UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION Washington,
D.C. 20549

FORM 1O-KSB

FOR THE YEAR ENDED JUNE
25, 2004

COMMISSION FILE No.
000-27629

Clean Water
Technologies Inc. & Subsidiaries(Name of Small Business Issuer in its charter)

Delaware (State
or other jurisdiction of incorporation organization)

23-2426437 (I.R.S.
Employer Identification No.)

2716 St. Andrews
Boulevard, Suite 200, Tarpon Springs, FL 34688 (Address of principal executive offices)
(Zip Code)

(727) 942-8938 (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 []

As of June 25, 2004 registrant had
one class of common stock, of which 7,217,855 shares were outstanding.

1

TABLE OF CONTENTS

|                                                           | 
|---------------------------------------------------------- | 
|Part I                                                     | 
|Item 1.  Description of Business                           | 
|Item 2.  Plan of Operation                                 | 
|Item 3.  Description of Property                           | 
|Item 4.  Security Ownership of Certain Beneficial          | 
|Owners and Management                                      | 
|Item 5.  Directors, Executive Officers, Promoters          | 
|and Control Persons                                        | 
|Item 6.  Executive Compensation                            | 
|Item 7.  Certain Relationships and Related Transactions    | 
|Item 8.  Description of Securities                         | 
|Item 9.  Management's Discussion and Analysis              | 
|Part II                                                    | 
|Item 1.  Market Price of and Dividends on the Registrant's | 
|Common Equity and Other Shareholder Matters                | 
|Item 2.  Legal Proceedings                                 | 
|Item 3.  Changes in and Disagreements with Accountants     | 
|Item 4.  Recent Sales of Unregistered Securities           | 
|Item 5.  Indemnification of Directors and Officers         | 
|Part F/S                                                   | 
|Financial Statements                                       | 
|Part III                                                   | 
|Item 1.  Index to Exhibits                                 | 
|Item 2.  Description of Exhibits                           | 
|Signatures                                                 | 

2

THIS REGISTRATION
STATEMENT CONTAINS CERTAIN FORWARD LOOKING STATEMENTS WITHINTHE MEANING OF THE
PRIVATE SECURITIES REFORM ACT OF 1995.     THE REGISTRANT INTENDS THAT SUCH FORWARD LOOKING STATEMENTS BE SUBJECT TO THE
          SAFE HARBORS CREATED THEREBY. THESE FORWARD LOOKING STATEMENTS INCLUDE
          STATEMENTS REGARDING (I) THE REGISTRANTS RESEARCH AND DEVELOPMENT PLANS,
          MARKETING PLANS, CAPITAL AND OPERATIONS EXPENDITURES, AND RESULTS OF OPERATIONS;
          (II) POTENTIAL FINANCING ARRANGEMENTS; (III) POTENTIAL UTILITY AND ACCEPTANCE OF
          THE REGISTRANTS EXISTING AND PROPOSED PRODUCTS; AND (IV) THE NEED FOR, AND
          AVAILABILITY OF, ADDITIONAL FINANCING.

THE FORWARD LOOKING STATEMENTS INCLUDED HEREIN ARE
BASED ON CURRENT EXPECTATIONS
AND INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. THESE
FORWARD LOOKING STATEMENTS ARE BASED ON
ASSUMPTIONS REGARDING THEREGISTRANTS BUSINESS ANDTECHNOLOGY WHICH INVOLVE
JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE SCIENTIFIC, ECONOMIC, REGULATORY AND COMPETITIVE
CONDITIONS, AND FUTURE BUSINESS DECISIONS, ALL OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND
MANY OF WHICH ARE BEYOND THE CONTROL OF THE REGISTRANT. ALTHOUGH THE REGISTRANT
BELIEVES THAT THE ASSUMPTIONS UNDERLYING THE FORWARD LOOKING STATEMENTS ARE
REASONABLE, ANY OF THE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE, ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD LOOKING STATEMENTS.
IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE FORWARD LOOKING
INFORMATION CONTAINED HEREIN, THE INCLUSION OF SUCH INFORMATION SHOULD NOT BE
REGARDED AS ANY REPRESENTATION BY THE REGISTRANT OR ANY OTHER PERSON THAT THE
OBJECTIVES OR PLANS OF THE REGISTRANT WILL BE ACHIEVED.

References in this registration
statement to We, Us, or the Company refer to Clean
Water Technologies,Inc., as well as their subsidiaries and predecessors.

PART I

Item 1. Description of Business.

(a)    
          Business Development.

| | We
were incorporated as Escalator, Inc. under the General Corporation Laws of the State of
Delaware on April 17, 1986. On June 3, 1986, Lone          Pine Resources, Inc. was
merged with our Company through a reverse merger whereby the shareholders of Lone Pine
Resources, Inc. received an equal number of shares in Escalator, Inc. Lone Pine
Resources, Inc. was incorporated under the laws of Utah on June 23, 1983.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the past, we conducted operations through our three wholly-owned subsidiaries Escalator
Securities, Inc. and Escalator Investments, Inc., and Frank Communications Corp., all
Pennsylvania corporations. Escalator Investments, Inc. was incorporated in the State of
Pennsylvania on August 15, 1984 and conducted financial planning activities through
approximately 1992 as a Registered Investment Advisor under the Investment Advisors Act
         of 1940. Since 1992, Escalator Investments, Inc. has had no operations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3

