SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB/A

                                 AMENDMENT NO. 1

 Annual report under section 13 or 15(d) of the Securities Exchange Act of 1934
                  for the fiscal year ended December 31, 2003

                        Commission File Number: 000-16936

                                WorldWater Corp.
                 (name of small business issuer in its charter)

             Delaware                                      33-0123045
  (State or other jurisdiction of                 (I.R.S. Identification Number)
Employer corporation or organization)

   55 Route 31 South, Pennington, NJ                         08534
(Address of principal executive offices)                   (Zip Code)

                     Issuers telephone number (609) 818-0700

       Securities registered under Section 12(b) of the Exchange Act: None

  Securities registered under Section 12 (g) of the Exchange Act: Common Stock,
                                $0.001 par value

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

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

The issuers revenue for its most recent fiscal year was $1,279,573.

On April 20, 2004 the aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately $26,024,273.

As of April 20, 2004 the Registrant had outstanding 57,831,719 shares of Common
Stock and 677,778 shares of Preferred Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the Registrant's Proxy Statement for its 2004 Annual Meeting of
Stockholders are incorporated by reference into Part III of this report.

                                        1

<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

WorldWater Corporation is an international solar engineering and water
management company with unique, high-powered solar technology providing
solutions to water supply and energy problems. The Company has developed
patented solar water pumping systems capable of operating pumps up to 600
horsepower for irrigation, refrigeration and water utility pumping systems.
WorldWater's proprietary AquaMax(TM) system is controlled by the Company's
patented AquaDrive(TM), an electronic board that reads and translates the output
of solar electric DC current from solar panels, converting the flow into AC
current for delivery to water pumps in deep wells or rivers or any 3-phase AC
motors. The Company's AquaMax(TM) hybrid solar irrigation pumps are able to
operate on solar alone or in combination with the electric grid or diesel
generators. Among the advantages of the Company's proprietary solar technology
is that during non-irrigation or compressor usage during daylight periods the
customer is able to transfer the unused self-generated electric solar power back
to the utility company for net-metering credit.

WorldWater's proprietary technology permits the use of Alternate Current ("AC")
pumps, an option previously unavailable for solar power. AC pumps are widely
available in countries throughout the world, allowing replacement pumps and
parts to be supplied on a local basis. Other forms of solar powered photovoltaic
(PV) pumping currently available use less reliable and less durable Direct
Current ("DC") pumps or custom AC pumps which are more costly and not readily
available in most developing countries.

Until 2002, WorldWater's business was focused exclusively on helping developing
countries with water and power problems, but the Company's sharply increased
power capability coupled with growing energy shortages in the U.S. has opened
widespread and emergent domestic market opportunities.

WorldWater's ability to operate large-scale pumps is especially important in
areas where electricity is expensive and diesel considered too pollutive.
California, for example, a major target market for the Company, is striving to
increase renewable energy usage to reduce demand on state electric utilities
grid and to improve the state's air quality by granting 50% rebates to buyers
and giving significant tax credits and other incentives for purchases of
renewable energy. In New Jersey, rebates from the electric utilities plus
federal tax incentives for the purchase of renewable power can reduce the price
of WorldWater's systems, including the high-powered hybrid AquaMax(TM)
irrigation pump, by up to 60 percent. This enables renewables in general to
better compete against traditional energy sources in New Jersey, California and
other states in industries such as agriculture, viniculture, and utilities.


                                       2
<PAGE>

By employing the hybrid AquaMax(TM) irrigation system, which can operate motors
up to 600 horsepower by sunshine alone or in combination with existing electric
grid or diesel, a farmer can irrigate his land at little or no additional cost
over what is paid currently for irrigation powered by grid electricity. This
occurs because when the farmer is not irrigating, the sun is still developing
electricity through WorldWater's system and the power is returned to the
electrical utility for storage for credit and later use or for direct utility
bill credit (depending upon the state). This process is called net metering and
is already in operation in New Jersey and California as well as more than a
dozen other states. By automatically switching between solar and the other power
sources, the AquaMax(TM) enables the farmer to protect against a loss of
irrigation water (even during daylight power shortages or blackouts) and can
operate during day or night hours. Our systems typically are financed through a
capital lease that requires fixed monthly payments for a term of between five
and seven years, with a residual payment due at the end of the term. Once
payment of the capital lease is completed, our systems generate energy at no
additional cost to the user, other than any required maintenance expenses.

The Company was incorporated in the state of Nevada on April 3, 1985 under the
name of Golden Beverage Company. In April 1997, the Company entered into a
reverse merger transaction with WorldWater, Inc., a Delaware corporation formed
in January 1984. Since the merger transaction, the Company, under the name of
WorldWater Corp., has been engaged exclusively in the solar/water power
industry. In June of 2000, the Company shareholders voted to change the state of
incorporation from Nevada to Delaware. The Company stock is publicly traded on
the OTC Bulletin Board under the symbol WWAT.OB.

The Company has its corporate headquarters and manufacturing facilities at its
plant located at 55 Route 31 South in Pennington, New Jersey 08534. Through this
central office, WorldWater designs, develops and markets proprietary technology
relating to solar energy and water engineering, including solar power projects
and international water management consulting.

(a) Major Customers and Export Sales

The Company offers a wide range of water resource services driven by its
solar-powered pumping systems for worldwide application for irrigation,
refrigeration and water utility pumping systems. The initial focus in the United
States has been California and New Jersey because of energy shortages, high
energy costs and rebates available to customers from the local utilities, along
with tax credits from federal and state governments. The Company is looking to
broaden our focus to other states to increase revenues as well as to continue to
submit proposals to various foreign governments (particularly, the Philippines
and Iraq) in need of solving critical water supply and energy problems using the
company's high-powered solar technology. At this point in time the Company is
dependent on solar-powered pumping systems sales, and research and development
grant revenue, but is not dependent on any of its customers.

In 2003, WorldWater installed its first solar refrigeration system, which drives
a 350 hp compressor pump, at a food processing facility near Bakersfield, CA -
the world's largest solar-powered refrigeration compressor system. The Company
entered the California agriculture market in 2002 with implementation of a 50 hp
irrigation pumping system for a cotton farm in the San Joaquin Valley - the
world's largest solar irrigation pumping system.


                                       3
<PAGE>

WorldWater participated as the exclusive PV systems supplier in the successful
bid for the largest PV installation on a U.S. community college campus at Cerro
Coso Community College, Ridgecrest, CA. During the first and second quarters of
2004 the Company supplied a one-megawatt system totaling $4.1 million. The prime
contractor, Contra Costa Electric of Bakersfield, CA, is scheduled to complete,
including testing and interconnection of the $8.9 million construction project
in the third quarter 2004.

The Company also entered the New Jersey agricultural market in 2003 with
completion of a 24 kW solar electrical system at Flatbrook Farm, an organic meat
and poultry farm in Montague, NJ. The New Jersey Board of Public Utilities (BPU)
has authorized a comprehensive range of incentives, due to take effect in
January 2004, that will require more than $600 million of new PV installations
in the state over the next five years.

In addition to this recent domestic business, WorldWater has operated in the
Philippines since 1997 when the Company delivered 25 solar pumps for
installation by the National Irrigation Authority (NIA) under a directive from
former President Fidel V. Ramos. The Company has formed a Philippine subsidiary,
WorldWater (Phils) Inc., and has established a local management team to develop
and implement business.

In September 2003, WorldWater (Phils) inaugurated the world's first solar
powered prepaid municipal water distribution system for the municipality of
Ronda on the island of Cebu. For the first time, a municipal water distribution
system utilizes "smart card" technology as a financing solution for community
water production and to remove problems associated with the payment collection
process. The Ronda system uses WorldWater's proprietary AquaCard(TM) debit card
system, which operates directly with WorldWater's AquaMeter(TM) solar pumping
stations throughout the community. The project was made possible by a commercial
loan from the Philippine National Bank and required no special loans or
subsidies.

WorldWater was contracted by Winrock International in 2003 to evaluate potential
water supply development and sanitation solutions for selected communities
within the Alliance for Mindanao Off-Grid Renewable Energy (AMORE) area in the
Southern Philippines. The assessment study has been completed and proposals have
been presented for project implementation.

The Company has signed a Memorandum of Agreement with the Philippine Department
of Agriculture National Irrigation Administration for a nationwide solar power
project to bring potable water, irrigation, and power to the country's rural
areas. Based upon approval of a sovereign guarantee by the Philippine
government, financing for the project will be provided by PNC Bank with a loan
guarantee from the U.S. Export-Import Bank.


                                       4
<PAGE>

(b) Products

SOLAR WATER SYSTEMS

AquaMax(TM) high yield hybrid irrigation pumps take solar water pumping systems
to unprecedented levels. For the first time, WorldWater has developed
technological capability to drive motors and pumps up to 600 hp, delivering
thousands of gallons of water per minute by solar energy alone or in automatic
combination with the electric grid or diesel generators. Irrigating fields in
remote areas with solar requires no fuel costs, no need for regular maintenance,
generates no noise and no pollution. And now with WorldWater's hybrid systems,
if sun is not available the AquaMax(TM) automatically switches to another diesel
or electrical power source.

The patented AquaDrive(TM) controller converts solar DC current to AC, then
supplies the AC power to a pump from either the solar array or the grid or
diesel generator or simultaneously from both sources. The hybrid operation is
programmed to be completely automatic so manual intervention is not required to
switch from one power source to the other.

The AquaMeter(TM) water meter allows consumers to buy water with a pre-paid
electronic "smart card." During each sale, the meter deducts the charge and
indicates the balance remaining on the card, which can be recharged at a
designated vendor site with additional cash payment. Designed to be
tamper-proof, the meter discourages wasteful spillage. Revenue collected from
the AquaCard(TM) is used to pay for the solar water system. Generally, after
five years the community owns the system and has a source of income for the
duration of the system's life, expected to exceed 20 years.

SOLPOWER(TM) SYSTEMS

SolPower(TM) PV power systems are designed for off-grid homes, schools, health
clinics, and village community centers. The systems produce electricity for
lighting, TV, radio, computers and a host of other uses. The key market for this
power system is in developing countries where those living outside major cities
are not connected to the electrical grid system.

SOLAR LIGHTING

SolBrite(TM), WorldWater's solar charged portable lantern, can be used virtually
anywhere. A PV module charges a high-quality, maintenance-free battery, located
in the base of the unit, to illuminate a bright fluorescent light.

SolLite(TM) WorldWater's solar light fixture, was developed by WorldWater
engineers to meet the demands of the marketplace for an affordable light at half
the price of the competition. SolLite(TM) also conserves energy, using less
power while still achieving similar output.


                                       5
<PAGE>

(c) Marketing

WorldWater markets the AquaMax(TM) pumping systems and other solar products
worldwide to both institutional public and private commercial markets. Until
2002, products were primarily marketed in developing nations, where there is a
great need for electrical power and clean water. In 2002, the Company began
marketing domestically in California and New Jersey. Until these products were
introduced, U.S. farms, water utilities and other large industrial power users
had not been able to take advantage of the substantial statewide financial
incentives available for solar powered systems. WorldWater's high-powered solar
pumps qualify to supply these markets and enable the buyer to benefit from the
rebates and credits. Potential markets include agriculture, dairies, livestock
farms, water utility districts, wineries and food processing (refrigeration
pumps and compressors).

Currently, in California, the Company has completed installations driving a 50
hp irrigation pump and a 350 hp refrigeration compressor pump system, and is in
the process of installing a One MW solar electrical system. The Company is also
conducting a study under contract with the Sacramento Municipal Utility District
for the installation of solar irrigation pumping systems within the Sacramento
district. In New Jersey, WorldWater has completed construction of a 24 kW system
for electricity for an organic farm. The price of the pumping systems being
marketed in California and New Jersey ranges from approximately $300,000 to
several million dollars. We have opened sales and technical offices in San Diego
and Sacramento to service the state.

International marketing efforts largely identify specific project opportunities
that have the potential for long-term growth, and institutional sources that are
capable and willing to finance these projects. The massive reconstruction effort
being undertaken in Iraq presents unique opportunities for American contracting
companies, and WorldWater has partnered with The Sandi Group, one of the largest
Iraqi construction and logistics companies, to pursue these opportunities.

The need and price for water worldwide is growing annually. The United Nations
estimates that $8 billion annually is currently spent in providing safe drinking
water in developing countries, and that $100 billion will be required over the
next five years. The problem of how to bring safe drinking water and electricity
to rural households in need is the focus of WorldWater's proprietary solar
technology. Solar energy supplies more energy in one hour than the world uses in
one year, so it is a plentiful resource well suited to the dispersed communities
off the electrical grid.


                                       6
<PAGE>

(d) Market Size

Over the last 15 years, the photovoltaic (PV) industry has grown in revenues
from $2 million to over $1.5 billion. By 2020, worldwide annual PV direct sales
are estimated to be $27 billion and related sales are estimated to be more than
$50 billion per year as stated by the U.S. National Renewable Energy Laboratory
Report, "Photovoltaics: Energy for the New Millennium," January 1, 2000.
Advances in PV technology and corresponding reduction in costs continue to fuel
the increasing demand for PV power. Great potential for PV technology also lies
in developing countries where roughly 2 billion people lack electricity and
water. Applications range from remote pumping, irrigation, telecommunications
and lighting, to village size power production.

Based on estimates by the United Nations Development Programme and the World
Bank, the cost of bringing clean water to the 2 billion people who are without
access to safe drinking water will be approximately $50 per person, or $100
billion total. Governments may be forced to reallocate their funding resources
to address what the World Bank says will be a major problem of the 21st century
-- water shortages.

