________________
(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.

                                  -44-
<PAGE>
(9)  Filed as an Exhibit of the same number to the Registrant's Current
     Report on Form 8-K, dated May 30, 2000, and incorporated herein by
     reference.


(b)  During the quarter ended December 31, 2000, 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 14(a)(3) of this Report.

(d)  Required financial statements are attached hereto and are listed in
     Item 14 of this Report.








                                  -45-
<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:  April 17, 2001         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         April 17, 2001
------------------------ Officer, (Principal Executive
George A. Kast           Officer) and Chairman of the Board


/s/ Martin E. Hout       Chief Financial Officer            April 17, 2001
------------------------ (Principal Financial Officer)
Martin E. Hout


/s/ Gary L. Brown        Secretary and Director             April 17, 2001
------------------------
Gary L. Brown


/s/ Michael A. Kast      Director                           April 17, 2001
------------------------
Michael A. Kast


/s/ Robert C. Koch       Director                           April 17, 2001
------------------------
Robert C. Koch



/s/ G. Edward Powell     Director                           April 17, 2001
------------------------
G. Edward Powell

                                  -46-
<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, 2000, 1999 and 1998. . . . . . . . . . . . . . . . .F-3

Consolidated Balance Sheets As of December 31, 2000, 1999 and 1998 . .F-4

Consolidated Statements of Cash Flows For Years Ended
     December 31, 2000, 1999 and 1998. . . . . . . . . . . . . . . . .F-5

Consolidated Statements of Stockholders' Equity For the Years ended
     December 31, 2000, 1999 and 1998. . . . . . . . . . . . . . . . .F-6

Notes to Consolidated Financial Statements December 31, 2000, 1999
     and 1998. . . . . . . . . . . . . . . . . . . . . . . . . . . . .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, 2000, 1999 and 1998, and the related
consolidated statements of operations, cash flows, and stockholders' equity
for each of the years ended December 31, 2000, 1999 and 1998.  These
financial statements are the responsibility of management.  Our
responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States.  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, 2000, 1999 and 1998 and the
results of its operations, cash flows, and changes in stockholders' equity
for each of the years ended December 31, 2000, 1999 and 1998, in conformity
with accounting principles generally accepted in the United States.

Denver, Colorado
April 11, 2001

                                   COMISKEY & COMPANY
                                   PROFESSIONAL CORPORATION



                                   F-2
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
          For the Years Ended December 31, 2000, 1999 and 1998


<TABLE>
<CAPTION>
                                                     2000             1999              1998
                                                     ----             ----              ----
<S>                                              <C>              <C>               <C>
Net revenues:
  United States                                  $ 40,729,990     $ 60,134,087      $ 29,486,771
  International                                     9,498,094        7,818,880         5,247,569
                                                 ------------     ------------      ------------
    Total revenues                                 50,228,084       67,952,967        34,734,340
                                                 ------------     ------------      ------------

Costs and expenses:
  Cost of sales                                    49,065,300       60,851,840        27,816,137
  Selling, general and administrative               4,926,055        4,938,947         4,762,328
  Research and development                             24,320           30,618           232,657
                                                 ------------     ------------      ------------
    Total costs and expenses                       54,015,675       65,821,405        32,811,122
                                                 ------------     ------------      ------------

Operating income (loss)                            (3,787,591)       2,131,562         1,923,218

Other income (expense):
  Interest - (expense)                               (516,970)        (395,813)         (167,420)
  Interest - income                                   526,555          129,265             9,900
  Other, net                                           47,969            5,883             1,180
                                                 ------------     ------------      ------------

Income (loss) before income taxes                  (3,730,037)       1,870,897         1,766,878

Income taxes (benefit)                             (1,578,974)         566,115           777,569
                                                 ------------     ------------      ------------

Net income (loss) before preferred dividend        (2,151,063)       1,304,782           989,309

Preferred stock dividend                               14,000           20,000             7,640
                                                 ------------     ------------      ------------
Net income (loss) (including the effect of a
  change in accounting principle for 1998)         (2,165,063)       1,284,782           981,669
Cumulative effect of a change in an accounting
  principle--net of $593,119 of related tax effect          -                -           754,296
                                                 ------------     ------------      ------------

