UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-QSB

(Mark One)

[X]          Quarterly Report pursuant to Section 13 or 15(d) of the  
             Securities Exchange Act of  1934

                       For the quarter ended June 30, 1998

                                       or

[ ]          Transition Report pursuant to Section 13 or 15(d) of the  
             Securities Exchange Act of  1934

                For the transition period from _______ to _______

                         Commission File number 0-27646

                          Gum Tech International, Inc.
         --------------------------------------------------------------
        (Exact name of small business issuer as specified in it charter)

              Utah                                        87-0482806
              ----                                        ----------
  (State or other jurisdiction                         (I.R.S. Employer
of incorporation or organization)                     Identification Number)


                             246 East Watkins Street
                                Phoenix, AZ 85004
                     --------------------------------------
                    (Address of principal executive offices)

                                 (602) 252-1617
                                 --------------
                           (Issuer's telephone number)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15 (d) of the  Exchange Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X No __

There  are  6,819,447  shares of the  registrant's  common  stock,  no par value
outstanding as of August 10, 1998.


<PAGE>




                          GUM TECH INTERNATIONAL, INC.
                                   FORM 10-QSB
                                      INDEX

Part I   Financial Information                                         Page

         Item 1.  Condensed Balance Sheet as of
                  June 30, 1998                                          1

                  Condensed Statements of Operations
                  for the three months ended June 30, 1998
                  and 1997                                               3

                  Condensed Statements of Operations
                  for the six months ended June 30, 1998
                  and 1997.                                              4

                  Condensed Statements of Cash Flows
                  for the six months ended June 30, 1998
                  and 1997                                               5

                  Notes to Condensed Financial Statements                6


         Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations          7

Part II  Other Information and Signatures                               12


<PAGE>


                          GUM TECH INTERNATIONAL, INC.
                             CONDENSED BALANCE SHEET
                                  June 30, 1998
                                   (Unaudited)

                                     ASSETS

Current Assets:
   Cash and cash equivalents                                        $ 2,641,651
   Restricted cash                                                       58,242
   Accounts receivable, net of allowance for
    doubtful accounts of $118                                           967,902
   Inventories                                                        1,230,385
   Prepaid expenses and other                                           140,339
                                                                    -----------

                Total Current Assets                                  5,038,519
                                                                    -----------

Property and Equipment, at cost:
   Machinery and production equipment                                 3,677,453
   Office furniture and equipment                                       166,595
   Leasehold improvements                                               232,901
                                                                    -----------

   Total Property and Equipment                                       4,076,949

   Less accumulated depreciation                                     (1,128,817)
                                                                    -----------

                Net Property and Equipment                            2,948,132
                                                                    -----------
Other Assets:
   Intangible assets, net of accumulated
    amortization of $98,648                                             172,733
   Deposits and other                                                   205,360
                                                                    -----------

                Total Other Assets                                      378,093
                                                                    -----------

                Total Assets                                        $ 8,364,744
                                                                    ===========
                                                                  

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

                                        1


<PAGE>



                          GUM TECH INTERNATIONAL, INC.
                             CONDENSED BALANCE SHEET
                                  June 30, 1998
                                   (Continued)
                                   (Unaudited)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Accounts payable                                                $    475,976
   Accrued interest                                                      58,889
   Customer deposits                                                     47,515
   Current portion of long-term debt                                    363,261
                                                                   ------------

                Total Current Liabilities                               945,641
                                                                   ------------

Long Term Debt, net of current portion above:
   Financial institutions and other                                   3,534,031
   Obligations under capital leases                                      28,986
   Less current portion above                                          (363,261)
                                                                   ------------

                Total Long Term Debt                                  3,199,756
                                                                   ------------

Commitments and Contingencies                                              --
                                                                   ------------

Stockholders' Equity:
   Preferred stock:  no par value, 1,000,000 shares
    authorized, none issued or outstanding                                 --
   Common stock: no par value, 10,000,000 share
    authorized, 6,669,960 shares issued and outstanding              13,971,547
   Additional paid in capital                                         2,144,540
   Accumulated deficit                                              (11,896,740)
                                                                   ------------

                Total Stockholders' Equity                            4,219,347
                                                                   ------------

                Total Liabilities and Stockholders' Equity         $  8,364,744
                                                                   ============

                  The accompanying ntoes are an integral part
                    of these condensed financial statements.


