U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 1998
---------------------
[ ] Transition report under Section 13 or 15(d) of the exchange act of
1934 for the transition period from ______________ to ______________
COMMISSION FILE NUMBER 33-37513-D
-------------------------------
GLOBAL WATER TECHNOLOGIES, INC.
- ------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 84-1148204
- ---------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1767 Denver West Boulevard Golden, Colorado 80401
- ------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(Issuer's telephone number): (303) 215-1100
-------------------
NA
- ------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
----- -----
Shares of Common Stock, $0.00001 par value, outstanding as of August 6,
1998: 294,050,000.
------------
Transitional Small Business Disclosure Format Yes No X
----- -----
<PAGE>
GLOBAL WATER TECHNOLOGIES, INC. (GWTR)
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Statements of Operations Three months and six
months ended June 30,
1998 and 1997
Consolidated Balance Sheet As of June 30, 1998
Consolidated Statements of Cash Flows Six months ended June
30, 1998 and 1997
Notes to Financial Statements June 30, 1998 and 1997
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART 2. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
SIGNATURES
<PAGE>
GLOBAL WATER TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
-------------------------
June 30, June 30,
1998 1997
--------- ---------
Construction revenue:
United States $ 5,816,621 $ 4,214,232
International 1,137,443 674,631
------------ ------------
Total revenues 6,954,064 4,888,863
------------ ------------
Costs and expenses:
Cost of construction 5,434,506 4,011,158
Selling, general and administrative 1,447,065 950,761
Research and development 56,285 30,742
------------ ------------
Total costs and expenses 6,937,856 4,992,661
------------ ------------
Operating income (loss) 16,208 (103,798)
Other income (expense):
Interest expense, net (34,879) (30,902)
Other, net 3,742 78
------------ ------------
Income (loss) before income taxes (14,929) (134,622)
Income taxes (benefit) (4,076) (43,845)
------------ ------------
Net income (loss) $ (10,853) $ (90,777)
============ ============
Income (loss) per share:
Basic weighted average shares
outstanding 294,050,000 261,382,500
Basic income (loss) per share $ (0.0000) $ (0.0003)
============ ============
Fully diluted weighted average shares
outstanding 294,050,000 261,382,500
Fully diluted income (loss) per
share $ (0.0000) $ (0.0003)
============ ============
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
GLOBAL WATER TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Six Months Ended
-------------------------
June 30, June 30,
1998 1997
--------- ---------
Construction revenue:
United States $ 9,142,884 $ 6,981,810
International 2,328,763 1,130,539
------------ ------------
Total revenues 11,471,647 8,112,349
------------ ------------
Costs and expenses:
Cost of construction 8,825,854 6,199,290
Selling, general and administrative 2,652,809 1,786,765
Research and development 108,317 72,769
------------ ------------
Total costs and expenses 11,586,980 8,058,824
------------ ------------
Operating income (loss) (115,333) 53,525
Other income (expense):
Interest expense, net (65,195) (65,449)
Other, net 3,997 1,226
------------ ------------
Income (loss) before income taxes (176,531) (10,698)
Income taxes (benefit) (59,021) (1,604)
------------ ------------
Net income (loss) $ (117,510) $ (9,094)
============ ============
Income (loss) per share:
Basic weighted average shares
outstanding 294,050,000 261,382,500
Basic income (loss) per share $ (0.0004) $ (0.0000)
============ ============
Fully diluted weighted average shares
outstanding 294,050,000 261,382,500
Fully diluted income (loss) per
share $ (0.0004) $ (0.0000)
============ ============
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
GLOBAL WATER TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF JUNE 30, 1998
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 126,339
Trade accounts receivable, net of allowance for
doubtful accounts of $175,616 4,343,341
Other receivables 63,611
Costs and estimated earnings in excess of billings
on uncompleted contracts 2,082,907
Inventories 318,923
Prepaid expenses 164,406
Restricted assets, certificate of deposit
(released 7/24/98) 228,687
------------
Total current assets 7,328,214
------------
Property and equipment, net 696,891
Intangibles, net of amortization 46,748
Deposits 11,948
------------
$ 8,083,801
============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Current maturities of long-term debt $ 979,399
Accounts payable 4,093,549