Net income (loss) available for common
  shareholders                                   $ (2,165,063)    $  1,284,782      $    227,373
                                                 ============     ============      ============

Income (loss) per share:
  Basic weighted average shares outstanding         5,823,632        5,569,252         4,904,185
  Basic income per share--prior to accounting
   change                                        $     (0.372)    $      0.231      $      0.200
  Cumulative effect of accounting change                    -                -            (0.154)
                                                 ------------     ------------      ------------
  Basic income (loss) per share available for
   common                                        $     (0.372)    $      0.231      $      0.046
                                                 ============     ============      ============

  Fully diluted weighted average shares
   outstanding                                      5,823,632        5,575,973         4,904,185
  Fully diluted income (loss)/share prior to
   acct. change                                  $     (0.372)    $      0.230      $      0.200
  Cumulative effect of accounting change                    -                -            (0.154)
                                                 ------------     ------------      ------------
  Fully diluted income (loss) per share          $     (0.372)    $      0.230      $      0.046
                                                 ============     ============      ============
</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, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                     2000             1999              1998
                                                     ----             ----              ----
<S>                                              <C>              <C>               <C>
ASSETS
------
Current assets:
  Cash and cash equivalents                      $    565,267     $    707,264      $  1,751,299
  Trade accounts receivable, net of allowance
    for doubtful accounts of $169,159, $136,029
    and $134,169, respectively                     11,990,459       11,210,659         8,205,563
  Other receivables                                 1,709,717          358,861           111,365
  Costs and estimated earnings in excess of
    billings on uncompleted contracts              16,455,824       10,968,967         3,623,538
  Income taxes receivable                             559,120                -            60,960
  Inventories                                       1,325,002          888,102           318,458
  Deferred income taxes                                58,647                -                 -
  Prepaid expenses                                    244,661          279,459           164,304
                                                 ------------     ------------      ------------
        Total current assets                       32,908,697       24,413,312        14,235,487
                                                 ------------     ------------      ------------

Property and equipment, net                         1,320,974          768,821           625,309
Deferred income taxes                                 558,137                -                 -
Intangibles, net of amortization                       19,238           30,242            41,246
Deposits                                               82,956           51,555           106,020
Long term lease receivable                            871,862                -                 -
                                                 ------------     ------------      ------------
                                                 $ 35,761,864     $ 25,263,930      $ 15,008,062
                                                 ============     ============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
  Current maturities of long-term debt           $  4,484,367     $  1,935,394      $  1,036,159
  Accounts payable                                 22,173,378       13,718,901         7,366,472
  Accrued liabilities                               2,222,460        1,916,508         1,884,950
  Billings in excess of costs and estimated
    earnings on uncompleted contracts               2,588,751        1,304,863         1,686,168
  Income taxes payable                                122,750          586,793           213,611
  Deferred income taxes                                     -           10,517           106,632
                                                 ------------     ------------      ------------
        Total current liabilities                  31,591,706       19,472,976        12,293,992
                                                 ------------     ------------      ------------

Long-term debt                                        343,396        1,989,390         1,137,076
Deferred income taxes                                  62,148           55,368            78,005

Stockholders' equity:
  Preferred stock, no par value, 20,000,000
    shares authorized; 876,341, 1,000,000 and
    1,000,000 shares issued and outstanding
    respectively; stated at redemption value
    of $0.0001 for 1999 and 1998 only                       -              100               100
  Preferred stock, no par, 1,000 shares
    authorized; 150, 250 and 250 shares issued
    and outstanding as of December 31, 2000, 1999
    and 1998; stated at redemption value of $1,000    150,000          250,000           250,000
  Common stock, $0.0006 par value; 13,333,333
    shares authorized; 5,990,048, 5,139,238 and
    4,914,238 shares issued and outstanding,
    respectively                                        3,594            3,083             2,948
  Capital in excess of par value                    3,787,278        1,504,208           541,918
  Retained earnings (deficit)                        (176,258)       1,988,805           704,023
                                                 ------------     ------------      ------------
         Total stockholders' equity                 3,764,614        3,746,196         1,498,989
                                                 ------------     ------------      ------------
                                                 $ 35,761,864     $ 25,263,930      $ 15,008,062
                                                 ============     ============      ============
</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, 2000, 1999 and 1998


