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

                           FORM 10-KSB/A

(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
     OF THE SECURITIES EXCHANGE ACT OF 1934

     For the fiscal year ended June 30, 2003

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
     OF THE SECURITIES EXCHANGE ACT OF 1934

     For the transition period from ____ to ____


                 Commission File Number 1-16165


                   AQUACELL TECHNOLOGIES, INC.
         ----------------------------------------------
         (Name of small business issuer in its charter)


            Delaware                        33-0750453
-------------------------------  --------------------------------
(State or other jurisdiction of         (I.R.S. Employer
 incorporation or organization)        Identification No.)

  10410 Trademark Street, Rancho Cucamonga, CA          91730
------------------------------------------------    -------------
    (Address of principal executive offices)          (Zip Code)

Issuer's telephone number:  (909) 987-0456

Securities registered pursuant to Section 12(b) of the Act:  None

Securities  registered  pursuant to Section  12(g)  of  the  Act:
Common Stock, par value $.001 per share

   Check whether the issuer (1) filed all reports required to  be
filed  by Section 13 or 15(d) of the Securities Exchange  Act  of
1934  during the preceding 12 months (or for such shorter  period
that  the issuer was required to file such reports), and (2)  has
been  subject to such filing requirements for the past  90  days.
Yes _X_  No ____

   Check  if there is no disclosure of delinquent filers pursuant
to  Item 405 of Regulation S-B contained herein, and will not  be
contained, to the best of issuer's knowledge, in definitive proxy
or  information statements incorporated by reference in Part  III
of this Form 10-KSB or any amendment to this Form 10-KSB. [X]

   The information required in Part III by Items 9, 10, 11 and 12
is  incorporated by reference to the issuer's proxy statement  in
connection  with  the 2003 Annual Meeting of Shareholders,  which
will  be  filed by the issuer within 120 days after the close  of
its fiscal year.

  State issuer's revenues for its most recent fiscal year:
$1,588,000.

   As  of  September 15, 2003, the aggregate market value of  the
issuer's  Common Stock (based on its reported last sale price  on
the American Stock Exchange) held by non-affiliates of the issuer
was $21,216,101.

   At  September  25, 2003 10,429,255 shares of  issuer's  Common
Stock were outstanding.


                             PART I

ITEM 1.   BUSINESS

Overview

   AquaCell Technologies, Inc. (the "Company") is engaged in  the
manufacture  and  sale  of  products  for  water  filtration  and
purification  through our operating subsidiaries,  Global  Water-
Aquacell,  Inc. and Water Science Technologies, Inc.  (WST).  Our
products   address  various  water  treatment  applications   for
industrial,  commercial, institutional and residential  purposes.
These  applications range from providing purified drinking water-
through  our  point-of-use patented self-filling  Purificr  Water
Cooler  and  production  of water bottling  plant  equipment-  to
equipment for processing water for ultra-pure purposes,  such  as
micro-chip  and  pharmaceutical manufacturing.  The  Company  was
incorporated in Delaware on March 19, 1997.

  Our flagship product is our patented five-gallon self-refilling
bottle  Purific water cooler, manufactured by our  Global  Water-
Aquacell subsidiary.  The various filtration systems available on
our  cooler  contain  different combinations  of  systems,  which
utilize  sediment filters, reverse osmosis, carbon block,  multi-
media  filters  and  ultra-violet light.  We replace  traditional
five-gallon  bottle  water coolers with a  permanently  installed
convenient alternative where the bottle never needs changing  and
water bottles no longer need to be delivered, stored or replaced.
In  addition, we replace water fountains where users tend to have
greater concerns as to sanitation and water quality.

Water Purification Industry Background

   Warning  of  a mounting water crisis, the United  Nations  has
designated  2003  as  the  "International  Year  of  Freshwater",
stating,  "Water is likely to become a growing source of  tension
and   fierce  competition  between  nations  if  present   trends
continue.".  The UN has reported that more than half of  humanity
will be living with water shortages within 50 years.  However, an
article   appearing  in  the  June  2003  Water  Conditioning   &
Purification  magazine, states that wars over water are  unlikely
since  it  would  cost  far  less to build  water  treatment  and
desalination  systems  to produce water for  a  given  country  -
giving rise to the water purification industry.

  The highly fragmented water purification industry has thousands
of  companies involved in various capacities, including companies
which design fully integrated systems for processing millions  of
gallons  of  water  for  municipal,  industrial,  and  commercial
applications,  down  to  the  independent  water  delivery  route
person.

   According to an article appearing in The Wall Street  Journal,
water  supply businesses generate approximately $400  billion  in
revenue  worldwide  annually. Demand for water  purification  has
continued to grow nationally and internationally due to  economic
expansion, scarcity of usable water, concern about water  quality
and regulatory requirements.  One of the fastest growing segments
of the industry is the drinking water segment, including point-of-
use  filtration systems for providing purified drinking water and
bottled drinking water.

  In November 2002, the Wall Street Journal reported that the new
kitchen status symbol is the water cooler, and that home delivery
service of water is increasing.  Sales of water coolers at retail
has  escalated due to consumer demand, according to the June  16,
2003  Weekly of Home Products Retailing.

U.S. Drinking Water Analysis

   While  many consumers use water filtration systems  and  drink
bottled  water for improved taste, there are other more important
reasons to do so.

   Risks of Tap Water.  Tap water, regardless of its source,  may
contain  certain  contaminants  that  can  affect  one's  health.
Although  municipalities are required to provide  drinking  water
which  complies  with  the Safe Drinking  Water  Act,  the  water
supplied  to  homes  from municipalities  may  contain  startling
levels of chlorine in addition to bacteria, toxins and parasites.
Although  the  water may be purified upon leaving  the  treatment
facility,  impurities may be picked up from  the  pipes  used  to
transfer it to the tap.  Lead may also leach into the water  from
pipes, especially in older construction.

   In  the  United States, water quality is being compromised  by
pollution, aging municipal water systems, and contaminated  wells
and  surface water. According to an August 12, 2002 U.S. News and
World Report article, researchers question whether Americans  are
getting  sick  from their drinking water far more often  than  is
recognized.  The report further states that the next  five  years
will  see more new rules than have been adopted in all the  years
since the enactment of the Safe Drinking Water Act in 1974.

   Cost  estimates for upgrading municipal water systems  in  the
United  States  range  from $151 billion  to  $1  trillion,  with
projected  costs as high as $6900 per household  in  some  areas.
Additionally,  costs  for  protection  stemming  from   potential
terrorism  will  cost  $450  million  for  Congressional  ordered
vulnerability studies, with an additional $1.6 billion needed for
basic security at pumping stations and treatment plants.

   The  awareness level of consumers of the potential hazards  of
drinking  tap  water is continuously increasing, and  we  believe
that  more  educated consumers will be seeking to  minimize  such
potential  risks through the purchase of point-of-use  filtration
systems.   An  article  appearing in  the  September  2002  Water
Technology   magazine,  included  predictions  from  point-of-use
experts   on   the  industry's  future.   The  article   includes
statements  that the home water treatment market will  grow  from
its  current 15 percent penetration to near 100%, with every home
having a point-of-use water drinking water system within the next
20  years,  as  point-of-use  equipment  will  become  a  regular
solution to some municipal water quality problems.

    Problems With Bottled Water.  While some people have resorted
to  drinking  bottled water as a safe alternative to  tap  water,
even bottled water can contain impurities. In February 1999,  the
Natural Resources Defense Council released an extensive four year
scientific  study  of bottled water sold in  the  United  States,
titled  "BOTTLED  WATER: Pure Drink or Pure  Hype?"   This  study
included  testing  of more than 1000 bottles  of  103  brands  of
bottled  water.   One- third of the bottled  waters  tested  were
found,  in  at  least  one  test sample,  to  contain  levels  of
contamination that exceeded allowable limits under  either  state
or  bottled  water standards.  Contaminants found in the  bottled
waters   included  synthetic  organic  chemicals,  bacteria   and
arsenic.    The   study  further  revealed  that,  according   to
government and industry estimates, 25% to 40% of bottled water is
just  tap  water- sometimes with additional treatment,  sometimes
not.   The conclusion of the study was that bottled water is  not
necessarily any better regulated, purer, or safer than  most  tap
water.

   In  June, 2003 the nation's largest bottled water company  was
charged with falsely advertising that the source of the water was
a  pristine  protected  spring, when  allegedly  it  is  actually
heavily treated ground water.

   The  growth of bottled water sales, particularly in individual
serve  bottles, has lead to an environmental issue with discarded
water  bottles  creating  a crisis in landfills.   These  bottles
remain  in  the  landfills forever, unless they are  incinerated,
which  releases  toxic fumes into the air  that  harm  the  ozone
layer.  In California alone, 3 million bottles per day are tossed
into  landfills  (1  billion  per year),  which  is  expected  to
increase with the popularity of bottled water.

Our Global Water-Aquacell, Inc. Subsidiary

   Our  flagship  product is our patented PURIFICr Water  Cooler.
The  Purific  cooler is hooked up to a standard  municipal  water
supply.  The water is filtered and purified through multiple step
systems and the treated water then automatically and continuously
fills  the permanently attached five-gallon bottle on the cooler.
Our  patents  pertain  to the attachment of  the  bottle  to  the
cooler,  and  the  float  valve  in  the  bottle,  providing  the
automatic refilling.

   The filtration systems available on the Purific cooler vary in
complexity; however, each system contains the proprietary  multi-
stage  Aquacell Multi-Media Filter set. These unique  multi-media
filters contain various medias known to filter certain impurities
from water, including activated carbon, activated alumina, KDF  r
and  Environmental  Protection  Agency  (EPA)  registered  silver
impregnated carbon, used to prohibit bacterial growth,  a  common
problem  with simple carbon filters.   EPA registration is  given
to  a  product only after evidence is submitted to validate  that
the labeling claims are true and that it does not impart over  50
ppb  of  silver  to  the treated water.  EPA registration  is  an
important  selling aid, as it makes the customer aware  that  the
product  is  established  and reliable.  The  Aquacell  was  also
involved  in  a  study performed by the EPA for effectiveness  in
removing various waterborne contaminants.

Purific Cooler Models:

   We  manufacture five different models of Purific water coolers
with  varying complexity of filtration systems, designed to  meet
the needs of the customers to which they are sold.

     Purific  2001 - The Purific 2001 is equipped with  our  most
comprehensive triple purification and filtration system  designed
to  protect  against potentially harmful foreign contaminates  in
drinking  water.   The system features a pressure  regulator  and
water  monitor with an enclosed filtration case that also  serves
as  a  leak detector with an automatic shutoff system. The target
market   is  a  corporation  seeking  the  best  possible   water
purification system in light of the events of September 11, 2001.

      Purific 500 - Our best selling system is equipped with  the
Aquacell  multi media and carbon block filtration in addition  to
either ultraviolet light or reverse osmosis.  The system includes
a  pressure  regulator and water monitor.  The target  market  is
Fortune 1000 companies.  Our filtration systems on this unit have
been tested and validated by the Water Quality Association (WQA),
which  is a trade association comprised of 2,600 members  in  the
household,   commercial,  industrial  and  small   system   water
treatment industry, and has earned the WQA Gold Seal of Approval.

     Purific  300 - The Purific 300 combines Aquacell multi-media
filtration with either ultraviolet light or reverse osmosis.  The
target  market  is  mid-size companies who have moderate  monthly
bottled water bills.

     Purific  100  -  A  basic  Aquacell  multi-media  filtration
combined with a sediment filter comprises the filtration  system.
The  target  market  is  small companies,  or  those  seeking  to
primarily just improve the taste of the tap water.

     Purific  50  - Designed for the retail consumer market,  the
Purific 50 provides Aquacell multi-media filtration.

      Replacement Filters - We also sell replacement filters  for
our  Purific  water  coolers.   The  filtration  systems  on  our
patented water coolers require replacement after 2,000 gallons of
water  have passed through the system or after one year from  the
date  of  installation, whichever comes first.   We  contact  our
customers on a regular basis to facilitate timely replacement  of
filters.  Customers with high water usage often stock replacement
filters.    The   revenue  from  replacement  filters   will   be
significant and will increase from year to year as we  sell  more
water coolers and other systems.

   In order to expand the product line to new sales channels,  we
are  offering  a system that will be marketed under the  AquaCell
name, which will include one commercial grade filter manufactured
by  a  large,  well-established water filtration  company.   This
filter is approved by the National Sanitation Foundation, and  is
used  by the top fast-food, convenience stores and numerous other
food  service  locations  for  the  treatment  of  water  serving
beverage bars and other food and beverage applications.

Advantages of the Purific Water Cooler

   The  Purific cooler's main advantages over bottled  water  are
Cost,  Convenience  and  Quality.  Since  the  tragic  events  of
September  11,  2001 an additional benefit of the Purific  cooler
has  emerged,  and  that  is the Security aspect  of  eliminating
potential  risk of bottled water deliveries.   Other benefits  of
Purific include:

  .  Saves money. Our self-filling cooler has been proven to save
     most companies a considerable amount of money over the costs
     of bottled water alternatives.

  .  No  bottles  to  change.  When  changing water bottles, most
     people  spill  or  splash  the water, and often a relatively
     strong person  must  be  located to  change the bottle. Also
     the  cleanliness  of  the  hands  of the person changing the
     bottle is  an issue,  since anything on their hands will end
     up in the water.

  .  Reduce  potential  worker's  compensation claims.  Potential
     worker's  compensation  claims from injuries due  to lifting
     the 40-pound bottle can be costly.

  .  No   bottles   to   store.  Replacement  water  bottles  are
     cumbersome to store, taking up a lot of valuable space in an
     office.  The higher the rent, the more it costs to store the
     water.

  .  Never   run   out   of  water.   Since  our  Purific  cooler
     continuously  refills  itself  as  water  is  dispensed, the
     cooler always has water available when needed.

  .  No   delivery  problems.   Deliveries of bottled  water  can
     disrupt   office  operations,  as  well  as  pose  potential
     security  risks.   Additionally,  in  large office buildings
     wait  time  for  freight  elevators  can delay bottled water
     delivery   by   several   hours,   further   adding  to  the
     inconvenience of bottled  water delivery.

  .  Freshly filtered and purified water.  The quality of bottled
     water varies greatly depending  upon  the source and whether
     or not it  is  filtered  or purified.  Also, water which has
     been stored  in  certain  areas  can  absorb  taste and odor
     through  the bottle.  The  water in our Purific water cooler
     maintains   its  freshness   as   it  is  constantly   being
     replenished.