| | Escalator
Securities, Inc. was incorporated in the State of Pennsylvania on August 22, 1985, and
conducted business as a          registered broker-dealer under the Securities Exchange
Act of 1934 and the Pennsylvania Securities Act of 1972 until 1997. On December 31, 1997,
Escalator Securities, Inc. was closed by the National Association of Securities Dealers.
Since this date, Escalator          Securities, Inc. has had no operations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
July of 1990, we acquired Frank Communications Corp., a Pennsylvania corporation
incorporated on May 30, 1989, which was in the business of financial public relations. In
consideration of this          acquisition, we paid $1,000. Frank Communications Corp.
has no operations.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
June 30, 1997, we transferred our holdings in Escalator Securities,  to Escalator
Investments, Inc. pursuant to the terms of an Agreement and Plan of Spinoff. The
shareholders of Escalator, Inc. received all of the outstanding stock of Escalator
Investments, Inc., and Escalator Securities, Inc., which then ceased being our
wholly-owned subsidiaries.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
April 22, 1998, we changed our name to Nu Electric Corporation. On June 30, 1999, we
acquired Clean Water Technologies, Inc. (hereinafter Clean Water), a Florida
limited liability company, through an agreement and plan of merger whereby all of the
outstanding and issued shares of Clean Water were exchanged for shares of Nu Electric.
Pursuant to this agreement, we acquired all of the assets of the business of Clean Water.
On September 21, 2000, we acquired Zorax, Inc. (hereinafter Zorax), a Florida
corporation, through an agreement and plan of merger whereby all of the issued and
outstanding shares of Zorax were exchanged for shares of Nu Electric. Pursuant to this
agreement, we acquired all of the assets of Zorax.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
April 2, 2002, we changed our name to Clean Water Technologies,           We have not
been a party to any bankruptcy, receivership or similar proceeding. We have not been
involved in any material reclassification, merger, consolidation, or purchase or sale of
a significant amount of assets not in the ordinary course of business.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)    
          Business of Issuer.

(1)          
          Principal products or services and their markets.

| | We
currently have no products or services. We plan to focus our efforts on sub-licensing
environmentally friendly technology developed by third parties. We received our first
royalty payment on January 7, 2002.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
have sub-licensed our Clean Water technology to International Water
PurificationTechnologies, LLC. We plan to sub-license our Zorax technology in the future.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
plan to obtain royalty fees on the use of the licensed technology.           There can be
no assurance that, if we obtain licenses to environmentally friendly technologies, we
will be able to locate entities with the requisite knowledge and          experience to
arrange application of such technology. Further, thereis no guarantee that if located, we
will be able to enter into licensing agreements with favorable terms, if  at all. If we
are unable to acquire rights to technology or sub-license such technology to qualified
entities, if obtained, it may have a materially adverse effect on our business and
operations.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

4

| | In
our acquisition of Clean Water, we acquired a license to  a technology related to the
removal of arsenic from water (arsenic technology). We have sublicensed this
arsenic technology to International Water Purification Technologies, LLC.
          Patent approval for the arsenic technology was received on
                 March 28, 2000 from the U.S. Patent Office.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In our acquistion of Zorax, we acquired a license to a                  technology related
to the extraction of cryptosporidium and & giardia from water. We have not sub-licensed
this technology. A patent has been applied for by the owner of the technology, Johns
Hopkins University.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(2)          
          Distribution methods of the products or services.

| | We
have no products or services to be distributed. As of the                  date of this
annual report, we have no plans for distribution of any products or services that we may
develop  in the future.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(3)          
          Status of any publicly announced new product or service.

| | We
currently have no new products or services that have been publicly announced.
| | --------------------------------------------------------------------------------

|(4) | Competitive
business conditions and the small business  issuers competitive position in the
industry and methods of competition.           In our search for technology and qualified
parties to apply such technology, we will compete with entities having significantly
greater financial and other resources than that of the company. There can be no assurance
that we will be able to compete effectively with such entities. Further, we will compete
with our own potential sub-licensees for the location                  and acquisition of
environmentally friendly technologies. Our failure to effectively compete with such
entities could have a materially adverse effect on our business and operations.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Sources
and availability of raw materials and the names of principal suppliers. We have no
arrangements for raw materials or suppliers.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------

(6)          
          Dependence on one or a few major customers.

| | We
have no customers.
| | ---------------------

(7)           Intellectual
Property.

| | Through
our acquisition of Clean  Water, we acquired an  exclusive license for a process to
remove arsenic from  drinking water. More specifically, the technology is a method  of
removing arsenic species from an aqueous liquid using  modified zeolite materials. This
agreement is for a period of                  the longer of twenty years or the patent
expiration. Although      we are the exclusive licensee of this the owners of the
technology are permitted by the agreement to infringe upon our  exclusive rights in the
case of our insolvency, bankruptcy,  dissolution, breach or similar occurrence. In
addition, we are  required to carry product liability insurance coverage in an  amount
sufficient to cover claims arising from the use of the Clean Water technology.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5

| | In
consideration for this exclusive license, Clean Water paid  eight-hundred ninety three
thousand (893,000) shares of their  common stock as the initial license fee for this
technology.  Further, we must pay two percent (2%) of revenues earned from  the use of
this technology. This percentage is subject to the  following minimum royalty schedule:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                           |            
|------------------------------------------ | -----------
|First 24 months                            | $         0
|End of year three                          | $  5,000   
|End of year four                           | $  6,000   
|End of year five                           | $  7,200   
|End of year six                            | $  8,640   
|End of year seven and each year thereafter | $10,368    

| | As
of the date of this registration statement, we currently have no trademarks, franchises,
concessions or labor contracts.
| | ---------------------------------------------------------------------------------------------------------------------------

| | Through
our acquisition of Zorax, we acquired an exclusive license for a process to extract
cryptosporidium and giardia from water. This agreement is for a period up to the patent
expiration.           In consideration for this license, Zorax paid an
                 advance fee of $15,000, and agreed to pay royalties of two point five
percent (2.5%) of revenues annually, subject to the following minimum royalty schedule:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     |       
|-------------------- | ------
|3rd anniversary      | $3,000
|4th anniversary      | $3,500
|5th anniversary      | $4,000
|6th anniversary      | $4,500
|7th anniversary     
|and each anniversary
|thereafter until the
|end of patent life   | $5,000