A similar size investment is needed to supply electricity to underdeveloped
nations. For example, WorldWater's analysis of the remote power markets in the
Philippines, where only 28 of the 2,800 inhabited islands have access to
electricity, shows that a modest 10% penetration by solar power represents an
outstanding market opportunity.

(e) Marketing Strategies

WorldWater is marketing the AquaMax(TM) pumping system and its other solar
products worldwide to both institutional public and private markets. Because
AquaMax(TM) solar water pumping systems are capable of operating pumps up to 600
horsepower, WorldWater is the first solar company in the world with the power to
deliver mainstream electric pumping capacity.

The new hybrid, AquaMax(TM), is a true breakthrough in terms of both power and
flexibility. It will work by solar alone or interchangeably with existing grid
electricity or diesel generators, contributing significantly to a farmer's
bottom line by cutting electrical or fuel costs whenever the sun is shining,
which also happens to be the peak cost period for grid users.


                                       7
<PAGE>

WorldWater is unique among its competition in that it does not merely solicit
and await tendered contracts from emerging markets, governments or international
agencies, but actively initiates projects by proposing rural water and power
solutions to key decision-makers at the highest government levels. This "top
down" water and power solution strategy is key for WorldWater and differentiates
the Company from its competitors. Once WorldWater obtains recognition and
acceptance at the highest levels, project development meetings are held with
national and local level decision-makers. After the benefits of WorldWater's
solar technology are made clear to officials, demonstrations and pilot programs
are implemented. These field demonstrations give decision-makers a first hand
look at how the systems operate and help to project the effectiveness of the
Company's technology for large water and power schemes.

WorldWater is also unique in that it provides solar solutions for water and
electricity needs by: Combining the two technological requirements of solar
engineering and water engineering, thus enabling the Company to more effectively
implement turnkey programs;

Utilizing Company specialists to find water sources;

Conducting site assessments for appropriately-sized solar water pumping and
electrical systems;

Installing the Company's proprietary solar products;

Focusing on community preparation and capacity-building for the technology;

Arranging project financing.

Most solar water projects are approached by large corporations as simply a means
to sell solar panels. Community preparation - if done at all - is accomplished
by very small local companies. WorldWater's competitors have been unable to
match the comprehensiveness of its programs.

Another key marketing strategy is the utilization of strategic alliances.
WorldWater, as a water and power solutions provider, is in an ideal position to
partner with major international organizations to enhance its financing
capabilities and with local organizations to enhance implementation.


                                       8
<PAGE>

WorldWater has a longstanding relationship with the U.S-based Vincent Uhl &
Associates for hydrogeological studies and Morehouse Engineering, a power system
controls engineering firm. The companies have successfully worked together in a
number of markets. Mr. Uhl and his associates have located, drilled and tested
new groundwater sources in Asia, Africa, and the Americas, and Schuyler
Morehouse has operated with the Company in Africa and Pakistan.

In addition to alliances with solar panel manufacturers, community preparation
organizations, governmental agencies, and hydrogeologists, WorldWater also works
closely with financial institutions such as private investment funds, the U.S.
Trade & Development Agency, the Export-Import Bank, World Bank, and USAID. Given
the recognized need for safe drinking water and power in emerging nations, these
financial organizations "earmark" funds for such projects in the form of loans,
grants, or as guarantees to local banks.

Domestically, WorldWater has worked closely with Rutgers University
agro-engineers and Cumberland County College in developing solar drip irrigation
systems for use in fresh and brackish water, and has signed a Memorandum of
Understanding with the International Center for Water Technology, California
State University at Fresno, to explore uses of solar power in domestic
irrigation.

(f) Research and Development

Research and Development expenditures were $505,572 in 2003 and $169,837 in
2002. A key strategy of WorldWater is to continue developing innovative, cutting
edge products to meet water and electricity needs with proprietary solar
technology. The Company holds a patent on the electronic board controller
(AquaDrive(TM)) of the AquaMax(TM) system. In 2003, the Company also was awarded
a patent on its automatic switching technology, which enables the system to
perform multiple functions such as water pumping and battery charging and also
to switch automatically between solar and grid-tied or diesel power. Three more
WorldWater patents are pending.

In November of 2003, the Company was awarded a $300,000 Renewable Energy and
Economic Development (REED) inaugural grant by the New Jersey Board of Public
Utilities to develop power electronics for controlling interaction between the
electric grid, solar power and motors. Princeton Power Systems, Princeton, NJ,
is WorldWater's subcontractor on the 18-month grant, the results of which are
expected to reduce the cost of electronic control equipment used in the
AquaMax(TM).


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<PAGE>

(g) Manufacturing

Sub-contractors currently manufacture components of the AquaMax(TM)systems in
the United States. WorldWater will continue to source materials worldwide, based
on quality and cost considerations.

(h) Patents

WorldWater has obtained patents and continuations-in-part for its newly
developed electronics systems and has filed for protections of our patents in
the Philippines. Thomas McNulty, Sr., Dr. Anand Rangarajan, and Douglas Williams
of WorldWater and Quentin T. Kelly, Chairman and CEO, together with Princeton
University engineers have been issued patents, all of which are assigned to
WorldWater. The Company holds patents on the electronic board controller
(AquaDrive(TM)) of the AquaMax(TM) system and on the Solar Thermal Powered Water
Pump. In 2003 the Company was issued another patent on an electronic board that
allows, in case of the interruption of service in an A/C grid power system, the
automatic transfer to Solar Power systems for uninterrupted operation of motors
and other power loads. The following table describes the status of our patent
applications.

<TABLE>
<CAPTION>
                               DOMESTIC /
PATENT TITLE                   INTERNATIONAL          PATENT FILE NO.   STATUS        EXPIRATION
------------                   -------------          ---------------   ------        ----------
<S>                                           <C>                      <C>            <C>
Solar Thermal Powered
Water Pump                     Domestic               U.S. 5,163,821   Approved       December 17, 2012

Switchable Multiple Source
Power Supply                   Domestic                 US 6,583,522   Approved       June 24, 2023

Bias controlled DC to AC
converter and systems          Domestic                 US 6,275,403   Approved       August 14, 2021

Bias controlled DC to AC       International
converter and systems          Phillipines           US 6,275,403 B1   Pending

Hybrid AC/DC                   Domestic        US -2004 - 0095091-A1   Pending

Low Water Cutoff               Domestic                                In Process

Smart Card Water System        International                           In Process
</TABLE>

(i) Source and Availability of Raw Materials

The solar modules used in our systems are composed of silicon and other
photovoltaic materials. Suppliers of solar modules include Shell Solar, Kyocera,
Sharp, BP Solar and RWE Schott. WorldWater orders solar modules and related
articles from several suppliers and have not entered into any supply contracts.

(j) Competitive Conditions Affecting the Company

The Company's products compete with both conventional and solar technologies
that bring power to off-grid areas. The main competitive technologies are diesel
and gasoline generators, and electrical grid extension. The cost of installing a
solar pump may be more or less than the cost of an electrical grid extension,
depending on the particular installation. One benefit of the solar pump is the
reduction in on-going electric costs. The initial cost of acquiring a diesel
pump is less than the initial cost of a solar pump, but the operations and
maintenance costs of the diesel pump are greater and, in remote areas, fuel and
spare parts are not always readily available.

The Company's most commonly encountered solar pumping competitor is Grundfos A/S
of Denmark, a manufacturer of a large range of water pumps, including a solar
pump line. Their pumps run off a specially wound AC motor which is significantly
more expensive than the conventional AC pumps that WorldWater uses. Grundfos
units are also limited in capacity to about 4 kW. WorldWater's systems can
operate pumps in the 400 kW range. Aero-Environment of California has somewhat
similar technology using AC pumps but they currently are limited in size to
about 3 horsepower. There are a number of other solar pump companies, including
Solar Jack of the US, Sun Motor of Canada, Southern Cross of Australia, and
Total Energie from Europe, which produce DC powered pumps.


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<PAGE>

(k) Subsidiaries

100% wholly owned by WorldWater Corp. - WorldWater, Inc.
WorldWater (Phils), Inc. WorldWater East Africa Ltd.

(l) Government Regulations

Compliance with federal, state, and local provisions regarding the production
and discharge of materials into the environment is expected to have no effect on
capital expenditures, earnings and competitive position. The Company has a
program to comply fully with the U.S. Foreign Corrupt Practices Act.

(m) Employees

On December 31, 2003, the company employed 15 people on a full-time basis. The
company also hires consultants on an as-needed basis and has informal
arrangements with two water consulting companies, the hydrogeological firm of
Vincent Uhl Associates and Morehouse Engineering, specialists in power control,
water/wastewater treatment systems integration.

ITEM 2. DESCRIPTION OF PROPERTY

The Company's executive office, manufacturing facility and research and
development facility are housed in a 12,000 square foot site located at 55 Route
31 South, Pennington, New Jersey 08534. This facility is leased under an
operating lease expiring June 25, 2007. The Company also uses a second facility
in Hopewell, New Jersey for conferences, meetings and demonstrations of its
products. This facility is leased from Quentin T. Kelly, Chairman and Chief
Executive Officer, on a month-to-month basis. See "Certain Relationships and
Related Transactions."

In August of 2002, the Company opened a sales and government liaison office in
Sacramento, California under a one year lease expiring August 15, 2004.

ITEM 3. LEGAL PROCEEDINGS

The Company is occasionally subject to various claims and suits that arise from
time to time in the ordinary course of its business. The Company is not aware of
any pending or threatened litigation that could have a material adverse effect
upon the company's business, financial condition or results of operations.

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

None


                                       11
<PAGE>

                                    PART II.

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) Price Range of Common Stock.

WorldWater Corp.'s common stock is traded on the OTC Electronic Bulletin Board
and is listed under the stock symbol "WWAT.OB". High and low bid quotations are
listed below:

                                            For the year ended December 31, 2003
                                            ------------------------------------
                                                    HIGH        LOW
                                                    ----        ---
First Quarter...............................        $0.19      $0.09
Second Quarter..............................        $0.21      $0.13
Third Quarter...............................        $0.26      $0.12
Fourth Quarter..............................        $0.20      $0.09

(b) Holders of Common Stock

As of April 16, 2004, the common stock price was $0.37 and there were
approximately 741 shareholders of record for the Company's common stock. The
number of record holders does not include holders whose securities are held in
street name.

(c) Dividends

The Company has not declared or paid, nor has it any intention to pay any cash
dividends on its common stock in the foreseeable future.

(d) Provisions of Preferred Stock

The Company issued 0 shares in 2003 and 2002, respectively, of Series A 7% three
year Convertible Preferred Stock at $0.90 per share. The Series A Preferred
Shares are callable at $1.80 if the market bid price remains over the call level
for 20 days.

In November 2001 the Company converted 1,111,055 shares plus preferred dividends
of $104,995 at $0.25 per share for a total of 4,419,778 common shares. In
accordance with SFAS No. 84, "Induced Conversions of Convertible Debt (an
Amendment of APB Opinion No. 26)", the Company recorded a charge to retained
earnings of $722,478. The charge was equal to the fair value of the common stock
received less the fair value of the common stock that would have been received
pursuant to the original conversion terms of the Series A Preferred Stock. This
charge was recorded as accretion of preferred stock dividends on the
accompanying statement of operations and as a component of the net loss
available to common shareholders.

The Company will pay 7% dividends annually on both the Series A and Series B
Preferred Stock based on its per share value as determined by the Board of
Directors based upon the results of operations and the financial condition of
the Company.


                                       12

<PAGE>

SALES OF RESTRICTED SECURITIES DURING THE FOURTH QUARTER 2003

In the fourth quarter ending December 31, 2003, the Company issued three year
convertible notes totaling $100,000 to institutional and accredited individual
investors. The notes bear interest at 10% per annum payable semi-annually
commencing June 2004. Interest is payable in cash or in shares of common stock
at the election of the holder. The notes are convertible at $0.15 into an
aggregate of 666,667 shares of common stock. Warrants to purchase an aggregate
of 357,334 shares of common stock at an exercise price of $0.30 per share,
89,333 at an exercise price of $0.20 and 89,333 at an exercise price of $0.15
per share were issued with the convertible notes.

Also in the fourth quarter, the Company received short term loans totaling
$150,000 from shareholders. The $100,000 note pays 10% interest per annum and a
5 year warrant to purchase 300,000 shares of common stock at $0.15 was included
as additional consideration and has been recognized as $21,000 of additional
compensation. Additional 5 year warrants to purchase 25,000 shares of common
stock at $0.15 per share were included as additional consideration for the
$50,000 in short term loans and have been recognized as $1,750 of additional
compensation (See Subsequent Events Note).

In December of 2003, warrants to purchase 300,000 shares of common stock at
$0.15 per share were granted as compensation for financing services,
compensation expense in the amount of $30,000 was recognized.

In the fourth quarter of 2003 the Company issued 625,001 shares of common stock
for financing services, $93,000 of compensation expense was recognized.

The sales of securities described in this section were made to "accredited
investors" as defined in Rule 501 of Regulation D. These transactions did not
involve a public offering and therefore are exempt from registration pursuant to
the Act.