Marketing of the Purific Water Cooler

   Beginning  in January 2002, Corbett Water Technologies,  Inc.,
(CWT)  a  company with which we had signed an agreement  for  the
marketing and distribution of our Purific water coolers,  built a
sales   force  through  the  recruitment  of  experienced   sales
personnel  from the largest bottled water delivery companies  for
sales  of Purific coolers.   In late September 2002, CWT  made  a
decision  to  restructure its business model, reduced  its  sales
staff and did not implement a plan for national marketing.  As  a
result,  we  restructured our relationship with CWT, whereby  CWT
relinquished its exclusive distribution rights, but is continuing
to   sell   Purific   coolers   on  a  non-exclusive  basis.  The
renegotiated distribution agreement with  the  counterparty  (see
Note K-2 of the  Financial  Statements)  contains a  written  put
option entitling the counterparty to $1,339,000 for  its  451,807
shares of the  Company.  The  Company  has  pledged 5% of  future
revenues of its Global Water-Aquacell, Inc. to compensate for any
shortfall in  the  counterparty's  proceeds  from  the  sales  of
Company stock.

    In  June  2002,  we  signed  a  distribution  agreement  with
Connecticut   Water  Service,  an  investor-owned  public   water
utility.   Connecticut Water markets our Purific  cooler  to  its
customers  in  Connecticut and other areas in  New  England.  The
program began with Connecticut Water distributing solely  to  its
commercial  customers.   The program is now being rolled  out  to
include  marketing of the new AquaCell branded  cooler  to  their
residential customers.

   In  May  2003 we announced a successful product test that  was
funded by a Fortune 100 company on our Purific water cooler.  The
results of this test confirmed the competitive advantages of  the
Purific  system,  particularly for the  residential  market,  the
fastest growing segment of the bottled water industry.

      Prior  to  signing these agreements, we  sold  our  Purific
coolers directly to corporations, with an emphasis on Fortune 500
headquarter  locations  and  the US Government  under  a  General
Services  Administration contract, to which we continue  to  sell
directly.   Additionally, we have an arrangement with Roto-Rooter
Plumbers  for the installation and sales of our Purific  coolers.
We  intend to maintain a small in-house sales force and  rely  on
our marketing partners for most of our sales.

   Additional  channels  of distribution are  being  marketed  to
through our AquaCell Media subsidiary, as described below.

Our Water Science Technologies, Inc. Subsidiary

   In  March  2002, AquaCell closed on its acquisition  of  Water
Science  Technologies (WST), a Tempe, Arizona based  manufacturer
of integrated water purification and treatment systems.  WST is a
wholly owned subsidiary of AquaCell.

   WST  operates as a manufacturer of custom designed systems  to
meet  a  variety of water purification and treatment needs.   The
company  will continue to manufacture certain custom systems  for
various  applications,  and additionally, management  intends  to
develop  targeted product lines for four specific markets,  which
we believe will position WST for long-term growth.

   The  first area of concentration is purification and  bottling
systems  for  water bottling plants, both foreign  and  domestic.
Bottled water is the fastest growing segment of both the beverage
industry  and the water industry.  WST has manufactured  numerous
systems  for  bottling plants installed throughout  the  US,  and
Central  and South America including systems for brands  such  as
Culligan,  O  Premium,  and  numerous  private-label  supermarket
brands.

   The  second area of concentration will be on systems to  treat
water   for   car  washes,  providing  environmentally   friendly
recycling  and  discharge,  as  well  as  spot-free  rinse.    We
currently supply such systems for use in car washes in a regional
southwest  area,  and will look to expand the program  throughout
the US.

   The  third product line will encompass the restaurant and food
service  industry,  providing protection of  equipment  and  more
consistent quality of food.

   The  fourth product line will target emergency drinking  water
systems, including the recently designed portable system  capable
of converting swimming pool water into drinking water.

  Given  WST's  experience and expertise in  manufacturing  water
store  equipment,  the Company will be opening  water  stores  in
various   locations,  which  it  will  own  and/or   operate   in
conjunction with strategic marketing partners.

   We  anticipate  that these product lines will be  marketed  by
marketing   partners   with  expertise   in   the   corresponding
industries.

Our AquaCell Media Inc. Subsidiary

  In September 2001, we formed a new subsidiary, dedicated to the
selling  of  advertising  space  on  the  bottle  label  of   the
permanently  attached five-gallon bottle of  our  patented  self-
filling Purificr Water Cooler.

   We  are in effect creating a water cooler billboard. Since the
water  cooler is a known congregating location, we believe it  is
the  perfect  venue for advertisers.  The benefits to advertising
on  the  Purific  bottle label include a high  level  of  viewing
frequency; no clutter from competing ads; and long viewing time -
since pages can't be turned, there is no channel surfing or mouse
clicking; and, it is inexpensive.

   Since  the bottle is permanently attached to the water cooler,
the  label - which can be changed intermittently to coincide with
advertising  campaigns - remains intact.   The  program  will  be
rolled out to encompass targeted industries such as health  care,
brokerage   firms,   travel   agencies,   salons,   schools   and
universities.

   The marketing model we have set up for this company will allow
us  to  maintain  ownership of the coolers, and generate  revenue
stream from the sales of advertising space.

   No  revenues were generated by this subsidiary during the year
ended June 30, 2003.

Customers

  Our Global Water customers currently include companies across a
broad  range of industries including investment banking, consumer
products,  aerospace, entertainment, banking,  brokerage  houses,
manufacturing   and  insurance.   Our  customers   also   include
professional  service providers and governmental  agencies.   Our
WST customers include a broad range of industries including water
bottling, car washes, and various manufacturing facilities.

   On May 30, 2003, we completed negotiations for the  return  of
the exclusive distribution rights from our major  customer.  (See
Note O to Financial Statements).  Until the  lengthy  negotiation
process was completed, the Company was impeded from pursuing  new
marketing avenues or channels of  distribution.  Upon  successful
completion of  the  negotiations  we  have  made  new  sales  and
marketing   alliances.   Our   association   with  Beau  Dietl  &
Associates will provide access  to  major  corporations  for  the
marketing  and  sales  of  our  patented  water  cooler  and  the
advertising on  the  permanently  attached  bottle.  Although  no
customer  currently   provides  more  than  10%  of  consolidated
revenues,  we  continue  to  do  business  with such companies as
Philip Morris, Connecticut  Water  and  Morgan  Stanley  and  the
United States government.

Production, Raw Materials and Supplies

   Our  Products  are  manufactured in  our  10,000  square  foot
manufacturing  facility located in Rancho Cucamonga,  California,
and the WST 8,300 square foot facility located in Tempe, Arizona.
Our  California plant is located within a 100-mile radius of  95%
of our suppliers allowing for just-in-time inventory. Our product
has  a  low  cost of manufacturing.  In our Global Water-Aquacell
subsidiary,  less than 10% of product cost is in labor,  allowing
for  high  gross  profit margins because our  operations  do  not
require  a  large  full  time employee  base  and,  when  needed,
temporary employees are readily available.

   Our facility utilizes manufacturing processes that follow  the
guidelines  of  the Water Quality Association. The  manufacturing
process of our various products includes utilization of injection
molded parts, for which we own the molds.  Multiple vendors  have
been  identified  as  sources  for parts  and  supplies  for  our
products  and  we  do  not  anticipate  any  shortages  of   such
materials.

  We maintain a controlled low inventory of finished goods.  Upon
completion   of  manufacture,  each  product  undergoes   quality
assurance  testing prior to shipping and installation.   The  raw
materials  and  components used in these  products  are  commonly
available commodities such as off the shelf water coolers,  water
bottles,  various  fittings,  plastic  tubing,  wiring,   valves,
sediment  filters,  reverse osmosis membrane filters  and  ultra-
violet  lights.  Our products are fabricated from these materials
and  assembled together with products bought from other companies
to  form  an integrated product.  We do not depend on any  single
supplier.   If any supplier were to become unable to perform,  we
believe we could readily find a substitute source.  We are not  a
party to any material long-term fixed price supply contracts.

Government Regulation

   Federal,  state,  local  and foreign  environmental  laws  and
regulations require substantial expenditures and compliance  with
water quality standards and impose liabilities for noncompliance.
We  believe  that  environmental laws and regulations  and  their
enforcement  are,  and will continue to be, a significant  factor
affecting  the marketability of our products.  The  treatment  of
drinking  water  in  the United States is governed  by  the  Safe
Drinking Water Act. The 1996 amendments to the Act emphasize risk
based  standards for contaminants in drinking water, afford small
water   supply  systems  operational  flexibility   and   provide
assistance  to  water  system infrastructures  through  a  multi-
billion-dollar  Drinking Water State Revolving  Fund.   The  Fund
program  assists public water systems with the financing  of  the
costs of drinking infrastructure that is necessary to achieve  or
maintain compliance with the Safe Drinking Water Act requirements
and  to  protect  public health.  The Fund, patterned  after  the
State  Revolving Fund contained in the Clean Water Act,  provides
funding  to  the  states  to  establish  a  renewable  source  of
financing for drinking water infrastructure projects.   The  Fund
program is designed to ensure that the drinking water supplies in
the  United  States remain safe and affordable, and that  systems
that  receive  funding will be properly operated and  maintained.
Regulations  under the Safe Water Drinking Act  also  established
maximum  containment levels for a wide variety of chemicals  that
may  be  present  in drinking water treatment to meet  applicable
standards.

   Any changes in applicable regulations or their enforcement may
affect   our   operations   by  imposing  additional   regulatory
compliance costs on our customers, requiring modification of  our
products or affecting the market for our products.  To the extent
that  demand for our products are created by the need  to  comply
with   such   enhanced  standards  or  their   enforcement,   any
modification  of  the standards or their enforcement  may  reduce
demand,  thereby  adversely  affecting  our  business,  financial
condition or results of operations.  The relaxation or repeal  of
any  such  laws or regulations or the strict enforcement  thereof
could   also   adversely  affect  our  business  and   prospects.
Conversely,  changes  in  applicable  environmental  requirements
imposing additional regulatory compliance requirements or causing
stricter  enforcement of these laws or regulations could increase
the demand for our products.

Competition

   The  drinking  water purification industry is  fragmented  and
highly  competitive due to the large number of businesses  within
certain product areas.  We compete with many companies that  have
greater market penetration, depth of product line, resources  and
access  to capital, all of which could be competitive advantages.
Competitors  of  our  Global  Water-Aquacell  products   include:
bottled water brands such as Arrowhead, Deer Park, Poland Spring,
and  Sparkletts;  water filtration system manufacturers  such  as
Culligan,  which is owned by US Filter Corporation, Brita,  which
is owned by Clorox and Pur, which is owned by Proctor and Gamble;
and  flat-top  point-of-use water cooler  manufacturers  such  as
Oasis, Cordley-Temprite, and Mutual of Omaha's Iinnowave product.
Competitors  of  our  WST  subsidiary  include  water  filtration
systems manufacturers such as US Filter, Ionics, and Osmonics.

   While  we  believe  that we can deliver  our  products  on  an
economically competitive basis, there can be no assurance in that
regard.   In  addition, many competitors have  greater  financial
resources than us to finance their expansion and internal  growth
opportunities.    Consequently,  we  may  encounter   significant
competition in our efforts to achieve our strategic goals.  There
can  be  no  assurance  that  our competitors  will  not  develop
products  that  are  superior to ours or achieve  greater  market
acceptance than our products.  Competition could have a  material
adverse  effect  on  our ability to consummate arrangements  with
customers  or enter into strategic business alliances.  Moreover,
in  response  to changes in the competitive environment,  we  may
make  certain  pricing, service or marketing decisions  or  enter
into  acquisitions  or new ventures that could  have  a  material
adverse  effect on our business, financial condition and  results
of operations.

Intellectual Property

   We  own  a United States and Canadian patent on our automatic-
refilling  purified bottle water cooler.  These  patents  do  not
expire until November 20, 2006 and October 2, 2009, respectively.
We  have  filed for two patents with the US Patent and  Trademark
office,  which  if  granted, would provide exclusive  rights  for
utilizing  the  water cooler bottle as an advertising  mechanism.
We  have  federally  registered our  Purific  and  Water  Science
Technologies   International   trademarks   and   have    pending
applications  to  federally register our  "Never  Change  Another
Bottle"  logo  and  AquaCell marks. We also conduct  business  in
California under the name Global Water Solutions, Inc.  We intend
to   seek   appropriate  additional  trademark   or   servicemark
registrations  in  connection  with  our  product   and   service
offerings.

Research and Development

   We have not spent any material amount of money on research and
development during the last two fiscal years.

Employees

   As  of  June  30,  2003,  we had 19 employees.   None  of  our
employees  are  covered  under collective  bargaining  agreements
although   we   do  have  employment  agreements   with   certain
executives.   Management believes we maintain a good relationship
with our employees.



ITEM 2.   PROPERTIES

   Our  principal  executive office and our  10,000  square  foot
Global  Water-Aquacell  manufacturing  facility  are  located  in
Rancho  Cucamonga,  California  under  a  five-year  lease   that
commenced  on January 1, 1999 and expires on December  31,  2003.
That  lease has an average annual base rent of $69,600.  We  also
maintain an 8300 square foot WST manufacturing facility in Tempe,
Arizona under a five (5) year lease that commenced on November 1,
2001  and expires on October 31, 2006.  That lease has an average
annual  base  rent  of $55,900.  We believe that,  if  necessary,
alternative space is readily available at comparable rates and on
comparable  terms  with respect to all of our leased  properties.
We  also believe that we can obtain additional space necessary to
support  increases in our future operation.  We believe that  the
properties  described above are currently protected  by  adequate
insurance.


ITEM 3.   LEGAL PROCEEDINGS

  None.


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

  None.


                             PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS

   The Company's Common Stock commenced quotation on the American
Stock  Exchange on February 12, 2001 following its initial public
offering.   The  following  table sets  forth,  for  the  periods
indicated, the last sale prices for the Common Stock as  reported
by American Stock Exchange:

Period                                       High      Low
                                              ($)      ($)
Fiscal 2004
     7/1/03 - 9/15/03 .....................  $3.05    $2.06

Fiscal 2003
     Fourth Quarter .......................  $3.15    $0.94
     Third Quarter ........................   1.30     0.60
     Second Quarter .......................   1.00     0.55
     First Quarter ........................   1.10     0.78

Fiscal 2002
     Fourth Quarter .......................  $3.04    $0.83
     Third Quarter ........................   4.18     2.95
     Second Quarter .......................   5.25     3.25
     First Quarter ........................   4.80     3.30


   On September 15, 2003, the last sale price of the Common Stock
as reported by AMEX was $2.99.  On September 15, 2003, there were
119  holders  of  record of the Company's Common Stock  and,  the
Company  believes, over 700 beneficial owners  of  the  Company's
Common Stock.