Accrued liabilities 758,181
Billings in excess of costs and estimated earnings
on uncompleted contracts 574,140
Income taxes payable 51,430
Deferred income taxes 126,716
------------
Total current liabilities 6,583,415
------------
Long-term debt 492,729
Deferred income taxes 122,853
Stockholders' equity:
Preferred stock, $0.00001 par value, 20,000,000 shares
authorized; 1,000,000 shares issued and outstanding;
stated at redemption value of $0.0001 100
Common stock, $0.00001 par value; 800,000,000 shares
authorized; 294,050,000 shares issued and outstanding 2,940
Capital in excess of par value 522,624
Retained earnings 359,140
------------
Total stockholders' equity 884,804
------------
$ 8,083,801
============
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
GLOBAL WATER TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
-------------------------
June 30, June 30,
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (117,510) $ (9,094)
Adjustments to reconcile net income
(loss) to net cash provided (used)
by operating activities:
Depreciation 85,001 69,011
Amortization 5,502 -
Decrease in deferred income taxes (64,626) -
(Increase) decrease in working capital:
Trade accounts receivable (405,696) (960,338)
Other receivables (47,514) (51,901)
Costs and estimated earnings in
excess of billings on uncompleted
contracts 612,875 597,656
Income taxes receivable 34,995 -
Inventories 61,205 (143,679)
Prepaid expenses (38,375) (51,094)
Deposits 1,138 (2,057)
Accounts payable (592,019) 1,236,045
Income taxes payable 51,430 (2,381)
Accrued liabilities 119,360 (63,919)
Billings in excess of costs and
estimated earnings on uncompleted
contracts 74,546 187,943
------------ ------------
Net cash provided (used) by
operating activities (219,688) 806,192
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of certificate of deposit (5,851) (5,656)
Purchase of property and equipment (177,314) (79,803)
------------ ------------
Net cash (used in) investing
activities (183,165) (85,459)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change on the lines-of-credit (7,000) (446,400)
Proceeds from issuance of debt 496,378 -
Repayments of debt (79,073) (68,028)
------------ ------------
Net cash provided (used) by
financing activities 410,305 (514,428)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 7,452 206,305
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 118,887 61,188
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 126,339 $ 267,493
============ ============
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
GLOBAL WATER TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1998 AND 1997
1. INTERIM FINANCIAL STATEMENTS
The consolidated balance sheet as of June 30, 1998, and the related
consolidated statements of operations for the three months and for the six
months ended June 30, 1998 and statements of cash flows for the six months
ended June 30, 1998 and 1997 are unaudited; in the opinion of management,
all adjustments necessary for a fair presentation of such financial
statements have been included. These financial statements and notes are
presented as permitted by Form 10-QSB and should be read in conjunction
with the Company's financial statements and notes included in Form 10-KSB
for the year ended December 31, 1997.
2. EARNINGS PER SHARE
The Company adopted FASB Statement No. 128 "Earnings Per Share" retroactive
to January 1, 1996. Income (loss) per basic share is computed on the basis
of the weighted average number of common shares outstanding for the
respective periods. Diluted income (loss) per share was computed using the
treasury stock method on the basis of the weighted average number of common
shares after giving effect to all dilutive potential common shares that
were outstanding during the respective periods. Certain options and
warrants were considered anti-dilutive and, therefore, the basic weighted
average shares outstanding was equal to the fully diluted weighted average
shares outstanding.
3. COMPREHENSIVE INCOME
In June, 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income
("FAS 130"). FAS 130, which is effective for fiscal years beginning after
December 15, 1997, defines comprehensive income as all changes in
shareholders' equity exclusive of transactions with owners, such as capital
investments. Comprehensive income includes net income or loss, changes in
certain assets and liabilities that are reported directly in equity such as
translation adjustments on investments in foreign subsidiaries, and certain
changes in minimum pension liabilities. The Company's comprehensive income
(loss) was equal to its net income (loss) for the three month and six month
periods ended June 30, 1998 and 1997.