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

Certain statements contained in Management's Discussion and Analysis, and
elsewhere in this annual report, concerning the Company's outlook or future
economic performance such as anticipated profitability, gross billings,
commissions and fees, expenses or other financial items; and conditions of
performance or other matters, are "forward looking statements" as that term is
defined under the Federal Securities Laws. Forward looking statements are
subject to risks, uncertainties, and other factors which would cause actual
results to differ materially from those stated in such statements. Such risks,
uncertainties and factors include, but are not limited to, the following: (1)
there can be no assurance that the Company will grow profitably or manage its
growth, (2) risk associated with acquisitions, (3) competition, (4) the
Company's quarterly results have fluctuated in the past and are expected to
fluctuate in the future, (5) the loss of services of key individuals which could
have a material adverse effect on the Company's business, financial condition or
operating results, (6) risks associated with operating in emerging countries.


                                       13
<PAGE>

GENERAL

WorldWater Corp. is an international solar engineering and water management
company with unique, high-powered solar technology providing solutions to water
supply and energy problems. Until 2002, the Company was a development-stage
enterprise organized to design, develop, manufacture and market solar water
pumping systems, and focused exclusively on helping developing countries with
water and power problems. Through research and development, the Company's
proprietary solar technology developed the capability in 2002 of operating pumps
and motors up to 600 horsepower for irrigation, refrigeration and water utility
pumping systems. This increased power capability, coupled with growing energy
shortages in the United States, has opened domestic market opportunities that
have now become the principal focus of its business. Throughout 2004, the
Company intends to focus efforts on the enhancement and aggressive
implementation of its marketing program domestically and internationally. In the
U.S., this includes institutional public and private commercial markets,
particularly in California, New Jersey and other states which offer incentives
for renewable energy sources. The Company continues to seek opportunities
throughout the world, including the Philippines, where it maintains nationwide
operations, the Middle East (most particularly, Iraq), and Africa.

SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                            Years ended December 31,
                                              2003              2002             2001             2000            1999
                                              ----              ----             ----             ----            ----
<S>                                       <C>              <C>              <C>              <C>              <C>
        OPERATING RESULTS
Net sales                                 $ 1,279,573      $   643,541      $   241,045      $   279,531      $   526,924
Income (loss) from operations              (3,301,020)      (2,007,536)      (1,547,865)      (1,958,821)      (1,225,600)
Net income (loss)                          (3,924,774)      (2,005,731)      (2,494,757)      (1,704,179)        (787,318)
Net income (loss) per share - Basic             (0.08)           (0.04)           (0.07)           (0.06)           (0.03)
Net income (loss) per share - Diluted           (0.08)           (0.04)           (0.07)           (0.06)           (0.03)

        FINANCIAL POSITION
Total assets                                  221,225        1,177,970          265,084          441,299          485,569
Long term obligations - less
     current portion                        1,665,396          349,878           61,270           20,480          200,000
Shareholders' equity (deficiency)          (3,941,442)      (1,339,968)        (939,952)        (254,046)      (1,788,250)
</TABLE>


                                       14
<PAGE>

RESULTS OF OPERATIONS:

Year ended December 31, 2003 ("Fiscal 2003") Year ended December 31. 2002
("Fiscal 2002")

REVENUE

For the year ended December 31, 2003 net revenues increased to $1,279,573 as
compared to $643,541 for the year ended December 31, 2002. Equipment sales and
grant revenue for the year ended December 31, 2003 were $1,143,302 and $136,271
as compared to $386,916 and $256,625 for the year ended December 31, 2002.
Equipment sales increased by $756,386 or 195% as compared to the previous year
and grant revenue decreased by $120,354 or 47%.

In 2002, the Company addressed the uncertainty of oversees market fluctuations
with a new focus on domestic business. The Company had entered the California
agriculture market in 2002 with implementation of a 50 hp irrigation pumping
system for a cotton farm in the San Joaquin Valley - which amounted to $293,000
of revenue. In 2003, WorldWater installed its first solar refrigeration system,
which drives a 350 hp solar-powered compressor pump, at a food processing
facility near Bakersfield, CA - in the amount of $913,749 in revenue.

Also in California, the Company was awarded a professional service contract in
November of 2002 with the Sacramento Municipal Utility District in the amount of
$77,000. The Company is to analyze possible irrigation projects powered by
solar, install and monitor a solar powered agricultural well pump - $25,000 of
revenue was recognized in 2003 for this project.

The Company also entered the New Jersey agricultural market in 2003 with
completion of a 24 kW solar electrical system at Flatbrook Farm, an organic meat
and poultry farm in Montague, NJ - in the amount of $193,736 in revenue. The New
Jersey Board of Public Utilities (BPU) has authorized a comprehensive range of
incentives, which took effect in January 2004, that will require 90 MW of solar
electric generation or more than approximately $600 million of new PV
installations in the state over the next five years (reference the State of New
Jersey/Board of Public Utilities/Renewables Portfolio Standards).

WorldWater participated in the successful bid for the largest PV installation on
a U.S. community college campus at Cerro Coso Community College, Ridgecrest, CA.
During the first and second quarters of 2004 the Company supplied a one-megawatt
system totaling $4.1 million. The prime contractor, Contra Costa Electric of
Bakersfield, CA, is scheduled to complete, including testing and
interconnection, the $8.9 million construction project in the third quarter
2004.

In addition to this recent domestic business, WorldWater has operated in the
Philippines since 1997. In September 2003, WorldWater (Phils) inaugurated the
world's first solar powered prepaid municipal water distribution system for the
municipality of Ronda on the island of Cebu - which amounted to approximately
$35,817 in revenue in 2003. The project was made possible by a commercial loan
from the Philippine National Bank to the municipality and required no special
loans or subsidies.


                                       15
<PAGE>

WorldWater was contracted by Winrock International in 2003 to evaluate potential
water supply development and sanitation solutions for selected communities
within the Alliance for Mindanao Off-Grid Renewable Energy (AMORE) area in the
Southern Philippines. The assessment study has been completed and $91,593 of
revenue was recognized. Proposals have been presented for project
implementation.

In January of 2002, the Company began work on a water and power feasibility
study for the Government of the Philippines (Department of Agriculture) funded
by the U.S. Trade and Development Agency (USTDA) in the amount of $302,500.
During 2003 and 2002, the Company realized $19,678 and $256,625, respectively of
revenue from this grant entered into by and between the Philippines National
Irrigation Administration and the Company for the preparation of a feasibility
study on the Mindanao Appropriate Irrigation Technologies for Enhanced
Agricultural Production project. A nationwide irrigation development project is
scheduled to follow on completion of the study.

COST OF SALES AND GROSS PROFIT

Cost of sales for the years ended 2003 and 2002 were $960,645 and $531,188,
respectively. Cost of sales for equipment increased $420,326 to $841,126 or 100%
on a 195% increase in equipment sales. Costs associated with grant revenue
increased $9,131 on a decrease of revenue of approximately 47%. At this point in
time the Company is dependent on solar-powered pumping system sales, and
research and development grant revenue, each with gross profit margins specific
to the model of the system sold or grant obtained.

Gross profit for the years ended 2003 and 2002 was $318,928 and $112,353,
respectively. Gross profit on equipment sales for the year ended December 31,
2003 was $302,176 as compared to a gross loss of $33,884 from the previous year.
The gross loss in 2002 was attributable to the execution of the Company's first
installation of a 50 horsepower irrigation pump where it experienced slight cost
overruns for various contracted labor. These overruns have been addressed and
fixed contracting prices have now been established.

MARKETING, GENERAL AND ADMINISTRATIVE

Marketing, general and administrative expenses were $3,114,376 for the year
ended December 31, 2003 as compared to $1,950,052 in 2002, an increase of 60% on
a 99% increase in revenue. This increase is primarily attributable to an
increase in sales efforts and staffing necessary to capture the newly developed
domestic market. We are gradually increasing our current staffing levels, but
have found it necessary to hire consultants from time to time, therefore
increasing this expense as compared to the same period in 2002. Assuming that
the domestic business continues to grow, it will be necessary to recruit
additional staff to implement the contracts.

RESEARCH AND DEVELOPMENT

Research and development expenses were $505,572 for the year ended December 31,
2003 compared to $169,837 in 2002. The company introduced its new solar energy
pumping technology capable of generating high power in 2002 at the Agricultural
Expo in Tulare, California. Research and development expenses resulting
therefrom have since increased as the company focuses its efforts on refining
and expanding this technology, focusing primarily on large scale pumping
systems.


                                       16
<PAGE>

LOSS FROM OPERATIONS

Operating loss for the year ended December 31, 2003 was $3,301,020 as compared
to $2,007,536 from the previous year.

INCOME TAXES

The Company recognized no income tax (benefit) expense for 2003 and 2002 to
date.

The Company participates in the State of New Jersey's corporation business tax
benefit certificate transfer program (the "Program"), which allows certain high
technology and biotechnology companies to transfer unused New Jersey net
operating loss carryovers and research and development tax credits to other New
Jersey corporation business taxpayers. During 2003 and 2002, the Company
submitted applications to the New Jersey Economic Development Authority (the
"EDA") to participate in the Program and the applications were approved. The EDA
then issued certificates certifying the Company's eligibility to participate in
the Program for these years.

The program requires that a purchaser pay at least 75% of the amount of the
surrendered tax benefit. During 2003 and 2002, the Company sold approximately $0
and $1,448,912 of its New Jersey state net operating loss carryforwards and $0
and $12,660 of its research and development tax credits for $0 and $121,603,
respectively and recognized a tax benefit for that amount. The Company plans on
selling its 2003 and 2002 net operating loss carryovers and research and
development tax credits in fiscal year 2004.

In the event of a change in ownership, the Tax Reform Act of 1986 (the "Act")
provides for a potential limitation on the annual use of net operating loss
(NOL) and research and development tax credit carryforwards that could
significantly limit the Company's ability to utilize these carryforwards.
Accordingly, because tax laws limit the time during which these carryforwards
may be applied against future taxes, the Company may not be able to take full
advantage of the net operating losses and credit carryforwards for Federal
income tax purposes.

LIQUIDITY AND CAPITAL RESOURCES

The net decrease in cash from all activities in 2003 was $81,529 as compared to
an increase of $122,459 in 2002. The cash used in operating activities was
$1,989,381 compared to $1,471,998 in 2002. The primary increase for use of cash
for operating activities is attributable to the increase in domestic sales
efforts as the company takes an aggressive approach in capturing this market
opportunity. The cash used in investing activities was $17,394 as compared to
$10,663 in 2002.

The cash provided by financing activities in 2003 was $1,960,564 as compared to
$1,608,557 in 2002. The company continued to finance its operations through the
sale of stock and convertible debentures. During 2003, the Company issued three
year convertible notes totaling $1,775,000 to institutional and accredited
investors. The notes bear interest at 10% per annum payable semi-annually.
Interest is payable in cash or in stock at the election of the holder. The notes
are convertible at $0.15 into an aggregate of 11,833,333 shares of common stock.
Warrants to purchase an aggregate of 7,839,001 shares of common stock at an
exercise price of $0.30 per share, 89,333 at an exercise price of $0.20 per
share and 89,333 at an exercise price of $0.15 per share were issued with the
convertible notes.


                                       17
<PAGE>

In 2002, the Company consummated an agreement with two related investment
companies for the sale of 1,667,000 shares each of common stock for a purchase
price of $250,000 each. Warrants to purchase 1,667,000 shares of common stock
also were issued in the transaction. A total of 1,168,000 warrants were
exercised in 2002, generating an additional $175,200 of proceeds. Under the
terms of a Securities Purchase Agreement executed on November 8, 2002, the
Company received $400,940 in net proceeds from a private placement offering of
10% convertible notes along with warrants to purchase 1,190,500 shares of common
stock. Throughout 2002, an individual invested an additional $250,000 for
1,666,668 common shares along with warrants to purchase an additional 1,000,000
shares of common stock.

At December 31, 2003, the Company had a working capital deficiency of $2,350,312
and a stockholders' deficiency of $3,941,442. It has experienced continuing
negative cash flows from operations, which have resulted in the inability to pay
certain existing liabilities in a timely manner. The Company has financed
operations, which historically have mainly focused on research and development,
through private funding of equity and debt.

WorldWater participated in the successful bid for the largest PV installation on
a U.S. community college campus at Cerro Coso Community College, Ridgecrest, CA.
During the first and second quarters of 2004 the Company supplied a one-megawatt
system totaling $4.1 million. The prime contractor, Contra Costa Electric of
Bakersfield, CA, is schedule to complete, including testing and interconnection,
the $8.9 million construction project in the third quarter 2004.

The Company expects to continue to incur losses until such time as it gains
greater market acceptance of our new technology at selling prices and volumes
which provide adequate gross profit to cover operating costs and generate
positive cash flow. Working capital requirements will depend upon numerous
factors, including the level of resources devoted to the scale-up of
installation activities, and increased sales and marketing. Management has
developed a financial plan to address working capital deficiency and to increase
the cash provided by financing activities. Since early 2000, this has included
the issuance of preferred stock, restricted stock and convertible debentures.
The financial plan has resulted in sufficient funding for operations to date and
is anticipated to adequately fund operating deficits expected to be incurred in
2004.

As part of the financial plan on April 1, 2004 the Company entered into a
Securities Purchase Agreement ("SPA") with SBI Brightline VIII LLC
("Purchaser"). Subject to the terms of the SPA the Company may issue and sell to
the Purchaser and Purchaser shall purchase from the Company up to 17,000,000
shares of common stock in three tranches with warrant consideration as defined
below:

<TABLE>
<CAPTION>
              NUMBER OF TRANCHE       NUMBER OF TRANCHE            TRANCHE PURCHASE            TRANCHE PURCHASE PRICE
TRANCHE      SHARES INCLUDED IN       WARRANTS INCLUDED            PRICE PER TRANCHE             PER TRANCHE WARRANTS
  NO.             TRANCHE                IN TRANCHE               SHARE (U.S. DOLLARS)              (U.S. DOLLARS)
-------      -------------------     -------------------         ----------------------        ----------------------
<S>              <C>                     <C>                            <C>                           <C>
  1              7,000,000               2,100,000                      $0.17                         $0.17
  2              5,000,000               1,500,000                      $0.22                         $0.22
  3              5,000,000               1,500,000                      $0.27                         $0.27
</TABLE>

The Company intends to sell Tranche Shares to the Purchaser subsequent to the
date on which the Registration Statement of the Company covering the resale of
the Shares is declared effective, which is expect to be early in the Third
Quarter of 2004. It is anticipated that all Tranche Shares will be sold by the
end of the Fourth Quarter 2004.