   The  Company presently intends to retain all earnings for  the
Company's continued growth.  Depending upon the Company's capital
resources  and needs, the Company may pay cash dividends  in  the
future.   The  payment of dividends, if any,  in  the  future  is
within  the discretion of the Board of Directors and will  depend
upon  the  Company's  earnings,  its  capital  requirements   and
financial  condition, and other relevant factors,  although  this
may change based upon the foregoing factors.

Recent Sales of Unregistered Securities

  During the year ended June 30, 2003, the Company made the
following sales of unregistered securities:

<TABLE>
<CAPTION>
                                 Consideration Received
                                 and Description of
                                 Underwriting or             Exemption
                                 Other Discounts to          From          If Option, Warrant or
Date      Title of      Number   Market Price                Registration  Convertible Security,
of Sale   Security      Sold     Afforded to Purchasers      Claimed       Terms of Exercise or Conversion
--------  ------------  -------  --------------------------  ------------  ----------------------------------------
<S>       <C>           <C>      <C>                         <C>           <C>
1/2/03    Options to    184,500  Option granted under        4(2)          All exercisable at $0.60 per share until
          Purchase               1998 Incentive Plan-                      1/02/10 and vesting over 5 year term.
          Common Stock           No cash received.
<S>       <C>           <C>      <C>                         <C>           <C>
4/21/03   Options to     12,500  Option granted under        4(2)          All exercisable at $1.14 per share
          Purchase               1998 Incentive Plan-                      through 4/21/10 and vesting over a 5
          Common Stock           No cash received.                         year term.
<S>       <C>           <C>      <C>                         <C>           <C>
1/22/03   Options to     30,000  Option granted under        4(2)          All immediately exercisable at $0.65
          Purchase               2002 Director's Stock                     per share through 1/22/13.
          Common Stock           Option Plan-
                                 No cash received.
<S>       <C>           <C>      <C>                         <C>           <C>
8/24/02   Warrants to    60,000  No cash received            4(2)          All exercisable at $0.78 per share.
          Purchase               until exercise.
          Common Stock
<S>       <C>           <C>      <C>                         <C>           <C>
3/16/03   Warrants to   150,000  No cash received            4(2)          All exercisable at $1.00 per share.
          Purchase               until exercise.
          Common Stock
<S>       <C>           <C>      <C>                         <C>           <C>
1/6/03    Common Stock  100,000  Issued as compensation in   4(2)          -
                                 connection with financing
                                 transactions.
<S>       <C>           <C>      <C>                         <C>           <C>
4/10/03   Common Stock   25,000  Issued as compensation in   4(2)          -
                                 connection with financing
                                 transactions.
<S>       <C>           <C>      <C>                         <C>           <C>
4/16/03   Preferred     685,000  Issued in connection        4(2); 4(6)    Convertible into Common Stock on a
          Stock                  with private placement                    share for share basis.
                                 at $0.63 per share.
<S>       <C>           <C>      <C>                         <C>           <C>
4/16/03   Warrants to   685,000  Issued in connection with   4(2); 4(6)    All exercisable at $1.16 per share.
          Purchase               private placement-
          Common Stock           No cash received until
                                 exercise.
<S>       <C>           <C>      <C>                         <C>           <C>
5/9/03    Preferred     500,000  Issued in connection with   4(2); 4(6)    Convertible into Common Stock on a
          Stock                  private placement at $0.75                share for share basis.
                                 per share.
<S>       <C>           <C>      <C>                         <C>           <C>
5/9/03    Warrants to   500,000  Issued in connection with   4(2); 4(6)    All exercisable at $1.60 per share.
          Purchase               private placement-
          Common Stock           No cash received
                                 until exercise.
</TABLE>


ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

   When  used  in this Form 10-KSB and in future filings  by  the
Company  with the Commission, statements identified by the  words
"believe",   "positioned",   "estimate",   "project",   "target",
"continue",  "will", "intend", "expect", "future", "anticipates",
and  similar  expressions  express management's  present  belief,
expectations   or  intentions  regarding  the  Company's   future
performance   within  the  meaning  of  the  Private   Securities
Litigation  Reform  Act of 1995.  Readers are  cautioned  not  to
place undue reliance on any such forward-looking statements, each
of  which  speaks only as of the date made.  Such statements  are
subject  to  certain  risks and uncertainties  that  could  cause
actual results to differ materially from historical earnings  and
those  presently anticipated or projected.  The  Company  has  no
obligations to publicly release the result of any revisions which
may   be  made  to  any  forward-looking  statements  to  reflect
anticipated  or  unanticipated events or circumstances  occurring
after the date of such statements.

Overview

   The  following  discussions and analysis  should  be  read  in
conjunction with the Company's consolidated financial  statements
and  the  notes  presented following the  consolidated  financial
statements.  The discussion of results, causes and trends  should
not  be  construed to imply any conclusion that such  results  or
trends will necessarily continue in the future.

   For the year ended June 30, 2003 we increased revenues by  51%
to  $1,588,000  while cutting our per share  losses  by  33%  and
decreasing  our selling, general and administrative  expenses  by
32%  to  $3,044,000.  This  increase  in  revenues  is  primarily
attributable to the growing acceptance of our flagship Purific(R)
Water Cooler in the marketplace.

  On   May   30,   2003   the   Company  successfully   completed
negotiations for the return of the exclusive distribution  rights
for  our  Purific  Water Cooler from Corbett Water  Technologies,
Inc. (CWT) and S&B Technical Products, Inc. (S&B).Under the terms
of   the  agreement,  CWT  and  S&B  relinquished  the  exclusive
distribution  rights  to  AquaCell, but  will  continue  to  sell
Purific coolers on a non-exclusive basis in the areas in which it
achieved  significant sales.  As a direct  result  of  this  nine
month  negotiation process, during which time these entities  did
not purchase any additional coolers, the Company was impeded from
pursuing  new  marketing  avenues or  channels  of  distribution.
While this encumbrance had a negative effect on sales during this
period,  management believes that its decision to  negotiate  for
the  return of these rights will, in the long term, prove  to  be
beneficial for the Company.

  The  Company  is  presently pursuing  other  opportunities  for
sales  and distribution of its self-filling coolers and does  not
anticipate incurring significant marketing costs as it intends to
utilize   channels   of  distribution,  including   joint-venture
marketing  partners, where the selling groups will be responsible
for payment of their own sales and marketing expenses.

   During  May  we  completed a successful product  test  of  our
Purific Water Cooler as the first phase of a project funded by  a
Fortune  100  company  and conducted by a consultant  group  they
hired  for its implementation. Given these favorable results,  we
are proceeding with our plans for marketing the Purific cooler to
the  residential community, the fastest growing  segment  of  the
bottled water industry, as well as other opportunities.

   We  recently teamed up with Beau Dietl & Associates (BDA),  an
internationally renowned security expert for marketing and  sales
of our Purific cooler.  BDA sees the delivery of bottled water as
a  major  security  risk that needs to be  addressed,  which  can
easily be rectified with our Purific cooler.

   During September 2003 the Company commenced negotiations for a
lease  on  a  20,000 square foot facility that  will  triple  its
existing manufacturing capabilities.

Results of Operations

   For  the year ended June 30, 2003 on a consolidated basis,  we
increased revenues by 51% to $1,588,000 as compared to $1,049,000
for the similar period of the preceding year. Approximately 1,400
coolers were sold during the year ended June 30, 2003 as compared
to approximately 800 for the prior year.  The revenue increase is
primarily attributable to an increase in sales to Corbett  Water,
a former distributor, in the amount of approximately $254,000 and
a   sales  increase  by  our  Water  Science  Technologies  (WST)
subsidiary in the approximate amount of $227,000, attributable to
our first full year of ownership.  Revenue resulting from sale of
replacement filters was insignificant during the year ended  June
30,  2003.   Net  loss on a consolidated basis,  attributable  to
common  stockholders,  for  the year  ended  June  30,  2003  was
decreased by 26% to $2,814,000 or $0.33 per share, as compared to
$3,804,000 or $0.47 per share for the prior year. The decrease in
the  loss  is primarily attributable to the increase in revenues,
as  well  as  a  reduction in selling, general and administrative
expenses  of $1,470,000 or 33%. The significant decrease  in  the
selling,  general and administrative expenses was  principally  a
result of a $1,226,000 impairment charge impacting only the prior
period.

   On  a consolidated basis gross margin percentage decreased  to
38%  for the year ended June 30, 2003 as compared to 46% for  the
prior year. This decrease is attributable to the 28% gross margin
maintained  by  our  WST  subsidiary. Our  Global  Water-Aquacell
subsidiary  reflected a gross profit margin of approximately  51%
based on material and direct labor costs reflecting a decrease of
6%  from  the  prior  year.   This decrease  is  attributable  to
increased labor and related costs.

  Salaries  and  wages increased by $291,000 for the  year  ended
June  30,  2003 over the prior year.  This increase is  primarily
attributable  to  salaries  incurred by  our  WST  subsidiary  of
approximately  $203,000 for our first full year of ownership  and
payments  to  senior  management in  the  approximate  amount  of
$107,000.   Legal,  accounting  and other  professional  expenses
decreased by approximately $295,000 for the year ended  June  30,
2003  primarily attributable to terminated consulting agreements.
Stock  based  compensation decreased by $429,000 to $199,000  for
the  year  ended  June  30,  2003.  Other  selling,  general  and
administrative expenses, consisting primarily of rent-  $168,000,
telephone  and  utilities-  $75,000,  travel-  $62,000,  business
promotion-  $153,000,  insurance- $97,000 and  vehicle  expenses-
$101,000  increased by approximately $159,000 to  $1,166,000  for
the  year  ended June 30, 2003.  During the year ended  June  30,
2003  the Company recorded a onetime reduction to fair value,  in
the  amount of $274,000, of its receivable in connection with the
sale of an investment.

   During the year ended June 30, 2003, the  Company  recorded  a
valuation adjustment, in connection with a put option relating to
the return and cancellation of  all  exclusive  distribution  and
marketing rights, in the amount of $140,000.

Liquidity and Capital Resources

  During  the year ended June 30, 2003 we financed our operations
primarily  from  the  collections of receivables  in  the  normal
course  of  business and the sales of equity securities.   During
the year ended June 30, 2003 the Company received net proceeds of
$733,000, after deducting expenses of $73,000, from the  sale  of
1,185,000 shares if its Series A convertible preferred stock.   A
net increase in loans from related parties amounted to $51,000.

  Cash  used  by  operations  during year  ended  June  30,  2003
amounted to $799,000.  Net loss of $2,434,000 was reduced by non-
cash  stock based compensation and loan fee amortization  in  the
amount  of  $288,000, reduction of receivable to fair  value  and
write-off of note and accrued interest in the amount of $333,000,
impairment   loss  on  goodwill  of  $72,000,  depreciation   and
amortization of $58,000, provision for bad debts of  $21,000  and
increased by a reduction in notes receivable reserve of $188,000.
Cash  used  by operations was further decreased by a decrease  in
accounts  receivable  in the amount of $96,000  and  by  accounts
payable and accrued expenses in the amount of $887,000.  Net loss
was   further  decreased  by  net  changes  in  accrued  interest
receivable,  prepaid expenses, customer deposits and  inventories
amounting to $68,000.

  Cash  used  in investing activities during the year ended  June
30,  2003 represented expenditures for property and equipment  in
the  amount of $11,000 decreased by notes issued for the purchase
of equipment in the amount of $7,000, net of repayments.

  Cash  provided  by  financing  activities   was   approximately
$784,000.  The Company borrowed  $51,000  from  related  parties.
Sales  of  Series  A  convertible  preferred  stock  amounted  to
$733,000 net of expenses of $48,000.

  Subsequent to June 30, 2003 the Company  raised  an  additional
$2,296,000 from the sale of equity securities, net of expenses of
$259,000.  The  Company  intends  to  use  the  net  proceeds  of
$2,296,000  from  the  private  placement  of  common  stock  and
warrants for general working  capital  purposes.  Cash  used  for
operations in each of the  two  most  recently  completed  fiscal
years  amounted   to  $799,000  and  $789,000  respectively  and,
accordingly, the net proceeds should enable the Company  to  fund
its operations for the current fiscal year.  The Company  intends
to replace lost revenues from its major  customer  with  revenues
from new customers to be generated from marketing and  consulting
agreements   recently   concluded.  In   addition,  the   Company
anticipates generating approximately $1,800,000 from the exercise
of   certain   outstanding   warrants  subject  to  certain  call
provisions.  Although we are confident that we  can  achieve  our
short range goals, there is no assurance, as stated in the second
paragraph of Note A, that  profitable  operations  will  ever  be
attained or that the Company will ever attain positive cash flow.

  We  have  granted  warrants,  subsequent  to our initial public
offering  in  connection  with  private  placements,  consulting,
marketing and financing agreements that may  generate  additional
capital of up to  approximately  $13,900,000  if  exercised.  The
private placement warrants are exercisable at prices ranging from
$1.16 to $4.00  and  the  warrants  granted  in  connection  with
consulting, marketing and financing agreements are exercisable at
prices ranging from $0.01 to $5.50 (See Notes H(4)  and P(1)  and
P(2) to the Financial Statements).There is no assurance  however,
that any of the warrants will be exercised.

  During  the  year  ended  June  30, 2003  principal payments of
$567,000,   which  consisted  of  contributed  accrued  officers'
salaries, reduced the balance on the $1,750,000 installment notes
receivable to $177,000 at June 30, 2003.

  In connection with the written put option regarding the  return
and  cancellation  of  all  exclusive  distribution and marketing
rights, the Company has recorded a liability of $140,000 at  June
30, 2003.  Such amount represents the fair value of liability  in
the event that the counterparty does not realize $1,339,000  from
the sale of  its  shares  owned  in  the  Company.  The  ultimate
obligation, if any, will be paid from 5% of future revenues to be
generated   by   the  Company's   Global   Water-Aquacell,   Inc.
subsidiary.

  Management  believes  that  its  current cash position and cash
flows expected to be generated from  future  operations  will  be
sufficient  to  meet  presently  anticipated  needs  for  working
capital  and  capital  expenditures  through at least the next 12
months; however, there can be no assurance in  that  regard.  The
Company presently has no material commitments for future  capital
expenditures.


ITEM 7.   FINANCIAL STATEMENTS

  See Financial Statements beginning on page F-1.


ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
          ON ACCOUNTING AND FINANCIAL DISCLOSURE

  None.


