FORM 10-KSB ANNUAL REPORT

                       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
(Fee required) for the fiscal year ended December 31, 1999

WorldWater Corp.

Nevada                                               33-0123045

(State or other jurisdiction of                     (IRS Identification Number)
Employer corporation or organization)

55 Route 31 South, Pennington, NJ                    08534

(Address of principal executive offices)             (Zip Code)

Issuer's 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.

The issuer's revenue for its most recent fiscal year was $526,924.

On April 12, 2000 the aggregate  market value of the  outstanding  stock held by
non-affiliates of the registrant was approximately $25,857,534

The  number  of  shares of Common  Stock  outstanding  as of April 12,  2000 was
28,483,145.

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                           FORM 10-KSB ANNUAL REPORT

Part l

Item 1. Description of Business

      WorldWater's  mission is to maintain its leadership as principal  provider
of renewable energy and remote water supply for emerging nations  throughout the
world.

      WorldWater  Corp.  ("the Company") has developed  extremely cost efficient
power systems driven entirely by solar energy. The proprietary  AquaSafe(TM) and
AquaMax 2200(TM) PV water pumping and solar electric systems provide  economical
water supplies and electric  power - at less cost than competing  systems and in
areas where such power may  otherwise not be  available.  The Company's  primary
customers  are  developing  countries  which  require  non-traditional  means of
fulfilling  their  energy  and  water  needs.  The  greatest  potential  for  PV
technology  is in  developing  countries  where  roughly 2 billion  people  lack
electricity   and  water.   Each  year  several  billion  dollars  from  various
international,  national and regional sources are spent on water and independent
power projects within the emerging countries.

      The Company was incorporated in the state of Nevada on April 3, 1985 under
the name 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.  The Company stock is publicly  traded on the OTC Bulletin Board under
the symbol WWAT.

      The Company has centralized its production,  servicing and  administration
functions  at its main  plant  located at 55 Route 31 South in  Pennington,  New
Jersey 08534.

(a)   Major Customers and Export Sales

      The  Company's  major  customers  continue  to be  national  and  regional
      Governments,  their  Ministries and Departments  responsible for power and
      water. They include:

      Sri Lanka:  The  Company  has  designed  a project  at the  request of the
      Ministry  of  Aquatics  and  Fisheries,  which has  decided to upgrade the
      quality of life of people in  fishing  villages  throughout  the island by
      installing solar  electricity and delivering safe drinking water and power
      needs.  The  Company  has  submitted  its bid toward a Tender  Offer to be
      awarded in May,  2000 for a total of 250 villages to receive  AquaSafe(TM)
      pumping  systems  and  SolPower(TM)   electrification   systems  for  7500
      households  within these same  villages.  This proposal  includes  project
      financing engendered by the Company for approximately $9,455,000. Approval
      and  commencement  of  operations  are  expected in  mid-2000.  The second
      project valued at $7 million is to supply water and  electrification to an
      additional 200 villages. A third project is valued at $11 million for port
      rehabilitation.

      Philippines:  The Company has been in the  Philippines  since 1997 when it
      delivered  25 solar  pumps for  installation  by the  National  Irrigation
      Administration  under a directive from Former President Fidel V. Ramos. As
      a result of the success of that  program,  WorldWater  Corp.  has recently
      concluded  a  10-team  feasibility  study  funded  by the U.S.  Trade  and
      Development  Agency  (USTDA) in the amount of  $235,000  for a $20 million
      water  supply  system for the island of Cebu  (population  2 million).  In
      February,  2000,  WorldWater (Phils) Inc. (see Subsequent Events Note) was
      formed  as a wholly  owned  subsidiary  of  WorldWater  Holdings  Inc.  of
      Delaware,  which is a holding  company owned 100% by WorldWater  Corp. The
      Company has several  projects in varying phases of  development.  The most
      immediate  prospect under the Department of Interior and Local  Government
      (DILG) is the Cebu water supply project. Successful implementation of this
      water supply  project could lead to an even larger project funded by World
      Bank/Local Government Unit (LGU) funds earmarked for communities of 20,000
      population or less. Other prospective  customers include the Department of
      Agrarian  Reform (DAR) to use solar energy for potable water,  irrigation,
      and  power in rural  Mindanao.  Under the Local  Water  Utility  Authority
      (LWUA),  there is a $7.5 million fund (LINGAP fund) available  immediately
      for a pilot  project  that uses  solar  pumps for  drinking  water  needs.
      Finally,  the National Irrigation  Administration  under the Department of
      Agriculture has discussed with WorldWater a program to


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                           FORM 10-KSB ANNUAL REPORT

      supply  irrigation  pumps  for  Spanish-grant   drilled  wells  that  were
      originally intended to be equipped with diesel pumps.