In conjunction with the above SPA in April of 2004 the Company entered into a
Term Loan for an aggregate of $800,000 with HIT Credit Union and Hong Kong
League Central Credit Union (the "Lenders"), and SBI Advisors, LLC as agent for
the Lenders. The Term Loans will be repaid as follows: $400,000 of the principal
amount will be due and payable within three days after receipt by the Company of
the proceeds from the $0.17 Tranche as per the SPA and the remaining unpaid
principal and accrued interest on the Term Loans will be payable October 2004.
The Term Loans bear interest at 18% per annum. SBI Advisors, LLC received
warrants to purchase 400,000 common stock shares exercisable at $0.30 as agents
for the Lenders. $108,000 of compensation expense will be recorded in the first
quarter of 2004. (See Subsequent Events Note).

CRITICAL ACCOUNTING ESTIMATES

The consolidated financials are presented on the basis the Company will continue
as a going concern. The going concern concept contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business over
a reasonable length of time. The Company's working capital deficit and
stockholder's deficiency raises substantial doubt about the Company's ability to
continue as a going concern. The Company continues to market its products
domestically and internationally. WorldWater participated in the successful bid
for the largest PV installation on a U.S. community college campus at Cerro Coso
Community College, Ridgecrest, CA. During the first and second quarters of 2004
the Company supplied a one-megawatt system totaling $4.1 million. The prime
contractor, Contra Costa Electric of Bakersfield, CA is scheduled to complete,
including testing and interconnection, the $8.9 million construction project in
the third quarter 2004.

Management has developed a financial plan to address working capital
deficiencies and to increase the cash provided by financing activities. Since
early 2000, this has included the issuance of preferred stock, restricted stock
and convertible debentures. Upon the closing of the SPA described above in the
Liquidity and Capital Resources section, the financial plan will result in
sufficient funding for operations and is anticipated to adequately fund
operating deficits expected to be incurred in 2004. See "Management's Discussion
and Analysis and Results of Operations -- Liquidity and Capital Resources."

However, there can be no assurances that the company will be successful in
these efforts. The consolidated financial statements do not include any
adjustments that might result from the outcome of this going concern
uncertainty.

Revenue is recognized primarily from the sale and installation of solar pumping
systems and solar energy systems. Revenues are recorded when persuasive evidence
of an arrangement exists, the price is fixed and determinable, delivery has
occurred or services have been rendered and when collectibility is reasonably
assured.

Deferred tax assets and liabilities are determined based on the temporary
differences between the financial reporting and the tax basis of assets and
liabilities, applying enacted statutory tax rates in effect for the year in
which the differences are expected to reverse. Future tax benefits, such as net
operating loss carryforwards, are recognized to the extent that realization of
these benefits is considered more likely than not.


                                       18
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

The financial statements of the Company, including the notes thereto, together
with the report of the independent public accountant thereon, are presented
beginning on page 26.

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

Effective January 15, 2003, we dismissed our independent accountants. Since
December 18, 1998, Civale, Silvestri, Alfieri, Martin & Higgins, LLC ('Civale'),
or a predecessor entity, has served as the Company's independent accountants.
The decision not to retain Civale as the company's independent accountants for
the fiscal year 2002 is not a reflection on Civale's capabilities or quality of
service. The reports of Civale on our financial statements for the past two
fiscal years did not contain any adverse opinion, disclaimer of opinion or any
qualifications or modifications related to uncertainty, limitation of audit
scope or application of accounting principles, except that Civales' reports on
our financial statements for the past two fiscal years did contain a
modification as to the uncertainty of our ability to continue as a going
concern. The decision to change the independent accountant was approved by our
Board of Directors.

In connection with its audits for the two most recent fiscal years and through
January 15, 2003, there have been no disagreements with Civale on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
Civale would have caused them to make reference thereto in their report on the
financial statements for such years. During the two most recent fiscal years and
through January 15, 2003, there have been no reportable events (as defined in
Item 304(a)(1)(v) of Regulation S-K promulgated under the Securities Act of
1933, as amended).

Effective January 15, 2003, we engaged Amper, Politziner & Mattia ('Amper') as
our new independent accountant to audit our financial statements beginning with
the year ended December 31, 2002. During the fiscal years prior to January 15,
2003, we have not consulted with Amper regarding either (i) the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on our financial statements;
or (ii) any matter that was either the subject of a disagreement or a reportable
event as defined in Item 304(a)(2) of Regulation S-K.


                                       19
<PAGE>

ITEM 8A. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures. An evaluation was
performed under the supervision and with the participation of the Company's
management, including the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO), of the effectiveness of the design and operation of the Company's
disclosure controls and procedures within 90 days before the filing date of this
Form 10-K. Based on their evaluation, the Company's principal executive officer
and principal financial officer have concluded that the Company's disclosure
controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the
Securities Exchange Act of 1934 (the "Exchange Act")) are effective to ensure
that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.

The Company's auditors have noted weaknesses with the accounting software being
utilized which the Company plans to address during the year 2004. At the
direction of the Audit Committee, Management has been charged with implementing
a new accounting software system to strengthen its controls by year end. In the
interim, Management has implemented additional detail account reconciliations
and tests to gain adequate assurance of the accounting records.

(b) Changes in internal controls. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
internal controls subsequent to their evaluation. There were no significant
deficiencies or material weaknesses, and therefore there were no corrective
actions taken.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

Information with respect to Item 9 is set forth in the Proxy Statement to be
filed with the Securities and Exchange Commission on or before April 29, 2003
and is incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION

Information with respect to Item 10 is set forth in the Proxy Statement to be
filed with the Securities and Exchange Commission on or before April 29, 2003
and is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

Information with respect to Item 11 is set forth in the Proxy Statement to be
filed with the Securities and Exchange Commission on or before April 29, 2003
and is incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with respect to Item 12 is set forth in the Proxy Statement to be
filed with the Securities and Exchange Commission on or before April 29, 2003
and is incorporated herein by reference.


                                       20
<PAGE>

                                     PART IV

ITEM 13. EXHIBITS LIST AND REPORTS ON FORM 8-K

EXHIBIT NUMBER DESCRIPTION

(a) Exhibits:

2.1 Plan of Merger of WorldWater Corp., a Nevada corporation with and into
WorldWater Corp., a Delaware corporation, filed with the State of Delaware April
30, 2001. Incorporated by reference to Exhibit 2.1 to Company's Form SB-2 filed
with the Securities and Exchange Commission on January 3, 2003 (No. 000-16936).

2.2 State of Nevada Articles of Merger, filed with the State of Nevada May 9,
2001. Incorporated by reference to Exhibit 2.2 to Company's Form SB-2 filed with
the Securities and Exchange Commission on January 3, 2003 (No. 000-16936).

2.3 Certificate of Merger of Domestic Corporation and Foreign Corporation filed
with State of Delaware April 30, 2001. Incorporated by reference to Exhibit 2.3
to Company's Form SB-2 filed with the Securities and Exchange Commission on
January 3, 2003 (No. 000-16936).

3.1 Certificate of Incorporation. Incorporated by reference to Exhibit 4.1 to
Company's Form S-8 dated July 23, 2001 filed with the Securities and Exchange
Commission on August 1, 2001 (No. 333-66484).

3.2 Certificate of Amendment of Certificate of Incorporation. Incorporated by
reference to Exhibit 3.2 to Company's Form SB-2 filed with the Securities and
Exchange Commission on January 3, 2003 (No. 000-16936).

3.3 Amended and Restated By-laws of WorldWater Corp. Incorporated by reference
to Exhibit 4.2 to Company's Form S-8 dated July 23, 2001 filed with the
Securities and Exchange Commission on August 1, 2001 (No. 333-66484).

10.1 Securities Purchase Agreement between WorldWater Corp. and Millennium 3
Opportunity Fund, LLC dated November 8, 2002. Incorporated by reference to
Exhibit 10.1 to Company's Form 10QSB/A filed with the Securities and Exchange
Commission on November 18, 2002 (No. 000-16936).

10.2 Investor Rights Agreement between WorldWater Corp. and Millennium 3
Opportunity Fund, LLC. Incorporated by reference to Exhibit 10.2 to Company's
Form 10QSB/A filed with the Securities and Exchange Commission on November 18,
2002 (No. 000-16936).

10.3 Registration Rights Agreement between WorldWater Corp. and Millennium 3
Opportunity Fund, LLC. Incorporated by reference to Exhibit 10.3 to Company's
Form 10QSB/A filed with the Securities and Exchange Commission on November 18,
2002 (No. 000-16936).


                                       21
<PAGE>

10.4 10% Convertible Note Due 2005 between WorldWater Corp. and Millennium 3
Opportunity Fund, LLC. Incorporated by reference to Exhibit 10.4 to Company's
Form 10QSB/A filed with the Securities and Exchange Commission on November 18,
2002 (No 000-16936).

10.5 Warrant to Purchase 595,250 shares at $0.20 between WorldWater Corp.and
Millennium 3 Opportunity Fund, LLC. Incorporated by reference to Exhibit 10.5 to
Company's Form 10QSB/A filed with the Securities and Exchange Commission on
November 18, 2002 (No. 000-16936).

10.6 Warrant to Purchase 595,250 shares at $0.50 between WorldWater Corp. and
Millennium 3 Opportunity Fund, LLC. Incorporated by reference to Exhibit 10.6 to
Company's Form 10QSB/A filed with the Securities and Exchange Commission on
November 18, 2002 (No. 000-16936).

10.7 Stock Purchase Agreement between WorldWater Corp., Kuekenhof Partners L.P.
and Kuekenhof Equity Fund L.P. dated December 31, 2001. Incorporated by
reference to Exhibit 10.7 to Company's Form SB-2 filed with the Securities and
Exchange Commission on January 3, 2003 (No. 000-16936).

10.8 Stock Purchase Agreement between WorldWater Corp. and Joann Jordan, David
D. Jordan and Lavorsia D. Jordan Custodian for Cayla Rae Jordan Dated January
15, 2002. Incorporated by reference to Exhibit 10.8 to Company's Form SB-2 filed
with the Securities and Exchange Commission on January 3, 2003 (No. 000-16936).

10.9 Stock Purchase Agreement between WorldWater Corp. and Peter Teevan dated
January 15, 2002. Incorporated by reference to Exhibit 10.9 to Company's Form
SB-2 filed with the Securities and Exchange Commission on January 3, 2003 (No.
000-16936).

10.10 Quentin T. Kelly Employment Agreement dated January 1, 2002. Incorporated
by reference to Exhibit 10.10 to Company's Form SB-2 filed with the Securities
and Exchange Commission on January 3, 2003 (No. 000-16936).

10.11 Amendment to Quentin T. Kelly Employment Agreement dated July 1, 2002.
Incorporated by reference to Exhibit 10.11 to Company's Form SB-2 filed with the
Securities and Exchange Commission on January 3, 2003 (No. 000-16936).

10.12 Restricted Stock Agreement for Quentin T. Kelly dated July 1, 2002.
Incorporated by reference to Exhibit 10.12 to Company's Form SB-2 filed with the
Securities and Exchange Commission on January 3, 2003 (No. 000-16936).

21 List of Subsidiaries.

23.1 Consent of Amper, Politziner & Mattia, P.C.

31.1 Certification by the Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.


                                       22
<PAGE>

31.2 Certification by the Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. 32.1 Certification by the Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.***

32.2 Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section
1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.***

*** In accordance with Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall
not be deemed "filed" for the purposes of Section 18 of the Securities and
Exchange Act of 1934 or otherwise subject to the liability of that section, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933 or the Securities Exchange Act of 1934.99.1 Certification Pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K.

There were no Forms 8-K filed by the registrant during the fourth quarter of
2003.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The Company's board of directors reviews and approves audit and permissible
non-audit services performed by its independent accountants, as well as the fees
charged for such services. In its review of non-audit service fees and its
appointment of Amper, Politziner & Mattia P.C. as the Company's independent
accountants, the board of directors considered whether the provision of such
services is compatible with maintaining independence. All of the services
provided and fees charged by Amper, Politziner & Mattia P.C. in 2003 were
approved by the board of directors.

AUDIT FEES

The aggregate fees billed by for professional services for the audit of the
annual financial statements of the Company and the reviews of the financial
statements included in the Company's quarterly reports on Form 10-QSB for 2003
and 2002 were $80,000 and $45,000, respectively, net of expenses and an
additional $38,000 in 2003 for audit fees related to filing amendments on prior
years.

AUDIT-RELATED FEES

There was $0 of other fees billed during 2003 for assurance and related services
that were reasonably related to the performance of the audit or review of the
Company's financial statements and not reported under "Audit Fees" above.

TAX FEES

There were no other fees billed by our independent auditors during the last two
fiscal years for tax compliance for 2003 and 2002.


                                       23
<PAGE>

ALL OTHER FEES

There were no other fees billed by our independent auditors during the last two
fiscal years for products and services provided.