|(8) | Need
for any government approval of principal products or services.           We are not in
need of governmental approval, as we have no products or services.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Effect
of existing or probable governmental regulations on the business.           Although we
have no operations which are currently affected by governmental regulation, we feel that
the                  following may be of importance, if we attempt to utilize our license
for the technology to remove arsenic from water.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Environmental
Protection Agency (EPA) established the current maximum contaminant level
(MCL) for arsenic, 50 micrograms per liter (ug/L) or parts per billion (ppb), in 1975.
This drinking water standard is based on the standard set by the Public Health Service in
1943.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
1996, Congress established certain requirements the EPA                  must meet in
designating a new standard for arsenic. These                  requirements have shaped
the agency's strategic approach. The EPA will use peer-reviewed health effects research
to meet the statutory deadlines, along with studies of treatment, analytical methods,
occurrence, and cost-benefits, and will                  identify affordable small system
technologies.           Results of                  focused long-term arsenic research
efforts will be considered in future reviews of the MCL, which will be
                 evaluated at least every 6 years, as appropriate, as required by the
1996 amendments.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

| | New
standards on arsenic have been finalized by the EPA. The allowable parts per billion
(ppb) level has been lowered to 10                   ppb, from the previous 50 ppb. These
standards will dictate the parameters within which our company may be able to proceed  in
developing an area of operations.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Further,
if we are able to acquire other environmentally  friendly technologies in the future, of
which there can be no  assurance, we will likely be affected by regulations similar  to
those discussed above. Our failure to develop awareness on  all regulations relating to
technologies, which we may seek to  acquire, could result in obsolescence of licenses
obtained by  us.           Such obsolescence could have a materially adverse effect on
our business and operations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Research
and Development in the last two fiscal years. As of   the
date of this registration statement, no amount has been  spent
on research and development.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | Costs
and effects of compliance with environmental laws. We  anticipate that the nature of our
business will surround  compliance with environmental laws. We plan to acquire
 technology based on compliance with the environmental law  standards.           Since
these standards will likely change regularly  in the future, we will incur expenses in
seeking technology  which compliments such standards. Our failure to acquire
 technologies, which comply with environmental law regulations,  could have a materially
adverse effect on our operations.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(12)         
          Number of total employees and number of full time employees.

| | We
currently have two total and full-time employees. There                  are no
employment or collective bargaining agreements in                  place.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 2. Plan of Operation.

We are currently unable to satisfy
our cash requirements without the financial support of our management. We anticipate that
we will meet our cash requirements for the foreseeable future through financial support of
our management.

Eventually, we may seek to raise
additional funds. We have not yet determined if or how we plan to obtain these additional
funds.

We plan to acquire existing
technology, which has already been fully developed. Consequently, we do not anticipate
significant research and development expenses over the next twelve months. We do not
expect to purchase or sell any plant and significant equipment or make any significant
changes in the number of employees over the next twelve months.

Item 3. Description of Property.

Our offices are located at 2716 St.
Andrews Blvd. Suite 200 Tarpon Springs, Fl. 34688. The space is owned by the Scalas. Clean
Water pays $500/month under an informal rental agreement. We do not own any significant
real or personal property.

7

Item 4. Security Ownership of Certain
Beneficial Owners and Management.

(a)    
          Security Ownership of Certain Beneficial Owners

|Title of
Class | Name & Address of
Beneficial Owner | Amount & Nature
of Ownership | Percent
of Class
|-------------- | ---------------------------------- | ---------------------------- | ----------------
|Common         | Howard A. & Laurie C. Scala        | 3,517,800 Joint Tenancy      | 48.7%           
|               | 2716 St. Andrews Blvd.            
|               | Suite 200                         
|               | Tarpon Springs, FL 34688          
|Common         | Howard A. Scala / IRA              | 8,330 Direct                 | .001%           
|               | 2716 St. Andrews Blvd.            
|               | Suite 200                         
|               | Tarpon Springs, FL 34688          
|Common         | Howard A. Scala                    | 6,000 Direct                 | .001%           
|               | c/f Matthew G. Scala              
|               | 2716 St. Andrews Blvd.            
|               | Suite 200                         
|               | Tarpon Springs, FL 34688          
|Common         | Utek Corporation                   | 960,779 Direct               | 13.3%           
|               | 202 South Wheeler Street          
|               | Plant City, Florida 33566         

(b)     Security Ownership of
Management

|Title of
Class | Name & Address of
Beneficial Owner | Amount & Nature
of Ownership | Percent
of Class
|-------------- | ---------------------------------- | ---------------------------- | ----------------
|Common         | Howard A. & Laurie C. Scala        | 3,517,800 Joint Tenancy      | 48.7%           
|               | 2716 St. Andrews Blvd.            
|               | Suite 200                         
|               | Tarpon Springs, FL 34688          
|Common         | Howard A. Scala / IRA              | 8,330 Direct                 | .001%           
|               | 2716 St. Andrews Blvd.            
|               | Suite 200                         
|               | Tarpon Springs, FL 34688          
|Common         | Howard A. Scala                    | 6,000 Direct                 | .001%           
|               | c/f Matthew G. Scala              
|               | 2716 St. Andrews Blvd.            
|               | Suite 200                         
|               | Tarpon Springs, FL 34688          
|               |                                    |                              |                 
|TOTAL          | Howard A. & Laurie C. Scala        | 3,532,130 shares             | 48.9%           

8

(c)    
          Changes in Control.

| | There
are currently no arrangements which may result in a change of control of the Company.
| | -------------------------------------------------------------------------------------------

Item 5. Directors and Executive
Officers, Promoters and Control Persons.