4. OTHER RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June, 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures About Segments of An
Enterprise and Related Information ("FAS 131"). FAS 131 changes the
disclosure requirements for segment reporting from an "industry segment"
approach required under FAS 14 to the "management approach". The new
approach is intended to allow users to "see through the eyes of management"
in order to better understand the Company's performance. FAS 131 is
effective for fiscal years beginning after December 15, 1997, with interim
segment disclosures not required until 1999. The Company has determined
that FAS 131 will not have a material impact on the financial statements
because the Company has only one business: the design, sale, and
manufacture and building of new industrial cooling towers and retrofitting
existing industrial cooling towers and cooling tower components.
5
<PAGE>
In June, 1998 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("FAS 133"). FAS 133 establishes a new
model for accounting for derivatives and hedging activities and supersedes
and amends a number of existing standards. FAS 133 is effective for fiscal
years beginning after June 15, 1999. The Company has determined that FAS
133 will not have a material impact on the financial statements because the
Company does not have material foreign exchange, commodities or interest
rate risk, and therefore does not enter into derivatives contracts often.
5. SUBSEQUENT EVENTS
On July 20, 1998 the Company entered into an exclusive licensing agreement
with Electronic Descaling 2000, Inc. ("ED 2000") for the manufacturing,
sales and servicing rights to a technologically advanced scale control
unit. The Company will exclusively market the equipment to prevent and
eliminate costly scale buildup within cooling water loops and cooling
towers for various industries worldwide.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
Global Water Technologies, Inc. (the "Company"), primarily through its
wholly owned subsidiary, Psychrometric Systems, Inc., is in the business of
designing, selling, manufacturing and building industrial cooling towers,
repairs and maintenance in the retrofit of existing industrial cooling
towers and cooling tower components for these and similar facilities. The
Company markets its products and services worldwide to the following
industries: electric power utilities; process (such as agricultural,
industrial and pharmaceutical process industries); petrochemical; chemical;
heating, ventilation and air-conditioning ("HVAC"); manufacturing; pulp &
paper and other industries utilizing cooling towers. Typical customers
include companies such as Archer Daniels Midland, Amoco, Mitsubishi, Mobil,
Texaco, Bechtel, Fluor Daniel, Inc. and other large corporations around the
world. In June of 1998, the Company's President and Chief Executive
Officer, George Kast, was named the Entrepreneur of the Year for the Rocky
Mountain Region. Kast received top honors in the category of "High-Tech
Manufacturing and Design" and will now attend the International
"Entrepreneur of the Year" program and conference to be held in Palm
Springs, California in November.
The Company derives revenue from the following principal sources: new
cooling tower sales, retrofits to existing cooling tower construction
repair projects, and spare parts and supplies to existing cooling tower
customers. The Company custom designs and constructs wooden, fiberglass
and concrete towers for its customer base worldwide.
The Company recognizes engineering and construction contract revenues
using the percentage-of-completion method, based primarily on contract
costs incurred to date compared with total estimated contract costs.
Contracts on new cooling towers are segmented between types of services,
such as engineering and construction, and accordingly, gross margin related
to each activity is recognized as those separate services are rendered.
Changes to total estimated contract costs and to contract revenues via
change orders are recognized in the period in which
6
<PAGE>
they are determined. In addition, a provision is made for the entire
amount of future estimated losses, if any, on contracts in progress in the
period in which such losses are determined.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
Total revenues were derived from engineering, construction, retrofits
and spare parts of cooling towers. For the three month period ended June
30, 1998, total tower revenue increased 42.2% to $6,954,064 as compared to
$4,888,863 for the three month period ended June 30, 1997. International
revenues comprised 16.4% of total revenues in 1998 versus 13.8% in 1997,
with such increase resulting from increased emphasis on the international
market.