<TABLE>
<CAPTION>
                                                     2000             1999              1998
                                                     ----             ----              ----
<S>                                              <C>              <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss) available for common
    shareholders:                                $ (2,165,063)    $  1,284,782      $    227,373
  Adjustments to reconcile net income to net
    cash provided by (used in) operating
    activities:
      Depreciation                                    300,471          204,852           174,712
      Amortization                                     11,004           11,004            11,004
      (Gain) Loss on disposition of fixed assets            -           (1,392)           31,883
      Increase (decrease) in deferred income taxes:  (620,522)        (118,752)         (129,558)
      (Increase) decrease in working capital:
        Trade accounts receivable                    (779,800)      (3,005,096)       (4,267,918)
        Other receivables                          (1,350,856)        (295,262)          (47,502)
        Costs and estimated earnings in excess
          of billings on uncompleted contracts     (5,486,857)      (7,345,429)         (927,756)
        Income taxes receivable                      (559,120)          60,960           (25,965)
        Inventories                                  (436,900)        (569,644)           61,670
        Prepaid expenses                               34,798         (115,155)          (38,273)
        Deposits                                      (31,401)          54,465           (92,934)
        Accounts payable                            8,454,477        6,352,429         2,680,903
        Income taxes payable                         (464,043)         373,182           213,611
        Accrued liabilities                           305,952           31,558         1,246,129
        Billings in excess of costs and estimated
          earnings on uncompleted contracts         1,283,888         (381,305)        1,186,574
                                                 ------------     ------------      ------------
          Net cash provided by (used in)
            operating activities                   (1,503,972)      (3,458,803)          303,953
                                                 ------------     ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net change in certificate of deposit                      -                -           222,836
  Purchase of property and equipment                 (567,366)        (323,563)         (227,325)
  Proceeds from sales of assets                             -           20,000                 -
  Investment in long term lease receivable           (871,862)               -                 -
  Issuance of stockholder loan                                          47,766           (47,766)
                                                 ------------     ------------      ------------
      Net cash (used in) investing activities      (1,439,228)        (255,797)          (52,255)
                                                 ------------     ------------      ------------

CASH FLOW FROM FINANCING ACTIVITIES:
  Lines-of-credit draws                             4,682,935        9,481,000         3,954,476
  Lines-of-credit paydowns                         (3,906,947)      (7,494,000)       (3,156,476)
  Issuance of common stock                          2,283,481          962,425            19,302
  Issuance (redemption) of preferred stock           (100,000)               -           250,000
  Proceeds from issuance of debt                            -                -           496,378
  Repayment of debt                                  (158,266)        (278,860)         (182,966)
                                                 ------------     ------------      ------------
    Net cash provided by financing activities       2,801,203        2,670,565         1,380,714
                                                 ------------     ------------      ------------

NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                        (141,997)      (1,044,035)        1,632,412
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR          707,264        1,751,299           118,887
                                                 ------------     ------------      ------------
CASH AND CASH EQUIVALENTS, END OF YEAR           $    565,267     $    707,264      $  1,751,299
                                                 ============     ============      ============
</TABLE>

Supplemental cash flow disclosures-- Cash paid for interest was $516,970,
$395,183 and $167,420 for the years ended December 31, 2000, 1999 and 1998,
respectively.  Cash paid for income taxes was $64,316, $37,565 and $176,547
for the years ended December 31, 2000, 1999 and 1998, respectively.
Purchases of property using debt totaled $285,257 and $43,410 for the years
ended 2000 and 1999, respectively.

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, 2000, 1999 and 1998

<TABLE>
<CAPTION>

                  Preferred Stock     Preferred Stock                           Capital in   Retained
                      Series B          Series A & C          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, 1998     ---  $    ---  1,000,000   $    100   4,900,834     $ 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    ---       ---        ---        ---      13,404           8      19,294         ---       19,302

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

BALANCE,
DECEMBER 31, 1998   250  $250,000  1,000,000   $    100   4,914,238     $ 2,948  $  541,918  $  704,023   $1,498,989

Stock issued
 September 29,
 1999               ---       ---        ---        ---     225,000         135     962,290         ---      962,425

Net income available
 for common         ---       ---        ---        ---         ---         ---         ---   1,284,782    1,284,782
                   ----  --------  ---------   --------   ---------     -------  ----------  ----------   ----------