                                       24
<PAGE>

SIGNATURES

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

WorldWater Corp.
(Registrant)


By: /s/ Quentin T. Kelly                                   Date: June 15, 2004
   ------------------------------                               --------------
Quentin T. Kelly, Chairman/CEO


By: /s/ Peter I. Ferguson                                        June 15, 2004
   -----------------------------
   Vice President/Principal
     Financial Officer


                                       25
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Shareholders of
WorldWater Corp. and Subsidiaries

We have audited the accompanying consolidated balance sheets of WorldWater Corp.
and Subsidiaries as of December 31, 2003 and 2002, and the related consolidated
statements of operations, changes in shareholders' equity (deficiency) and cash
flows for the years ended December 31, 2003 and 2002. These consolidated
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 our 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position at December 31, 2003
and 2002, the results of their operations and their cash flows for the years
then ended, in conformity with accounting principles generally accepted in the
United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and has a working capital deficiency that raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

                                        /s/ Amper, Politziner & Mattia, P.C.
                                        ------------------------------------

April 7, 2004
Edison, New Jersey


                                       26
<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                           DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>

       Assets                                                                            2003              2002
                                                                                     ------------      ------------
<S>                                                                                  <C>               <C>
Current Assets:

    Cash and cash equivalents                                                        $     59,045      $    140,574
    Accounts receivable, net of allowance for doubtful
        accounts of $22,647 in 2003 and $8,980 in 2002                                     49,101           283,172

    Inventory                                                                                  --            61,862
    Deferred contract costs                                                                 8,872           583,643
    Advances to employees                                                                  16,800                --
    Prepaid expenses                                                                       13,141            16,585
                                                                                     ------------      ------------
       Total Current Assets                                                               146,959         1,085,836
    Equipment and leasehold improvements, Net                                              65,219            88,587
    Deposits                                                                                9,047             3,547
                                                                                     ------------      ------------
       Total Assets                                                                  $    221,225      $  1,177,970
                                                                                     ============      ============

       Liabilities and Stockholders' (Deficiency)

Current Liabilities:

    Notes payable                                                                    $    212,000      $    197,000
    Notes payable, related parties                                                        262,703           102,000
    Current maturities of long-term debt                                                  172,901           171,937
    Customer deposits payable                                                             134,515           243,172
    Accounts payable and accrued expenses                                               1,715,152         1,453,951
                                                                                     ------------      ------------
       Total Current Liabilities                                                        2,497,271         2,168,060
    Long-term debt                                                                      1,582,502           349,878

    Note payable, related party                                                            82,894                --
                                                                                     ------------      ------------
       Total Liabilities                                                                4,162,667         2,517,938
                                                                                     ------------      ------------

Commitments and contingencies                                                                  --                --

Stockholders' (Deficiency):

    Preferred Stock 7% Convertible,$.01 par value; authorized 10,000,000; issued
       and outstanding at December 31, 2003 and 2002:

          Series A  66,667 shares, liquidation preference $60,000                             667               667
          Series B  611,111 shares liquidation preference $550,000                          6,111             6,111
    Common stock, $.001 par value; authorized 135,000,000;
       issued and outstanding 52,506,720 and 50,365,052
       shares at December 31, 2003 and 2002, respectively                                  52,507            50,365
    Additional paid-in capital                                                         15,726,953        14,400,477
    Deferred compensation                                                                (105,000)         (135,000)
    Accumulated other comprehensive expense                                               (49,396)          (14,078)
    Accumulated deficit                                                               (19,573,284)      (15,648,510)
                                                                                     ------------      ------------
       Total Stockholders' (Deficiency)                                                (3,941,442)       (1,339,968)
                                                                                     ------------      ------------
       Total Liabilities and Stockholders' (Deficiency)                              $    221,225      $  1,177,970
                                                                                     ============      ============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                       27
<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS

For the years ended December 2003 and 2002

<TABLE>
<CAPTION>
                                                           2003              2002
                                                       ------------      ------------
<S>                                                    <C>               <C>
Revenue:

    Equipment sales                                    $  1,143,302      $    386,916
    Grant revenue                                           136,271           256,625
                                                       ------------      ------------
        Total                                             1,279,573           643,541
                                                       ------------      ------------
Cost of goods sold:
    Cost of equipment sales                                 841,126           420,800
    Cost of grant revenue                                   119,519           110,388
                                                       ------------      ------------
                                                            960,645           531,188
                                                       ------------      ------------
Gross Profit                                                318,928           112,353
                                                       ------------      ------------
Operating Expenses:

    Research and development expense                        505,572           169,837
    Marketing, general and administrative expenses        3,114,376         1,950,052
                                                       ------------      ------------
        Total Expenses                                    3,619,948         2,119,889
                                                       ------------      ------------
Loss from Operations                                     (3,301,020)       (2,007,536)
                                                       ------------      ------------
Other Expense (Income)

    Interest expense (income), net                          585,254            81,298
                                                       ------------      ------------
        Total Other Expense (Income), Net                   585,254            81,298
                                                       ------------      ------------
Loss before income taxes and extraordinary item          (3,886,274)       (2,088,834)
Benefit from sale of NJ net operating losses                     --           121,603
                                                       ------------      ------------
Net loss                                                 (3,886,274)       (1,967,231)

  Accretion of preferred stock dividends                    (38,500)          (38,500)
                                                       ------------      ------------

Net Loss Applicable to Common Shareholders             $ (3,924,774)     $ (2,005,731)
                                                       ============      ============

Net Loss Applicable per Common Share:

     Basic                                             $      (0.08)     $      (0.04)
                                                       ============      ============
     Diluted                                           $      (0.08)     $      (0.04)
                                                       ============      ============

Shares used in Per Share Calculation:

     Basic                                               51,008,306        46,151,102
                                                       ============      ============
     Diluted                                             51,008,306        46,151,102
                                                       ============      ============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                       28
<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS

For the years ended December 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                                              2003             2002
                                                                           -----------      -----------
<S>                                                                        <C>              <C>
Cash Flows from Operating Activities:
    Net loss                                                               $(3,886,274)     $(1,967,231)
    Adjustments to reconcile net loss to
       net cash used in operating activities:
           Non-cash compensation expense related to warrants issued                 --           46,500
           Amortization of interest expense                                    137,706           20,100
           Issuance of stock for service                                       233,875          214,341
           Depreciation                                                         35,262           41,000
           Beneficial conversion of convertible notes                          205,333               --
           Issuance of warrants for services                                   188,217               --
           Issuance of warrants for loan consideration                          56,608               --
           Bad debts                                                            13,667            5,220
           Stock based compensation expense                                     30,000           15,000
           Changes in assets and liabilities:
               Accounts receivable                                             220,404         (234,758)
               Inventory                                                        61,862           (6,744)
               Deferred contract costs                                         574,771         (583,643)
               Prepaid expenses                                                (13,356)            (839)
               Customer deposits payable                                      (108,657)         243,172
               Accounts payable and other accrued expenses                     261,201          735,884
                                                                           -----------      -----------
                   Net Cash (Used in) Operating Activities                  (1,989,381)      (1,471,998)
                                                                           -----------      -----------

Cash Flows from Investing Activities:

    Purchase of equipment and leasehold improvements                           (11,894)         (11,889)
    Deposits                                                                    (5,500)           1,226
                                                                           -----------      -----------
                   Net Cash Provided by (Used in) Investing Activities         (17,394)         (10,663)
                                                                           -----------      -----------

Cash Flows from Financing Activities:

    Proceeds from issuance of long-term debt                                 1,775,000          600,000
    Proceeds from exercise of stock options and warrants                        15,000          175,200
    Payments on long-term debt                                                  (5,139)        (126,531)
    Proceeds from issuance of notes payable                                    868,003          351,500
    Payments on notes payable                                                 (692,300)        (301,000)
    Proceeds from issuance of common stock                                          --          909,388
                                                                           -----------      -----------
                   Net Cash Provided by Financing Activities                 1,960,564        1,608,557
                                                                           -----------      -----------

Net effect of currency translation on cash                                     (35,318)          (3,437)

Net Increase (Decrease) in Cash and cash equivalents                           (81,529)         122,459

Cash and cash equivalents at Beginning of Year                                 140,574           18,115
                                                                           -----------      -----------

Cash and cash equivalents at End of Year                                   $    59,045      $   140,574
                                                                           ===========      ===========
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                       29
<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY

For the years ended December 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                                                                Additional
                                                                                                 Paid-In
                                              Common Stock              Preferred Stock          Capital
                                           Shares     Par Value      Shares       Par Value      (Common)
                                       ------------  ------------  ------------  ------------  ------------
<S>                                      <C>         <C>                <C>      <C>           <C>
Balance, December 31, 2001               40,761,489  $     40,761       677,778  $      6,778  $ 12,162,540
Preferred Stock
   -Accretion of dividends                       --            --            --            --            --
Issuance of common stock
   and warrants for cash                  5,500,335         5,500            --            --       794,525
Issuance of common stock
  for warrants exercised                  1,168,000         1,168            --            --       174,032
Issuance of common stock
  for services                            1,342,335         1,343            --            --       212,998
Issuance of common stock
  for options exercised                     592,893           593            --            --       108,770
Warrants granted for financing                   --            --            --            --       210,223
Warrants granted for consulting
   Services                                      --            --            --            --        46,500
Issuance of common stock pursuant
   to restricted stock plan               1,000,000         1,000            --            --       149,000
Amortization of deferred

   Compensation restricted stock                 --            --            --            --            --
Comprehensive loss:
  Net loss                                       --            --            --            --            --
Other comprehensive expense -
  Currency translation adjustment                --            --            --            --            --

Total comprehensive loss                         --            --            --            --            --

Balance, December 31, 2002               50,365,052        50,365       677,778         6,778    13,858,588
                                       ------------  ------------  ------------  ------------  ------------
Preferred Stock

   -Accretion of dividends                       --            --            --            --            --
Amortization of deferred compensation
   and restricted stock                          --            --            --            --            --
Warrants granted for financing                   --            --            --            --       587,693
Warrants granted for commissions
  on financing                                   --            --            --            --       188,217
Beneficial conversion feature of
  convertible notes                              --            --            --            --       205,333
Conversion of convertible notes             500,000           500            --            --        59,500
Stock granted for services                1,541,668         1,542            --            --       232,333
Exercise of stock options                   100,000           100            --            --        14,900
Comprehensive loss:

  Net loss                                       --            --            --            --            --
Other comprehensive expense -
  Currency translation adjustment                --            --            --            --            --

Total comprehensive loss                         --            --            --            --            --
                                       ------------  ------------  ------------  ------------  ------------
Balance, December 31, 2003               52,506,720  $     52,507       677,778  $      6,778  $ 15,146,564
                                       ============  ============  ============  ============  ============
<CAPTION>
                                         Additional                                Accumulated
                                          Paid-In                                    Other
                                          Capital      Deferred     Accumulated   Comprehensive
                                        (Preferred)  Compensation     Deficit     Income (Loss)       Total
                                       ------------  ------------   ------------   ------------   ------------
<S>                                    <C>           <C>            <C>            <C>            <C>
Balance, December 31, 2001             $    503,389  $         --   $(13,642,779)  $    (10,641)  $   (939,952)
Preferred Stock
   -Accretion of dividends                   38,500            --        (38,500)            --             --
Issuance of common stock
   and warrants for cash                         --            --             --             --        800,025
Issuance of common stock
  for warrants exercised                         --            --             --             --        175,200
Issuance of common stock
  for services                                   --            --             --             --        214,341
Issuance of common stock
  for options exercised                          --            --             --             --        109,363
Warrants granted for financing                   --            --             --             --        210,223
Warrants granted for consulting
   Services                                      --            --             --             --         46,500
Issuance of common stock pursuant
   to restricted stock plan                      --      (150,000)            --             --             --
Amortization of deferred

   Compensation restricted stock                 --        15,000             --             --         15,000
Comprehensive loss:
  Net loss                                       --            --     (1,967,231)            --     (1,967,231)
Other comprehensive expense -
  Currency translation adjustment                --            --             --         (3,437)        (3,437)
                                                                                                  ------------
Total comprehensive loss                         --            --             --             --     (1,970,668)
                                                                                                  ------------
Balance, December 31, 2002                  541,889      (135,000)   (15,648,510)       (14,078)    (1,339,968)
                                       ------------  ------------   ------------   ------------   ------------
Preferred Stock

   -Accretion of dividends                   38,500            --        (38,500)            --             --
Amortization of deferred compensation
   and restricted stock                          --        30,000             --             --         30,000
Warrants granted for financing                   --            --             --             --        587,693
Warrants granted for commissions
  on financing                                   --            --             --             --        188,217
Beneficial conversion feature of
  convertible notes                              --            --             --             --        205,333
Conversion of convertible notes                  --            --             --             --         60,000
Stock granted for services                       --            --             --             --        233,875
Exercise of stock options                        --            --             --             --         15,000
Comprehensive loss:

  Net loss                                       --            --     (3,886,274)            --     (3,886,274)
Other comprehensive expense -
  Currency translation adjustment                --            --             --        (35,318)       (35,318)

                                                                                                 ------------
Total comprehensive loss                         --            --             --             --     (3,921,592)
                                       ------------  ------------   ------------   ------------   ------------
Balance, December 31, 2003             $    580,389  $   (105,000)  ($19,573,284)  $    (49,396)    (3,941,442)
                                       ============  ============   ============   ============   ============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                       30
<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) LIQUIDITY

These consolidated financials are presented on the basis that the Company will
continue as a going concern. The going concern concept contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business over a reasonable length of time. The Company's working capital
deficit and stockholder's deficiency raises substantial doubt about the
Company's ability to continue as a going concern. Management continues to raise
capital through the sale of common stock and additional borrowings. In addition,
management is continuing to market their products domestically and
internationally. However, there can be no assurances that the company will be
successful in these efforts. The consolidated financial statements do not
include any adjustments that might result from the outcome of this going concern
uncertainty.