Contracts awarded ("bookings") during the three month period ended
June 30, 1998 increased 7.6% to $8,688,692 from $8,069,545 in 1997. The
increase in bookings awarded is due to an overall increase in the number of
projects won and increased selling expenses to take advantage of market
opportunities. The 1997 amounts included one large international project
representing 37.2% of the total bookings in the three month period ending
June 30, 1997. Backlog increased from $14,455,817 at March 31, 1998 to
$16,190,446 at June 30, 1998. Of this total, approximately $4.3 million is
expected to be recognized as revenue in 1999.
The Company's cost of construction increased 35.5% from $4,011,158 in
1997 to $5,434,506 in 1998. As a percentage of revenues, cost of
construction decreased from 82.0% in 1997 to 78.1% in 1998. Management
anticipates that the actual gross margins for calendar year 1998 will be
comparable to 1998 year to date amounts. The absolute increase in cost of
construction resulted primarily from a 42.2% increase in corresponding
revenues. Due to significant competition, there can be no assurance that
the Company can maintain its profit margins in the future.
Selling, general and administrative expenses increased 52.2% from
$950,761 in 1997 to $1,447,065 in 1998 as the Company continues to make an
investment in its future. As a percentage of revenues, these expenses
increased from 19.4% in 1997 to 20.8% in 1998. As a percentage of new
bookings which increased 7.6%, these expenses increased from 11.8% in 1997
to 16.7% in 1998. In support of greater anticipated bookings, the overall
increase in selling, general and administrative expense primarily occurred
in two areas. The first was in personnel related costs, primarily from an
increase in number of staff and the necessary facilities to support the
increased staff. The second occurred in such areas as travel related to
international sales opportunities and increased participation in national
and international trade shows. Management believes that the increases in
selling expenses will continue to have a positive impact on the increase in
bookings and the recognition of the related revenues for future periods.
Research and development costs increased 83.1% to $56,285 in 1998 from
$30,742 in 1997. These costs include the research and development facility
in Idaho and the expenses associated with the Company's diversification
effort into water treatment and water purification.
Operating income (loss), based on the explanations noted above,
increased from a loss of ($103,798) in 1997 to a an operating income of
$16,208 in 1998.
7
<PAGE>
Other income and expense primarily consisted of interest expense,
which increased slightly, related to the Company's various debt financings.
Income taxes (benefit) decreased from a benefit of ($43,845) with an
effective 32.6% tax rate in 1997 to a tax benefit of ($4,076) with an
effective tax rate of 27.3% in 1998.
Net income (loss) improved from ($90,777) in the three month period
ended June 30, 1997 to a net loss of ($10,853) in the similar period in
1998. Basic and fully diluted income (loss) per share was ($0.0000) in the
three month period ended June 30, 1998 and ($0.0003) in 1997.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Total revenues were derived from engineering, construction, retrofits
and spare parts of cooling towers. For the six month period ended June 30,
1998, total tower revenue increased 41.4% to $11,471,647 as compared to
$8,112,349 for the six month period ended June 30, 1997. International
revenues comprised 20.8% of total revenues in 1998 versus 13.9% in 1997,
with such increase resulting from increased emphasis on the international
market.
Contracts awarded ("bookings") during the six month period ended June
30, 1998 increased 45.5% to $16,055,847 from $11,035,805 in 1997. The
increase in bookings awarded is due to an overall increase in the number of
projects won and increased selling expenses to take advantage of market
opportunities. The 1997 amounts included one large international project
representing 27.2% of the total bookings in the six month period ending
June 30, 1997. Backlog increased from $11,606,245 at December 31, 1997 to
$16,190,446 at June 30, 1998. Of this total, approximately $4.3 million is
expected to be recognized as revenue in 1999.
The Company's cost of construction increased 42.4% from $6,199,290 in
1997 to $8,825,854 in 1998. As a percentage of revenues, cost of
construction increased from 76.4% in 1997 to 76.9% in 1998. The absolute
increase in cost of construction resulted primarily from a 41.4% increase
in corresponding revenues. Due to significant competition, there can be no
assurance that the Company can maintain its profit margins in the future.
