SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

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.


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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.


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      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. Current costs are fixed for a period of time after which he owns
the equipment and obtains most or all of his irrigation electrical power free.
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.

      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.

      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.


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<PAGE>

      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. The Company is the exclusive PV systems supplier for the
one-megawatt system with an order totaling $4.1 million. The prime contractor,
Contra Costa Electric of Bakersfield, CA, has scheduled the $8.9 million full
construction project for completion in June 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.


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<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.


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<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.


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<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.

Also, the Company has strategic alliances or partnerships with Winrock
International (see above), The Sandi Group (see above), Princeton Power Systems
(see below), Contra Costa Electric, Inc., the prime contractor for the Cerro
Coso College project, and the International Center for Water Technology (see
below).

      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
certain key countries including 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 addition, this year the company was issued
another patent on an electronic board which matches pump performance with
available solar power input and has a patent pending on its "smart card"
municipal water distribution system.

(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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(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


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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.


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<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 in transactions not involving a
public offering and therefore 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.
The Company is the exclusive PV systems supplier for the one-megawatt system.
The prime contractor, Contra Costa Electric of Bakersfield, CA, has scheduled
the $8.9 million full construction project for completion in June 2004. With the
current orders which total more than $4 million and additional anticipated
contracts, the Company anticipates being able to cover its fixed and variable
marketing and general and administrative expenses by the fourth quarter of 2004.
Until that time, the Company will continue to source private funding of equity
and debt (See Subsequent Events Note).

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%.

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.

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 restricted stock and convertible debentures.
This financial plan has sufficiently funded operations to date, that is, funding
the development and introduction of its solar technology. (See Subsequent Events
Note).

Critical Accounting Estimates

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.

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.

      (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).

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

23.2 Consent of Civale, Silvestri, Alfieri, Martin & Higgins, LLC

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: April 20, 2004
------------------------------                                    --------------
Quentin T. Kelly, Chairman/CEO

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

Signature                               Title                         Date

/s/ Quentin T. Kelly            Chairman/Chief Executive          April 20, 2004
---------------------            Officer
Quentin T. Kelly


 /s/ Terri Lyn Harris           Vice President/Controller         April 20, 2004
---------------------
Terri Lyn Harris


 /s/ Joseph Cygler              Director                          April 20, 2004
------------------
Joseph Cygler


 /s/ Rolf Frauenfelder          Director                          April 20, 2004
----------------------
Rolf Frauenfelder


 /s/ Dr. Davinder Sethi         Director                          April 20, 2004
-----------------------
Dr. Davinder Sethi


 /s/ Lange Schermerhorn         Director                          April 20, 2004
------------------------
Lange Schermerhorn


/s/ David K. Lifschultz         Director                          April 20, 2004
------------------------
David K. Lifschultz


                                       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>      <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 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 industry 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.

      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.

(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, 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>
<CAPTION>
<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
                                                    ========   ========

<TABLE>
<CAPTION>
                                                             2003            2002
                                                         -----------     -----------
<S>                                                      <C>             <C>
      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
                                                         ===========     ===========
</TABLE>

      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

      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.

      Foreign sales, mostly Philippines, were $35,817 in 2003 and $89,255 in
      2002, all the rest were domestic.

(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
      with SBI Brightline VIII LLC ("Purchaser"). Subject to the terms of the
      Agreement the Company may issue and sell to the Purchaser and the
      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 SHARES           NUMBER OF TRANCHE WARRANTS         TRANCHE PURCHASE PRICE PER
        TRANCHE NO.            INCLUDED IN TRANCHE                 INCLUDED IN TRANCHE            TRANCHE SHARE (U.S. DOLLARS)
        -----------            -------------------                 -------------------            ----------------------------
<S>                                 <C>                                 <C>                                  <C>
             1                      7,000,000                           2,100,000                            $0.17
             2                      5,000,000                           1,500,000                            $0.22
             3                      5,000,000                           1,500,000                            $0.27
</TABLE>

      The Company may elect to sell Tranche Shares of any Tranche to the
      Purchaser at any time commencing on the date on which the Registration
      Statement of the Company covering the resale of the Shares is declared
      effective. The Company plans to file this Registration Statement in May
      2004.

      In April of 2004 the Company entered into a Term Loan with HIT Credit
      Union and Hong Kong League Central Credit Union ("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 SBI Agreement defined above) and all
      remaining unpaid principal and accrued interest on the Term Loan shall be
      payable six months from the closing date which would be 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 also
      have registration rights which the Company will include in the
      Registration Statement as mentioned above.

      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

      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