BALANCE,
DECEMBER 31, 1999   250  $250,000  1,000,000   $   100    5,139,238     $ 3,083  $1,504,208  $1,988,805   $3,746,196

Stock issued from
 exercise of C
 warrants various
 exercise dates     ---       ---      ---        ---       228,334         137   2,164,463         ---    2,164,600

Stock issued from
 exercise of placement
 agent options,
 March 1, 2000      ---       ---        ---        ---      22,500          14     107,986         ---      108,000

Stock issued from
 exercise of employee
 stock options,
 various exercise
 dates              ---       ---        ---        ---       2,157           1      10,880         ---       10,881

Stock issued from
 redemption of
 preferred series A,
 March 10, 2000     ---       ---   (123,659)       (12)    597,684         359        (347)        ---          ---

Redemption of
 preferred series
 A and issue of
 preferred series C,
 February 22, 2000  ---       ---        ---        (88)        ---         ---          88         ---          ---

Redemption of
 preferred series B,
 May 1, 2000       (100) (100,000)       ---        ---         ---         ---         ---         ---     (100,000)

Stock issued, fractional
 shares, various    ---       ---        ---        ---         135         ---         ---         ---          ---

Net (loss) available
 for common         ---       ---        ---        ---         ---         ---              (2,165,063)  (2,165,063)
                   ----  --------  ---------   --------   ---------     -------  ----------  ----------   ----------

BALANCE,
DECEMBER 31, 2000   150  $150,000    876,341   $    ---   5,990,048     $ 3,594  $3,787,278  $ (176,258)  $3,764,614
                   ====  ========  =========   ========   =========     =======  ==========  ==========   ==========
</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, 2000, 1999 and 1998


1.   SIGNIFICANT ACCOUNTING POLICIES

COMPANY HISTORY
---------------
Global Water Technologies, Inc. ("GWT",) through its wholly owned
subsidiary, Psychrometric Systems, Inc. ("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 97% 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. ("GWS",) another wholly owned GWT subsidiary, is in the business of
providing total cooling water management services to cooling tower customers.

BASIS OF PRESENTATION
---------------------
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.

                                   F-7
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 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 the
financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could materially increase or
decrease from those estimates if the completed unapproved change orders and
other contingent amounts are not fully realized.

INCOME PER SHARE
----------------
Basic income per share is computed on the basis of the weighted average
number of common shares outstanding for the respective periods.  Fully
diluted income per share is 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 50,313 warrants and
options that were considered dilutive securities.  As of December 31, 2000
and 1998, there were no existing dilutive common shares.

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, was recognized over a four-year
period for tax purposes.  The deferred income from the change in method was
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.

                                   F-8
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

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, 2000, 1999 and 1998, cash equivalents included $58,747, $254,175 and
$441,133, respectively, in amounts restricted to the payment of vendor
obligations on specific projects.

INVENTORY VALUATION
-------------------
Inventory is stated at the lower of cost (first-in, first-out method) or
market value which is approximated by average cost .  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
$260,593, $408,402 and $319,805 for the years ended December 31, 2000, 1999
and 1998, 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

                                   F-9
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

credit risk, the Company continually evaluates the credit worthiness of its
customers and, where appropriate, strives to obtain appropriate collateral,
including the filing of liens against projects.

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, 2000, the Company did not have a major customer
accounting for more than 10% of its revenues.  The Company had a major
customer accounting for 39.8% of revenues during 1999.  The Company had a
major customer accounting for 13.9% of its revenues for the year ended
December 31, 1998.  Additionally, the Company has five projects with one
customer included in its December 31, 2000, backlog which represents
approximately 26% of its total backlog.

RECLASSIFICATIONS
-----------------
Certain amounts as of or for the years ended December 31, 1999 and 1998
have been reclassified to conform with the December 31, 2000 presentation.