Selling, general and administrative expenses increased 48.5% from
$1,786,765 in 1997 to $2,652,809 in 1998 as the Company continues to make
an investment in its future. As a percentage of revenues, these expenses
increased from 22.0% in 1997 to 23.1% in 1998. As a percentage of new
bookings which increased 45.5%, these expenses increased from 16.2% in 1997
to 16.5% in 1998. In support of greater bookings, the overall increase in
selling, general and administrative expense primarily occurred in two
areas. The first was in personnel related costs, primarily from an
increase in number of staff and the necessary facilities to support the
increased staff. The second occurred in such areas as travel related to
international sales opportunities and increased participation in national
and international trade shows. Management believes that the increases in
selling expenses will continue to have a positive impact on the increase in
bookings and the recognition of the related revenues for future periods.
Research and development costs increased 48.9% to $108,317 in 1998
from $72,769 in 1997. These costs include the research and development
facility in Idaho and the expenses associated with the Company's
diversification effort into water treatment and water purification.
9
<PAGE>
Operating income (loss), based on the explanations noted above,
decreased from an income of $53,525 in 1997 to a an operating loss of
($115,333) in 1998.
Other income and expense primarily consisted of interest expense.
Income taxes (benefit) increased from a benefit of ($1,604) with an
effective 15.0% tax rate in 1997 to a tax benefit of ($59,021) with an
effective tax rate of 33.4% in 1998.
Net income (loss) was ($117,510) in the six month period ended June
30, 1998 compared to a net loss of ($9,094) in the similar period in 1997.
Basic and fully diluted income (loss) per share was ($0.0004) in the six
month period ended June 30, 1998 and ($0.0000) in 1997.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company had working capital of $744,799 compared
to a working capital deficit of ($33,751) at June 30, 1997. The Company's
cash flow provided by and used in its operating, investing and financing
activities during the first six months of 1998 and 1997 are as follows:
1998 1997
---- ----
Operating activities $ (219,688) $ 806,192
Investing activities (183,165) (85,459)
Financing activities 410,305 (514,428)
------------ ------------
Net increase (decrease) in
cash and cash equivalents $ 7,452 $ 206,305
============ ============
The Company's capital requirements for its continuing operations
consists of its general working capital needs, scheduled payments on its
debt obligations, new business opportunities and capital expenditures.
Management anticipates that due to the growth in sales volume, the
Company's operating activities will require cash investment during the
remainder of the year. Management believes that its current debt
facilities and/or possible capital market funding will be sufficient for
its operational cash investment requirements during the next four quarters.
At June 30, 1998, net costs in excess of billings and estimated
earnings on uncompleted contracts were $1,508,767 as compared to net costs
in excess of billings and estimated earnings on uncompleted contracts of
$1,047,985 at June 30,1997.
Budgeted capital expenditures during the remainder of the year consist
of ongoing amounts for computer equipment, vehicles and office equipment
for anticipated growth.
The Company has a line of credit with a commercial lender totaling
$1,025,000 to finance its working capital needs partially secured by a
stockholder's and the Company's certificates of deposit. On July 24, 1998,
the Company's certificate of deposit in the amount of $228,687 was released
by the lender. As of June 30, 1998, $738,000 was outstanding on this line
of credit. The note matures on January 3, 1999. Management expects that
this line of credit will be refinanced into a long-term obligation when the
obligation becomes due. The interest rate on the note is 7.75%. In
addition to the interest rate stated, the Company pays the above noted
stockholder additional interest of $4,065 per month on his certificates of
deposit securing the above mentioned Company notes.
9
<PAGE>
The Company also has a line of credit with a commercial lender
totaling $1,000,000 to finance its working capital needs on foreign
projects. This line of credit is guaranteed by the Export Import Bank of
the United States and subjects the Company to certain financial covenants
including minimum net worth requirements. The line of credit bears
interest at prime plus 1% and matures on March 17, 1999. As of June 30,
1998, there was no outstanding balance on this line of credit.
The Company has term loans secured by the Small Business
Administration with an outstanding balance at June 30, 1998 of $616,948
including a new $475,000 SBA loan which fully amortizes in June of 2003.