      Pakistan:  The Company has  submitted a proposal to the  Government  for a
      National   Electrification  and  Water  Supply  Program  for  Rural  Areas
      utilizing  Company solar power. The Company has received verbal statements
      of approval  from the Office of the Chief  Executive  but awaits a written
      contract.  In 1999, an AquaSafe(TM)  water pumping system and SolPower(TM)
      system were demonstrated in Quetta, Baluchistan. Following this successful
      demonstration,  an MOU was  signed to supply  up to $50  million  worth of
      solar-powered  water and power  systems to the  Baluchistan  province.  In
      addition,  in the Punjab  region,  WorldWater  has  provided a proposal to
      provide the Rangers  (non-military border police) water pumps and security
      lights. This project is valued at $10 million.

      Tanzania:  The Company sold and installed  its solar pumping  equipment in
      the capital of Dar es Salaam to supply clean water to the city's main meat
      processing plant. The solar pumping operation was inaugurated by the Prime
      Minister and attended by senior government  officials.  As a result of the
      success  of the  WorldWater  system,  the  Ministry  of Water has signed a
      Memorandum  of  Understanding  (MOU)  with  the  Company  to  establish  a
      financially  self- sustaining rural water supply project to be implemented
      on a national  level,  starting with pilot projects in 7 water  districts.
      Funding  of   $150,000   may  be   provided   by  E&Co.,   a   Rockefeller
      Foundation-supported  energy investment group to be applied to this 7-site
      pilot project. The Company expects to complete the financing in the second
      half of 2000 and to start implementation thereafter.

            Because  of  the  nature  of  its  business  with  Governments,  the
      Company's  revenue are dependent upon the annual budgetary  periods of the
      sovereign and regional  governments and  international  funding  agencies.
      Results  of selling  efforts  therefore  are  generally  reflected  in the
      budgetary year following the presentation  and agreement to purchase.  For
      this reason, despite its many successful demonstrations,  negotiations and
      agreements  in 1999,  the  Company's  revenue  for the year was  $526,924,
      reflecting the limited  discretionary funds outside the standard budgetary
      process  available  to the  government  and agency  departments.  (See (c)
      Marketing (below)).

 (b)  Products

AquaSafe(TM)

The AquaSafe(TM) PV pumping systems use a proprietary method of control to drive
off-the-shelf  AC motors from  photovoltaic  (PV) power.  AC pumps are low-cost,
require no maintenance and have a long track record of reliable service.

AquaSafe(TM)  borehole  systems are  engineered for depths to 1,000 feet (300m).
Multi-stage stacked impeller submersible pumps give the flexibility of flow from
5 gallons/min  (20 lpm) to 260  Gallons/Min  (1,000 lpm). The pumps are sized to
power 1 to 50 HP motors.

AquaMax2200(TM)

The AquaMax2200(TM)  high yield irrigation pumps take WorldWater's  AquaSafe(TM)
remote water pumping systems to unprecedented  levels.  For the first time, more
than 2,000 gallons per minute of water for irrigation  using pumps of 2 to 50 HP
and up, can be powered with solar energy --anywhere in the sun.

A 25 HP  AquaMax2200(TM)  delivers up to 2,200 gallons per minute (8,400 lpm) or
approximately 792,000 gallons per day (3,000 cubic meters/day).

SolPower(TM)

The  WorldWater  SolPower(TM)  system is designed  for remote  homes and village
community  centers.  The system generates  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 elctrical grid system.


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                           FORM 10-KSB ANNUAL REPORT

SolPower(TM) can also be used to power Security Lights and backup Security Power
systems,  which are  particularly  useful for US Government and foreign building
operations and industrial projects,  such as pipelines and remote communications
projects.

Solar Products

The  Company  has  also   introduced  a  number  of  new   products   including:
SolarLite(TM),  a  solar  charged  portable  lantern,  SolPrayer(TM)  -- a solar
powered  call-to-prayer  public address system for mosques;  SolPal(TM) -- solar
powered street lights, and solar powered security lights.