                                        2









<PAGE>
<TABLE>
<CAPTION>

                                     GUM TECH INTERNATIONAL, INC.
                                  CONDENSED STATEMENTS OF OPERATIONS
                                            (Unaudited)
 

                                                                    Three months ended June 30,
                                                                ------------------------------------
                                                                   1998                     1997
                                                                ------------------------------------

<S>                                                             <C>                      <C>        
Net sales                                                       $ 1,213,086              $   584,077

Cost of sales                                                     1,025,272                  961,896
                                                                -----------              -----------

             Gross Profit                                           187,814                 (377,819)

Operating expenses                                                  720,403                  757,788
Research and development                                             27,401                   21,247
                                                                -----------              -----------

             Income  (Loss) From Operations                        (559,990)              (1,156,854)
                                                                -----------              -----------

Other Income (Expense):
   Interest and other income                                         32,320                   50,481
   Interest expense                                                (137,698)                (120,507)
                                                                -----------              -----------

             Total Other Income (Expense)                          (105,378)                 (70,026)
                                                                -----------              -----------

Income (Loss) Before Provision For Income Taxes                    (665,368)              (1,226,880)

Provision (benefit) for income taxes                                    150                     --
                                                                -----------              -----------

Net Income (Loss)                                               $  (665,518)             $(1,226,880)
                                                                ===========              ===========

Net Income (Loss) Per Share of Common Stock:
  Basic:
     Weighted Average Number of Common Shares Outstanding         6,441,724                4,948,740
                                                                ===========              ===========
      Net Income (Loss) Per Share of Common Stock               $     (0.10)             $     (0.25)
                                                                ===========              ===========

  Diluted:
     Weighted Average Number of Common Shares Outstanding         6,441,724                4,948,740
                                                                ===========              ===========
      Net Income (Loss) Per Share of Common Stock               $     (0.10)             $     (0.25)
                                                                ===========              ===========




        These accompanying notes are an integral part of these condensed financial statements.

                                                 3





</TABLE>
<PAGE>

                          GUM TECH INTERNATIONAL, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                      Six months ended June 30,
                                                     ---------------------------
                                                         1998           1997
                                                     ---------------------------

Net sales                                            $ 2,317,517    $ 1,307,688

Cost of sales                                          1,815,100      2,128,349
                                                     -----------    -----------

      Gross Profit                                       502,417       (820,661)

Operating expenses                                     3,989,672      1,385,181
Research and development                                 141,872         71,217
                                                     -----------    -----------
      Income (Loss) From Operations                   (3,629,127)    (2,277,059)
                                                     -----------    -----------
Other Income (Expense):
   Interest and other income                              75,128         81,703
   Interest expense                                     (261,624)      (859,950)
                                                     -----------    -----------

      Total Other Income (Expense)                      (186,496)      (778,247)
                                                     -----------    -----------

Income (Loss) Before Provision For Income Taxes       (3,815,623)    (3,055,306)

Provision (benefit) for income taxes                         150           --
                                                     -----------    -----------

Net Income (Loss)                                    $(3,815,773)   $(3,055,306)
                                                     ===========    ===========

Net Income (Loss) Per Share of Common Stock:
  Basic:
    Weighted Average Number of
      Common Shares Outstanding                        6,151,259      4,948,740
                                                     ===========    ===========
    Net Income (Loss) Per Share of Common Stock      $     (0.62)   $     (0.62)
                                                     ===========    ===========
  Diluted:
    Weighted Average Number of
      Common Shares Outstanding                        6,151,259      4,948,740
                                                     ===========    ===========
    Net Income (Loss) Per Share
      of Common Stock                                $     (0.62)   $     (0.62)
                                                     ===========    ===========