ITEM 8A.  CONTROLS AND PROCEDURES

  Within  the  90 days  prior  to  the  date of this  Report  the
Company carried out an evaluation, under the supervision and with
the  participation  of  the Company's management,  including  the
Company's chief executive officer and chief financial officer, of
the  effectiveness of the design and operation of  the  Company's
disclosure  controls  and  procedures  pursuant  to  Rule  13a-14
adopted  under  the Securities Exchange Act of 1934.  Based  upon
that  evaluation, the chief executive officer and chief financial
officer  concluded  that  the Company's disclosure  controls  and
procedures  are effective. There were no significant  changes  in
the  Company's internal controls or in other factors  that  could
significantly  affect these controls subsequent to  the  date  of
their evaluation.


                            PART III

ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information About Directors and Executive Officers

Name                    Age   Position
---------------------   ---   --------------------------------
James C. Witham         62    Chairman of the Board and
                              Chief Executive Officer

Glenn A. Bergenfield    50    Director

Dr. William DiTuro      48    Director

Karen B. Laustsen       43    President, Chief Operating
                              Officer, Secretary and Director

Gary S. Wolff           65    Chief Financial Officer,
                              Treasurer and Director

  Mr. James C. Witham founded AquaCell in March, 1997 and  serves
as its Chairman and Chief Executive Officer.  Prior  to  founding
AquaCell, Mr. Witham founded JW Acquisition Co. in May, 1996  and
served as its Chief Executive Officer  until  March,  1997.  From
April, 1987 through May, 1996, Mr. Witham founded and  served  as
Chairman, Chief Executive Officer and President of  U.S.  Alcohol
Testing.  Mr. Witham also served as Chairman and Chief  Executive
Officer of U.S. Alcohol's two  publicly  held  subsidiaries, U.S.
Drug Testing, Inc. and Good Ideas  Enterprises, Inc.  Mr.  Witham
is the husband of Karen B. Laustsen, President of AquaCell.

  Mr. Glenn A. Bergenfield has been a director of AquaCell  since
July 1997.  For the past fifteen years, Mr. Bergenfield has  been
self-employed as a sole practitioner of law in the State  of  New
Jersey.  Mr. Bergenfield served as a director  of  U.S.  Alcohol,
and as a director  of U.S.  Drug  Testing, Inc.  and  Good  Ideas
Enterprises, Inc.

  Dr. William DiTuro has been a director of AquaCell  since  July
1997.  Dr. DiTuro has been self-employed as a  sole  practitioner
of general pediatrics since 1986 and has  served  as  a  clinical
instructor of pediatrics  at  the  Robert  Wood  Johnson  Medical
School.  Dr. DiTuro served as a director of  U.S.  Alcohol,  U.S.
Drug Testing, Inc. and Good Ideas Enterprises, Inc.

  Ms. Karen B. Laustsen is a founder of AquaCell and  has  served
as its President, Chief Operating  Officer,  Secretary, and  as a
Director since March,  1997.  Prior  to  founding  AquaCell,  Ms.
Laustsen served as President of JW Acquisition Co. from May, 1996
through March, 1997.  From April, 1987  through  May,  1996,  Ms.
Laustsen served as Executive Vice President  and  a  director  of
U.S. Alcohol Testing of America, Inc.  Ms. Laustsen  also  served
on the board of directors of U.S.  Drug  Testing, Inc.  and  Good
Ideas Enterprises, Inc.  Ms. Laustsen is the  wife  of  James  C.
Witham, Chairman of AquaCell.

  Mr. Gary S. Wolff is a founder of AquaCell and  has  served  as
its Treasurer, Chief Financial Officer and  as a  Director  since
March, 1997.  Prior to founding  AquaCell,  Mr. Wolff  served  as
Chief  Financial  Officer  and  a  director  of  U.S.  Alcohol, a
publicly held company from April, 1987 through  July,  1996.  Mr.
Wolff also served as Chief Financial Officer and as a director of
U.S. Drug Testing, Inc. and as Treasurer and a  director of  Good
Ideas Enterprises, Inc.  He is  licensed  as a  Certified  Public
Accountant in the States of New York and New  Jersey  and  during
the period from July, 1996  through  March,  1997  he  was  self-
employed as a sole practitioner of accounting.

  The executive officers of the Company are elected  annually  by
the Board of Directors and serve at the discretion of the Board.

  During the fiscal year ended June 30, 2003, the Company's Board
of Directors held 7 meetings.

  The  Board  of  Directors  maintains   an  Executive  Committee
currently consisting of directors  Witham,  Laustsen  and  Wolff,
which has all of the authority of the Board of  Directors  except
as limited by applicable  law.  In  addition  we  have  an  Audit
Committee and a Compensation  Committee  which  are  required  to
consist of a majority of outside directors.  The Audit Committee,
currently   consisting   of  directors  Bergenfield  and  DiTuro,
oversees actions taken by our independent  auditors  and  reviews
our   internal   audit   controls.  The  Compensation  Committee,
currently consisting of directors Witham, Bergenfield and DiTuro,
reviews the  compensation  levels  of  our  employees  and  makes
recommendations   to   the   Board  regarding  compensation.  The
Company's audit committee was established in  June  2000  and  is
currently comprised of Glenn Bergenfield and William  DiTuro. The
audit committee met 2 times in the fiscal  year  ended  June  30,
2003.  The Compensation Committee of the Board of  Directors  met
once during the 2003 fiscal year.

Compliance with Section 16(a) of the Exchange Act

  Section 16(a) of the Securities Exchange Act of  1934  requires
AquaCell's directors and executive officers to file with the  SEC
initial  reports  of   ownership  and  changes  in  ownership  of
AquaCell's Common Stock during the fiscal  year  ended  June  30,
2003. AquaCell believes that its officers  and directors complied
with all these filing requirements during the  fiscal  year.  The
Company has relied upon the representations of its directors  and
executive  officers.  The Company  does  not  believe  any  other
stockholders are subject to Section 16(a) filing requirements.


ITEM 10.	EXECUTIVE COMPENSATION.

  The   following   table  sets   forth   information  concerning
compensation for the fiscal years indicated for services  in  all
capacities awarded to, earned by or paid to  the Company's  Chief
Executive  Officer   and   the  other  executive  officers  whose
compensation was in excess of $100,000  during  the  fiscal  year
ended June 30, 2003.

<TABLE>
<CAPTION>

 Name and Principal Position	           Annual Compensation                   Long-Term Compensation
----------------------------       -------------------------------  ------------------------------------------
                         	     Year  Salary($)(1)(2)  Bonus($)  Options Granted(3)  All Other Compensation
                                   ----  ---------------  --------  ------------------  ----------------------
<S>                                <C>   <C>              <C>       <C>                 <C>
James C. Witham................... 2003      316,000         --            --                      --
Chairman of the Board and          2002      265,000         --            --                      --
Chief Executive Officer	           2001      196,000         --            --                      --

Karen B. Laustsen................. 2003      190,000         --            --                      --
President, Chief Operating         2002      160,000         --            --                      --
Officer, Secretary and Director    2001       99,000	       --            --                      --

Gary S. Wolff..................... 2003      170,000         --            --                      --
Treasurer, Chief Financial Officer 2002      142,000         --            --                      --
and Director                       2001      103,000         --            --                      --
</TABLE>

(1)  Aggregate salaries actually paid in fiscal  year  2003  were
     $109,000.  $567,000 of  accrued  and  unpaid  salaries  were
     utilized to pay principal on certain notes  receivable  from
     third   parties  that  were  personally  guaranteed  by  the
     Company's executive officers.
(2)  All of the salaries actually paid  to  the  officers  during
     fiscal 2003 represented vacation pay.
(3)  No options were granted to the  executive  officers  in  the
     last fiscal year.  The executive officers do  not  hold  any
     options.

Employment Agreements

  On February 12, 2001,  we  entered  into  five-year  employment
agreements with each of Mr. Witham and Ms. Laustsen, an d a  two-
year employment  agreement  with  Mr.  Wolff  that  was  extended
through  June   30,  2005.  These  agreements  provide  for  base
salaries of $265,000, $160,000, and $142,000,  respectively,  and
also provide for  bonuses  to  be  paid  based  upon  established
financial  performance   targets.  Each   of   these   employment
agreements  contains  standard  noncompete,  confidentiality  and
benefit   provisions,    including   provisions   for   severance
compensation in the event  of  a  termination  without  cause  or
transactions that result in a  change  in  control  of  AquaCell.
Each of these contracts provide that after the  first  year,  the
base salary amounts will be subject to increase  by  50%  of  the
amount of any bonus, with such bonus to be based on net sales and
net income earned  during  the  prior  year.  The  terms  of  the
employment agreements, including bonus criteria were reviewed and
approved by the Compensation Committee.

Summary of 1998 Incentive Stock Plan

  Our 1998 Incentive Stock Plan, covering 1,000,000 shares of our
Common Stock, is administered by the  Compensation  Committee  of
our  Board  of  Directors.  Among  the  Compensation  Committee's
powers will be the authority to:

  .  interpret the plan;
  .  establish rules and regulations for its operation;
  .  select officers, other key employees, consultants and
     advisors to receive awards; and
  .  determine the form, amount and other terms and conditions
     of awards.

  Directors, officers, key employees and independent  contractors
will be eligible to participate in the  plan.  The  selection  of
participants  is   within  the  discretion  of  the  Compensation
Committee.

  The plan provides for the grant of any or all of the  following
types of awards:

  .  stock options, including nonqualified stock options and
     incentive stock options;
  .  stock awards;
  .  stock appreciation rights;
  .  performance shares; and
  .  performance units.

  Awards  may  be  granted  by  themselves, in  combination or in
tandem with other awards as determined by the Compensation
Committee.

  .  Under the plan, the Compensation Committee may grant awards
     in the form of nonqualified stock options or incentive stock
     options, shares of our Common Stock, stock appreciation
     rights, performance shares or performance units.  The
     Compensation Committee, with regard to each stock option,
     will determine the number of shares subject to the option,
     the manner and time of the option's exercise and vesting,
     and the exercise price per share of stock subject to the
     option.  The following limitations are applicable under the
     plan:  no incentive stock options may be exercisable later
     than ten years after the date they are granted and no
     nonqualified stock options may be exercisable later than
     fifteen years after the date they are granted;

  .  the aggregate fair market value at the time of grant of
     shares of Common Stock with respect to which incentive stock
     options are exercisable for the first time by a participant
     during any calendar year cannot be more than $100,000;

  .  the exercise price of a stock option will not be less than
     100% of the fair market value of the shares of Common Stock
     on the date the option is granted for incentive stock
     options or less than 85% of the market value for non
     qualified stock options (or, in either case, not less than
     110% of fair market value if the optionee is an officer,
     director or a 10% stockholder);

  .  the option price must be paid by a participant by check or,
     in the discretion of the Compensation Committee, by delivery
     of our Common Stock; and

  .  awards may be subject to such terms, conditions,
     restrictions or limitations, as the Compensation Committee
     deems appropriate, including restrictions on transferability
     and continued employment.

  Under the plan, each stock appreciation right will entitle  the
holder to elect to receive the appreciation in  the  fair  market
value of the shares subject to the stock appreciation right up to
the date the right is exercised.  Stock appreciation  rights  may
be granted independent of, or in connection with, stock  options.
In the case of stock appreciation rights  issued  independent  of
stock options, the appreciation shall  not  be  measured  from  a
value less than 85% of the fair market value of the shares on the
date of grant.  If the stock appreciation rights  are  issued  in
connection with stock options, the appreciation shall be measured
from not less than the option price.  No stock appreciation right
may be exercised earlier than six months after the date of  grant
or later than the earlier of the term of the  related  option  or
fifteen years after the date it was granted.

<PAGE>
  Performance shares and units may be awarded either alone or  in
addition to other awards and will consist of:

  .  in the case of performance shares, the right to receive
     shares of Common Stock or cash of equal value at the end of
     a specified performance period; or

  .  in the case of performance units, the right to receive a
     fixed dollar amount, payable in cash or shares of Common
     Stock or a combination of both at the end of a specified
     performance period.

  The Compensation Committee may condition the performance shares
or units on the attainment of specified performance goals or such
other facts or criteria as the committee shall determine.

  The  plan  provides  that  awards  shall  not  be  transferable
otherwise than by law or by will  or  the  laws  of  descent  and
distribution.  However, the Compensation Committee may permit the
transferability of an  award  to  members  of  the  participant's
immediate family or trusts or family partnerships for the benefit
of such family members.

  The Board of Directors  has  the  right  to  amend,  suspend or
terminate the  plan  at  any  time,  subject  to  the  rights  of
participants under any outstanding awards.  However, no amendment
to the plan may be made without the approval of our  stockholders
if such approval is required by law or regulatory authority.

Summary of 2002 Directors Stock Option Plan

  In order to provide the Company the ability to issue options to
non-employee directors, the  Board  adopted  the  2002  Directors
Stock Option Plan (the "2002 Directors Plan")  effective  January
26, 2002 and approved by the Company's stockholders  on  December
4, 2002, pursuant to which the Company may issue options to  non-
employee directors to acquire up to 500,000 shares of its  common
stock.  The 2002 Directors Plan is intended  to  encourage  stock
ownership by non-employee directors  and  thereby  enhance  their
proprietary interest in the Company.  The Company  currently  has
two (2) non-employee directors serving on the Board of Directors,
whose service as directors is compensated solely by the  issuance
of stock  options.  These  directors  do  not  receive  any  cash
compensation for their service as directors.

  A summary of the significant provisions of the  2002  Directors
Plan is set forth below.

Administration of the 2002 Directors Plan

  The 2002 Directors Plan is administered  by  a  committee  (the
"Committee") consisting of two or more persons who are  appointed
by, and serve at the pleasure of, the Board and each of whom is a
"disinterested person" as that term is defined in Rule 16b of the
General Rules and Regulations under the Securities  Exchange  Act
of 1934.  Subject to the express provisions of the 2002 Directors
Plan, the Committee has the sole discretion to determine to  whom
among those eligible, and the time or  times  at  which,  options
will be granted, the number of  shares  to  be  subject  to  each
option and the manner in  and  price  at  which  options  may  be
exercised.  In making such determinations, the committee may take
into account  the  nature  and  period  of  service  of  eligible
directors, their level of compensation, their past,  present  and
potential contributions to the Company and such other factors  as
the Committee in its discretion deems relevant.