(c)   Marketing

      WorldWater's  products are marketed  primarily in developing nations where
there is a large  demand  for  electrical  power  and  clean  water -  literally
billions of dollars annually.  The Company now has its proprietary solar pumping
and solar electrical systems operating in the Philippines,  Sri Lanka, Tanzania,
Ethiopia, Djibouti, Ecuador and others.

      In  order  to  maintain  close  contacts  with  international   government
embassies, US Government departments and agencies, as well as such international
organizations  such as the World Bank and the  Inter-American  Bank, the Company
established  an office in  Washington  DC in 1998.  The Company  Representative,
retired Ambassador Alan Lukens, a career foreign officer who spent many years in
Africa,  Europe and the Caribbean for the US State Department,  has strengthened
Company  efforts by adding and  maintaining  new contacts for marketing  support
within the  government  structure,  particularly  the State  Department  and the
Pentagon.

      The Company's  marketing  efforts are largely  concentrated in identifying
specific project  opportunities that have the potential for long-term growth and
high value, and identifying  institutional  sources that are capable and willing
to finance these projects.  In general,  the long-term  market  potential of any
emerging  country  is  less  predictable  compared  with  that  of  a  developed
industrial  country because emerging nations present higher degrees of political
and currency risks. WorldWater's marketing goals and forecasts are adjusted from
time to time based on new developments in any particular country.

      Because of the economics involved in doing business overseas, WorldWater's
strategy is to seek large  contracts in the range of $500,000 to  $10,000,000 or
more.  Winning  contracts of this  magnitude  can entail months or even years of
development effort in a target market; consequently,  actual sales and operating
income may vary widely from forecasts, either up or down (See (a) above).

      Over the long  term,  however,  the rapid  growth  of the  solar  industry
worldwide,  doubling  to more than $1.5  billion in the  1990's,  is expected by
energy economists to multiply again in worldwide  revenues before the year 2005.
Solar energy will command an  ever-larger  percentage  of total world energy use
and WorldWater solar products can be expected to participate in that growth.

      In addition,  the need and price for water worldwide is growing  annually.
The United Nations  officially  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 5  years.  WorldWater  is  strongly
positioned in both of these solar power and water markets (See (d) below).

      The  following is a  discussion  of the  Company's  efforts in some of the
countries  where the  Company  is  demonstrating  viable  sales  activities  and
opportunities:

Sri Lanka: See Major Customers, Item 1. Description of Business (above)

Philippines: See Major Customers (above)

Pakistan:  See Major Customers (above)

Tanzania: See Major Customers (above)


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                           FORM 10-KSB ANNUAL REPORT

Somaliland:  The Company was  appointed by President  M.I. Egal to be the Master
Implementation  Contractor for water for this entire region of what was formerly
the  northwestern  area of  Somalia.  The Company  responded  to a crisis in the
municipal  water supply  system of Hargeisa,  the capital  city,  by sending two
senior  engineers to assess the emergency and recommend  immediate and long term
solutions.  The Company's team prepared a detailed report for the Government and
the on-site  international  agencies  (UNDP,  UNHCR,  UNICEF etc.)  outlining an
appropriate  solution to the urgent  problem for a total  budget of $10 million.
The Company's report also identified certain immediate improvements needed for a
cost of $1 million  as the first  phase of the larger  project.  This  report is
being used by the Water  Ministry to secure  financing  for this project and the
Company is  assisting  the  Ministry  to secure  the  financing  from  different
sources,  including the Islamic Development Bank. The Company continues to be in
close  communication with the President's office regarding the project financing
effort.

Ecuador:  The Company has  submitted a proposal to the  Department  of Renewable
Energy for a regional rural  electrification  project for bringing home lighting
systems to about 600 homes in the Bolivar region. The Company has also submitted
proposals to several  municipalities  to upgrade  their  municipal  water supply
systems using solar pumps and financing from private  institutions.  The Company
plans to  continue  its  efforts  in Ecuador by  entering  into  fee-for-service
contracts with regional electric and water utility companies.