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


                                        4




<PAGE>
<TABLE>
<CAPTION>

                                               GUM TECH INTERNATIONAL, INC.
                                            CONDENSED STATEMENTS OF CASH FLOWS
                                                        (Unaudited)

                                                                                        Six months ended June 30,
                                                                                      ------------------------------
                                                                                          1998              1997
                                                                                      ------------------------------
Cash Flows From Operating Activities:
<S>                                                                                   <C>                <C>         
      Net income (loss)                                                               $(3,815,772)       $(3,055,306)
      Adjustments to reconcile net income (loss
         to net cash (used) by operating activities:
                  Depreciation                                                            126,063            285,984
                  Amortization                                                             50,938             21,299
                  Compensation from forgiveness of notes receivable                       114,012               --
                  Compensation from extension of stock options                          1,478,750               --
                  Interest expense from beneficial conversion
                   feature of notes payable                                                  --              665,790
                  Accrued interest on notes receivable                                     60,164            (44,697)
                  Changes in assets and liabilities:
                  Decrease in accounts receivable                                         114,332            324,050
                  Decrease in employee receivable                                          61,054               --
                  Decrease in income tax receivable                                          --              234,440
                  (Increase) decrease in inventories                                     (197,003)           445,165
                  (Increase) in prepaid expenses and other                                (24,134)           (78,525)
                  (Increase) decrease in deposits and other                               (59,489)           158,715
                  Increase (decrease) in accounts payable and accrued expenses           (265,593)           102,701
                  Increase (decrease) in customer deposits                                 32,515            (55,330)
                                                                                      -----------        -----------

                  Net Cash (Used) By Operating Activities                              (2,324,163)          (995,714)
                                                                                      -----------        -----------

Cash Flows From Investing Activities:
                  Capital expenditures                                                   (198,825)          (147,585)
                  Receipt of principal on notes receivable                                250,000               --
                  Increase in notes receivable                                               --             (164,130)
                                                                                      -----------        -----------

                  Net Cash Provided (Used) By Investing Activities                         51,175           (311,715)
                                                                                      -----------        -----------

Cash Flows From Financing Activities:
                  Proceeds from borrowing                                                    --            2,530,000
                  Principal payments on notes payable                                    (165,938)          (109,207)
                  Issuance of common stock upon exercise of options and warrants        1,484,397               --
                  Debt issuance costs incurred                                            (11,733)          (259,648)
                                                                                      -----------        -----------

                  Net Cash Provided By Financing Activities                             1,306,726          2,161,145
                                                                                      -----------        -----------

                  Net Increase (Decrease) in Cash and Cash Equivalents                   (966,262)           853,716
                  Cash and Cash Equivalents at Beginning of Period                      3,607,913          1,116,751
                                                                                      -----------        -----------

                  Cash and Cash Equivalents at End of Period                          $ 2,641,651        $ 1,970,467
                                                                                      ===========        ===========

Supplemental Disclosure of Cash Flow Information:
                  Cash paid during the period for:
                       Interest                                                       $   221,944        $   103,477
                       Income taxes                                                          --                 --

Supplemental Disclosure of Non Cash Investing and Financing Activities:
                  Conversion of notes payable into common stock                       $   399,000        $      --


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


                                                           5

</TABLE>

<PAGE>

                          GUM TECH INTERNATIONAL, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)


1.   The  accompanying  financial  information  of the  Company is  prepared  in
     accordance with the rules prescribed for filing condensed interim financial
     statements and,  accordingly,  does not include all disclosures that may be
     necessary for complete  financial  statements  prepared in accordance  with
     generally accepted  accounting  principles.  The disclosures  presented are
     sufficient,  in  management's  opinion,  to make  the  interim  information
     presented not misleading.  All adjustments,  consisting of normal recurring
     adjustments,  which are necessary so as to make the interim information not
     misleading,  have been made. Results of operations for the six months ended
     June 30, 1998 are not necessarily  indicative of results of operations that
     may be expected for the year ending  December 31, 1998.  It is  recommended
     that  this  financial  information  be read  with  the  complete  financial
     statements  included in the Company's  Annual Report on Form 10-KSB for the
     year ended  December  31, 1997  previously  filed with the  Securities  and
     Exchange Commission.