(2) NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                           DESCRIPTION OF THE BUSINESS

The Company operates in one business segment, two geographic locations, as a
full-service water management and solar energy company, designing, developing
and marketing technology relating to water needs and solar power applications.
The Company advises and supplies governments and industries throughout the world
on solar electric applications and on all phases of water needs. The Company has
customers in developing countries and in the United States. Information with
respect to the Company's geographic segments for the years ended December 31,
2003 and 2002 is presented below.

                                  Revenue                  Long-lived assets
                                  -------                  -----------------
                            2003           2002           2003           2002
                            ----           ----           ----           ----
United States            $1,243,756     $  554,286     $   58,712     $   77,837
Philippines                  35,817         89,255          6,507         10,750
Total                    $1,279,573     $  643,541     $   65,219     $   88,587

                           PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the parent company WorldWater
Corp., and its wholly owned subsidiary company, WorldWater (Phils) Inc. and
certain other inactive subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

WorldWater Corp., 100% wholly owned inactive subsidiaries include
- WorldWater, Inc.
WorldWater Holdings Inc.
WorldWater East Africa Ltd.

                        WorldWater Pakistan (Pvt.), Ltd.


                                       31
<PAGE>

                                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 amounts reported in the consolidated
financial statements and accompanying notes. Estimates are used for, but not
limited to, foreign currency translation, depreciation, taxes and the value of
shares issued. Although these estimates are based on management's best knowledge
of current events and actions that the company may undertake in the future,
actual results may be different from the estimates.

                          FOREIGN CURRENCY TRANSLATION

For International subsidiaries, asset and liability accounts are translated at
year-end rates of exchange and revenue and expenses are translated at average
exchange rates prevailing during the year. For subsidiaries whose functional
currency is deemed to be other than the U.S. dollar, translation adjustments are
included as a separate component of other comprehensive income and stockholders
deficiency. Currency transaction gains and losses are recorded in income.

                               COMPREHENSIVE LOSS

Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income" establishes standards for reporting and presentation of
comprehensive loss and its components in a full set of financial statements.
Comprehensive loss consists of net loss and foreign currency translation and is
presented in the consolidated statements of stockholders' deficiency. SFAS No.
130 requires only additional disclosures in the financial statements; it does
not affect the Company's financial position or results of operations.

                               REVENUE RECOGNITION

The Company derives revenue primarily from the sale and installation of its
solar pumping systems and solar energy products. Revenues are also derived to a
lesser extent from government consulting projects and from grant revenue
received. Revenues are recorded when persuasive evidence of an arrangement
exists, the price is fixed and determinable, delivery has occurred or services
have been rendered and when collectibility is reasonably assured.

Revenues from time and material service arrangements are recognized using the
percentage of completion method measured by labor and other costs incurred to
total estimated labor and other costs required. Estimates of costs to complete
are reviewed periodically and modified as required. Provisions are made for the
full amount of anticipated losses, if any, on all contracts in the period in
which the losses are first determined. Changes in estimates are also reflected
in the period they become known.

Revenues from equipment sales and installation contracts containing acceptance
provisions are recognized upon customer acceptance. Deferred contracts cost
represent costs incurred on uncompleted contracts. Cash payments received in
advance of product or service revenue are recorded as customer deposits payable.
Some contracts have specified identifiable multiple elements whereby upon
completion of that stage or milestone and customer acceptance is received, the
applicable revenue is recognized.


                                       32
<PAGE>

                         REVENUE RECOGNITION (CONTINUED)

Revenues from consulting projects are recognized as services are rendered.

Grant revenues on the basis of entitlement periods are recorded as revenue when
entitlement occurs.

Estimated expenses related to contractual product warranties are accrued at the
time of contract completion. Estimates are established using historical
information on the nature, frequency, and average cost of warranty claims.

                           ACCOUNTING FOR INCOME TAXES

Deferred tax assets and liabilities are determined based on the temporary
differences between the financial reporting and the tax basis of assets and
liabilities, applying enacted statutory tax rates in effect for the year in
which the differences are expected to reverse. Future tax benefits, such as net
operating loss carryforwards, are recognized to the extent that realization of
these benefits is considered more likely than not.

                            CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. The carrying amount of cash and
cash equivalents approximates its fair value due to its short-term nature.

                                    INVENTORY

Inventory is stated at the lower of cost or market determined by the First-In,
First-Out (FIFO) method. Inventory consists mainly of purchased system
components.

                      EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment and leasehold improvements are carried at cost, less accumulated
depreciation and are depreciated for financial reporting purposes using the
straight-line method. Depreciation for income tax purposes is computed using
accelerated methods. The estimated useful lives are: computers and information
equipment, 5 years, office furniture, vehicles, and test and assembly fixtures,
5 to 7 years: leasehold improvements, the shorter of 7 years or the life of the
lease. Upon retirement or disposal, the asset cost and related accumulated
depreciation are removed from the accounts and the net amount, less any
proceeds, is charged or credited to income.

Expenditures for maintenance and repairs are expensed as incurred. Expenditures,
which significantly increase asset value or extend useful lives, are
capitalized.

                        RESEARCH AND DEVELOPMENT EXPENSE

Research and development costs are expensed as incurred. Enhancements to
products are capitalized once technological feasibility has been established.


                                       33
<PAGE>

                         IMPAIRMENT OF LONG-LIVED ASSETS

The Company evaluates long-lived assets for potential impairment in compliance
with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. The Company records, in depreciation expense, impairment losses on
long-lived assets used in operations when events and circumstances indicate the
assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than their carrying amounts. The current fair
market value of the assets is determined by recent transactions, expected
remaining useful lives, future market trends and projected salvage values to
determine the fair market value of these assets. Impairment losses are measured
by comparing the fair value of the asset to its carrying amount.

                            STOCK-BASED COMPENSATION

The Company granted options for a fixed number of shares to key employees with
the exercise price equal to the fair value of shares at the date of grant. The
Company accounts for stock option grants in accordance with APB Opinion No. 25,
"Accounting for Stock Issued to Employees", and, accordingly recognizes no
compensation expense for the stock option grants. The Company has adopted the
disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation", which permits entities to provide pro forma net income (loss)
disclosure for stock-based compensation as if the fair-value method had been
applied. Proforma Stock Based Compensation

The company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Accordingly, no compensation cost has
been recognized for the stock option plans because the exercise price of
employee stock options equals the market prices of the underlying stock on the
date of grant. Had compensation cost been determined based on the fair value at
the grant date for awards in the years ended December 31, 2003 and 2002,
respectively, consistent with the provisions of SFAS No. 123, the Company's net
income and earnings per share would have been reduced to the pro forma amounts
indicated below.

                                                     2003             2002
                                                 -------------    -------------
Net loss, as reported -                          $  (3,924,774)   $  (2,005,731)
    Add:  Total stock based employee
compensation expense included in
reported net income, net of related
tax effects                                             30,000           15,000
    Deduct:  Total stock based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects                            (119,195)         (43,407)
                                                 -------------    -------------

Pro forma net loss                               $  (4,013,969)   $  (2,034,138)
         Earnings per share:

Basic-as reported                                $       (0.08)   $       (0.04)
Basic-pro forma                                  $       (0.08)   $       (0.04)

Diluted-as reported                              $       (0.08)   $       (0.04)
Diluted-pro forma                                $       (0.08)   $       (0.04)


                                       34
<PAGE>

Transactions with non-employees and consultants, in which goods or services are
considered received for the issuance for equity instruments, are accounted for
under the fair value method defined in SFAS No. 123.

The Company used the Black-Scholes model to value the stock options that it
granted. The assumptions that the Company used to estimate the fair value of the
options and the weighted-average estimated fair value of an option on the date
of the grant are as follows:

                                                  2003           2002
                                                  ----           ----

Terms (years)                                     10             10
Volatility                                        45%            79%
Risk-free interest rate (zero coupon U.S.
           Treasury Notes)                         3%             5%
Dividend yield                                     0%             0%
Weighted-average fair value per option            $0.15       $0.15-$0.34

                          EQUITY SECURITY TRANSACTIONS

Since inception, the Board of Directors has established the fair value of common
stock based upon quoted market prices existing at the dates such equity
transactions occurred.

                            NET LOSS PER COMMON SHARE

Basic loss per share includes no dilution and is computed by dividing net loss
attributable to common stockholders by the weighted average number of common
shares outstanding for the period. As presented, our basic and diluted loss per
share attributable to common stockholders is based on the weighted average
number of common shares outstanding during the period and does not include other
potential common shares, including shares issuable upon exercise of options,
warrants and conversion rights, since their effect would be antidilutive due to
our losses.

                                RECLASSIFICATION

Certain prior year balances have been reclassified to conform to current year
presentation.

                       IMPACT OF ACCOUNTING PRONOUNCEMENTS

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." SFAS 148 amends SFAS 123, "Accounting
for Stock-Based Compensation," to provide alternative methods of transaction for
an entity that voluntarily changes to the fair value based method of accounting
for stock-based compensation. It also amends the disclosure provisions of that
statement. The disclosure provisions of this statement are effective for
financial statements issued for fiscal periods beginning after December 15, 2002
and became effective for the Company in the second quarter of our 2003 fiscal
year. The Company has adopted the applicable disclosure requirements of this
Statement in its financial statements.


                                       35
<PAGE>

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". SFAS No. 149 clarifies under
what circumstances a contract with an initial net investment meets the
characteristics of a derivative as discussed in Statement No. 133. It also
specifies when a derivative contains a financing component that warrants special
reporting in the Consolidated Statement of Cash Flows. SFAS No. 149 amends
certain other existing pronouncements in order to improve consistency in
reporting these types of transactions. The new guidance is effective for
contracts entered into or modified after June 30, 2003, and for hedging
relationships designated after June 30, 2003. The adoption of this standard did
not have a material impact on the Company's consolidated financial statements.

In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"),
"Guarantors' Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others". FIN 45 requires a liability to
be recognized at the time a company issues a guarantee for the fair value of the
obligations assumed under certain guarantee agreements. Additional disclosures
about guarantee agreements are also required in the interim and annual financial
statements. The adoption of FIN 45 did not have an effect on the Company's
results of operations or financial position.

On May 15, 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS 150
establishes standards for classifying and measuring as liabilities certain
financial instruments that embody obligations of the issuer and have
characteristics of both liabilities and equity. SFAS 150 represents a
significant change in practice in the accounting for a number of financial
instruments, including mandatory redeemable equity instruments and certain
equity derivatives that frequently are used in connection with share repurchase
programs. We currently do not have any such instruments. SFAS 150 is effective
for all financial instruments created or modified after May 31, 2003. There was
no impact from the adoption of this statement.

In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest
Entities," which is effective for interim periods beginning after December 15,
2003. This Interpretation changes the method of determining whether certain
entities should be included in the Company's Consolidated Financial Statements.
An entity is subject to FIN 46 and is called a variable interest entity ("VIE")
if it has (1) equity that is insufficient to permit the entity to finance its
activities without additional subordinated financial support from other parties,
or (2) equity investors that cannot make significant decisions about the
entity's operations, or that do not absorb the expected losses or receive the
expected returns of the entity. All other entities are evaluated for
consolidation under SFAS No. 94, "Consolidation of All Majority-Owned
Subsidiaries." A VIE is consolidated by its primary beneficiary, which is the
party involved with the VIE that has a majority of the expected losses or a
majority of the expected residual returns or both. There was no impact from the
adoption of this standard

                                ADVERTISING COSTS

Advertising costs are expensed as incurred. Such expense for the periods ended
December 31, 2003 and 2002 was $16,496 and $17,024, respectively.


                                       36
<PAGE>

(3) EQUIPMENT AND LEASEHOLD IMPROVEMENTS

                                                     2003        2002

                                                   --------    --------
      Computers                                    $ 40,278    $ 36,537
      Office furniture and equipment                106,158      98,695
      Test and assembly fixtures                     34,140      34,140
      Vehicles                                       99,956      99,266
      Leasehold improvements                          8,123       8,123
                                                   --------    --------
                                                    288,655     276,761

      Less:  Accumulated depreciation               223,436     188,174
                                                   --------    --------
      Equipment and leasehold improvements, net    $ 65,219    $ 88,587
                                                   ========    ========

(4) NOTES PAYABLE

The Company has outstanding several notes payable in the aggregate amounts of
$212,000 and $197,000 at December 31, 2003 and 2002, respectively. The effective
interest rates on these notes range from 0.00% to 10%. All outstanding notes
payable are unsecured. As of December 31, 2003 $80,000 of short term convertible
notes were in default and the remaining notes are payable on demand. The short
term convertible notes are convertible at the option of the holder at $0.25 -
$0.20 per common share for a total of 330,000 shares.

(5) RELATED PARTY TRANSACTIONS

                                  NOTE PAYABLE

                                                 2003        2002
                                               --------    --------
         Directors                             $185,894    $  3,000
         Employees                              159,703      99,000
                                               --------    --------
             Total                              345,597     102,000

         Less current maturities                262,703     102,000
                                               --------    --------

Total long term note payable, related party    $ 82,894    $      0
                                               ========    ========

Amounts payable to directors includes a three year convertible loan dated
January 30, 2003 face value of $100,000 bears interest at 10.00 percent per
annum. Payments of interest are due semi-annually beginning in July 2003. The
loan is convertible at the option of the holder at $0.15 per common share for a
total of 666,667 shares.