(a)    
          Officers and Directors.

| | The
following chart sets forth information on our officers and directors:
| | -------------------------------------------------------------------------

|Name            | Age | Title(s)                       | Term of Office         
|--------------- | --- | ------------------------------ | -----------------------
|Laurie C. Scala | 50  | President,Secretary/Treasurer, | July 1, 1998 to present
|                |     | & Director                     |                        
|Howard A.Scala  | 52  | Vice President & Director      | July 1, 1998 to present

| | Our
Bylaws require that we have a minimum of one director. Directors  are elected at our
annual meeting to be held on the second Monday of  each September or at a time as soon
thereafter as is convenient, at a  time to be fixed by the Board of Directors. Directors
shall serve until  their successors are duly elected or appointed. A vacancy on the Board
 of Directors may be filled by a majority vote of the remaining  directors.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our
Bylaws provide for a minimum of the following officers: President, Treasurer and
Secretary. These officers are to be elected by the Board  of Directors at the first Board
meeting following the annual meeting.  Other officers may be appointed by the Board at
any time, and the Board  may fill any vacancies.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Laurie
C. Scala is a graduate of Douglas College in Communications (B.A. 1975). She
began her brokerage career as a registered representative of Merrill Lynch, Pierce,
Fenner & Smith, Inc. in 1976. In 1980, she became a Vice President of Herzfeld & Stern,
Inc. In 1982, Mrs. Scala assumed a position as Vice President of Thomson
McKinnon Securities, Inc. In 1984, she left her former position to work at a
partnership formed with her husband, Howard Scala, providing financial planning and
brokerage services. Since its formation in 1986, Mrs. Scala has worked for the Company.
She holds no other directorships in any reporting companies.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Howard
A. Scala is a graduate of Syracuse University School of Management in Marketing (B.S.
1973). He began his brokerage career as a registered representative of Merrill Lynch,
Pierce, Fenner & Smith, Inc. in 1976. In 1980, he became a Vice President
of Herzfeld & Stern, Inc. In 1982, Mr. Scala assumed a position as Vice
President of Thomson McKinnon Securities, Inc. In 1984, he left his former position to
work at a partnership formed with his wife, Laurie Scala, providing financial planning
and brokerage services.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

| | Since
its formation  in 1986, Mr. Scala has worked for the  Company.           He holds no
other  directorships in any reporting companies.
| | -------------------------------------------------------------------------------------------------------------------------------------------

(b)     Identify
Significant Employees.

| | We
have no persons, not mentioned above, who are expected to make a  significant
contribution to our business.
| | --------------------------------------------------------------------------------------------------------------

(c)    
          Family relationships.

| | Laurie
and Howard Scala are husband and wife.
| | ---------------------------------------------

|(d) | Involvement
in certain legal proceedings. As of December 31, 1997,   the registration of Escalator
Securities, Inc. as a broker-dealer from   the National Association of Securities
Dealers,  was revoked, and Howard  Scala was barred as a broker.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Other
than the aforementioned, we have had no events that occurred during the past five years,
including bankruptcies, criminal  convictions or proceedings, court orders or judgments,
that are  material to an evaluation of the ability or integrity of any director,  person
nominated to become a director, executive officer, promoter or  control person of our
Company.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 6. Executive Compensation.

|Name and Principal
Position | Year | Salary
($) | Bonus
($) | Other Annual
Compensation
($) | Restricted
Stock Award(s)
($) | Securities
Underlying
Options (#) | LTIP
Payouts
($) | Other
($)
|--------------------------- | ---- | ---------- | --------- | ----------------------------- | ----------------------------- | --------------------------------- | ---------------- | ---------
|Laurie & Howard Scala,      | 1996 | 0          | 0         | 0                             | 0                             | 0                                 | 0                | 0        
|President & Vice            | 1997 | 0          | 0         | 0                             | 0                             | 0                                 | 0                | 0        
|President                   | 1998 | 0          | 0         | 0                             | $187,500                      | 0                                 | 0                | 0        
|respectively                | 1999 | 0          | 0         | 0                             | $234,375                      | 0                                 | 0                | 0        
|                            | 2000 | 0          | 0         | 0                             | 0                             | 0                                 | 0                | 0        
|                            | 2001 | 0          | 0         | 0                             | $200,000                      | 0                                 | 0                | 0        
|                            | 2002 | 0          | 0         | 0                             | $  75,000                     | 0                                 | 0                | 0        
|                            | 2003 | 0          | 0         | 0                             | 0                             | 0                                 | 0                | 0        

Item 7. Certain Relationships and
Related Transactions.

There have been no transactions
during the last two years, or proposed transactions, to which we were or are a party, in
which any of our directors, executive officers, nominees for such positions, security
holders or the families of such people had a material interest. We are not a subsidiary of
any other company.

Item 8. Description of Securities.

Common Stock.

In General. We are authorized to
issue 50,000,000 shares of common stock with a par value of $0.001 each, of which
7,217,855 common shares were outstanding as of June 25, 2004. All of the issued and
outstanding common stock is fully paid and non-assessable.

Voting.    
          Each share of our common stock entitles the holder thereof to one vote per share
          in the election of directors and in all other matters upon which stockholders
          are entitled to vote. The holders of shares of common stock do not have
          cumulative voting rights, which means that the  holders of more than 50% of the
outstanding shares voting for the election of directors can elect all of the directors to
be elected, if they so choose. In such event, the holders of the remaining shares will not
be able to elect any of our directors. As of the date of this registration statement,
Howard and Laurie Scala are the beneficial owners of 3,532,130 voting shares or
approximately 48.9% of our outstanding voting stock.