  The  Committee  may  amend,  suspend   or  terminate  the  2002
Directors Plan at any time,  except  that  no  amendment  may  be
adopted without the approval  of  shareholders  which  would  (i)
increase the  maximum  number  of  shares  which  may  be  issued
pursuant to the exercise of options granted under the  Plan; (ii)
change the eligibility requirements for participation in the 2002
Directors Plan; or (iii) extend the term of any  incentive  stock
options or the period during which any  incentive  stock  options
may be granted under the 2002 Directors Plan.

  Unless the 2002 Directors Plan is  terminated  earlier  by  the
Board, the 2002 Directors Plan will  terminate  on  December  31,
2012.

Shares Subject to the 2002 Directors Plan

  No more than 500,000 shares  of  common  stock  may  be  issued
pursuant to the  exercise  of  options  granted  under  the  2002
Directors Plan.  If any option  expires  or  terminates  for  any
reason, without having been exercised  in  full, the  unpurchased
shares subject  to  such  option  will  be  available  again  for
purposes of the 2002 Directors Plan.

  Under certain circumstances involving a change in the number of
shares of common stock without the receipt by the Company of  any
consideration   therefore,   such  as   a   stock   split,  stock
consolidation or payment  of a  stock  dividend,  the  class  and
aggregate number of shares of common stock in  respect  of  which
options may be granted under the 2002 Directors  Plan, the  class
and number of shares subject to each outstanding option  and  the
option price per  share  will  be  proportionately  adjusted.  In
addition, if the Company is involved in a merger,  consolidation,
dissolution or liquidation, the options granted  under  the  2002
Directors Plan will be  adjusted  or, under  certain  conditions,
will terminate, subject to the  right  of  the  option-holder  to
exercise his/ her option or a comparable  option  substituted  at
the discretion of the Company prior to such event.  An option may
not be transferred other than by will or by the laws  of  descent
and distribution, and during the lifetime  of  the  option-holder
may be exercised only by such holder.

Participation

  The  Committee  is  authorized  to grant non-qualified  options
under the 2002 Directors Plan from time  to  time  to  such  non-
employee directors of the Company as the Committee, in  its  sole
discretion, may determine.

Terms of Options

  The Committee has the discretion to fix the term of each option
granted under the 2002 Directors Plan, except  past  the  maximum
length of term of each option  is  ten  (10)  years,  subject  to
earlier termination as provided in the 2002 Directors Plan.



<PAGE>
ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
            AND MANAGEMENT

  The following  table  sets  forth  certain  information  as  of
October 3, 2003 (on which date 10,454,255shares of the  Company's
Common Stock were outstanding), with respect to (i) those persons
or groups known to the Company to beneficially own more  than  5%
of the Company's Common Stock, (ii) each  director  and  nominee,
(iii) each executive officer whose compensation exceeded $100,000
in fiscal 2003, and (iv) all directors and executive officers  as
a group. The information is determined in  accordance  with  Rule
13d-3 promulgated under the Securities Exchange Act of 1934 based
upon information furnished by the persons listed or contained  in
filings made by them with the Securities and Exchange Commission.
Except as indicated below, the stockholders listed  possess  sole
voting and investment power with respect to their shares.

<TABLE>
<CAPTION>
Name and Address                    Shares of         Percentage of
                                  Common Stock        Common Stock,
                               Beneficially Owned  Warrants and Options
-----------------------------  ------------------  --------------------
<S>                            <C>                 <C>
James C. Witham..............    2,017,030 (1)	         19.34 %
10410 Trademark Street
Rancho Cucamonga, CA 91730

Karen B. Laustsen............      576,172 		    5.52 %
10410 Trademark Street
Rancho Cucamonga, CA 91730

Gary S. Wolff................      488,367		    4.68 %
10410 Trademark Street
Rancho Cucamonga, CA 91730

Glenn A. Bergenfield.........      374,500 (2)(3)	    3.52 %
10410 Trademark Street
Rancho Cucamonga, CA 91730

Dr. William DiTuro...........      337,500 (2)(4)	    3.16 %
10410 Trademark Street
Rancho Cucamonga, CA 91730

All officers and directors
as a group (five persons)....    3,793,569		   34.84 %
</TABLE>

(1)  Includes an aggregate of 480,000 shares owned of record by
     Witham Group, LLC and JW Acquisitions, LLC which are
     entities in which Mr. Witham controls 100% of the
     outstanding equity.

(2)  Includes 75,000 options exercisable within 60 days.

(3)  Includes 75,000 series A convertible preferred shares and
     75,000 common stock purchase warrants exercisable within 60
     days.

(4)  Includes 80,000 series A convertible preferred shares and
     80,000 common stock purchase warrants exercisable within 60
     days.


<PAGE>
  The following table sets forth certain information at June  30,
2003 with respect to the Company's equity compensation plans that
provide for the  issuance  of  options,  warrants  or  rights  to
purchase the Company's securities.

<TABLE>
<CAPTION>
                                                                         Number of Securities
                                                                         Remaining Available for
Plan Category        Number of Securities to be   Weighted-Average       Future Issuance under
                     Issued upon Exercise of      Exercise Price of      Equity Compensation Plans
                     Outstanding Options,         Outstanding Options,   (excluding securities
                     Warrants and Rights          Warrants and Rights    reflected in the first column)
-------------------  --------------------------   --------------------   ------------------------------
<S>                  <C>                          <C>                    <C>
Equity Compensation
Plans Approved by             476,000                    $ 0.92                     524,000
Security Holders

Directors Equity
Compensation                   30,000                    $ 0.65                     470,000
Plans Approved by
Security Holders

</TABLE>

ITEM 12.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  None.


ITEM 13. 	EXHIBITS AND REPORTS ON FORM 8-K

  (a)  See Exhibit Index.

  (b)  None.




                      AQUACELL TECHNOLOGIES, INC.

              INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                               Page

REPORT OF INDEPENDENT AUDITORS.............................     F-1

FINANCIAL STATEMENTS

Consolidated Balance Sheet, June 30, 2003..................     F-2

Consolidated Statements of Operations for the years ended
       June 30, 2003 and 2002..............................     F-3

Consolidated Statements of Stockholders' Equity
       for the years ended June 30, 2003 and 2002..........     F-4

Consolidated Statements of Cash Flows for the years ended
       June 30, 2003 and 2002..............................     F-5

Notes to Consolidated Financial Statements.................     F-7




                    REPORT OF INDEPENDENT AUDITORS



The Board of Directors of
Aquacell Technologies, Inc.

We  have  audited  the  accompanying  consolidated  balance  sheet  of
Aquacell Technologies, Inc. and Subsidiaries as of June 30, 2003,  and
the  related  consolidated  statements  of  operations,  stockholders'
equity,  and cash flows for each of the two years in the period  ended
June  30, 2003.  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 audits.

We   conducted  out  audits  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  audits
provide a reasonable basis for our opinion.

In  our  opinion, the financial statements referred to  above  present
fairly,  in all material respects, the consolidated financial position
of  Aquacell Technologies, Inc. and Subsidiaries as of June 30,  2003,
and  the results of their operations and their cash flows for each  of
the  two  years  in the period ended June 30, 2003 in conformity  with
accounting  principles  generally accepted in  the  United  States  of
America.



                                   WOLINETZ, LAFAZAN & COMPANY, P.C.



Rockville Centre, New York
September 15, 2003



                                  F-1


             AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEET
                             June 30, 2003

ASSETS

Current assets:
   Cash ......................................................... $   32,000
   Notes receivable, including accrued interest of $69,000 ......    160,000
   Accounts receivable, net of allowance of $25,000 .............     74,000
   Inventories ..................................................     84,000
   Prepaid Expenses .............................................    123,000
                                                                  -----------
      Total current assets ......................................    473,000
                                                                  -----------

Property and equipment, net .....................................     38,000
                                                                  -----------
Other assets:
   Goodwill .....................................................  1,042,000
   Patents, net .................................................     98,000
   Security deposits ............................................     14,000
                                                                  -----------
      Total other assets.........................................  1,154,000
                                                                  -----------

                                                                  $1,665,000
                                                                  ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable ............................................  $  735,000
   Accrued expenses ............................................     502,000
   Preferred stock dividend payable.............................      12,000
   Customer deposits ...........................................      23,000
   Current portion of deferred payable - derivative ............      12,000
   Current portion of long term note ...........................       4,000
   Loans payable - related parties .............................      80,000
                                                                  -----------
      Total current liabilities ................................   1,368,000

Long term note, net of current portion .........................       3,000
Deferred payable - derivative, net of current portion ..........     128,000
                                                                  -----------
      Total liabilities ........................................   1,499,000
                                                                  -----------
Commitments and contingencies

Stockholders' equity:
Preferred stock - Class A, par value $.001;
   1,870,000 shares authorized;
   1,185,000 issued and outstanding ............................       1,000
Preferred  stock, par value $.00l;
   8,130,000 shares authorized;
   no shares issued ............................................           -
Common stock, par value $.001;
   40,000,000 shares authorized;
   8,726,224 shares issued and outstanding .....................       9,000
Additional paid-in capital .....................................  13,544,000
Accumulated deficit ............................................ (13,049,000)
                                                                  -----------
                                                                     505,000
Unamortized deferred compensation ..............................    (339,000)
                                                                  -----------
      Total stockholders' equity ...............................     166,000
                                                                  -----------

                                                                  $1,665,000
                                                                  ===========

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

                                  F-2


             AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS

                                                       Year Ended June 30,
                                                   -----------------------------
                                                        2003           2002
Revenue:                                           -------------   -------------
  Net sales ....................................   $  1,582,000    $  1,042,000
  Rental income ................................          6,000           7,000
                                                   -------------   -------------
                                                      1,588,000       1,049,000
Cost of sales ..................................        990,000         565,000
                                                   -------------   -------------
Gross profit ...................................        598,000         484,000
                                                   -------------   -------------

Selling, general and administrative expenses:
  Salaries and wages ...........................      1,290,000         999,000
  Legal, accounting and other professional
     expenses ..................................        172,000         467,000
  Stock based compensation......................        199,000         628,000
  Other ........................................      1,166,000       1,007,000
  Impairment loss on investment.................              -       1,226,000
  Impairment loss on goodwill...................         72,000         187,000
  Reduction of receivable to fair value.........        274,000               -
  Write-off of note receivable and accrued
     interest ..................................         59,000               -
  Recovery of notes-receivable reserve..........       (188,000)              -
  Fair value adjustment of derivative ..........        140,000               -
                                                   -------------   -------------
                                                      3,184,000       4,514,000
                                                   -------------   -------------
  Loss from operations before other income
     (expense)..................................     (2,586,000)     (4,030,000)
                                                   -------------   -------------
Other income (expense):
  Interest expense .............................        (41,000)              -
  Interest income ..............................         53,000         126,000
  Other income .................................              -         100,000
                                                   -------------   -------------
                                                         12,000         226,000
                                                   -------------   -------------
Net loss for the year ..........................   $ (2,574,000)   $ (3,804,000)
                                                   =============   =============
Weighted average common shares outstanding-
   basic and diluted ...........................      8,655,000       8,149,000
                                                   =============   =============
Loss attributable to common stockholders:
   Net loss ....................................   $ (2,574,000)   $ (3,804,000)
   Preferred stock dividends....................        380,000               -
                                                   -------------   -------------
   Loss attributable to common stock holders....   $ (2,954,000)   $ (3,804,000)
                                                   =============   =============
   Net loss per common share....................   $      (0.34)   $      (0.47)
                                                   =============   =============

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

                                  F-3

               AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                    Preferred Stock  Common Stock
                                    ---------------- ----------------
                                                                      Additional  Unamortized
                                    Number    Par    Number    Par    Paid-in     Deferred     Accumulated   Treasury
                                    of Shares Value  of Shares Value  Capital     Compensation Deficit       Stock      Total
----------------------------------- --------- ------ --------- ------ ----------- ------------ ------------- ---------- ------------
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Balances- July 1, 2001 ............                  7,733,250 $7,000 $ 9,441,000 $  (308,000) $ (6,671,000)            $ 2,469,000
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Issuance of common stock for
   consulting services to
   the Company ....................                    240,000      -     324,000    (324,000)                                    0
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Issuance of common stock warrants
   for services to the Company ....                                       589,000    (589,000)                                    0
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Amortization of deferred costs ....                                                   628,000                               628,000
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Issuance of common stock for
   investment in Corbett
   Water Technologies, Inc. .......                    451,807  1,000   1,499,000                                         1,500,000
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Issuance of common stock for
   acquisition of Water Science
   Technologies, Inc., including
   55,337 shares issued to
   vendors of acquired company ....                    258,589  1,000   1,188,000                                         1,189,000
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Surrender of 82,422 shares of
   common stock by officers
   in payment of principal and
   interest on notes receivable ...                                                                          $(251,000)    (251,000)
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Net loss for the year ended
   June 30, 2002 ..................                                                              (3,804,000)             (3,804,000)
                                    --------- ------ --------- ------ ----------- ------------ ------------- ---------- ------------
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Balances- June 30, 2002 ...........                  8,683,646  9,000  13,041,000    (593,000)  (10,475,000)  (251,000)   1,731,000
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Sale of 1,185,000 shares of
   preferred stock in private
   placements, net of costs
   of $73,000 ..................... 1,185,000 $1,000                      732,000                                           733,000
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Amortization of deferred costs ....                                                   199,000                               199,000
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Write-off of unamortized                                                 (110,000)    110,000                                     0
   deferred compensation ..........
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Issuance of 125,000 shares of
   common stock in connection
   with financing arrangement .....                    125,000      -      89,000                                            89,000
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Issuance of 160,000 common stock
   warrants in connection with
   credit facility agreement ......                                        43,000     (43,000)                                    0
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Retirement of 82,422 shares of
   common stock held in
   the treasury ...................                    (82,422)     -   (251,000)                              251,000            0
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Issuance of 150,000 common stock
   warrants in connection with
   consulting agreement ...........                                       12,000      (12,000)                                    0
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Deemed dividends on beneficial
   conversion feature of                                                 368,000
   preferred stock offerings ......                                     (368,000)                                                 0
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Dividends on Class A
   preferred stock ................                                      (12,000)                                           (12,000)
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Net loss for the year ended
   June 30, 2003 ..................                                                              (2,574,000)             (2,574,000)
<S>                                 <C>       <C>    <C>       <C>    <C>         <C>          <C>           <C>        <C>
Balances- June 30, 2003 ........... 1,185,000 $1,000 8,726,224 $9,000 $13,544,000 $  (339,000) $(13,049,000) $        - $   166,000
                                    ========= ====== ========= ====== =========== ============ ============= ========== ============
</TABLE>