2.   As of  December  31,  1997,  the Company  adopted  Statement  of  Financial
     Accounting  Standards (SFAS) No. 128, "Earnings Per Share", which specifies
     the method of  computation,  presentation  and  disclosure  of earnings per
     share.  SFAS No. 128  requires the  presentation  of two earnings per share
     amounts,  basic and diluted.  Basic earnings per share is calculated  using
     the average number of common shares outstanding. Diluted earnings per share
     is computed on the basis of the average number of common shares outstanding
     plus the dilutive  effect of outstanding  stock options using the "treasury
     stock" method.  The basic and diluted earnings per share are the same since
     the  Company  had a net loss in 1998 and  1997 and the  inclusion  of stock
     options and other incremental  shares would be antidilutive.  Consequently,
     options,  warrants and other incremental  shares to purchase  1,533,680 and
     3,055,500  shares of common stock at June 30, 1998 and 1997,  were excluded
     from the computation of diluted earnings per share.

                                        6



<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

     The  Company  was  organized  in 1991 to  develop,  market  and  distribute
specialty chewing gum products. The Company's first chewing gum product included
a natural caffeine substance marketed to runners and other exercise  enthusiasts
as a source of energy and  carbohydrates.  In 1994 and 1995,  the Company raised
funds  through  debt and equity  financings  which were used to  establish a new
management team, develop additional chewing gum products,  build inventories and
purchase   manufacturing   equipment  for  the  Company's   28,000  square  foot
manufacturing  facility,  which commenced operations in late March, 1996. All of
the Company's chewing gum products are researched,  developed,  manufactured and
packaged at the  facility.  In April 1998,  the Company  relocated its corporate
offices to the manufacturing facility.

     Gum Tech  International,  Inc. develops and manufactures  specialty chewing
gum  products  for  branded  and private  label  customers,  as well as products
marketed under the Gum Tech brand. The products contain vitamins, herbals and/or
active drugs ingredients.  Gum Tech currently targets four market segments: oral
care, smoking cessation,  dietary supplement,  and over-the-counter  (OTC) drug.
The  Company's  current  strategy  is to offer its  research  and the use of its
formulations in exchange for co-manufacturing  agreements with major branded and
private label customers who possess the capital resources to promote  functional
chewing gum on a large scale.  The Company  currently  employs  approximately 40
people, but also utilizes  additional  contract workers to meet regular and peak
production requirements.




                                        7


<PAGE>





Results of Operations for the Three Months Ended June 30, 1998 Compared to the
Three Months Ended June 30, 1997

     The following table sets forth certain Statement of Operations  information
expressed  both in  dollars  and as a  percentage  of net sales for the  periods
indicated:

<TABLE>
<CAPTION>

                                                                   Three Months Ended June 30,
                                                                   ---------------------------
                                                             1998                              1997
                                                             ----                              ----
<S>                                            <C>                  <C>         <C>                   <C> 
Net sales                                      $ 1,213,086          100%        $   584,077           100%
Cost of sales                                    1,025,272           85             961,896           165
                                               -----------          ---         -----------           ---

Gross profit                                       187,814           15            (377,819)          (65)
Operating expenses                                 720,403           59             757,788           130
Research and development                            27,401            2              21,247             3
                                               -----------          ---         -----------           ---

Income (Loss) from operations                     (559,990)         (46)         (1,156,854)         (198)
Interest and other income                           32,320            2              50,481             9
Interest expense                                   137,698           11             120,507            21
Provision (benefit) for income taxes                   150           --                --              --
                                               -----------          ---         -----------           ---
                                           
Net income (loss)                              $  (665,518)         (55)%       $(1,226,880)         (210)%

</TABLE>

     Net  Sales.  Net  sales  for the  three  months  ended  June 30,  1998 were
$1,213,086,  an  increase  of  $629,009  or 107%  from the same  period in 1997.
Contract manufacturing sales increased to more than 90% of the total compared to
less than 20 % in 1997,  which reflects the Company's change in strategic focus.
Significant  deliveries during the period were diet and energy gums to Herbalife
and initial  deliveries of Aspergum (an analgesic gum)and Chooz (an antacid gum)
to Schering-Plough.