10

Dividends.    
          Each share of common stock entitles the holder thereof to receive cash dividends
          as the Board of Directors may declare from funds legally available therefor.
          However, we have only declared one dividend to date and do not intend to declare
          any dividend on our common stock in the foreseeable future.

Rights.    
          There are no preemptive rights with respect to the common stock. Upon
          liquidation, dissolution or winding up of the affairs of the Company, and after
          payment of creditors, the assets legally available for distribution will be
          divided ratably on a share-for-share basis among the holders of the outstanding
          shares of common stock.

Preferred Stock.

We are not authorized to issue any
preferred stock at this time.

Item 9. Managements
Discussion and Analysis

The company has generated revenues of
$13,200 in the last two fiscal years. In the past year, we experienced a loss of $75,678.
Management cannot say with certainty when significant revenue will be received from the
companys business.

We are dependent on financial support
from the management of the company to meet our cash requirements. While the company hopes
to raise money through the sale of securities in a public or private offering during the
next fiscal year, there is no guarantee that we will do so.

After acquiring Clean Water
Technologies, we signed an agreement with Element 33, LLC to act as our exclusive
sublicensee. We subsequently signed a new exclusive agreement with International Water
Purification Technologies, LLC (IWPT). Pursuant to the contract, the company
is entitled to a royalty of 5% of the gross revenue transacted by IWPT along with a
minimum royalty payment of at least $8,640, up to a maximum of $10,368. IWPT has ambitious
plans to exploit our arsenic technology and is in the process of going public to raise
money to support their marketing effort. Our initial royalties commenced with a $5,000
payment in January, 2002.

We signed a letter of intent to
acquire Zorax, Inc. on May 1, 2000. After performing due diligence on the company, we
agreed to issue 600,000 shares of restricted common stock to acquire Zorax, on September
21, 2000. We continue to explore the acquisition of environmentally friendly technologies.

We announced on August 18, 2004 that
we signed an agreement with Hanover Financial Services of Boulder, Colorado. They were
retained as Business Development Consultants to advise the company on potential
acquisition opportunities and other related corporate activities.

11

PART II

Item 1. Market Price of and Dividends
on the Registrants Common Equity and Related
Stockholder Matters.

(a)    
          Market information.

| | Our
common stock is traded on the Over the Counter Bulletin Board (OTCBB) under
the symbol CWTI. The following bid quotations have been reported for the period beginning
 January 1, 2002 and ended June 30, 2004:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                   | Bid Quotations
|------------------ | --------------
|
|Quarter Ended:     |               
|March 31,2002      | .55           
|June 30,2002       | .45           
|September 30, 2002 | .26           
|December 31, 2002  | .30           
|March 31, 2003     | .15           
|June 30, 2003      | .10           
|September 30, 2003 | .35           
|December 31, 2003  | .26           
|March 31, 2004     | .46           
|June 30, 2004      | .31           

| | Such
quotations reflect  inter-dealer prices, without retail mark-up,  mark-down or
commission. Such quotes are not necessarily representative           of actual
transactions or of the value of our securities, and are in all likelihood not based upon
any recognized criteria of securities  valuation as used in the investment banking
community.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company has been advised that approximately eleven member firms of the NASD are currently
acting as market makers for the common stock.  There is no assurance that an active
trading market will develop which  will provide liquidity for the Companys existing
shareholders or for  persons who may acquire common stock through the exercise of
warrants.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12

(b)     Holders.

| | As
of June 25, 2004, there were approximately 1,200 holders of record of our 7,217,855
shares of common stock outstanding. Of these shares, 4,835,302 are restricted securities
within the meaning of Rule 144(a)(3)           promulgated under the Securities Act of
1933, as amended, because such shares were issued and sold by the Company in private
transactions not involving a public offering. Certain of the shares of common stock are
held in street name and may, therefore, be held by several beneficial owners.
Our transfer agent is Fidelity Transfer Company located at 1800 South West Temple, Suite
301, Box 53, Salt Lake City, UT 84115.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | No
prediction can be made as to the effect, if any, that future sales  of shares of common
stock or the availability of common stock for  future sale will have on the market price
of the common stock  prevailing from time-to-time. Sales of substantial amounts of common
 stock on the public market could adversely affect the prevailing market  price of the
common stock.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(c)    
          Dividends.

| | We
have not paid a cash dividend on our common stock in the past two  years.           The
payment of dividends may be made at the discretion of our  Board of Directors and will
depend upon, among other things, our  operations, our capital requirements and our
overall financial  condition. As of the date of this registration statement,
we have no  intention to declare dividends.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 2. Legal Proceedings.

The Company is not the subject of any
legal proceedings at this time.

Item 3. Changes in and Disagreements
with Accountants.

In September, 2002, we retained our
current accountants, Baumann, Raymondo & Company PA. Our previous accountants,
Acquavella, Chiarelli, Shuster & Company, resigned from the position in the same
month.

The change was not due to any
unfavorable report or disagreement. We believe that since our new accounting firm is
local, we will receive better service.

Item 4. Recent Sales of Unregistered
Securities.

On January 13, 1997 we issued 3,000
shares of our common stock as an employee bonus. This transaction was made in reliance on
the exemption from the registration requirements provided in section 4(2) of the
Securities Act of 1933.

On June 30, 1997, we issued 306,000
shares of our common stock in the conversion of outstanding 10% convertible bonds. This
transaction was made in reliance on the exemption from the registration requirements
provided in section 4(2) of the Securities Act of 1933.