2.   PROPERTY AND EQUIPMENT

The following is a summary of property and equipment as of December 31,
2000, 1999 and 1998:

<TABLE>
<CAPTION>
                                                 2000          1999           1998
                                                 ----          ----           ----
   <S>                                    <C>           <C>            <C>
   Office furniture and equipment         $ 1,233,684   $   893,132    $   623,383
   Machinery and equipment                    382,834       224,120        192,646
   Vehicles                                   498,355       213,098        209,307
   Leasehold improvements                     107,711        39,610         29,729
                                          -----------   -----------    -----------
                                          $ 2,222,584   $ 1,369,960    $ 1,055,065
   Less accumulated depreciation              901,610       601,139        429,756
                                          -----------   -----------    -----------
   Property and equipment, net            $ 1,320,974   $   768,821    $   625,309
                                          ===========   ===========    ===========
</TABLE>

3.   STOCKHOLDERS' EQUITY

COMMON AND PREFERRED 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. On May 1, 2000,
the Company redeemed 100 of these shares for $100,000.

                                  F-10
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

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 4,235,649
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 4.83:1 upon a change in control of the Company.
The remaining 123,659 shares of Series A Preferred Stock converted into
597,684 on March 10, 2000.

On November 4, 1997, the Company increased the authorized shares of Common
Stock to 13,333,333 shares.  On December 15, 1997, the Company issued
10,417 shares of Common Stock relating to a non-compete agreement.  On
October 7, 1998, the Company issued 13,404 shares of Common Stock related
to an outstanding option.

On September 29, 1999, the Company concluded its Private Placement with the
issuance of 225,000 shares, a corresponding 225,000 Class C warrants,
22,500 underwriter warrants (Class C) and an option to acquire an
additional 22,500 shares and warrants.  Gross proceeds were $1,080,000
while net proceeds after fees, commissions and expenses were $962,425.

During the first half of 2000, the Company received $2,272,600 from the
exercise of 228,334 Class C warrants and 22,500 underwriter options.  The
remaining 52,084 Class C warrants were called on April 5, 2000.

On May 30, 2000, the Company announced a reverse split of its outstanding
Common Stock on the basis of 1 share for each 60 shares outstanding. The
reverse split became effective at the close of business on June 30, 2000.
Fractional shares were not issued; instead, fractional shares were rounded
up to the next whole share. The reverse split reduced the approximately
360,000,000 shares issued and outstanding to 5,990,048 shares, and reduced
the authorized Common Stock of the Company from 800,000,000 shares to
13,333,333 shares.  All share amounts have been restated to account for
this 1:60 reverse stock split.

WARRANTS AND OPTIONS
--------------------
There are 134,042 Class A warrants exercisable at $7.20 per share and
134,042 Class B warrants exercisable at $12.00 per share.  The warrants are
scheduled to expire on April 14, 2001.

                                  F-11
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

An investment banking house, which assisted in the Company's initial public
offering in 1992, holds 13,404 Class A warrants and 13,404 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 $7.20 per share and $12.00 per
share, respectively and are scheduled to expire on April 14, 2001.

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
500,000 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 82,813 options to employees on March 8,
1999 and 104,538 on February 9, 2000.

The Company granted the aforementioned stock options to employees at a
strike price of $4.80 per share when the Company's stock traded at $4.20
and $7.50 per share when the Company's stock traded at $6.60.  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.  Employees exercised 2,157
options during 2000.

<TABLE>
<CAPTION>
OPTION ACTIVITY                              2000          1999           1998
---------------                              ----          ----           ----
          <S>                             <C>           <C>            <C>
          Outstanding at January 1, 2000    77,005             -              -
          Granted                          112,538        82,813              -
          Forfeited                        (18,619)       (5,808)             -
          Exercised                         (2,157)            -              -
                                          --------      --------       --------
          Outstanding at December 31, 2000 168,767        77,005              -
                                          ========      ========       ========

          Vested at December 31, 2000       51,646
                                          ========
</TABLE>

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

                                  F-12
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

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 $9,276. These amounts have not been reflected in income since the
Company is accounting for stock based compensation in accordance with APB-25.

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

<TABLE>
<CAPTION>
                                                                2000           1999
                                                                ----           ----
        <S>                                                  <C>            <C>
        Pro-form net income (loss)                           $(2,170,415)   $1,197,555
        Pro-forma basic income per share                         $(0.372)       $0.215
        Pro-forma fully diluted income per share                 $(0.372)       $0.215

        Assumptions:
             Volatility                                               50%          75%
             Risk free rate of return                                6.0%         5.5%
             Forfeiture rate                                        10.0%        10.0%
</TABLE>

6.   BACKLOG

The following 2000 schedule summarizes changes in backlog on contracts
during the years ended December 31, 2000, 1999 and 1998.  Backlog
represents the amount of revenue the Company expects to realize from work
to be performed on uncompleted contracts.