(d)   Market Size

      Over  the  last 15 years  the  photovoltaic  (PV)  industry  has  grown in
revenues  from $2  million  to  $1.5  billion.  Advances  in PV  technology  and
corresponding  reduction in costs continue to fuel the increasing  demand for PV
power.  As stated  earlier,  the  greatest  potential  for PV  technology  is 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.  Worldwide  PV module  shipments
continue at an accelerating rate. Global shipments of PV modules have risen from
60 Megawatts in 1993 to more than 200 Megawatts in 1999.

      Formal  reports  and market  analyses  of the  countries  that  WorldWater
services are not available.  However, based on estimates by UNDP and World Bank,
to bring safe drinking  water to the 2 billion  people who are without access to
safe  drinking  water and who are targeted for such access by the  international
financial agencies and national and regional Governments will cost approximately
$50 per person,  or $100 billion total.  Although the national and international
agencies  obviously do not have such budgets,  they are making concerted efforts
to involve the private  sector and all levels of  national,  regional  and local
governments  to finance  these top priority  projects with the goal of achieving
full  coverage  by the  year  2004.  These  efforts  include  implementation  of
self-financing  businesses similar to WorldWater's  pending programs in Tanzania
and the Philippines.

      A  similar   sized   investment  of  $100  billion  is  needed  to  supply
electricity.  For example,  the Company's analysis of the remote power market in
the  Philippines,  where only 28 of the 2800  inhabited  islands  have access to
electricity,  shows that a modest 10%  penetration  by solar power  represents a
market opportunity of about $1 billion. In Tanzania,  where 14 million people do
not have access to safe drinking  water,  the market  opportunity  is about $700
million.  The  Company  has in place a  strategy  to convert  these  substantial
opportunities into sales.

      WorldWater   is   presently   creating  a  network   of   representatives,
distributors,  licensees  and  joint  ventures  in the  most  significant  world
markets.   The  Company  has  initiated  discussion  with  potential  Philippine
investors for WorldWater-Philippines to manufacture and market solar modules and
AquaSafe(TM)  systems in the Philippines and, as the market develops,  to export
to other Southeast Asian nations.

(e)   Marketing Strategies

      As stated, WorldWater's strategic mission is to maintain its leadership as
principal  provider of  renewable  energy and remote  water  supply for emerging
nations throughout the world.

      WorldWater  is marketing  the  AquaSafe(TM)  and  AquaMax2200(TM)  pumping
systems and its other solar  products  worldwide  to both the public and private
sector.


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                           FORM 10-KSB ANNUAL REPORT

            The institutional public and private sectors, including governments,
      contribute  billions  of  dollars in  emerging  nations to water and small
      power projects that fall within the scope of WorldWater's business.  These
      sectors  represent the largest  potential markets for the Company products
      in the near  future.  In  addition  to  governments,  public  institutions
      consisting  primarily of national  and  international  organizations  that
      assist developing  countries are also potential markets. The countries are
      mostly in tropical zones and have a dramatic, recognized need for water in
      areas without  available and  economical  electric  power  supplies.  Such
      national and international organizations include:

      -     Government Water, Energy and Agricultural Ministries

      -     multilateral  international  assistance agencies,  such as the World
            Bank,  UNICEF,  the United Nations  Development  Program (UNDP), the
            World  Health  Organization  (WHO)  and the  Food  and  Agricultural
            Organization (FAO), and

      -     regional  banks,   such  as  the  African   Development   Bank,  the
            Inter-American Development Bank and the Asian Development Bank, and

      -     bilateral development agencies in the aid-giving nations [(e.g. U.S.
            Agency for International Development (USAID), Canadian International
            Development  Agency  (CIDA) and  Swedish  International  Development
            Agency  (SIDA)]  as  well  as  smaller  agencies  in the  developing
            nations, and

      -     quasi-public (non-profit,  private)  Non-Governmental  Organizations
            (NGO's) such as CARE (USA,  Canada etc.),  Save the Children,  World
            Vision,  Food for the  Hungry,  Doctors  Without  Borders  etc.  and
            various religious  organizations (e.g. Christian and Islamic groups)
            and  service   clubs   (Rotary,   Lions   etc.)   which   contribute
            substantially to aid efforts.

            All of the above  agencies  and  organizations  work with and assist
            emerging  nation  governments  which wish to purchase the WorldWater
            products.