     Cost of Sales.  Cost of sales  increased to $1,025,272 for the three months
ended June 30, 1998 or $63,376  above the prior year  period.  The cost of sales
for the three months ended June 30, 1997 includes $308,140 associated with sales
under the Company's Barter Agreements for which  corresponding  revenues are not
recorded.  The  cost  of  sales  for  the  second  quarter  of  1998  represents
approximately  85% of Net  Sales.  The costs  for this  period  were  negatively
impacted by start-up and production  scale-up costs  associated with the initial
manufacturing of new products.

     Gross  Profit.  Gross  profit for the  quarter  increased  by  $565,633  to
$188,814 for 1998 compared with the same period in 1997.

     Operating  Expenses.  Operating  expenses  decreased  to  $720,403  for the
quarter   compared  to  $757,788  the  prior  year.   Decreases  in  advertising
($124,000),  other marketing  expenses  ($90,000) and travel expenses  ($70,000)
reflect the Company's  decreased emphasis on direct marketing of its own branded
products. These reductions were offset in part by increases in Contract Services
($139,000)  and other  outside  services.  Contract  Services  increased  due to
initial testing of raw materials for the initial production of OTC gum products.

                                        8

<PAGE>


Depreciation expense decreased $75,000 due to the refinancing/restructuring of a
capital  lease debt  obligation  into a term loan  facility,  which  allowed for
depreciating the equipment over its estimated useful life instead of the term of
the  lease.  The amount of  operating  expenses  allocated  to Cost of Goods was
$225,000 in 1998 versus $387,497 in 1997.

     Interest  Expense.  Interest  expense  for the  second  quarter of 1998 was
$137,698  , an  increase  of  $17,191  from  1997.  The  increase  is due to the
accelerated  amortization of debt issuance costs  associated with the conversion
of approximately  $399,000 of the Company's  Convertible  Subordinated Debt into
common stock.

     Net Income (Loss). Net loss improved to $665,518 for the three months ended
June 30, 1998, which was a reduction of $561,362 from the prior year's loss.


Results of Operations for the Six Months Ended June 30, 1998 Compared to the Six
Months Ended June 30, 1997.

     The following table sets forth certain Statement of Operations  information
expressed  both in  dollars  and as a  percentage  of net sales for the  periods
indicated:
<TABLE>
<CAPTION>

                                                                Six Months Ended June 30,
                                                                -------------------------
                                                           1998                            1997
                                                           ----                            ----
<S>                                          <C>                  <C>         <C>             <C> 
Net sales                                    $ 2,317,517          100%        $ 1,307,688          100%
Cost of sales                                  1,815,100           78           2,128,349          163
                                             -----------     --------         -----------     --------
Gross profit                                     502,417           22            (820,661)         (63)
Operating expenses                             3,989,672          173           1,385,181          106
Research and development                         141,872            6              71,217            5
                                             -----------     --------         -----------     --------
Income (Loss) from operations                 (3,629,127)        (157)         (2,277,059)        (174)
Interest and other income                         75,128            3              81,703            6
Interest expense                                 261,624           11             859,950           66
Provision (benefit) for income taxes                 150         --                  --             --
                                             -----------     --------         -----------     --------
Net income (loss)                            $(3,815,773)        (165)%       $(3,055,306)       (234)%
</TABLE>

     Net Sales. Net sales for the six months ended June 30,1998 were $2,317,517,
an increase of $1,009,829,  or 77%, above the year earlier period. Major product
deliveries during the six months of 1998 were Cigarest's  smoking cessation gum,
Herbalife's diet and energy gums and Schering-Plough's Aspergum and Chooz.