<TABLE>
<CAPTION>
                                                 2000          1999          1998
                                                 ----          ----          ----
   <S>                                    <C>           <C>           <C>
   Backlog, beginning of year             $20,846,108   $27,155,058   $11,606,245
   Adjustment due to accounting change              -             -     1,036,272
   Contracts removed                       (3,402,196)            -    (3,885,000)
   New contracts during year               67,042,288    61,774,341    53,142,019
   Contract revenues earned during the
    year                                  (50,228,084)  (68,083,291)  (34,744,478)
                                          -----------   -----------   -----------
   Backlog, end of year                   $34,258,116   $20,846,108   $27,155,058
                                          ===========   ===========   ===========
</TABLE>

Included in the above 1998 backlog amounts are $1,507,778 recognized under
Letters of Intent.  All of these contracts were subsequently awarded
through purchase orders.  This is consistent with standard industry
practices for the Company's main business line.

                                  F-13
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

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.

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 $20,000 per month to
unaffiliated entities at varying monthly rentals. All of the subleases have
terms of twelve months or less.  In November of 2000, Mr. Kast sold his
interest in the building to an unaffiliated entity.

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 an annual 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 December of 2001.

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

                                  F-14
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

               2001                          $  741,220
               2002                             649,836
               2003                             642,456
               2004                             642,456
               2005                             642,456
               Thereafter                     2,569,824
                                             ----------

               In the aggregate              $5,888,248
                                             ==========

Rent expense net of sublease income totaled $558,096, $377,443 and $450,171
for the years ended December 31, 2000, 1999 and 1998, respectively.

8.   LONG- AND SHORT-TERM DEBT

The Company has a line of credit with Wells Fargo Bank totaling $2,800,000.
The line-of-credit is secured by a stockholder's personal certificates of
deposit of $807,914 and certain business assets.  The line of credit has a
tiered rate of 6.69% on the first $770,000 and 10.5% on the remaining
portion and matured on January 15, 2001.  The line of credit has been
renewed through April 30, 2001.

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, 2000, 1999 and 1998.  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, 2000.  The
international line of credit matures on April 15, 2001.  Management expects
this line of credit will be renewed at comparable terms.

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

               2001                          $4,484,367
               2002                             176,461
               2003                             121,201
               2004                              42,627
               2005                               3,107
                                             ----------
               Total                         $4,827,763
                                             ==========


The following is a summary of the long- and short-term debt as of December 31,
2000, 1999 and 1998:

                                  F-15
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                        2000             1999              1998
                                                        ----             ----              ----
<S>                                              <C>              <C>               <C>
Wells Fargo Bank, Lakewood, CO:
  --Line-of-credit--domestic                     $ 2,450,000      $ 1,725,000       $   750,000
  --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       1,855,988        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
  --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         224,609          319,614           423,310
First Interstate Bank--payable in monthly
  installments of $912, including interest at
  9.5%; secured by a vehicle                             ---              ---            23,505
Ford Motor--payable in various monthly installments
  of $459 to $893, including interest at 8.49% to
  10.81%, secured by eleven vehicles                 288,520           42,244               ---
GMAC-payable in monthly installments of $542,
  including interest at 9.96%; secured by a vehicle    8,646           32,330            73,997
                                                 -----------      -----------       -----------
                                                   4,827,763        3,924,784         2,173,235
  Less current maturities included in current
    liabilities                                    4,484,367        1,935,394         1,036,159
                                                 -----------      -----------       -----------
  Net long-term debt                             $   343,396      $ 1,989,390       $ 1,137,076
                                                 ===========      ===========       ===========
</TABLE>

9.   INCOME TAXES

The components of the net deferred tax liability at December 31, 2000, 1999
and 1998 are as follows:

                                  F-16
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                 2000          1999          1998
                                                 ----          ----          ----
   <S>                                    <C>           <C>           <C>