      International  organizations  and  NGO's  can be  slow  to  approve  a new
product. WorldWater, however, has already achieved high visibility, interest and
in many cases approval.  The advantages of dealing with these  organizations are
that:

      -     the development  agencies/NGO's  serve many different countries that
            combine a  desperate  need for low cost  water  pumping  with a good
            availability of solar energy,

      -     acceptance  by one  development  agency  promotes  acceptance by the
            others, thus greatly reducing the length of the business development
            cycle,

      -     acceptance  by  recognized  experts in the  international  community
            gives  WorldWater  an  implied  endorsement  that  helps in  private
            marketing, and

      -     the  international   development   agencies/NGO's  have  substantial
            available monies for water supply systems and pay dependably.

            Marketing  to the public  sector is being done  principally  through
Company  personnel,  consultants and sales  representatives,  as well as through
information articles in relevant  international  newsletters and magazines (such
as Solar journals, UNICEF, USAID and World Bank publications),  participation in
international  trade  shows and  conferences,  targeted  mailings,  and  journal
advertising. These methods are used to contact government agencies in developing
countries  that  have a program  to  purchase  the  pumps and the  international
assistance agencies that fund these programs. CEO Quentin Kelly and WorldWater's
executives and consultants have extensive contacts with government  officials in
many  countries  that are  potential  customers  and with the highest  executive
levels  in many key  international  assistance  agencies.  These  contacts  have
enabled  demonstrations  of the  Company's  products to  appropriate  officials,
resulting in agreements and sales in its target countries.


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                           FORM 10-KSB ANNUAL REPORT

      The  Company  is  actively  working to broaden  its  sources  and means by
offering multi-year financing to buyers of WorldWater products. The Company thus
maintains contacts with  International  Federal and State agencies including the
World Bank, U.S.  Export/Import Bank (Exim), the Small Business  Administration,
New Jersey's Economic Development Agency, as well as various international banks
and forfaiting  companies and other potential sources to obtain lines of credit,
credit guarantees and bid guarantees.

(f)   Research and Development

      Research and Development  expenditures  were $386,936 and $167,563 in 1999
and 1998,  respectively.  In addition to its  present  pumps that have  delivery
capacities between 5 and 2200 gallons per minute, WorldWater has other water and
solar products in various stages of research and development.

      For example,  the Company has developed a prototype water  diagnostics kit
called the AquaTester(TM) that can determine if water is contaminated by placing
a small quantity in the AquaTester(TM) incubator, which can be operated by solar
power in the field or by other  electrical  input.  After 24 hours, the user can
tell if the water is polluted by certain color  changes.  The Company is working
in collaboration  with IDEXX  Laboratories of Maine, which produces the chemical
reagents used in the AquaTester(TM) process.

      The  Company  is  also  exploring  the   possibilities  of  combining  its
AquaSafe(TM) and AquaTester(TM) systems with various water purification units in
those areas where clean water is otherwise difficult to find.

      The Company has been awarded cost sharing grants with a NJ state agency in
collaboration  with Rutgers University and has developed a breakthrough in solar
powered "drip irrigation"  systems.  The Company expects to continue development
research in this area including using "brackish" water for irrigation.

      The  Company  has  developed  a new and  improved  proprietary  electronic
control  subsystem  for its  AquaDrive(TM)  controller.  This new  subsystem  is
simpler  and more  rugged in its  operation  and the  Company  has filed for new
patents on this device.

(g)   Manufacturing

      Sub-contractors  currently  manufacture  parts  of  the  AquaSafe(TM)  and
AquaMax  2200(TM)  systems in the United  States.  WorldWater  will  continue to
source materials worldwide, based on quality and cost considerations.

      In the future,  when justified by marketing and  production  requirements,
WorldWater  intends to locate  AquaSafe(TM)  and other  product  assembly  sites
overseas.   Joint  venture   discussions  include  proposed  production  in  the
Philippines  and Pakistan (solar panel  manufacturing  facilities for production
and sales of solar  products).  Such  projects  will  leverage  the  capacity of
WorldWater to obtain local  permits,  finance  production  and better market its
products in many of the world's largest and most promising potential markets.

      Other prospective joint venture partners are seeking technical  assistance
from WorldWater for developing local manufacturing  capability,  particularly to
produce  the  solar  panels,   with  WorldWater   shipping  in  the  proprietary
electronics.