All other amounts payable to employees, directors and their immediate relatives
are due on demand. Interest rates on these notes accrue at 10% per annum.

                                     LEASES

The Company leased office and laboratory facilities from the Chairman of the
Company on a month to month basis. Lease payments to the Chairman were $39,000
for 2003 and $33,000 in 2002.


                                       37
<PAGE>

(6) ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following at December 31:

                                               2003          2002
                                            ----------    ----------
            Accounts payable                $  695,986    $1,013,936
            Accrued interest                   266,123       153,075
            Accrued salaries - officers        447,880       242,560
            Accrued sales bonus                105,000         1,500
            Accrued payroll taxes               80,466        14,384
            Accrued audit fees                  50,000             0
            Accrued warranty reserve            27,206         5,868
            Accrued consulting                  24,000             0
            Other accrued expenses              18,491        22,628
                                            ----------    ----------
                                            $1,715,152    $1,453,951
                                            ==========    ==========

(7) LONG-TERM DEBT

<TABLE>
<CAPTION>
Long-term debt consist of the following at December 31:                      2003         2002
                                                                             ----         ----
<S>                                                                       <C>           <C>
Uncollateralized loans payable to a Funds and qualified                   $1,245,283           0
individual investors dated January 30 through December 15,
2003, face value of $1,675,000 bears interest at 10.00 percent
per annum with, using the original issue discount the
effective interest rate ranges from 19 - 30% per annum with
three year maturity dates. Beneficial conversion interest of
$205,333 was recorded as a result of the conversion feature of
the instrument. Payments of interest are due semi-annually
beginning July 30, 2003. The loans are convertible at the
option of the holder at $0.15 per common share for a total of
11,166,667 shares.

Uncollateralized loans payable to a Fund dated November 8th and
15th, 2002, face value bears interest at 10.00 percent per annum
with, using the original issue discount the effective interest
rate is 32% per annum with three year maturity dates. Beneficial
conversion interest of $54,294 was recorded as a result of the
conversion feature of the instrument. Payments of interest are
due semi-annually beginning May 8th and 15th, 2003. The loans are
convertible at the option of the holder at $0.12 per common share
for a total of 4,166,667 shares, $60,000 of the loan was
converted (the original conversion
price) in July, 2003 for a total of 500,000 shares.                          304,171     309,877
</TABLE>


                               38
<PAGE>

(7) LONG-TERM DEBT (CONTINUED)

<TABLE>
<S>                                                                           <C>         <C>
Loans payable to individuals, with no stated interest rate or
maturity date. Imputed interest is calculated at a rate of 4.50%
and is included in accrued interest. These uncollateralized notes
are convertible at the option of the holder at $0.495 per common
share for 106,060 shares of common stock.                                     52,500      52,500

Loan payable to an individual dated October 14, 1992, bearing
interest at 8.00 percent per annum with an original maturity date
of October 14, 1997. Payment of principal and accrued interest
were due at maturity. The loan is uncollateralized and is
convertible at the option of the holder at the rate of $0.40 per
share for a total conversion amount of 125,000 shares of common
stock.                                                                        50,000      50,000

Loans payable to individuals dated July 17, 1995 through February
25, 1997 bearing interest at 10.00 percent per annum and due on
demand.The loans are uncollateralized and are convertible at the
option of the holder at $0.50 per common share for 106,000 shares
of common stock. In addition, all holders were granted 602,965
warrants for the purchase of common stock at the price of $0.60
per share.                                                                    53,000      53,000

Loan payable to an individual dated December 14, 2001, bearing
interest at 8.00 percent per annum with a maturity date of March
19, 2004. The loan is uncollateralized and is convertible at the
option of the holder at $0.25 per common share for 40,000 shares
of common stock.                                                              10,000      10,000

Loan payable to PNC Bank dated November 2001 bearing interest at
7.75% per annum payable in monthly installments of $813 with a
maturity date of November 2008 and is guaranteed by the Chairman.             40,449      46,438
                                                                          ----------   ---------

Total                                                                     $1,755,403   $ 521,815

Less current maturities                                                      172,901     171,937
                                                                          ----------   ---------
Total long-term debt                                                      $1,582,502   $ 349,878
                                                                          ==========   =========
</TABLE>


                               39
<PAGE>

(7) LONG-TERM DEBT (CONTINUED)

The current maturities of long-term debt are:

    2004                                           172,901
    2005                                           311,683
    2006                                         1,253,398
    2007                                             8,767
    2008 thereafter                                  8,654
                                                ----------
                                                $1,755,403

(8) INCOME TAXES

The components of income tax expense (benefit) are as follows:

                                          2003       2002

                                        --------   --------
Federal:

    Current                             $     --   $     --
    Deferred                                  --         --
    Foreign                                   --         --
                                        --------   --------
                                        $     --   $     --
                                        ========   ========

State:

    Current                             $     --   $     --
    Deferred                                  --         --
    Benefit from sale of state NOL's          --    121,603
                                        --------   --------

                                        $     --   $121,603
                                        ========   ========

                                                       2003            2002
                                                   -----------     -----------
Expected tax benefit at 34%                        $ 1,289,000     $   669,000
State tax benefit before allowance                    (138,395)       (209,000)
Change in deferred tax valuation allowance          (1,150,605)       (460,000)
Sale of state net operating loss and research &
  development credit                                        --         121,603
                                                   -----------     -----------
Income tax benefit                                 $        --     $   121,603
                                                   ===========     ===========

The tax effect of significant items comprising the Company's deferred tax asset
are as follows:

                                         2003          2002
                                      ----------    ----------
Net operating losses carryforwards    $5,509,996    $4,359,391
Valuation allowance                    5,509,996     4,359,391
                                      ----------    ----------

Net deferred tax asset                $       --    $       --
                                      ==========    ==========


                               40
<PAGE>

(8) INCOME TAXES (CONTINUED)

Due to the current uncertainty of realizing the benefits of the tax loss
carryforward, valuation allowances equal to the U.S. deferred taxes have been
established. The full realization of the tax benefit associated with the carry
forward depends predominantly upon the Company's ability to generate taxable
income during the carryforward period. The valuation allowance will be evaluated
at the end of each reporting period, considering positive and negative evidence
about whether the deferred tax asset will be realized.

At December 31, 2003, the Company had net operating loss carryforwards (NOL) and
research and development credits which may be available to offset future Federal
and state taxable income, if any and will expire as follows:

                   Net Operating Loss           Research and Development
Year Expiring         Carryforwards                    Tax Credits
-------------        -------------                     -----------
                  Federal         State         Federal         State
                -----------    -----------    -----------    -----------
     2004       $    95,302             --             --             --
     2005            94,557             --             --             --
     2006           402,684             --             --             --
     2007           251,079             --             --             --
     2008           641,341             --             --             --
     2009           887,929      1,690,979         19,646         21,400
     2010           912,453      3,790,000         15,207             --
     2011           981,193             --         15,387             --
     2012         1,263,193             --         12,923             --
     2013         1,337,702             --         20,398             --
     2014           660,000             --         16,100             --
     2015         1,729,498             --         17,701             --
     2016         1,381,244             --         12,795             --
     2017         1,718,872             --         21,400             --
     2018         3,790,000         20,000         20,000
                -----------    -----------    -----------    -----------
                 16,147,047      5,480,979        171,557         41,400
                ===========    ===========    ===========    ===========

The Comp any participates in the State of New Jersey's corporation business tax
benefit certificate transfer program (the "Program"), which allows certain high
technology and biotechnology companies to transfer unused New Jersey net
operating loss carryovers and research and development tax credits to other New
Jersey corporation business taxpayers. During 2002, the Company submitted
applications to the New Jersey Economic Development Authority (the "EDA") to
participate in the Program and the applications were approved. The EDA then
issued certificates certifying the Company's eligibility to participate in the
Program for these years.

The program requires that a purchaser pay at least 75% of the amount of the
surrendered tax benefit. During 2003 and 2002, the Company sold approximately $0
and $1,448,912 of its New Jersey state net operating loss carryforwards and $0
and $12,660 of its research and development tax credits for $0 and $121,603,
respectively and recognized a tax benefit for that amount.


                               41
<PAGE>

(8) INCOME TAXES (CONTINUED)

In the event of a change in ownership, the Tax Reform Act of 1986 (the "Act")
provides for a potential limitation on the annual use of net operating loss
(NOL) and research and development tax credit carryforwards that could
significantly limit the Company's ability to utilize these carryforwards.
Accordingly, because tax laws limit the time during which these carryforwards
may be applied against future taxes, the Company may not be able to take full
advantage of the net operating losses and credit carryforwards for Federal
income tax purposes.

(9) STOCK-BASED COMPENSATION PLANS

The Company provides a stock option plan, for the granting of incentive stock
options to key employees, directors, officers, key consultants, and advisor to
the Company. The Company may grant up to 1,257,629 shares, with an option term
not to exceed ten years.

<TABLE>
<CAPTION>
                                                                                  Weighted-average
                                                Exercise                          remaining          Weighted-average
                                                price per      Share              contractual life   exercise price
                                                Shares         Options            (years)            per share
                                                ---------      ---------          ----------------   ----------------
<S>                                             <C>            <C>                       <C>           <C>
Balance, December 31, 2001                      .15 -1.00      2,566,080
    Granted                                     .14 -.34       3,769,184
    Cancelled                                         --              --
    Exercised                                   .14 -.40        (592,893)
                                                               ----------

Balance, December 31, 2002                      .14 -1.00      5,742,371
    Granted                                     .14 - .15      1,324,386
    Cancelled                                         --        (835,850)
    Exercised                                   .15
                                                                (100,000)

Balance, December 31, 2003                      .14-1.00       6,130,907
                                                               =========
Options outstanding and exercisable as of
December 31, 2003

                                                  .14             18,057                9.50         $ .14
                                                  .15          4,003,454                8.35           .15
                                                  .20            150,000                8.50           .20
                                                  .22             50,000                8.50           .22
                                                  .25             31,000                6.31           .25
                                                  .30             50,000                8.50           .30
                                                  .32            833,500                7.10           .32
                                                  .34            709,000                7.77           .34
                                                  .45             79,300                6.47           .45
                                                  .57             99,996                5.92           .57
                                                  .59             94,600                7.50           .59
                                                 1.00             12,000                6.83          1.00
                                                --------     -----------                ----         -----
Balance, December 31, 2003                      .14-1.00       6,130,907                7.64         $0.22
                                                ========     ===========                ====         =====
</TABLE>


                               42
<PAGE>

(9) STOCK-BASED COMPENSATION PLANS (CONTINUED)

In accordance with APB Opinion No. 25, the Company does not recognize
compensation expense for stock options granted to employees under the plan. SFAS
No 123, "Accounting for Stock-Based Compensation" requires a Company to
determine the fair market value of all awards of stock based compensation using
an option priced model and to disclose pro forma net income as if the resulting
stock-based compensation amounts were recorded. The table below presents these
pro forma disclosures.

(10) WARRANTS

The Company accounts for transactions with non-employees, in which goods or
services are the consideration received for the issuance of equity instruments
under the fair value based method.

At December 31, 2003, warrants to purchase 17,978,999 common shares are
outstanding, exercisable as follows:

Year              Warrants Exercisable        Strike Price
----              --------------------        ------------
2004                    2,040,000             $0.10-$0.50
2005                    1,118,333             $0.15-$0.25
2006                    1,812,000             $0.15-$0.30
2007                    2,881,000             $0.15-$0.50
2008                   10,127,666             $0.15-$0.30
                       ----------
                       17,978,999
                       ==========

(11) CONVERTIBLE PREFERRED STOCK

In June 2001 the Company issued 66,667 shares of Series A 7% three year
Convertible Preferred Stock in exchange for financial public relations services.
The shares were issued at $0.90 per share and the services were valued at
$60,000 and recorded in the financial statements.

In November 2001 the Company converted 1,111,055 shares of Series A 7% three
year Convertible Preferred Stock plus accrued interest of $104,995 at $0.25 per
share for a total of 4,419,778 common shares.

In 2000 the Company sold 1,111,055 shares of Series A and 611,111 shares of
Series B 7% three year Convertible Preferred Stock at $0.90 per share. The
Series A Preferred Shares are callable by the Company at $1.80 if the market bid
price remains over the call level for 20 days. The Series B Preferred Stock
proceeds are intended to be used by the Company for the initial operating
requirements of WorldWater (Phils) Inc., the Philippine subsidiary wholly owned
by WorldWater Corp. Therefore the conversion privilege is either into 10% of
WorldWater (Phils) Inc. or into 611,111 shares of WorldWater Corp. common stock.

The Company will pay 7% dividends annually on both the Series A and Series B
Preferred Stock as determined by the Board of Directors based upon the results
of operations and the financial condition of the Company. Dividends have been
accrued and are shown in accretion on the statement of operations.


                               43
<PAGE>

(12) DETACHABLE WARRANTS

For the years ended December 31, 2003 and 2002, the Company was provided
$300,000 and $245,000 of short term loans and $1,775,000 and $500,000 of
convertible notes for working capital financing. The Company agreed to issue
497,000 and 285,000 warrants for the short term notes and 7,839,001 and
2,381,000 warrants for the convertible notes representing additional
consideration for the loans provided.