   Deferred tax liabilities:
     Deferred revenue under section 481   $        --   $        --   $   150,574
     Property and equipment                    47,147        61,685        68,006
     Other                                     15,000        15,000        10,000
                                          -----------   -----------   -----------
        Total deferred tax liabilities    $    62,147   $    76,685   $   228,580
                                          ===========   ===========   ===========

   Deferred tax assets:
     Non-current loss carryforward        $   558,137   $         -   $         -
     Accounts receivable allowance             58,647        10,800        43,943
                                          -----------   -----------   -----------
        Total deferred tax assets         $   616,784   $    10,800   $    43,943
                                          -----------   -----------   -----------
        Net deferred tax (assets)
          liabilities                     $  (554,637)  $    65,885   $   184,637
                                          ===========   ===========   ===========
</TABLE>
The provision for income taxes consisted of the following at December 31,
2000, 1999 and 1998:

<TABLE>
<CAPTION>
                                                 2000          1999          1998
                                                 ----          ----          ----
   <S>                                    <C>           <C>           <C>
   Income taxes currently payable         $         -   $   686,557   $   313,324
   Income taxes receivable/payable           (957,268)          ---
   Deferred income taxes                     (620,532)     (118,752)     (129,558)
   Increase (decrease) in other, net           (1,174)       (1,690)          684
   Tax effect of accounting change                 --            --       593,119
                                          -----------   -----------   -----------
     Income tax expense                   $(1,578,974)  $   566,115   $   777,569
                                          ===========   ===========   ===========
</TABLE>

The differences between the federal income tax rate of 34% and the
Company's effective tax rate of 42.3% were as follows:

<TABLE>
<CAPTION>
                                                 2000          1999          1998
                                                 ----          ----          ----
   <S>                                    <C>           <C>           <C>
   Taxes (benefit) at the U.S. statutory
     rate                                 $(1,268,213)  $   636,105   $   600,739
   State income taxes,
     net of federal income tax benefit       (114,137)       37,044        58,307
   Permanent M-1 differences                 (252,092)     (175,270)      (31,827)
   Non-deductible items                        33,447        39,411        10,780
   Adjustment in effective tax rate
     estimates for timing differences         (32,855)       34,025       129,076
   Other                                       54,876        (5,200)       10,494
                                          -----------   -----------   -----------
     Provision for income taxes           $(1,578,974)  $   566,115   $   777,569
                                          ===========   ===========   ===========
</TABLE>

                                  F-17
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

10.  COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Uncompleted contracts at December 31, 2000, 1999 and 1998, are summarized
as follows:

<TABLE>
<CAPTION>
                                                 2000          1999          1998
                                                 ----          ----          ----
   <S>                                    <C>           <C>           <C>
   Costs incurred to date                 $60,022,201   $53,062,731   $20,040,123
   Gross profit recognized to date          6,706,534     7,342,093     4,136,042
                                          -----------   -----------   -----------
   Total costs plus gross profit to date  $66,728,735   $60,404,824   $24,176,165
   Billings to date                        51,989,800    50,740,720    22,238,795
                                          -----------   -----------   -----------
                                          $14,738,935   $ 9,664,104   $ 1,937,370
                                          ===========   ===========   ===========
</TABLE>

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

<TABLE>
<CAPTION>
                                                 2000          1999          1998
                                                 ----          ----          ----
   <S>                                    <C>           <C>           <C>
   Costs and estimated earnings in excess
     of billings on uncompleted contracts $16,455,824   $10,968,967   $ 3,623,538
   Long term lease receivable                 871,862             -             -
   Billings in excess of costs and estimated
     earnings on uncompleted contracts      2,588,751     1,304,863     1,686,168
                                          -----------   -----------   -----------
                                          $14,738,935   $ 9,664,104   $ 1,937,370
                                          ===========   ===========   ===========
</TABLE>

11.  ACCRUED LIABILITIES

The accrued liabilities consist of the following as of December 31, 2000,
1999 and 1998:

<TABLE>
<CAPTION>
                                                 2000          1999          1998
                                                 ----          ----          ----
   <S>                                    <C>           <C>           <C>
   Payroll taxes payable                  $   608,952   $    78,876   $   101,940
   Accrued commissions payable                474,222       810,690       779,038
   Accrued salaries and vacations             438,354       272,174       395,938
   Sales tax payable                          281,210       524,129        95,489
   Accrued workers compensation                     -             -        98,297
   Other accrued liabilities                  419,722       230,639       414,248
                                          -----------   -----------   -----------
                                          $ 2,222,460   $ 1,916,508   $ 1,884,950
                                          ===========   ===========   ===========
</TABLE>