(h)   Patents

      WorldWater has filed and been issued patents and continuations-in-part for
its newly developed  AquaSafe(TM) and AquaMax 2200(TM)  electronics  systems and
has filed for  protections  of its patents in certain key countries  outside the
United States.  Thomas  McNulty,  Sr. and Doug Williams of WorldWater  staff and
Quentin T. Kelly, Chairman and CEO, together with Princeton University engineers
have been issued patents, all of which are assigned to WorldWater.


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(i)   Source and Availability of Raw Materials

      The Company's solar modules are composed of silicon and other photovoltaic
materials.  The chief suppliers of solar modules to WorldWater are Siemens Solar
(see Subsequent Events), BP Solar, Evergreen,  AstroPower and Solarex, all based
in the US.

(j)   Competitive Conditions Affecting the Company

      WorldWater  Corp.  products  compete  with  both  conventional  and  solar
technologies that bring power to remote areas. The main competitive technologies
are diesel or gasoline  generators and electrical grid extension,  which is very
expensive.   WorldWater's   proprietary   technology   permits   unique  use  of
"off-the-shelf"   Alternate  Current  (AC)  pumps,  opening  a  whole  range  of
previously  unavailable  options  for solar  power.  These 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  systems  currently  available use less reliable and durable Direct
Current  (DC) pumps or custom AC pumps  which are more  costly  and not  readily
available in most developing countries.

      The principal competitive factors affecting the Company's products are the
upfront cost of a solar pump system compared to a less expensive  diesel option.
However studies by GTZ (West German counterpart of USAID) indicate that PV has a
simple  payback period of 18 months for remote power  applications.  Electricity
costs per kilowatt-hour for PV systems now compare favorably with diesel and are
substantially less expensive for water pumping over 3-5 years.

      The Company  believes that it has a strong lead in the markets in which it
operates.  In many regions of the world competitive  products are not available.
In  those  markets  where  competition  exists,  the most  commonly  encountered
competitor is Grundfos A/S of Denmark,  a manufacturer of a large range of water
pumps including a solar pump line. However, the Company product line tends to be
10%-20% less expensive than the  competition  and a Grundfos  specialty motor is
required to run the Grundfos system. WorldWater systems can operate with a broad
line of motors.

(k)   Subsidiaries
      100% wholly owned by WorldWater Corp. -
      WorldWater, Inc
      WorldWater Holdings Inc.
      WorldWater East Africa Ltd.
      WorldWater Pakistan (Pvt.), 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 US Foreign Corrupt Practices Act.

(m)   Employees

      On December 31, 1999, the Company  employed  fifteen people on a full-time
basis.  The  Company  also  hires  consultants  on an  as-needed  basis  and has
strategic  alliances with two water consulting  companies,  the  hydrogeological
firm of Vincent Uhl  Associates and Morehouse  Engineering,  specialist in water
pumping and distribution  and waste water treatment.  WorldWater is developing a
worldwide  capability for installing and  maintaining  its line of products.  In
some cases this involves additional consulting contracts to evaluate local water
usage requirements,  to find the needed water sources, drill the necessary wells
and supply the desired water storage facilities.  It may also involve training a
local   installation   and  servicing  team  and  supplying   assistance  on  an
as-requested basis.


                                       8
<PAGE>

                           FORM 10-KSB ANNUAL REPORT

(n)   The Year 2000.

      The  Company  did not  experience  any  problems  relating  to  Year  2000
compliance.

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 in Pennington,  New
Jersey. This facility is leased under an operating lease expiring June 14, 2002.
The Company also uses a second facility in Hopewell, New Jersey for conferences,
meetings and  demonstrations  of its products.  This facility is leased from the
Company's CEO on a month-to-month basis (See Item 12).

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,  including  actions with
respect to contracts  and  intellectual  property.  The company does not believe
that any current action will have a material  effect on the company's  business,
financial condition or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

None


                                       9
<PAGE>

                           FORM 10-KSB ANNUAL REPORT

PART ll.

Item 5.  Market for Common Equity and Related Stockholder Matters

      WorldWater  Corp.'s  common  stock  is  traded  on the  NASDAQ  Electronic
Bulletin Board and is listed on the National  Association of Securities  Dealers
Automated  Quotation System (NASDAQ) under the stock symbol "WWAT". High and low
bid quotations are listed below:

For the year ended December 31, 1999

                                                        HIGH          LOW

First Quarter................................          $0.50         $0.14
Second Quarter...............................          $0.81         $0.30
Third Quarter................................          $0.48         $0.05
Fourth Quarter...............................          $0.50         $0.15

      As of April 12,  2000,  the  common  stock  price was $1.00 and there were
approximately  768  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.