On March 2, 1998, we issued 3,000
shares of our common stock as an employee bonus. In addition, we issued 500,000 shares to
Howard and Laurie Scala as compensation for services rendered on the same date. These
transactions were made in reliance on the exemption from the registration requirements
provided in section 4(2) of the Securities Act of 1933.

13



On February 17, 1999, we issued 2,000
shares of our common stock as an employee bonus. This transaction was made in reliance on
the exemption from the registration requirements provided in section 4(2) of the
Securities Act of 1933.

On June 17, 1999 we issued 1,000,000
shares of our common stock as compensation for services rendered. This transaction was
made in reliance on the exemption from the registration requirements provided in section
4(2) of the Securities Act of 1933.

On June 30, 1999, we issued 893,000
shares of our common stock pursuant to the Agreement and Plan of Merger with Clean Water.

On December 30, 1999, we issued 2,000
shares of our common stock as an employee bonus. This transaction was made in reliance on
the exemption from the registration requirements provided in section 4(2) of the
Securities Act of 1933.

On September 29, 2000, we issued
600,000 shares of our common stock pursuant to the Agreement and Plan of Merger with
Zorax.

On December 19, 2000, we issued 2000
shares of our common stock as an employee bonus. This transaction was made in reliance on
the exemption from the registration requirements provided in section 4(2) of the
Securities Act of 1933.

On November 20, 2001, we issued
1,000,000 shares of our common stock as compensation for services rendered. This
transaction was made in reliance on the exemption from registration requirements provided
in section 4(2) of the Securities Act of 1933.

On December 27, 2001, we issued 3,000
shares of our common stock as an employee bonus. This transaction was made in reliance on
the exemption from the registration requirements provided in Section 4(2) of the
Securities Act of 1933.

On December 19, 2002, we issued
1,500,000 shares of our common stock as compensation for services rendered. This
transaction was made in reliance on the exemption from the registration requirements
provided in Section 4(2) of the Securities Act of 1933.

Item 5. Indemnification of Directors
and Officers.

Our Amended and Restated Certificate of
Incorporation eliminates the liability of our directors, officers, and trustees to the
fullest extent permitted by Section 145 of the Delaware General Corporation Law
(DCGL), as the same may be amended from time to time.

Section 145(a) of the DGCL provides
that a Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys
fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful.

Section 145(b) of the DGCL provides
that a Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason of the fact
that such person acted in any of the capacities set forth above, against expenses
(including attorneys fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to be indemnified for such expenses which the court shall
deem proper.

14

Section 145 of the DGCL further
provides that to the extent a director or officer of a corporation has been successful on
the merits or otherwise in the defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in the defense of any claim, issue, or matter
therein, he shall be indemnified against expenses (including attorneys fees)
actually and reasonably incurred by him in connection therewith; that indemnification and
advancement of expenses provided by, or granted pursuant to Section 145 shall not be
deemed exclusive of any other rights to which those seeking indemnification or advancement
of expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to his official capacity and as to action in
another capacity while holding such office; that indemnification and advancement of
expenses provided by, or granted pursuant to, Section 145 shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and administrators of such
a person; and that the corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director or officer of the corporation against any
liability asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would have the power to indemnify him
against such liability under such Section 145.

15

CLEAN WATER
TECHNOLOGIES, INC. & SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS

|                                   |        
|---------------------------------- | -------
|                                   | Page   
|Independent Auditor's Report       | F-1    
|Consolidated Financial Statements:
|Balance Sheets                     | F-2    
|Statements of Operations           | F-3    
|Statements of Stockholder's Equity | F-4    
|Statements of Cash Flows           | F-5    
|Notes to Financial Statements      | F-6-F-9

INDEPENDENT AUDITORS
REPORT

To the Board of Directors
and StockholdersClean Water Technologies, Inc. and Subsidiaries

We have audited the balance sheet of
Clean Water Technologies, Inc. and Subsidiaries as of June 27, 2003, and June 25, 2004 and
the related statements of operations, stockholders equity, and cash flows for the
year then ended. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial statements
based on our audit.

We conducted our audit in accordance
with auditing standards generally accepted in the United States of America. 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 audit provides a reasonable basis for our
opinion.

In our opinion, the financial
statements referred to above present fairly, in all material respects, the financial
position of Clean Water Technologies, Inc. and Subsidiaries as of June 27, 2003 and June
25, 2004, and the results of its operations and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of America.

/s/Baumann Raymondo & Company PA
September 2, 2004

F-1

# CLEAN WATER
TECHNOLOGIES, INC. & SUBSIDIARIES

CONSOLIDATED BALANCE
SHEETS

|ASSETS                               | Fifty-two
Weeks Ended
June 27, 2003 | Fifty-two
Weeks Ended
June 25, 2004
|------------------------------------ | ----------------------------------- | -----------------------------------
|Cash                                 |                                     |                                    
|Deposits                             |                                     |                                    
|License agreement                    |                                     |                                    
|                                     |                                     |                                    
|                                     |                                     |                                    
|                                     |                                     |                                    
|LIABILITIES AND STOCKHOLDERS' EQUITY |                                     |                                    
|Due to officers                      |                                     |                                    
|Royalty fees payable                 |                                     |                                    
|                                     |                                     |                                    
|Total liabilities                    |                                     |                                    
|                                     |                                     |                                    
|STOCKHOLDERS' EQUITY                 |                                     |                                    
|Common stock - par value $.001       |                                     |                                    
|Authorized 50,000,000 shares -       |                                     |                                    
|issued and outstanding 7,217,855     |                                     |                                    
|Additional paid in capital           |                                     |                                    
|Accumulated deficit                  |                                     |                                    
|                                     |                                     |                                    
|Total stockholders' equity           |                                     |                                    
|                                     |                                     |                                    
|                                     |                                     |                                    
|                                     |                                     |                                    