12.  LITIGATION AND CLAIMS

     Psychrometric Systems, Inc. is a defendant in a lawsuit filed by a
subcontractor in the Commonwealth Courts of Puerto Rico alleging breach of
contract emanating from a project PSI performed for the Puerto Rico
Electric Power Authority.  The suit seeks damages in the amount

                                  F-18
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

of $450,000.  PSI has denied the allegations of the plaintiff and has filed
a counterclaim against the plaintiff in the amount of $950,000 associated
with the cost of completion of the project after the plaintiff defaulted
and was terminated for cause under its contract with PSI.  PSI has also
filed suit against the subcontractors bonding company for the recovery of
its damages associated with the costs of completing the subcontractors work
on the project.  To date, no trial date has been set and discovery has not
yet occurred.  While PSI feels very strong in its position, there is no
definitive time frame for the completion of this litigation and no
assurances can be given on its outcome.

     PSI has also filed a lawsuit against Consorcio Azucarero Escorpion
S.A. de CV (hereinafter CAZE) alleging breach of contract in the
engineering and supply of cooling towers to CAZE.  To date, the complaint
has yet to be served and the parties are in settlement discussions.  PSI
seeks in excess of $4,000,000 from CAZE and to date has not allowed the
finished manufactured product to be exported to Mexico by CAZE.

PSI has various other contingent assets on its books resulting from claims
and commitments incident to its ordinary course of business.  Management
believes that these items will be favorably resolved and, based upon the
advice of counsel, will be sufficient such that these contingencies will
not have a materially adverse effect on the financial position of the Company.

13.  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, 2000, 1999 and 1998, the Company did not make any
contributions to the plan.

14.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of the Company's debt at December 31, 2000, 1999 and
1998, 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, 2000 and 1998, 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.

                                  F-19
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

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 was 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 contract was
closed in May and recorded against the underlying contract value.

15.  RELATED PARTY TRANSACTIONS

A stockholder has pledged two personal certificates of deposit in the
amount of $807,914 as security for the Company's line-of-credit.  For the
years ended December 31, 2000, 1999 and 1998, the Company authorized fees
of $137,567, $137,567, 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, 2000, 1999
and 1998, the Company incurred $14,856 for each year in rent expense for
this 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 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 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.

16.  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

                                  F-20
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

comparable office space in the area of our offices.  GWT subleases the
garden level of the building for approximately $20,000 per month to
unaffiliated entities at varying monthly rentals.

In November of 2000, Mr. Kast sold his ownership interest in the building
to an unaffiliated entity.

17.  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 $9,498,094, $7,818,880 and $5,247,569 for
the Fiscal years 2000, 1999 and 1998, respectively.  The following schedule
summarizes the segmentation of the international and domestic business segments.



                BUSINESS SEGMENT STATEMENTS OF OPERATIONS
          For the Years Ended December 31, 2000, 1999 and 1998



<TABLE>
<CAPTION>
                                               2000
                                               ----

                               DOMESTIC    INTERNATIONAL   OTHER        TOTAL
                               --------    -------------   -----        -----
<S>                            <C>           <C>          <C>          <C>
Revenues                       $40,729,990   $9,498,094   $        --  $50,228,084
Costs                           41,820,626    7,244,674     4,950,375   54,015,675
Segment profit (loss)           (1,090,636)   2,253,420    (4,950,375)  (3,787,591)
Assets                          22,404,421    9,996,030     3,361,413   35,761,864
</TABLE>

                                  F-21
<PAGE>
                     GLOBAL WATER TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    December 31, 2000, 1999 and 1998

<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                       $29,486,771   $5,247,569   $       --   $34,734,340
Costs                           23,247,579    4,568,558    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>




18.  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
                                                         ----
     Pro-forma amounts assuming retroactive
     application of accounting change:
          Net income (loss)                            $981,669

          Basic income per share                         $0.200
                                                         ======

          Fully diluted income per share                 $0.200
                                                        =======



                                  F-22