      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.

SALES OF RESTRICTED SECURITIES DURING THE FOURTH QUARTER 1999

1. Equity Investment

      Joseph  Marzilli  invested  $50,000 in the Company by  purchasing  200,000
shares at $0.25 per share.

      Thomas Clark invested $200,000 in the Company by purchasing 571,429 shares
at $0.35 per share.

2. Conversion to shares

      One  individual  holding a loan totaling  $25,000  principal  converted to
100,000 shares at $0.25 per share.

      One individual converted loan interest to 15,000 shares.

3. Services

      3,843 shares were issued to Rolf Haefeli for prior services rendered.


                                       10
<PAGE>

                           FORM 10-KSB ANNUAL REPORT

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 states 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)  risks  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.

Background

      The Company designs,  develops and markets proprietary technology relating
to solar water power,  including  solar power products and  international  water
management  consulting.  The Company's primary products are cost effective power
systems driven entirely by solar energy,  such as proprietary  water pumping and
solar electric systems. The Company's primary customers are developing countries
that require non-traditional means of fulfilling their energy and water needs.

Results of Operations

Year Ended December 31, 1999 ("Fiscal 1999")
Compared to December 31, 1998 ("Fiscal 1998")

      The net revenues  increased to $526,924 from $45,451 in 1999 primarily due
to  technology  grants  received  from the New Jersey  Commission on Science and
Technology  for  $249,967  and the U.S.  Trade  Development  Agency for $123,560
recognized in 1999  ($235,470  total  granted).  Although  several solar powered
electric  systems  were sold in 1999,  the majority of sales effort was targeted
towards  large  contracts on the order of $500,000 to $10 million (see Item 1(a)
and (c) and "Net Loss"  paragraph  below.)  The  Company is  involved in ongoing
negotiations pending contracts with several developing countries.

      Cost of sales for the year was  $251,717,  reflecting  the fixed  overhead
required selling into an international market.

      Research  and  Development  expenses  were  $386,936  in 1999  compared to
$167,563  in 1998,  an  increase  of 57%,  reflecting  a  continuing  effort  to
introduce technological improvements into the Company's products.

      Marketing,  General and  Administrative  expenses were $1,113,871 in 1999,
compared to $1,055,982 in 1998, an increase of 5%. The slight increase primarily
resulted from increased overseas travel expenses.

      The Net Loss of $787,318 resulted  partially from the marketing process of
proposing,   presenting  and  demonstrating  the  Company's  new  technology  to
appropriate officials of developing countries and the resultant lag time between
agreements  and  annual  budgeting  (See  Item 1 (a)  and  (c)).  The  Company's


                                       11
<PAGE>

                           FORM 10-KSB ANNUAL REPORT

marketing efforts with its successful feasibility studies was not able to secure
annual  budgeting  for  large  purchases  in time  for  the  1999  fiscal  year.
Management is focusing its efforts on those countries among the emerging nations
which can assume financing  arrangements offered through the Company's financing
programs.

Liquidity and Capital Resources

      Net cash provided by all activities in 1999 was $191,138 compared with net
cash used by  operations  of  $56,998  in 1998.  The net cash used in  operating
activities during 1999 was $834,504 compared to $1,254,290 in 1998. The net loss
experienced in 1999 was the primary  reason for the  consumption of cash used in
operating  activities.  Inventory  levels  decreased  $15,932 in 1999.  Accounts
receivable increased $162,061.

      The  Company's  auditors have  alleviated  the going  concern.  Management
believes  that  prospects  for winning one or more large  contracts  in 2000 are
favorable. The Company has also encouraged several debt holders to convert their
notes into common stock which amounted to $902,900 of debt and accrued  interest
converted in the 1st quarter of 2000. A 7% Convertible Preferred Stock Placement
has also successfully  earned a $999,950 investment which occurred in March 2000
with $1  million  anticipated  to  follow  in the  second  quarter  of 2000 (see
Subsequent  Events).  The  Company  was also  able to raise  $185,000  through a
private  equity  placement  and an  additional  $100,000  from the  exercise  of
Warrants.  All of these actions combined to a positive net worth as of March 31,
2000.