Accordingly, the warrants have been valued at their fair value and the proceeds
from the loans have been allocated on a relative fair value basis between the
debt and the warrants in accordance with Accounting Principles Board Opinion No.
14 ("APB 14"). For the years ended December 31, 2003 and 2002 this resulted in a
discount on the debt and a charge to additional paid in capital of $587,693 and
$210,123, respectively. The amount of additional interest recorded during the
years ended December 31, 2003 and 2002 was $54,600 and $20,100, respectively.

Also, for the years ended December 31, 2003 and 2002 the Company provided
300,000 and 425,000 warrants for services. These warrants have been valued at
their fair value on the date of issuance and recorded as compensation expense.
The amount of additional compensation expense recorded during the years ended
December 31, 2003 and 2002 was $30,000 and $46,500, respectively.

(13) EMPLOYMENT AND CONSULTANT AGREEMENTS

On January 1, 2002, the Company entered into a five-year employment agreement
with the Chief Executive Officer ("CEO"). Compensation under the agreement is
$150,000 annual salary, $1,200 per month auto allowance and $1,500 per month to
cover rental offices in Hopewell, New Jersey. The CEO agreed to an amendment
which provided for an annual salary of $25,200 accruing the difference beginning
on July 1st. The CEO has full participation in the Company "fringe benefits"
including health coverage and the maintenance of a whole life policy. The
benefits continue if employment is terminated without cause or by reason of
death or disability to the CEO or his estate for the remaining term of the
agreement or a period of 24 months, whichever is longer. Bonus and participation
in the Stock Option Plan are based upon the discretion of the compensation
committee. In July 2002, the CEO was granted 120,000 stock options vesting in
equal installments of 10,000 shares per month, at an exercise price of $0.15,
the fair market value at the date of the grant.

In July 2002, WorldWater Corp. granted 1,000,000 shares of restricted stock for
the benefit of its Chairman. Compensation expense for restricted stock is based
on the market price of the Company stock at the time of the grant ($0.15) and
amortized on a straight-line basis over the vesting period which is five years.
The recipient (Chairman) did not pay any cash consideration to the Company for
the shares and has the right to vote all shares subject to the grant, whether or
not the shares have vested. The restriction is based upon continuous service.

The balance of unearned compensation related to these restricted shares as of
December 31, 2003 was $105,000. Total compensation expense recognized was
$30,000 for the year ended December 31, 2003 and $15,000 for 2002.


                               44
<PAGE>

(13) EMPLOYMENT AND CONSULTANT AGREEMENTS (CONTINUED)

Also on January 1, 2002, the Company entered into three-year employment
agreements with the Vice President/Controller and the Vice President. Total
compensation under these agreements amounted to $152,000 annually. In July 2002,
the Vice President/Controller and Vice President agreed to amend their
employment agreements such that their combined annual salaries were reduced to
$73,200. Subsequently, with effect on November 1, 2002, the combined salaries of
these individuals were increased to $122,000 annually. In addition, effective
July 2002, these individuals were granted 156,000 stock options, vesting 13,000
per month, at an exercise price of $0.15, the fair market value at the date of
the grant.

The Company has unpaid salaries of $447,880 which have been deferred by the
officers as of December 31, 2003, and are included in accrued expenses.

(14) LEASES

The Company leases its production, service and administrative premises under a
five-year lease agreement expiring June 25, 2007. The lease requires the lessee
to pay taxes, maintenance, insurance and certain other operating costs of the
leased property. Rent expense for 2003 and 2002 was $66,000.

The minimum future rental payments under this lease are $231,000 through June
14, 2007.

                             2004              66,000
                             2005              66,000
                             2006              66,000
                             2007              33,000
                                             --------
                                             $231,000
                                             ========

The Company also leases a sales office in Sacramento, California under a one
year lease agreement expiring August 15, 2004. Rent expense for this office in
2003 was $7,200.

(15) RISKS AND UNCERTAINTIES

Foreign Operations

The Company operates in various countries that are subject to risks peculiar to
each country. With respect to any particular country, these risks may include:

-     expropriation and nationalization of our assets (including
      intellectual property) in that country;
-     political and economic instability;
-     social unrest, acts of terrorism, force majeure, war or
      other armed conflict;
-     inflation;
-     currency fluctuations, devaluations and conversion
      restrictions;
-     confiscatory taxation or other adverse tax policies;
-     governmental activities that limit or disrupt markets,
      restrict payments or limit the movement of funds;
-     governmental activities that may result in the deprivation
      of contract rights; and
-     trade restrictions and economic embargoes imposed by the
      United States and other countries.

No single country other than the United States accounted for more than 10% of
our revenues in 2003 and 2002. Foreign sales, mostly to Philippines, were
$35,817 in 2003 and $89,255 in 2002, all the remainder was in the United States.

In 2004 the Company has initiated a marketing initiative in Iraq and other
Middle East countries. Unsettled political conditions, social unrest, acts of
terrorism, force majeure, war or other armed conflict, exploitation or other
governmental actions, inflation, exchange controls or currency devaluation may
result in increased business risk in this region. The company has entered an
alliance with The Sandi Group, one of the largest Iraqi construction and
logistics companies in the region, to assist the Company in doing business in
this region.

Fixed-price Contracts

The Company utilizes fixed-price contracts which results in business risk. Risk
arises from, among other things:

-     uncertainty in estimating the technical aspects and effort
      involved to accomplish the work within the contract
      schedule;
-     labor availability and productivity; and
-     supplier and subcontractor pricing and performance.

Intellectual Property Rights

The Company relies on a variety of intellectual property rights in the
manufacture of our products. The Company may not be able to preserve these
rights intellectual property rights in the future and these rights could be
invalidated, circumvented or challenged. In addition, the laws of some foreign
countries in which our equipment may be sold do not protect intellectual
property rights to the same extent of the United States. Failure to protect our
proprietary information and successful intellectual property challenges or
infringement proceedings against the Company could materially and adversely
affect the Company's competitive position.

Technological Developments

The market for our equipment is characterized by continual technological
developments to provide better and more reliable performance and services. If
the Company is not able to design, develop, and produce commercially competitive
products and complete installation in a timely manner in response to changes in
technology, the business and revenues could be materially and adversely
affected. Similarly, if our proprietary technologies and equipment become
obsolete, we may no longer be competitive and our business and revenues could be
materially and adversely affected.

Technical Personnel

The services we sell in association of the equipment sold is complex and highly
engineered and often must be performed in harsh conditions. The Company's
success depends on its ability to employ and retain technical personnel with the
ability to design, utilize and enhance these products and services. In addition,
our ability to expand our operations depends in part on our ability to increase
our skilled labor force. The demand for skilled workers is high and the supply
is limited. A significant increase in wages paid by competing employers could
result in a reduction of our skilled labor force and or increases in wage rates
that we must pay. If either of these events were to occur, our cost structure
could increase, our margins decrease and our growth potential could be impaired.

Government Incentives

The competitiveness of our technology and equipment is very much dependent upon
governmental rebates and incentives. If there the governmental rebates and
incentives were to be materially reduced or eliminated our business and revenues
could be materially and adversely affected.

The Company markets its products to developing nations. The ability of these
customers to order and pay for the Company's products and services is dependent
on a variety of factors including government approval, adequate funding and
vigorous testing procedures.

(16) FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practical to estimate that
value.

The carrying value of cash and cash equivalents, receivables, accounts payable
and accrued expenses approximate fair value because of the short maturity of
those instruments. The fair value of the Company's debt is estimated based on
the current rates offered to the Company for debt of the same remaining
maturities and similar terms.


                                       45
<PAGE>

(17) CONTINGENCIES

The Company is occasionally subject to various claims and suits that arise from
time to time in the ordinary course of its business. The Company is not aware of
any pending or threatened litigation that could have a material adverse effect
upon the company's business, financial condition or results of operations.

(18) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

                                                 2003          2002
                                               ---------    ---------
         Cash paid during the year for:
                  Interest                     $  51,800    $   6,673
                                               =========    =========
Benefit for sale of NJ net operating losses    $       0    $(121,603)
                                               =========    =========

Supplemental schedule of non-cash investing and finance activities:

In July of 2003, $60,000 of a convertible loan was converted into 500,000 shares
at $0.12 per share (the original conversion price).

For the year ended December 31, 2003 the Company recorded $38,000 for accretion
of preferred stock dividends.

(19) SUBSEQUENT EVENTS

In January of 2004, $440,000, the balance of a $0.12 per share convertible loan,
was converted into 3,666,666 common stock shares at the original conversion
price. The interest on the loan was paid to the investor in cash.

During the first quarter 2004 the Company issued three year convertible notes
totaling $1,180,000 to institutional and accredited individual investors. The
notes bear interest at 10% per annum payable semi-annually commencing July 2004.
Interest is payable in cash or in shares of common stock at the election of the
holder. The notes are convertible into an aggregate of 7,866,667 shares of
common stock at $0.15 per share. The notes are convertible at the option of the
holder, anytime after purchase. As a result of this issuance beneficial
conversion interest of $399,667 will be recorded in the first quarter of 2004.
Warrants to purchase an aggregate of 5,270,667 shares of common stock at an
exercise price of $0.30 per share were issued with the convertible notes valued
at $553,420.

During the first quarter of 2004 the Company sold 1,000,000 restricted common
stock shares through a private placement at $0.15 per share to an accredited
investor totaling $150,000. Warrants to purchase an aggregate of 670,000 shares
of common stock at an exercise price of $0.20 per share were issued with the
stock purchase and are valued at $80,400.

During the first quarter of 2004 the Company issued 525,000 warrants to purchase
common stock at $0.15 per share to shareholders as consideration for extension
of loans totaling $150,000 originally payable in December 2003. The warrant
issuance will result in $58,000 of recorded interest expense in the first
quarter of 2004. Also, as consideration for loans totaling $70,000 common stock
shares in the amount of 375,000 were issued and will be recorded as $55,500 of
compensation expense in the first quarter of 2004. The loans were paid in April
of 2004.


                                       46
<PAGE>

In March of 2004 the Company issued 150,000 common stock shares to a Swiss
investor relations firm, $25,500 of compensation expense will be recorded.

Also in March of 2004, an employee exercised 33,333 stock options exercisable at
$0.15 per share totaling $5,000.

During the first quarter of 2004 a warrant in the amount of 100,000 shares
exercisable at $0.15 per share was exercised for a total of $15,000.

On April 1, 2004 the Company entered into a Securities Purchase Agreement (SPA)
with SBI Brightline VIII LLC ("Purchaser"). Subject to the terms of the SPA the
Company may issue and sell to the Purchaser and Purchaser shall purchase from
the Company up to 17,000,000 shares of common stock in three tranches with
warrant consideration as defined below:

<TABLE>
<CAPTION>
              NUMBER OF TRANCHE       NUMBER OF TRANCHE            TRANCHE PURCHASE            TRANCHE PURCHASE PRICE
TRANCHE      SHARES INCLUDED IN       WARRANTS INCLUDED            PRICE PER TRANCHE             PER TRANCHE WARRANTS
  NO.             TRANCHE             IN TRANCHE                  SHARE (U.S. DOLLARS)              (U.S. DOLLARS)
-------      -------------------     -------------------         ----------------------        ----------------------
<S>              <C>                     <C>                            <C>                           <C>
  1              7,000,000               2,100,000                      $0.17                         $0.17
  2              5,000,000               1,500,000                      $0.22                         $0.22
  3              5,000,000               1,500,000                      $0.27                         $0.27
</TABLE>

The Company intends to sell Tranche Shares to the Purchaser subsequent to the
date on which the Registration Statement of the Company covering the resale of
the Shares is declared effective, which is expect to be early in the Third
Quarter of 2004. It is anticipated that all Tranche Shares shall be sold by the
end of the Fourth Quarter 2004.

The trading price of our common stock during the several week period leading up
to April 1, 2004 was generally greater than the price per share for the first
7,000,000 shares that may be sold under our stock purchase agreement with SBI;
however, our average closing price during March 2004 was slightly more than
$0.20 per share and the average share price of all of the shares to be sold
under our stock purchase agreement with SBI is slightly more than $0.21 per
share.

In conjunction with the above SPA in April of 2004 the Company entered into a
Term Loan with HIT Credit Union and Hong Kong League Central Credit Union (the
"Lenders") and SBI Advisors, LLC as agent for the Lenders for $800,000. The Term
Loan shall be repaid as follows: $400,000 of the principal amount will be due
and payable within three days after receipt by the Borrower of the proceeds from
the $0.17 Tranche as per the SPA and the remaining unpaid principal and accrued
interest on the Term Loan shall be payable October 2004. The Term Loan bears
interest at 18% per annum. SBI Advisors, LLC received a five year warrants to
purchase 400,000 common stock shares exercisable at $0.30 as placement agents
for this transaction, $108,000 of compensation expense will be recorded in the
first quarter of 2004. These warrants will be included in the above mention
Registration Statement

The above transactions did not involve a public offering and therefore were
exempt from registration pursuant to Section 4(2) of the Securities Act of 1933,
as amended (the "Act").


                                       47
<PAGE>

EXHIBIT     INDEX
-------     -----

21          Subsidiaries

23.1        Consent of Independent Accountants

31.1        Certification by the Chief Executive Officer Pursuant to
            Section 302 of the Sarbanes-Oxley Act of 2002.

31.2        Certification by the Chief Financial Officer Pursuant to
            Section 302 of the Sarbanes-Oxley Act of 2002.

32.1        Certification by the Chief Executive Officer Pursuant to 18 U.S.C.
            Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley
            Act of 2002.***

32.2        Certification by the Chief Financial Officer Pursuant to 18 U.S.C.
            Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley
            Act of 2002.***


                                       48