Scheduled principal payments on these term notes are $195,012 over the next
twelve months and interest rates are stated at one percent over prime. The
Company has various term notes secured by Company vehicles. The
outstanding balance on these notes at June 30, 1998 was $117,180 with
scheduled principal payments over the next twelve months of $46,387 with
interest rates ranging from 9.5% to 10.75%.
Management believes that the Company will have sufficient capital
resources to fund its ordinary capital requirements for at least the next
four quarters for continuing operations. No assurance can be made that the
Company will have sufficient working capital to continue its requirements
for continuing operations beyond the next four quarters.
FORWARD LOOKING STATEMENTS
Statements of the Company's or management's intentions, beliefs,
anticipations, expectations and similar expressions concerning future
events contained in this document constitute "forward looking statements"
as defined in the Private Securities Litigation Reform Act of 1995. As
with any future event, there can be no assurance that the events described
in forward looking statements made in this report will occur or that the
results of future events will not vary materially from those described in
the forward looking statements made in this report. Important factors that
could cause the Company's actual performance and operating results to
differ materially from the forward looking statements include, but are not
limited to, changes in the general level of economic activity in the
markets served by the company, competition in the cooling tower industry
and other industries where the Company markets its products and the
introduction of new products by competitors in those industries, delays in
refining the Company's manufacturing and construction techniques, cost
overruns on particular projects, availability of capital sufficient to
support the Company's level of activity and the ability of the Company to
implement its business strategy.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of the Company was held on June 30, 1998
10:00 a.m. at the Company's principal offices in Golden, Colorado. A total
of 287,717,011 shares of common stock, which is 97.9% of the shares
outstanding on May 27,1998 were represented at the meeting, either in
person or by proxy. Three proposals were approved by the shareholders with
the vote tabulations noted as follows:
1. The following directors were elected to serve until the next Annual
Meeting of Shareholders and until their successors have been elected
and qualified.
- ----------------------------------------------------------------------
DIRECTORS: FOR AGAINST ABSTAIN
- ----------------------------------------------------------------------
George A. Kast 287,701,011 0 16,000
- ----------------------------------------------------------------------
Robert L. Tomz 287,701,011 0 16,000
- ----------------------------------------------------------------------
2. The 1998 Stock Option Plan for employees, officers and consultants was
approved.
----------------------------------------------
FOR AGAINST ABSTAIN
----------------------------------------------
283,637,395 78,300 5,100
----------------------------------------------
3. The Board of Directors, at its discretion and when and if it deems
appropriate, was granted the authority and discretion to effect a: (i)
reverse stock split not to exceed 1-for-100, whereby an as yet
undetermined number of shares of currently outstanding $0.00001 par
value Common Stock of the Company (the "Old Common Stock") would be
combined into one share of new Common Stock (the "New Common Stock");
(ii) a corresponding amendment to the Company's Certificate of
Incorporation to reduce the number of authorized shares of Common
Stock in the same ratio as the reverse split; and (iii) a
corresponding increase in the par value of the shares of Common Stock
in the same ratio as the reverse split.
----------------------------------------------
FOR AGAINST ABSTAIN
----------------------------------------------
279,696,378 8,020,633 0
----------------------------------------------
These were all the matters submitted to the shareholders at the annual
shareholders meeting.
11
<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.
GLOBAL WATER TECHNOLOGIES, INC.
Date: August 6, 1998 By: /s/ George A. Kast
----------------------------------
George A. Kast
President, Chief Executive Officer
and Chairman of the Board
Date: August 6, 1998 By: /s/ Robert L. Tomz
----------------------------------
Robert L. Tomz
Chief Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM GLOBAL WATER TECHNOLOGIES' QUARTERLY REPORT TO
STOCKHOLDERS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 126,339
<SECURITIES> 0
<RECEIVABLES> 4,518,957
<ALLOWANCES> 175,616
<INVENTORY> 318,923
<CURRENT-ASSETS> 7,328,214
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0
100
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