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

                                  F-4

               AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        Year Ended June 30,
                                                   -----------------------------
                                                        2003           2002
                                                   -------------- --------------
Cash flows from operating activities:
Net loss .........................................  $ (2,574,000)  $ (3,804,000)

Adjustment to reconcile net loss to net cash used in operating activities:
  Issuance of common stock in connection
     with financing transactions .................        89,000              -
  Impairment loss on investment ..................             -      1,226,000
  Impairment loss on goodwill ....................        72,000        187,000
  Reduction of reserve on notes receivable .......      (188,000)             -
  Fair value adjustment of derivative ............       140,000              -
  Reduction of receivable to fair value ..........       274,000              -
  Write-off of note receivable and
     accrued interest ............................        59,000              -
  Stock based compensation .......................       199,000        628,000
  Provision for bad debts ........................        21,000          1,000
  Depreciation and amortization ..................        58,000         57,000

Changes in:
  Accounts receivable ............................        96,000       (120,000)
  Accrued interest receivable ....................       (53,000)             -
  Prepaid expenses and other current assets ......        93,000         80,000
  Inventories ....................................        18,000         55,000
  Security deposits ..............................         3,000              -
  Accounts payable ...............................        17,000        457,000
  Accrued expenses ...............................       870,000        487,000
  Customer deposits ..............................         7,000        (43,000)
                                                   -------------- --------------
        Net cash used in operating activities ....      (799,000)      (789,000)
                                                   -------------- --------------

Cash flows from investing activities:
  Notes issued for purchase of property and
     equipment, net of payments ..................         7,000              -
  Collections on notes receivable ................             -        498,000
  Purchase of property and equipment .............       (11,000)        (6,000)
  Cash balance of acquired subsidiary ............             -         25,000
                                                   -------------- --------------
        Net cash provided by (used in)
           investing activities ..................        (4,000)       517,000
                                                   -------------- --------------

Cash flows from financing activities:
  Loans and advances from related parties ........        51,000         25,000
  Proceeds from private placements of
     preferred stock .............................       781,000              -
  Expenses of offerings ..........................       (48,000)             -
                                                   -------------- --------------
        Net cash provided by financing
           activities ............................       784,000         25,000
                                                   -------------- --------------
Decrease in cash .................................       (19,000)      (247,000)
Cash, beginning of year ..........................        51,000        298,000
                                                   -------------- --------------
Cash, end of year ................................  $     32,000   $     51,000
                                                   ============== ==============

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

                                  F-5

             AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

                                                        Year Ended June 30,
                                                   -----------------------------
                                                        2003           2002
                                                   -------------- --------------
Supplemental disclosure of cash flow information:
  Cash paid for interest .........................  $     36,000   $          -

Supplemental schedule of non-cash investing and financing activities:
  Note receivable payments of principal and
     interest made by officers/
     stockholders with their shares of the
     Company's common stock
     recorded as treasury stock ..................  $          -   $   251,000
  Issuance of common stock in connection with
     investment .................................   $          -   $ 1,500,000
  Issuance of common stock and warrants for
     services ...................................   $     55,000   $   913,000
  Issuance of common stock to acquire
     subsidiary .................................   $          -   $ 1,000,000
  Issuance of common stock to satisfy
     indebtedness to acquired subsidiary's
     vendors ....................................   $          -   $   189,000
  Principal payments on notes receivable by
     conversion of accrued officers
     salaries ...................................   $    567,000   $   349,000
  Issuance of preferred stock in private
     placement for expenses of the
     offering ...................................   $     25,000   $         -
  Retirement of 82,422 shares of treasury
     stock ......................................   $    251,000   $         -
  Dividends payable on preferred stock ..........   $     12,000   $         -
  Consideration received for sale of
     investment .................................   $    274,000   $         -
  Deemed dividends on preferred stock ...........   $    368,000   $         -
  Write-off of unamortized deferred
     compensation ...............................   $    110,000   $         -
  Increase in derivative payable ................   $    140,000   $         -

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

                                  F-6

          AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2003


Note A - Description of Business

     AquaCell Technologies, Inc. was incorporated in Delaware on March
19,  1997  and its principal business activity is the manufacture  and
sale  of  products for water filtration and purification.  The Company
conducts substantially all of its business in the United States.

      As  shown in the accompanying financial statements, the  Company
has  incurred  substantial  net losses since  inception  and  utilized
substantial  cash  in operating activities.  The Company  expects  its
operations will provide sufficient cash flows through June  30,  2004.
There  is no assurance, however, that profitable operations will  ever
be attained or that the Company will ever attain positive cash flow.

Note B - Summary of Significant Accounting Policies

[1]  Principles of consolidation:

      The  accompanying consolidated financial statements include  the
accounts  of  AquaCell  Technologies,  Inc.,  and  its  wholly   owned
subsidiaries  (the  "Company").  Such subsidiaries  are  Global  Water
Aquacell,  Inc.,  incorporated December 21, 1998,  and  Water  Science
Technologies, Inc., acquired on March 19, 2002. AquaCell Media,  Inc.,
formed  on  September 10, 2001, is a wholly owned  subsidiary  of  the
Company  that  had no revenues through June 30, 2003. All  significant
intercompany  accounts  and  transactions  have  been  eliminated   in
consolidation.

[2]  Inventories:

      Inventories  are carried at the lower of cost, determined  using
the FIFO (first-in, first-out) method or market.

[3]  Property and equipment:

      Property  and  equipment  is stated  at  cost  less  accumulated
depreciation.  Depreciation is computed using the straight-line method
over   the  estimated  useful  lives  of  the  related  assets   which
approximates three to five years.

[4]  Goodwill:

      Goodwill  represents the excess of the purchase price  over  the
fair  value  of  net assets of a business acquired.  The  Company  has
adopted  Statements of Financial Accounting Standards  No.  142  (SFAS
142), "Goodwill and Other Intangible Assets". The Company operates  as
a  single  integrated business, and as such has one operating  segment
which is also the reportable unit. Fair value of the reporting unit is
determined  by comparing the fair value of the unit with its  carrying
value,  including  goodwill.  Impairment  tests  are  performed  using
discounted  cash  flow analysis and estimates of sales  proceeds.  The
annual  evaluation of goodwill is performed at June 30th, the  end  of
the Company's fiscal year.

[5]  Patents:

      The  value  of  patents  is amortized  over  nine  years,  their
remaining useful lives at date of acquisition, using the straight-line
method.   Patents  at  June 30, 2003, are stated  net  of  accumulated
amortization  of  approximately  $99,000.   Amortization  expense  was
$22,000 for the years ended June 30, 2003 and 2002, respectively.

[6]  Revenue recognition:

     Revenues are recorded at the time our products are shipped unless
we  agreed to install the products, in which case we recognize revenue
at the time of installation.  Rental income from coolers is recognized
on a straight-line basis over the term of the rental agreement.

                                  F-7

             AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                             June 30, 2003


Note B - Summary of Significant Accounting Policies (continued)

[7]  Advertising:

      Advertising costs are expensed as incurred.  Advertising expense
for  the years ended June 30, 2003 and 2002, was approximately  $3,000
and $42,000, respectively.

      The  costs of direct response advertising, whose primary purpose
is  to  elicit sales to customers and that should result  in  probable
future  benefits  are capitalized.  Advertising costs  capitalized  at
June  30,  2003,  and included in prepaid expenses were  approximately
$93,000.   These  costs  will be written off when  first  placed  into
service.

[8]  Use of estimates:

      The  preparation  of  financial statements  in  conformity  with
accounting  principles  generally accepted in  the  United  States  of
America  requires  management to make estimates and  assumptions  that
affect  the  reported amounts of assets and liabilities and disclosure
of  contingent  assets and liabilities at the date  of  the  financial
statements  and  the reported amounts of revenues and expenses  during
the   reporting  period.   Actual  results  could  differ  from  those
estimates.

[9]  Income taxes:

      The  Company  accounts  for income taxes  using  the  asset  and
liability  method  described on SFAS No. 109, "Accounting  For  Income
Taxes, the objective of which is to establish deferred tax assets  and
liabilities  for  the  temporary  differences  between  the  financial
reporting and the tax bases of the Company's assets and liabilities at
enacted  tax  rates  expected to be in effect when  such  amounts  are
realized  or  settled.  A valuation allowance related to deferred  tax
assets  is recorded when it is more likely than not that some  portion
or all of the deferred tax assets will not be realized.

[10] Net loss per common share:

      Loss  per common share is based upon the weighted average number
of common shares outstanding during the year.  Diluted loss per common
share  is  the  same  as  basic loss per  share,  as  the  effects  of
potentially  dilutive  securities (see Notes H  [2]  and  H  [4])  are
antidilutive.  Losses attributable to common stock have been  adjusted
for the preferred stock dividends.

[11] Long-lived assets:

      The Company accounts for the impairment and disposition of long-
lived  assets  in accordance with SFAS No. 121,  "Accounting  for  the
Impairment  of  Long-lived Assets to Be Disposed Of."   In  accordance
with SFAS No. 121,  long-lived assets to be held are reviewed whenever
events or changes in circumstances indicate that their carrying  value
may not be recoverable.  The Company periodically reviews the carrying
value  of  long-lived assets to determine whether or not an impairment
to  such  value has occurred, and has determined that as of  June  30,
2003,  that  impairment,  where  appropriate,  was  recorded  in   the
financial statements.

[12] Concentrations of credit risk:

      Financial  instruments that potentially subject the  Company  to
significant concentrations of credit risk consist principally of trade
accounts  receivables  and  notes receivable.   The  Company  performs
ongoing credit evaluations of its customers' financial condition,  but
does not require collateral to support such receivables.

      The  Company utilizes a limited number of suppliers for  certain
components used in its products but has no long-term supply  contracts
with them.

                                  F-8

             AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                             June 30, 2003


Note B - Summary of Significant Accounting Policies (continued)

[13] Financial instruments:

      The  carrying amounts of the Company's cash, notes  receivables,
accounts  receivable, accounts payable, customer  deposits  and  loans
payable to related parties, approximate fair value.

[14] Stock compensation plans:

     The Company applies Accounting Principles Board (APB) Opinion No.
25,   "Accounting  for  Stock  Issued  to  Employees",   and   related
interpretations in accounting for its stock-based compensation  plans.
The  Company does not recognize compensation expense for stock options
granted  under  the plans as the exercise price of the option  on  the
date of grant is equal to the fair market value as of that date.

[15] Shipping and handling fees and costs:

     Shipping and handling fees and costs of $34,000 and $15,000  for
the years ended June 30, 2003 and 2002, respectively, are included in
other selling, general and administrative expenses.

[16] Derivatives:

     The  Company  recognizes  all  speculative  derivatives  on  the
balance sheet at fair value on the date the derivative  instrument is
entered into, with a  corresponding  charge  to  income  (loss)  from
operations in accordance with FAS-133.  Subsequent  changes  to  fair
value are reflected in income (loss) from operations.  Fair  value is
estimated at each balance sheet date using  a  Black-Scholes  pricing
model.

[17] New accounting pronouncements:

      In  July  2001, the Financial Accounting Standards Board  (FASB)
issued  SFAS  No.  141,  "Business Combinations"  and  SFAS  No.  142,
"Goodwill and Other Intangible Assets."

      SFAS No. 141 requires that the purchase method of accounting  be
used  for all business combinations initiated after June 30,  2001  as
well as all purchase method business combinations completed after June
30, 2001.  SFAS No. 141 also specifies criteria that intangible assets
acquired  in a purchase method business combination must  meet  to  be
recognized and reported apart from goodwill.  The Company has  adopted
SFAS 141 for the year ended June 30, 2002.

      SFAS  No. 142 requires that goodwill and intangible assets  with
indefinite useful lives no longer be amortized, but instead be  tested
for  impairment  at least annually.  SFAS No. 142 also  requires  that
intangible  assets with definite useful lives be amortized over  their
respective estimated useful lives to their estimated residual  values,
and  reviewed  for impairment in accordance with SFAS  No.  121.   The
Company has adopted SFAS No. 142 for the year ended June 30, 2002.

      In  October 2001, the FASB issued SFAS No. 144, "Accounting  for
the  Impairment  or Disposal of Long-Lived Assets."  SFAS  144  amends
existing accounting guidance on asset impairment and provides a single
accounting model for long-lived assets to be disposed of.  Among other
provisions, the new rules change the criteria for classifying an asset
as held-for-sale.  The standard also broadens the scope of business to
be  disposed of that qualify for reporting as discontinued operations,
and  changes the timing of recognizing losses on such operations.  The
Company has adopted SFAS 144 for the year ended June 30, 2003.

      In  December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based  Compensation-Transition and  Disclosure".  SFAS  No.  148
amends  SFAS  No.  123, "Accounting for Stock-Based  Compensation"  to
provide  alternative methods of transition for a voluntary  change  to
the  fair  value  based method of accounting for stock-based  employee
compensation.  In  addition,  SFAS  No.  148  amends  the   disclosure
requirements of SFAS No. 123 to require prominent disclosures in  both
annual and interim financial statements about the method of accounting
for  stock-based employee compensation and the effect  of  the  method
used on reported results. The provisions of SFAS No. 148 are effective
for  financial statements for the year ended June 30, 2003.  SFAS  No.
148  did  not  have  a  material impact on the Company's  consolidated
financial  statements,  as  the adoption of  this  standard  does  not
require  the  Company  to change, and the Company  does  not  plan  to
change,  to  the fair value based method of accounting for stock-based
compensation.

Note C - Inventories:

     Inventories consist of the following at June 30, 2003:

             Raw materials..............   $  69,000
             Work in progress...........      15,000
                                           ---------
                                             $84,000
                                           =========

                                  F-9

             AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                             June 30, 2003


Note D - Property and Equipment:

      Property and equipment is summarized as follows at June 30, 2003:

        Furniture and fixtures..........................  $  35,000
        Equipment office................................     95,000
        Machinery and equipment.........................    122,000
        Leasehold improvements..........................     10,000
        Rental units....................................      9,000
        Truck...........................................     11,000
                                                          ---------
                                                            282,000
        Less accumulated depreciation...................    244,000
                                                          ---------
                                                          $  38,000

      Depreciation expense was $36,000 and $35,000 for the year  ended
June 30, 2003 and 2002, respectively.

Note E - Notes Receivable

      At June 30, 2003, the notes receivable consisted of the balances
of   notes   aggregating   $268,000  due  from   non-director/employee
stockholders  and  entities owned by them bearing an  annual  interest
rate of 8%.

      The  first  note,  with a balance of $91,000, is  unsecured  and
matured  October  2002.  The note that matured  in  October  2002  was
extended  for one year.  In July 2003 the Company received  a  $68,000
principal payment plus accrued interest on this note and extended  the
remaining balance to June 30, 2004.

