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Global Water Technologies releases shareholder letter
December 19, 2010
Dear fellow shareholders,
After two years of concentrated efforts, we believe Global Water Technologies has reached a stable point from which it can grow. Essentially we have transitioned from a troubled turnaround operation into an entrepreneurial start-up, which is an exciting place to be!
That means we have both challenges and opportunities as we head into 2011.
In the July shareholder letter, we noted specific accomplishments in reducing overhead and completing all outstanding legal matters. As anticipated, we have engaged a CPA to review the company's financials and take steps to report regular results. While such numbers will outline the difficulties of operating over the past two years, we believe providing transparency is an important step forward for the company as a public entity.
We have also taken steps to establish Global Water as a small technology company that can move quickly to identify new opportunities and develop them with strategic partners. Stressing the importance of both innovation and collaboration is important for technology companies and today's world presents many opportunities for such work.
As outlined on our web site, we have identified four stages for new technologies that provide a framework for developing innovative ideas into profitable commercial operations. We believe this will allow us to serve an important role in facilitating the connection between new water technologies and those who wish to invest in this area.
Our Electric H20 subsidiary had exports to Europe, Canada and Asia in the past year. Although revenues continue to be minimal, they have solid potential to expand and do not rely on any one country or economy. We are also working on ways to update the technology of the ED2000 product line and expand its applications.
In 2010, Global Water created an advisory board that brings diversity in both expertise and geography. We are thankful to these members for assisting the company during the past year and look forward to continued progress with them as we work to create value for all of our stakeholders in the future.
In the fourth quarter of the year, Global Water identified ballast water treatment as a new area of interest and began seeking new technologies that can be applied to this growing market. We raised some initial funding to begin research on promising technologies from Australia and Canada and plan to proceed with lab and pilot testing of those in 2011. New regulations affecting shipping in the Great Lakes make this an important economic issue regionally and one that will have worldwide impact in the coming years.
We have also been working over the past year to lay the groundwork for other new technologies and projects that can help the company grow. While the nature of new technology development means that some ideas will succeed and others will fail, we are taking a balanced approach in our projects to mitigate that risk. Our business model allows the company to create project teams that can move individual efforts forward independently, while seeking synergies with our strategic partners.
As a technology company we appreciate the importance of intellectual property and have retained good legal counsel in this area. The most significant development of our intellectual property portfolio in 2010 was the completion of the company's patent application and review for the on-site production of sulfuric acid. We have received a Notice of Allowance from the U.S Patent and Trademark office and anticipate an issuance in the first quarter of 2011.
All of this work has been completed while reducing the number of outstanding shares in Global Water. As a result of the successful completion of litigation in 2010, some 195 million shares were returned to the company treasury. We have used these shares to secure professional services and also to reduce debts incurred over the past two years. As a result, there are currently 155 million shares reserved for convertible notes that mature from 2011 to 2013 and have a face value of $367,500. These notes have been structured with fixed conversion rates on terms that the company believes are favorable.
As the company moves forward with its business plan in 2011, additional funding for new projects will be necessary. Such funding may result in the issuance of additional shares and a move to restructure the existing shares so that they are not trading in fractions of a penny. The company believes this will benefit existing shareholders by improving the company's visibility to capital markets and providing better access to funding opportunities on favorable terms.
In order to complete this objective, the company also anticipates filing information with the Pink Sheets so that its stock moves from a status of No Information to a status of Limited Information. According to statistics from the Pink Sheets, such a move is generally accompanied by significantly higher interest and trading volume from investors.
These plans are all designed to give Global Water Technologies a solid base from which to operate as it seeks to create value for all of its stakeholders who are seeking opportunities to follow its founding motto of investing in the world's most precious resource over the coming years.
As 2010 draws to a close, we would like to thank all of our shareholders, customers, vendors, associates and partners for your continued support and wish you all a blessed holiday season.
Chairman and CEO
FORWARD-LOOKING STATEMENT_ Statements relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments, and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors inherent in doing business. Forward-looking statements may be identified by terms such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "forecasts," "potential," or "continue," or similar terms or the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The company has no obligation to update these forward-looking statements.