Read
independent auditors report. The
accompanying notes are an integral part of these financial statements. F-2

CLEAN WATER
TECHNOLOGIES, INC. & SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS

|                                   | Fifty-two
Weeks Ended
June 27, 2003 | Fifty-two
Weeks Ended
June 25, 2004
|---------------------------------- | ----------------------------------- | -----------------------------------
|Revenue                            |                                     |                                    
|                                   |                                     |                                    
|Operating Expenses:                |                                     |                                    
|Accounting and legal               |                                     |                                    
|Royalty fees                       |                                     |                                    
|Consulting fees                    |                                     |                                    
|Rent                               |                                     |                                    
|Depreciation                       |                                     |                                    
|Telephone and utilities            |                                     |                                    
|Taxes, licenses and filing fees    |                                     |                                    
|Salaries expense                   |                                     |                                    
|                                   |                                     |                                    
|Total operating expenses           |                                     |                                    
|                                   |                                     |                                    
|Net income (loss)                  |                                     |                                    
|                                   |                                     |                                    
|Net income (loss) per common share |                                     |                                    
|basic and fully diluted            |                                     |                                    
|                                   |                                     |                                    
|Weighted average number of shares  |                                     |                                    
|Basic                              |                                     |                                    
|                                   |                                     |                                    
|Fully diluted                      |                                     |                                    
|                                   |                                     |                                    

Read
independent auditors report. The
accompanying notes are an integral part of these financial statements. F-3

# CLEAN WATER
TECHNOLOGIES, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENT
OF STOCKHOLDER'S EQUITY

|                                          | C o m m o n S t o c k |  | 
|----------------------------------------- | --------------------- |  | 
|
|Balance - June 28, 2002                   |                       |  | 
|Issuance of stock for services            |                       |  | 
|Shareholder loan converted to             |                       | 
|paid in capital                           |                       |  | 
|Net(loss)                                 |                       |  | 
|                                          |                       |  | 
|Balance - Balance June 27, 2003 7,217,855 |                       |  | 
|Officer donated services                  |                       |  | 
|Shareholder loan converted to             |                       | 
|paid in capital                           |                       |  | 
|Net(loss)                                 |                       |  | 
|                                          |                       |  | 
|Balance - June 25, 2004                   |                       |  | 
|                                          |                       |  | 

Read
independent auditors report. The
accompanying notes are an integral part of these financial statements. F-4

# CLEAN WATER
TECHNOLOGIES, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENT
OF CASH FLOWS

|                                             | Fifty-two
Weeks Ended
June 27,2003 | Fifty-two
Weeks Ended
June 25, 2004
|-------------------------------------------- | ---------------------------------- | -----------------------------------
|Cash flows from operating activities:        |                                    |                                    
|Net (loss)                                   |                                    |                                    
|Adjustment to reconcile net loss to          |                                    |                                    
|net cash (used) in operations:               |                                    |                                    
|Officer donated services                     |                                    |                                    
|Issuance of stock for services               |                                    |                                    
|Depreciation and amortization                |                                    |                                    
|Decrease in accounts payable and             |                                    |                                    
|accrued expenses                             |                                    |                                    
|Decrease in royalty fees payable             |                                    |                                    
|                                             |                                    |                                    
|Net cash (used)in operating activities       |                                    |                                    
|                                             |                                    |                                    
|Cash flows provided by financing activities: |                                    |                                    
|Increase in due to officer                   |                                    |                                    
|                                             |                                    |                                    
|Net increase (decrease) in cash              |                                    |                                    
|Cash - beginning                             |                                    |                                    
|                                             |                                    |                                    
|Cash - ending                                |                                    |                                    
|                                             |                                    |                                    

Read
independent auditors report. The
accompanying notes are an integral part of these financial statements. F-5

# CLEAN WATER
TECHNOLOGIES, INC. & SUBSIDIARIESNOTES TO FINANCIAL STATEMENTS

1.    
          Organization and Nature of Business:

Escalator, Inc. was incorporated
under the General Corporation laws of the state of Delaware on April 17, 1986. On April
22, 1998, a certificate of amendment was filed to change the name of the Company to Nu
Electric Corporation. On April 2, 2002 the Company filed for another amendment to change
its name to Clean Water Technologies, Inc. (the Company).The Company is a
publicly traded Company which trades under the symbol CWTI.

2.    
          Summary of Significant Accounting Policies:

a.    
          Principals of Consolidation:

The consolidated financial statements
include the accounts of Clean Water Technologies, Inc. and its wholly-owned subsidiaries
of Clean Water Technologies, and Zorax Inc. All significant intercompany transactions and
balances have been eliminated.

b.    
          Property, Equipment, Depreciation and Amortization:

Property and equipment are stated at
cost. Depreciation and amortization are provided using the straight-line and declining
balance method over the estimated useful lives of the assets.

c.    
          Income/(Loss) Per Common Share:

The income or loss per common share
is based on the weighted average number of shares outstanding.

d.     Statement
          of Cash Flows:

For purposes of the statement of cash
flows, the Company considers all highly liquid accounts with a maturity of three months or
less as cash equivalents.

e.    
          Concentrations of Credit Risk:

Financial instruments which
potentially subject the Company to concentrations of credit risk consist of cash and cash
equivalents. The company places its temporary cash investments with a quality, high credit
financial institution. At times, such investments, along with the Companys cash
balances with this institution, exceeded the current insured amount under the Federal
Deposit Insurance Corporation.

Read
independent auditors report.