      The  remaining notes, aggregating $177,000, were in the original
principal  amount  of $1,750,000, maturing August 16,  2001  and  were
extended to September 16, 2001.  At September 16, 2001 the notes  were
restructured  into  twelve-month installment notes  collateralized  by
marketable securities with the first installment due October 16, 2001.
The  Company  recorded an adjustment to reflect  a  reduction  in  the
estimated  fair  value of these notes of $365,000 at  June  30,  2001.
Officers/stockholders  of AquaCell have personally  guaranteed  up  to
$1,750,000  of  the  notes and have offered as  collateral  designated
assets.  Installment payments of $438,000 were received by the Company
and  the  officer/stockholders have paid $1,135,000 of  the  remaining
principal  balance of $1,312,000 and $32,000 in interest through  June
30,  2003.  These payments were made through contribution of  salaries
in  the  amount  of  $916,000 and surrender of 82,422  shares  of  the
Company's  common  stock, valued at $251,000 through  June  30,  2003.
Such shares were recorded as treasury stock and retired by the Company
at  December 31, 2002.  In January 2003 the collateral underlying  the
guarantees was released.

     Interest receivable at June 30, 2003 amounted to $69,000.

      At  June  30, 2003, the adjustment for reduction in the  reserve
against  these  notes  was  decreased by  $188,000  from  $365,000  to
$177,000.  Such  decrease  has  been  reported  in  the  statement  of
operations for the year ended June 30, 2003.

Note F - Receivable from Sale of Investment

      At  June  30,  2003, the receivable of $274,000 represented  the
consideration received for the sale by the Company of its 15% interest
in a privately held corporation.  The receivable is payable over three
years  and  bears  interest at the rate of 4% per annum.  Interest  is
payable on a semi-annual basis.  Principal payments will be made  from
proceeds  received  from the sale of their AquaCell  common  stock  in
excess  of $1,339,000 and, if required, from 5% of future revenues  to
be generated by our Global Water-Aquacell subsidiary.

     At June 30, 2003, the Company recognized a fair  value  reduction
of $274,000 on this receivable because future collections could not be
determined with any degree  of  certainty.  Such  reduction  has  been
charged to operations during the year ended June  30,  2003.  Interest
income on this receivable will be recorded as received.

Note G - Loans Payable - Related Parties

      At  June  30, 2003 loans payable to related parties  consist  of
unsecured  demand  interest free loans of  $55,000  and  an  unsecured
demand loan with nominal interest in the amount of $25,000.

                                 F-10

             AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                             June 30, 2003


Note H - Equity Transactions

[1]  Series A Convertible Preferred Stock:

      During  March 2003 the Company completed a private placement  of
685,000  shares  of  newly designated Series A  Convertible  Preferred
Stock.  The  offering  consisted of one share of class  A  convertible
preferred stock at a price of $0.63 per share and one Class  A  common
stock  purchase  warrant  exercisable at $1.16  per  share.  Both  the
preferred stock and warrant contain certain call features. The  Series
A   Convertible  Preferred  Stock  carries  an  8%  dividend  and   is
convertible  into the Company's common stock on a one for  one  basis.
Based  on the effective conversion price of the preferred stock  using
relative  fair  value  of $154,000 attributable to  the  warrants  the
Company  recognized a beneficial conversion feature of $158,000  as  a
deemed dividend to the holders of the convertible preferred stock.  In
connection with this offering the Company received gross proceeds of $
406,000.  As  part of this offering 40,000 shares, valued at  $25,200,
were issued to the Company's attorney as consideration for expenses of
the offering.

     During  May  2003  the  Company completed an  additional  private
placement  of  500,000  shares  of  its  newly  designated  Series   A
Convertible  Preferred Stock. The offering consists of  one  share  of
class A convertible preferred stock at a price of $0.75 per share  and
one  Class  A common stock purchase warrant exercisable at  $1.60  per
share.  Both  the  preferred stock and warrant  contain  certain  call
features.  Based  on the effective conversion price of  the  preferred
stock  using  a  relative fair value of $208,000 attributable  to  the
warrants  the  Company recognized a beneficial conversion  feature  of
$210,000  as  a  deemed  dividend to the holders  of  the  convertible
preferred stock. In connection with this offering the Company received
gross  proceeds  of $ 375,000. Expenses  of  the offering amounted  to
$48,000.

     The preferred stockholders  have  no  voting  rights  unless  the
preferred shares are converted to common stock.  The preferred  shares
will be converted on a mandatory basis provided  that  the  underlying
common shares have been registered and the common stock has traded  at
a price of $1.89 for 20 consecutive trading days.

[2]  Stock option plans:

     During August 1998, the Company adopted the 1998 Incentive  Stock
Plan   (the   "Plan")  under  which  options  (either   incentive   or
nonqualified),  stock  appreciation rights, stock  and  other  awards,
covering an aggregate amount of 1,000,000 shares of common stock,  may
be  granted to officers, directors, employees and consultants  of  the
Company.  The exercise price established for any awards granted  under
the Plan, shall be determined by a Compensation Committee appointed by
the  Company's  Board of Directors.  The exercise price  of  incentive
stock  options  cannot  be less than 100% (110%  for  10%  or  greater
shareholder employees) of the fair market value ("FMV") at the date of
grant  and the exercise price of nonqualified options cannot  be  less
than  85%  of  the FMV at the date of grant.  The exercise  period  of
incentive options cannot extend beyond 10 years from the date of grant
and  nonqualified options cannot extend beyond 15 years from the  date
of grant.

      During January 2002, the Board of Directors adopted a Director's
Option  Plan covering an aggregate amount of 500,000 shares of  common
stock.   As  of  June 30, 2003, 30,000 options have been granted  from
this plan.

      A  summary  of  stock option activity under  both  plans  is  as
follows:

                                            Year Ended June 30,
                         -------------------------------------------------------
                                     2003                        2002
                         --------------------------- ---------------------------
                                    Weighted Average            Weighted Average
                           Shares    Exercise Price    Shares    Exercise Price
                         ---------- ---------------- ---------- ----------------
Balance, July 1..........  551,000       $ 2.41        148,000       $ 3.06
     Options granted.....  227,000          .64        406,000         2.17
     Options cancelled... (272,000)        3.74         (3,000)        2.59
                         ----------                  ----------
Balance, June 30.........  506,000       $  .90        551,000       $ 2.41
                         ==========                  ==========
Exercisable, June 30.....  188,000       $ 1.02        196,000       $ 2.60
                         ==========                  ==========

                                  F-11

             AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                             June 30, 2003


Note H - Equity Transactions (continued)

[2]  Stock option plans (continued)

     The  following  table presents information relating to  stock  options
outstanding at June 30, 2003:


                   Options Outstanding                     Options Exercisable
-------------------------------------------------------- -----------------------
Exercise        Weighted-Average    Weighted-Average            Weighted-Average
 Price   Shares  Exercise Price  Remaining Life in Years Shares  Exercise Price
-------- ------ ---------------- ----------------------- ------ ----------------
  0.60  185,000                             6.5
  0.65   30,000                             9.6          30,000
  1.00   75,000                             1.2          69,000
  1.14   12,000                             6.8
  1.15   60,000                             1.9          60,000
  1.15   60,000                             3.8          12,000
  1.16   84,000                             5.9          17,000
        -------                  ---------------------- -------
        506,000       $0.90                 4.9         188,000      $1.02
        =======                  ====================== =======

      If  the options had been accounted for under SFAS 123, net  loss
attributable to common stockholders for the years ended June 30,  2003
and  2002,  would have been $(2,876,000) OR $(0.33) per common  share,
and  $(4,064,000) or $(0.50) per common share, respectively.  The fair
value of options granted during the years ended June 30, 2003 and June
30,  2002,  was  $0.27  and $0.64 per share  on  the  date  of  grant,
respectively.   The  options were valued utilizing  the  Black-Scholes
valuation  method using the following assumptions: risk-free  interest
rate  of 3.1% and 4.99%, volatility of 33% and 42% and expected  lives
of five and three years, respectively.

[3]  Issuances of common stock:

      In connection with a six-month consulting agreement (see Note  H
(4))  the  Company issued 10,000 shares of its common stock valued  at
$34,000.  The value of the stock was amortized over the six-month life
of  the  agreement.  Amortization amounted to $34,000 during the  year
ended June 30, 2002.

      In connection with a six-month consulting agreement (see Note  H
(4))  the  Company issued 10,000 shares of its common stock valued  at
$42,000.  The value of the stock was amortized over the six-month life
of  the  agreement.  Amortization amounted to $42,000 during the  year
ended June 30, 2002.

      In connection with a five-year consulting agreement (see Note  H
(4))  the Company issued 120,000 shares of its common stock valued  at
$150,000.   The value of the stock is being amortized over  the  five-
year  life of the agreement.  Amortization amounted to $30,000  during
the  year  ended June 30, 2003, and $4,000 during the year ended  June
30, 2002.

     In  connection with a five-year consulting agreement (see Note  H
(4))  the Company issued 100,000 shares of its common stock valued  at
$98,000.  The value of the stock is being amortized over the five-year
life  of  the agreement.  Amortization amounted to $20,000 during  the
year  ended June 30, 2003, and $2,000 during the year ended  June  30,
2002.

      In  connection with financing transactions, during  January  and
April  2003,  the  Company issued 125,000 shares of its  common  stock
valued  at $89,000. Amortization amounted to $89,000 during  the  year
ended June 30, 2003.

                                 F-12

             AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                             June 30, 2003


Note H - Equity Transactions (continued)

[4]  Issuances of common stock purchase warrants:

      In connection with a financial consulting agreement, the Company
issued  a  warrant to purchase 200,000 shares of the Company's  common
stock  to  be exercisable for a five-year period at $4.20  per  share.
The Company estimated the fair value of these warrants to be $370,000,
utilizing  the  Black-Scholes valuation  method  using  the  following
assumptions: a risk-free interest rate of 4.99%, volatility of 42% and
a  term  of  five years.  Such amount was amortized over  six  months.
Amortization amounted to $308,000 during the year ended June 30, 2002.

     In  connection  with  a three-year consulting agreement,  entered
into  in August 2001, the Company issued a warrant to purchase  75,000
shares  of the Company's common stock to be exercisable for  a  three-
year  period at $4.40 per share.  The Company estimated the fair value
of   these  warrants  to  be  $110,000,  utilizing  the  Black-Scholes
valuation method using the following assumptions: a risk-free interest
rate  of  4.58%, volatility of 42%, and a term of three  years.   Such
amount  is  being amortized to expense over three years.  Amortization
amounted  to $37,000 and $31,000 during the years ended year June  30,
2003 and 2002, respectively.

     In connection with a six-month consulting agreement, entered into
in  September  2001, the Company issued warrants to  purchase  100,000
shares  of the Company's common stock to be exercisable for  a  three-
year period (50,000 at $4.50 per share and 50,000 at $5.50 per share).
The  Company estimated the fair value of these warrants to be $79,000,
utilizing  the  Black-Scholes valuation  method  using  the  following
assumptions:  a risk-free interest rate of 5.99%, volatility  of  42%,
and  a term of three years.  Such amount was amortized to expense over
six  months.  Amortization amounted to $79,000 during the  year  ended
June 30, 2002.

     In connection with a six-month consulting agreement, entered into
in  October  2001,  the Company issued warrants  to  purchase  100,000
shares  of the Company's common stock to be exercisable for  a  three-
year period (50,000 at $4.50 per share and 50,000 at $5.50 per share).
The  Company estimated the fair value of these warrants to be $83,000,
utilizing  the  Black-Scholes valuation  method  using  the  following
assumptions: a risk-free interest rate of 3.1%, volatility of  33.33%,
and  a term of three years.  Such amount is being amortized to expense
over  six  months.  Amortization amounted to $83,000 during  the  year
ended June 30, 2002.

     In  connection with a distribution agreement (See  Note  K),  the
Company  issued warrants to purchase 300,000 shares of  the  Company's
common  stock  to  be  exercisable for a  five-year  period  (100,000,
100,000,  and 100,000 at exercise prices of $5.00, $6.00,  and  $7.00,
per  share  respectively).  The Company estimated the  fair  value  of
these  warrants to be $283,000, utilizing the Black-Scholes  valuation
method  using the following assumptions: a risk-free interest rate  of
3.1%, volatility of 33.33%, and a term of five years.  Such amount  is
being amortized to expense over five years. During the year ended June
30,   2003   the  agreement  was  amended  and  the  100,000  warrants
exercisable at $6.00 per share and the 100,000 warrants exercisable at
$7.00 per share were to be returned to the Company and cancelled.  The
unamortized portion of these warrants, in the amount of $110,000,  was
written  off  to additional paid in capital. Amortization amounted  to
$54,000  and  $42,000 during the years ended June 30,  2003  and  2002
respectively.

     In connection with a five-year consulting agreement, entered into
in  May  2002, the Company issued a warrant to purchase 100,000 shares
of the Company's common stock to be exercisable for a five-year period
at  $3.30  per share.  The Company estimated the fair value  of  these
warrants  to  be $9,000, utilizing the Black-Scholes valuation  method
using  the following assumptions: a risk-free interest rate  of  3.1%,
volatility of 33.33%, and a term of five years.  Such amount is  being
amortized to expense over five years.  Amortization amounted to $2,000
during  the  year ended June 30,2003 and was insignificant during  the
year ended June 30, 2002.

     In  connection with a one-year consulting agreement, entered into
in May 2002, the Company issued a warrant to purchase 50,000 shares of
the Company's common stock to be exercisable for a five-year period at
$1.05  per  share.   The Company estimated the  fair  value  of  these
warrants  to be $18,000, utilizing the Black-Scholes valuation  method
using  the following assumptions: a risk-free interest rate  of  3.1%,
volatility of 33.33%, and a term of five years.  Such amount is  being
amortized to expense over one year.  Amortization amounted to  $16,000
and   $2,000  during  the  years  ended  June  30,  2003,   and   2002
respectively.

                                 F-13

             AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                             June 30, 2003


Note H - Equity Transactions (continued)

[4]  Issuances of common stock purchase warrants (continued)

     In connection with a five-year consulting agreement, entered into
in  June 2002, the Company issued warrants to purchase 200,000  shares
of the Company's common stock to be exercisable for a five-year period
(100,000 and 100,000 at exercise prices of $3.00 and $5.00, per share,
respectively).  The Company estimated the fair value of these warrants
to  be $6,000, utilizing the Black-Scholes valuation method using  the
following  assumptions: a risk-free interest rate of 3.1%,  volatility
of  33.33%, and a term of five years.  Such amount is being  amortized
to  expense over five years.  Amortization was $1,000 during the  year
ended  June 30, 2003 and was insignificant during the year ended  June
30, 2003.