     Cost of Sales. Cost of Sales for the six month periods  decreased  $313,249
to $1,815,100  from the $2,128,349 in 1997. The cost of sales for the six months
ended June 30, 1997 include  costs of  approximately  $617,143  associated  with
sales under the Company's Barter Agreements for which corresponding revenues are
not reflected.

                                        9

<PAGE>


     Gross  Profit.  Gross  Profit  for the six months  ended June 30,  1998 was
$502,417  or 22% of Net Sales.  This  represents  an  increase of more than $1.3
million from the year earlier  period,  or $706,000 after adjusting for the cost
of the Barter Credits in 1997.

     Operating  Expenses.  Operating  expenses for the six months ended June 30,
1998 were  $3,989,672  compared  to  $1,385,181  for the same period  1997.  The
increase in expenses  is  attributable  to an  extension  of stock  options to a
former officer of the Company ($1,478,750) and severance  compensation  expenses
($618,230).  The remaining  increase is largely  attributable to fees associated
with the testing of raw materials for the Company's full scale production of OTC
gum products and higher legal fees.

     Research and Development.  Research and Development  expenses  increased by
$70,655 to  $141,872  for the six months  ended June 30,  1998  versus the prior
year. The increase reflects costs associated with several new products including
Aspergum, Chooz and various dental gum products.

     Interest  Expense.  Interest  expense was $261,624 for the six months ended
June 30, 1998, a decrease of $598,326  from the year  earlier  period.  Interest
expense in the 1997 period was impacted by a non-cash charge of $665,790 related
to a  beneficial  conversion  feature  received by  investors  in the  Company's
convertible debentures issued in March, 1997.

     Net  Income  (Loss).  Net loss for the six months  ended June 30,  1998 was
$3,815,773 compared to a net loss of $3,055,306 for the same period in 1997.

Liquidity and Capital Resources

     As of June 30,  1998,  the  Company's  working  capital  was $4.09  million
compared to $5.09  million at December 31, 1997.  For the six month period ended
June 30,  1998,  the Company  experienced  a decrease in cash used by  operating
activities of $2.3 million primarily as a result of the net loss incurred.

     Investing activities provided $51,175 of cash for the six months ended June
30, 1998  compared  to  $311,715  of cash used in the same  period of 1997.  The
amount for 1998  reflects  the  repayment of two  outstanding  notes from former
officers  of  the  Company  which  offset  the  cost  of  acquiring   additional
manufacturing  equipment  in the  period.  In  addition  to the  acquisition  of
additional  manufacturing  equipment in 1997,  investing activities in 1997 also
reflect a note receivable from a former officer.

     Financing  activities  provided  $1.31  million  in cash for the six months
ended June 30, 1998 compared to $2.16  million for the same period in 1997.  The
1998 amount reflects cash received form the exercise of common stock options and
warrants,  while the 1997  reflects  the issuance of the  Company's  convertible
notes in March 1997.

                                       10

<PAGE>




Outlook

     The company recently  announced  agreements to manufacture  dental gums for
Breath Asure, Inc. and Ranir/DCP Corp.  Initial sales under these agreements are
anticipated  in  the  third  quarter  of  1998.  In  order  to  meet  production
requirements  under these agreements and other anticipated sales, the Company is
currently  evaluating leasing additional  manufacturing space in the vicinity of
its existing facility.

     The  Company's  future  results of  operations  and other  forward  looking
statements contained in this section, in particular the statement(s)  concerning
plant  efficiencies and capacities,  capital spending,  research and development
and other expenses involve a number of risks and  uncertainties.  In addition to
the factors  discussed  above,  among the other  factors that could cause actual
results to differ  materially  are the  following:  business  conditions and the
general economy;  competitive factors, such as rival gum manufacturers'  pricing
and  marketing  efforts;   availability  of  third-party  material  products  at
reasonable prices; unused barter credits, if any; risk of nonpayment of accounts
receivable;  risks of  inventory  obsolescence  due to shifts in market  demand;
timing of product  introductions;  and litigation  involving product liabilities
and consumer issues.