F-6

# CLEAN WATER
TECHNOLOGIES, INC. & SUBSIDIARIES

NOTES TO FINANCIAL
STATEMENTS

2.    
          Summary of Significant Accounting Policies (Continued)

f.    
          Use of Estimates in Preparation of Financial Statements:

The preparation of financial
statements in conformity with generally accepted accounting principles requires management
to make certain estimates and assumptions that affect the reported amounts of 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 differ from those
estimates.

g.    
          Advertising Costs:

The Company expenses the production
costs of advertising the first time the advertising takes place.

3.    
          Income Taxes:

The Company records its federal and
state tax liabilities in accordance with Financial Accounting Standards Board Statement
No. 109 Accounting for Income Taxes. Income taxes are provided for the
tax effects of transactions reported in the financial statements and consist of tax
currently due and deferred taxes. Deferred taxes are recorded for temporary differences in
the recognition of income and expenses between tax and financial accounting, using current
tax rates. Deferred assets and liabilities represent the future tax consequences of those
differences, which will either be taxable or deductible when the assets and liabilities
are recovered or settled.

For income tax reporting, the Company
and its subsidiaries have net operating loss carry forwards, available to reduce future
Federal income taxes. If not used, the carry forwards will expire as follows:

|Year Ending
In June | Federal Net
Operating Loss
|------------------- | --------------------------
|2005                |                           
|2008                |                           
|2010                |                           
|2011                |                           
|2012                |                           
|2013                |                           
|2014                |                           
|2015                |                           
|2016                |                           
|                    |                           
|                    |                           
|                    |                           

Read
independent auditors report.

F-7

# CLEAN WATER
TECHNOLOGIES, INC. & SUBSIDIARIES

NOTES TO FINANCIAL
STATEMENTS

4.    
          Business Combinations:

On June 30, 1999, Clean Water
Technologies, Inc. & Subsidiaries, a Delaware Corporation entered into a merger
agreement with Clean Water Technologies, Inc., (CWT) a Florida Corporation. The merger
was accounted for by the pooling of interests method, where all of the shares of
outstanding common stock was exchanged for 893,000 shares of common stock of Clean Water
Technologies, Inc. & Subsidiaries. CWT had no assets, liabilities or income of any
kind, character or description at the time of the merger, and accordingly there was no
effect on the revenues and earnings reported. CWT holds a license for a technology
developed at USF (University of South Florida) to remove arsenic from drinking water. In
October 1999 the Company granted GSA Resources, Inc. an exclusive sublicense to use and
market the technology to remove arsenic from drinking water. This license was
subsequently transferred to International Water Purification Technologies, LLC (IWPT) in
July 2003.

Minimum royalty payments under this
agreement are as follows:

|                             | 
|---------------------------- | 
|2004                         | 
|2005 (and until termination) | 

On September 21, 2000 the Company
merged with Zorax, Inc. the owner of an exclusive worldwide license to manufacture and
market a proprietary process technology that improves the extraction of cryptosporidium
and giardia from drinking water. A U.S. patent has been filed by Johns Hopkins
University, the owner of the technology. Zorax, Inc. has no assets or liabilities other
than as relates to its license of the technology and research agreement with Johns
Hopkins University. The Company acquired Zorax, Inc. by way of tax free merger whereby
the Company issued 600,000 shares of its common stock in exchange for all outstanding
shares of Zorax, Inc.

As a result of the merger the
Company acquired the license agreement which had a book value of $15,000.

The Company shall pay to Johns
Hopkins University earned royalties of two and one half percent (2.5%) of net sales
annually payable on a quarterly basis until March 30, 2017.

Minimum royalty payments under this
agreement are as follows:

|                             | 
|---------------------------- | 
|March 30, 2005               | 
|2006 (and until termination) | 

Read
independent auditors report.

F-8

# CLEAN WATER
TECHNOLOGIES, INC. & SUBSIDIARIES

NOTES TO FINANCIAL
STATEMENTS

5.    
          Related Party Transactions:

The officers donated services to the
Company in fiscal 2004. The services were valued at $75,000.

The Company rents office space from
the officers of the Company under an informal lease agreement that requires monthly rent
of $500. The Company incurred rent expense of $6,000 for the years ended June 27, 2003
and June 25, 2004.

The Company issued 1,500,000 shares
of its $.001 par value common stock to the officers of the Company for services rendered
in fiscal 2003. The value of the management services rendered was estimated at $75,000.

The Company is indebted to the
officers in the amount of $17,760 at June 27,2003. The indebtedness is not evidenced by a
formal promissory note.

Read
independent auditors report.

F-9

EXHIBIT INDEX

|         | 
|-------- | 
|EXHBIT # | 

| | 2.1 | Acquisition
of Escalator, Inc.*
| | --- | -------------------------------

| | 2.2 | Lone
Pine Resources, Inc. Merger*
| | --- | ---------------------------------

| | 2.3 | Agreement
and Plan of Spinoff*
| | --- | ------------------------------

| | 2.4 | Acquisition
of Clean Water Technologies, Inc.*
| | --- | ----------------------------------------------

| | 2.5 | Acquisition
of Zorax, Inc.*
| | --- | ---------------------------

| | 3.1 | Articles
of Incorporation*
| | --- | --------------------------

| | 3.2 | Bylaws*
| | --- | -------

| | 4 | Share
Certificate*
| | - | ------------------

| | 10 | Sublicense
Agreement GSA*
| | -- | -------------------------

| | 21 | Subsidiaries
of the Registrant*
| | -- | -------------------------------

| | 27 | Financial
Data Schedule*
| | -- | ------------------------

| | 31 | Certification
| | -- | -------------

| | 32 | Certification
| | -- | -------------

* Previously filed.

16

SIGNATURES

Pursuant to the requirements of
Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto duly
authorized.

Clean Water Technologies,
Inc.

/s/ Laurie C. Scala By: Laurie C. Scala,
PresidentDate: September 13, 2004