     In  connection with a one-year credit facility agreement, entered
into  in  August 2002, the Company issued warrants to purchase 160,000
shares  of  common stock to be exercisable for a five-year  period  at
$.78 per share. The Company estimated the fair value of these warrants
to  be $43,000 utilizing the Black-Scholes valuation method using  the
following  assumptions: a risk-free interest rate of 3.1%,  volatility
of  33.33% and a term of five years. Such amount is being amortized to
expense  over  one year. Amortization amounted to $36,000  during  the
year ended June 30, 2003.

      In connection with a one-year consulting agreement, entered into
in March 2003, the Company issued a warrant to purchase 150,000 shares
of  common stock to be exercisable for a two-year period at $1.00  per
share.  The  Company estimated the fair value of this  warrant  to  be
$12,000  utilizing  the  Black-Scholes  valuation  method  using   the
following  assumptions: a risk-free interest rate of 3.1%,  volatility
of  33.33% and a term of two years. Such amount is being amortized  to
expense over one year. Amortization amounted to $3,000 during the year
ended June 30, 2003.

      In  connection with a private placement of series A  convertible
preferred  stock completed in March 2003, the Company issued  warrants
to  purchase  685,000 shares of common stock to be exercisable  for  a
five-year period at $1.16 per share (See Note H (1) above).

      In  connection with a private placement of series A  convertible
preferred stock completed on May 2003, the Company issued warrants  to
purchase 500,000 shares of common stock to be exercisable for a  five-
year period at $1.60 per share (See Note H (1) above).

     At June 30, 2003, the Company had warrants outstanding as follows:

      Exercise Price        Shares        Expiration Date
      --------------        ------        ---------------

            .78             160,000        August 2007
           1.00             150,000        March 2005
           1.16             685,000        March 2008
           1.60             500,000        May 2008
           4.40              75,000        August 2004
           4.50              50,000        September 2004
           5.50              50,000        September 2004
           4.50              50,000        October 2004
           5.00             100,000        October 2006
           5.50              50,000        October 2004
           4.20             200,000        May 2006
           8.25             120,000        February 2006
           3.30             100,000        May 2007
           1.05              50,000        May 2007
           3.00             100,000        June 2007
           5.00             100,000        June 2007
                          ---------
                          2,540,000
                          =========

     At  June 30, 2003, the weighted average  exercise  price  of  the
outstanding  warrants  was  $2.64 and the weighted  average  remaining
contractual life of the warrants was 3.58 years.

                                 F-14

             AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                             June 30, 2003


Note H - Equity Transactions (continued)

 [5] Shares reserved:

     At June 30, 2003, the Company has reserved 5,225,000 shares of
common stock for issuance upon conversion of preferred stock and
exercise of options and warrants.

Note I - Acquisition:

      On March 19, 2002, the Company completed the acquisition of 100%
of   the   issued  and  outstanding  common  stock  of  Water  Science
Technologies,  Inc.,  a privately owned Arizona  Corporation  ("WST").
The  purchase price was the issuance of 203,252 shares at a  price  of
$4.92  per  share, for a total of $1,000,000, as calculated by  taking
the  average  closing  price of AquaCell  common  stock  on  the  five
business  days immediately preceding the signing of the  agreement  of
October  23, 2001.  In addition, the Company issued 55,337  shares  of
its  common  stock at $3.43 per share to WST vendors as calculated  by
taking  the  average closing price of AquaCell common stock  for  five
days immediately preceding the closing on March 19, 2002.

     The  primary reasons for the acquisition of WST were the  synergy
with our existing business and the addition of new capabilities to our
presence  in the water industry with its history as a manufacturer  of
integrated  water  purification and treatment  systems.  The  purchase
price was a negotiated price between the parties based upon comparable
industry  valuations.  There are no contingent payments,  options,  or
commitments as part of this acquisition.

     The transaction has been accounted for under the purchase method.
Accordingly,  the consolidated balance sheet includes the  assets  and
liabilities of WST at June 30, 2002 and the consolidated statements of
operations  include  the  results of WST from  March  19,  2002.   The
acquisition  resulted in excess cost over fair  value  of  net  assets
acquired  of $1,301,000.  Pursuant to the provisions of SFAS 142,  the
Company recorded an impairment loss of $72,000 for the year ended June
30,  2003 and an impairment loss of $187,000, for the year ended  June
30,   2002.   Such  impairment  losses  resulted  from  the  Company's
determination of fair value using present value cash flow analysis.

     On  the  basis  of a pro forma consolidation of  the  results  of
operations  as  if the acquisition had taken place at  July  1,  2000,
unaudited consolidated net revenues, net loss, and loss per share  for
the   year   ended  June  30,  2002,  would  have  been  approximately
$1,516,000, $(3,938,000), and $(0.48); and for the year ended June 30,
2001,  would  have  been approximately $1,344,000,  $(3,042,000),  and
$(0.45), respectively.

     A  condensed  unaudited  balance  sheet  of  WST  at the  date of
acquisition is presented below:


     ASSETS
     Current assets                                 $   131,000
     Property and equipment, net                         13,000
     Deposits                                             5,000
                                                   -------------
                                                    $   149,000
                                                   =============

     LIABILITIES AND STOCKHOLDERS DEFICIENCY
     Current liabilities                            $   450,000
     Stockholders' deficiency                          (301,000)
                                                   -------------
                                                    $   149,000
                                                   =============

                                 F-15

             AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                             June 30, 2003


Note J - Income Taxes:

     At June 30, 2003, the Company had available federal net operating
loss  carryforwards  to  reduce  future  taxable  income,  if  any  of
approximately $8,200,000.  The net operating loss carryforwards expire
at various dates through 2023.

      At  June  30,  2003,  the Company has a deferred  tax  asset  of
approximately  $3,526,000,  representing  the  benefit  of   its   net
operating  loss  carryforwards.  The Company has not  recorded  a  tax
benefit  because realization of the benefit is uncertain and therefore
a valuation allowance has been fully provided against the deferred tax
asset.  The difference between the federal statutory rate of  34%  and
the  Company's effective tax rate of 0% is due to an increase  in  the
valuation  allowance  of  $686,000 and $720,000  in   2003  and  2002,
respectively.

Note K - Commitments and Contingencies

[1]  Lease commitments:

      The  Company  occupies office space in California  and  Arizona,
under  noncancellable operating leases.  As of June 30,  2003,  future
minimum commitments under office and equipment leases are as follows:

           Year Ending June 30,
           --------------------

                   2004          $  107,000
                   2005              70,000
                   2006              65,000
                   2007              20,000
                                 ----------
                                 $  262,000
                                 ==========

      Rent  expense  under  office and equipment  leases  amounted  to
$175,000  and  $131,000 for the years ended June 30,  2003  and  2002,
respectively.

[2]  Distribution agreement:

      On  October 9, 2001, the Company entered into distribution  (See
Note   N)  and  joint  venture  agreements  with  two  privately  held
companies.   In  connection  with  the distribution  agreement,  which
grants  exclusive  North American distribution and  marketing  rights,
excluding existing customers and existing distribution agreements, the
Company  acquired  15%  of a privately held company  in  exchange  for
451,807  shares  of common stock of the Company.  The Company  applied
the  cost  method of accounting in connection with this 15% investment
(See  Note  M).  The Company granted warrants (100,000,  100,000,  and
100,000  at  exercises prices of $5.00, $6.00, and  $7.00  per  share,
respectively)  in  connection  with the  distribution  agreement.   In
connection  with  the  joint-venture  agreement,  the  agreement   was
modified  and AquaCell's initial ownership of 45% was reduced  to  19%
ownership  of all net profits, with no responsibility for funding  any
of  the manufacturing or marketing costs, with the remaining 81% owned
by the other privately held company.

    On May 30, 2003 the Company negotiated the return and cancellation
of  all  exclusive  distribution  and  marketing   rights   under  the
distribution agreement and joint  venture  agreement,  the  return  of
100,000 warrants exercisable at $6.00 per  share  and  the  return  of
100,000 warrants exercisable at $7.00 per share. In exchange  AquaCell
granted the private company the  right  to  continue  to  sell  Global
Water-Aquacell's products on a non-exclusive basis in those  areas  in
which it retains salesmen. It was  agreed  that  the  private  company
would realize a return of $1,339,000 from sales of the 451,807  shares
of AquaCell common stock that it owns and,  if  required,  from 5%  of
future   revenues   to  be  generated  by  our  Global  Water-Aquacell
subsidiary.  For the year ended June 30, 2003 in connection with  this
transaction  the  Company  recognized  a  charge,  in  the  amount  of
$140,000, for the  fair  value  of  its  put  option  classified  as a
derivative.  As of June 30, 2003, $219,000 has been liquidated through
sales  of   91,807   shares  by  the  counterparty.  The  Company  has
calculated fair value of the unliquidated balance of the put option on
the unsold shares (360,000) using the Black-Scholes  valuation  method
utilizing the following assumptions: risk-free interest rate  of 3.1%,
volatility of 33% and expected life of eleven months at June 30, 2003.
In the event that the private  company  realizes  proceeds  exceeding
$1,339,000, the first $274,000 of such proceeds will be used to repay
the receivable from sale of investment (see Note F).



[3]  Employment agreements

     The Company has employment agreements with various executives and
employees  of  the  Company  which expire  at  various  dates  through
February,  2006.   These  agreements  provide  for  aggregate  minimum
salaries  of  $677,000  for  the  year  ending  June  30,  2004.   The
agreements  also provide for incentive bonuses based upon  achievement
of  certain  milestones.   No  bonuses  have  been  paid  under  these
agreements as of June 30, 2003.

     Effective July 2002 the Company entered into a five-year
employment contract with one of the officers of WST.  The contract
calls for a minimum annual salary of $100,000.

                                 F-16

             AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                             June 30, 2003


Note L - Long Term Note

      At  June  30, 2003 the long term note consists of an installment
note,  secured by a truck, payable in monthly payments of $342 through
February 2005.  Maturities on the note follows:

          Year Ending    June 30, 2004    $  4,000
                         June 30, 2005       3,000
                                          --------
                                          $  7,000
                                          ========

Note M - Impairment Loss On Investment

       In   connection  with  a  15%  investment  in   Corbett   Water
Technologies,  Inc.,  the Company recognized  an  impairment  loss  of
$1,226,000  during  the year ended June 30, 2002  in  accordance  with
generally accepted accounting principles (GAAP), as contained  in  the
provisions  of SFAS-121, "Accounting for the Impairment of  Long-Lived
Assets  and  for Long-Lived Assets to be Disposed Of". The  investment
was sold during the year ended June 30, 2003 (See Note F).

Note N - Related Party Transactions

      Included in net sales are sales to a former affiliate,  pursuant
to  a  distribution agreement, aggregating approximately $706,000  for
the  year ended June 30, 2003 and $452,000 for the year ended June 30,
2002. (See Note K (2)).

Note O - Major Customers and Suppliers

      During  the  years ended June 30, 2003 and June  30,  2002,  the
Company  sold approximately 44% and 43% respectively, of its  products
to a former affiliate (See Note K (2)).

     During the years ended June 30, 2003 and 2002, the Company
purchased approximately 27% and 39% respectively, of its materials
from one vendor, the supplier of its raw cooler.

Note P - Subsequent Events

(1)   During  July  through  September 2003 the  Company  completed  a
private  placement  of  1,703,000 shares  of  its  common  stock.  The
offering consists of one share of common stock at a price of $1.50 per
share  and one common stock purchase warrant exercisable at $4.00  per
share.  The  warrant  contains a call feature.  The  Company  received
proceeds of $2,296,000 net of expenses of $259,000. In connection with
the  offering  the  placement  agent  received  341,000  common  stock
purchase warrants exercisable at $4.00 per share.

(2)   During  August  2003  the  Company entered  into  marketing  and
consulting  agreements  with  five  separate   entities. Consideration
for  these  agreements  included  cash  fees  of $45,000 and 1,250,000
warrants to purchase shares  of common stock of the Company at a price
of $.01 per share. These  warrants were valued at $2,564,000 utilizing
the  Black-Scholes valuation  method. Such amount will be amortized to
expense  over  the term of the agreements.

(3)    During  September  2003  the  Board  of  Directors  adopted   a
resolution, subject to shareholders' approval, to amend the 1998 Stock
Option Plan to increase the number of shares issuable thereunder  from
1,000,000 to 2,000,000.

                                 F-17


                           SIGNATURES

   In  accordance  with  Section 13 or 15(d)  of  the  Securities
Exchange  Act  of 1934, the Registrant caused this Report  to  be
signed   on  its  behalf  by  the  undersigned,  thereunto   duly
authorized.


Dated:  November 5, 2003       AQUACELL TECHNOLOGIES, INC.
                               (Registrant)

                               By: /s/ JAMES C. WITHAM
                               -------------------------------
                               Name:   James C. Witham
                               Title:  Chief Executive Officer

   In accordance with the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf
of  the  Registrant  and  in  the  capacities  and on the dates
indicated.


Signatures              Title                                 Date
----------              -----                                 ----


/s/ James C. Witham     Chairman of the Board of Directors    November 5, 2003
----------------------  and Chief Executive Officer
    James C. Witham     (Principal Executive Officer)


/s/ Karen B. Laustsen   Director and President                November 5, 2003
----------------------
    Karen B. Laustsen


/s/ Gary S. Wolff       Director and Chief Financial Officer  November 5, 2003
----------------------  (and Principal Accounting Officer)
    Gary S. Wolff


/s/ Glenn Bergenfield   Director                              November 5, 2003
----------------------
    Glenn Bergenfield


/s/ Dr. William DiTuro  Director                              November 5, 2003
----------------------
    Dr. William DiTuro



                          EXHIBIT INDEX


 Exhibit
 Number     Description
---------   ---------------------------------------------------

  10.0      Material Contracts

   (1)      Distribution Agreement dated October 9, 2001

   (2)      Joint Venture Agreement dated October 9, 2001

   (3)      Dissolution Agreement dated May 30, 2003


  31.1      CEO's Certification pursuant to Rule 13a-14 and
            15d-14 under the Securities Exchange Act of 1934,
            as amended


  31.2      CFO's Certification pursuant to Rule 13a-14 and
            15d-14 under the Securities Exchange Act of 1934,
            as amended


  32.1      Certification pursuant to 18 U.S.C. Section 1350
            as adopted pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002