                                       11


<PAGE>

Part II. Other Information

Item 1.   Legal Proceedings
          -----------------

     On October 16, 1996, a lawsuit was filed  against the Company in the United
States District Court for the Central  District of California,  CV-95-9784.  The
action is entitled GCN Products, Inc. vs. Roy Kelly, et al. The complaint, as it
relates to the Company, principally alleges that the Company engaged in unlawful
rebates,  appropriations and overcharges,  commercial bribery,  fraud and unjust
enrichment.  Plaintiff  seeks  compensatory  and punitive  damages.  The Company
denies all allegations and intends to vigorously defend the suit.

     On August 27,  1997, a lawsuit was filed by Paul R.  Janssens-Lens  against
Gum  Tech  International,  Inc.,  in the  case  of  Janssens-Lens  v.  Gum  Tech
International,  Inc.,  Kensington  Securities,  Inc.,  Kirtis Wyatt and Jane Doe
Wyatt in the Superior Court of Arizona, in and for the County of Maricopa,  case
number CV97-15896. The Jansenns-Lens lawsuit alleges both breach of contract and
tort actions,  including  intentional  interference  with  prospective  economic
advantage,  misrepresentation,  securities  fraud and  consumer  fraud and seeks
compensatory  damages in an amount of no less than $1,680,000,  together with an
award of punitive  damages in an amount to be determined  at trial.  The lawsuit
settled  in the  early  stages  between  plaintiff  Paul  R.  Janssens-Lens  and
defendants  Kensington  Securities,  Inc. and Kirtis Wyatt.  The Company did not
participate in this settlement agreement. The plaintiff is now in the process of
determining  whether he believes he still has a viable  cause of action  against
the Company.  In the event the plaintiff  elects to proceed against the Company,
the Company intends to vigorously defend the lawsuit. The Company believes it is
insured for its costs in this  matter.

     On March 26,  1998,  Roy Kaplan filed a charge of  discrimination  with the
California  Department of Fair  Employment and Housing and the Equal  Employment
Opportunity  Commission  alleging  discrimination  based  on age  and  religion.
Specifically,  he alleges that he was terminated  from his position as Executive
Vice  President  of Sales  because of his age (63) and  religion  (Jewish).  The
Company denies Mr. Kaplan's  allegations and anticipates  that the resolution of
this matter will not have a material impact on the Company.

Item 2.  Changes in Securities
         ---------------------

               None

Item 3.  Defaults Upon Senior Securities
         -------------------------------

               None

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

     At the 1998 Annual  Meeting of  Stockholders,  held on July 17,  1998,  the
Stockholders approved the following items:

                                       12

<PAGE>


(1)  Election of five  directors to serve for the following  year or until their
     successors are elected.


             Name                     For                Abstain
             ----                     ---                -------

         Bruce Jorgenson            5,651,753            55,383
         Gary Kehoe                 5,652,353            54,783
         William D. Boone           5,652,353            54,783
         W.    Brown Russell        5,652,353            54,783
         William A. Yuan            5,651,953            55,183


(2)  Proposal to approve an amendment to the  Articles of  Incorporation  of the
     Company  increasing the number of authorized shares of the Company's Common
     Stock from 10 million shares to 20 million shares.

                           For               5,343,040
                           Against             317,861
                           Abstain              46,235
                                             ---------
                              Total          5,707,136

Item 5.  Other
         -----

                  None

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

                  A.  Exhibits
                           None

                  B.  Reports on Form 8-K
                           None



                                       13
<PAGE>

                                   SIGNATURES


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


Gum Tech International, Inc.


/s/  Gary S. Kehoe
----------------------
Gary S. Kehoe
President and
Chief Operating Officer



/s/ William J. Hemelt
----------------------
William J. Hemelt
Chief Financial Officer


August 14, 1998



                                       14