      The Company paid no federal or state  income taxes in 1999,  and ended the
year with a federal net operating loss carryforward of approximately $7,663,600.

      During  1999 the  Company's  application  to the New  Jersey  Division  of
Taxation and the New Jersey Economic Development  Authority to sell its State of
New Jersey Corporate Net Operating Losses was approved.  The new law was enacted
January 1, 1999 and allows emerging  technology  companies  involved in research
and  development  the  opportunity  to sell their state loss  carryforwards  and
research and  development  credits to profitable  companies in the state for not
less  than 75% of their  net tax  value.  The  Company  was able to sell its Net
Operating Losses for $475,285.

      The Company also  continues to encourage  its Warrant  holders to exercise
their  warrants,  which  provide an efficient and  inexpensive  means of raising
capital.

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 F-1.

Item 8. Changes  in  and  Disagreements   with  Accountants  on  Accounting  and
        Financial Disclosure

Not Applicable.

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of the Exchange Act.

Name of Executive Officer           Age            Office

Quentin T. Kelly                    65             Chairman & CEO
John A. Pell                        74             President
Dr. Anand Rangarajan                50             Executive Vice President
Peter I. Ferguson                   56             Vice President
Terri Lyn Harris                    33             Vice President-Controller
Steven Salvo, Esq.                  50             Secretary


                                       12
<PAGE>

                           FORM 10-KSB ANNUAL REPORT

Name of Director                    Age            Term of Office
                                                   Commenced

Quentin T. Kelly                    65                 1984
Rolf Haefeli                        34                 1997
Dr. Russell Sturzebecker            82                 1997
Dr. Martin Beyer                    67                 1995
Joseph Cygler                       64                 1993
Dr. Davinder Sethi                  50                 1999

Quentin T. Kelly founded  WorldWater in 1984 as a consulting and R&D Company and
has been  Chairman  and CEO since then.  Mr.  Kelly was  previously  Director of
Information  Services and  Assistant to the President of  Westinghouse  Electric
Corporation from 1965 to 1971 and subsequently  became President of Kelly-Jordan
Enterprises,  Inc., a publicly-held  leisure products Company from 1971 to 1975,
and  then   President  of  Pressurized   Products,   Inc.,   manufacturers   and
international  marketers of specialized water systems and products, from 1976 to
1984.  Mr.  Kelly is an alumnus of Kenyon  College and holds three U.S.  patents
relating  to water  systems.  He has many  years'  experience  in  international
business  relating  to water and power  needs in the  developing  world.  He has
worked on water supply and solar power projects with  governments and several of
the international  assistance agencies (USAID, UNDP and UNICEF among others) and
more than a dozen governments and private contractors throughout the world.

John A. Pell,  President & Chief  Operating  Officer,  was a senior officer with
Chase  Manhattan  Bank in New York and London  where he was in charge of African
banking  activities  for U.S.  Multinationals.  He was  Managing  Director  of a
European Bank Consortium and President of a trade finance  banking  organization
in Hong Kong. He is a graduate of Princeton  University  and the Wharton  School
(MBA) of the University of Pennsylvania.

Dr.  Anand  Rangarajan,  Executive  Vice  President,  started  his career at MIT
(Massachusetts  Institute of Technology) Lincoln  Laboratory.  He is a solar and
water  pump  specialist  with 20 years  experience  in all  aspects of the solar
electric  business and has  pioneered  the  development  of several  proprietary
systems, products and markets which have been installed in over 20 countries. He
has his Ph.D. in Engineering  from  University of Wisconsin and holds patents in
solar energy and pumping systems. He has published technical papers and has been
a featured speaker at National and International conferences.

Peter I. Ferguson, Vice President of Administration,  joined WorldWater in 1989.
He previously  served as a Vice President and general  management  executive and
accountant  for companies in New York and New Jersey.  He graduated from Rutgers
University   in   Accounting   and   Management.

Terri Lyn Harris, Vice  President-Controller,  joined WorldWater in 1999 after 3
years  of  consulting  to the  Company.  She  spent  the  last 10  years  as the
Controller for a publicly traded international manufacturing company. Ms. Harris
is a graduate of Ursinus College and holds an MBA from Rider University.

Stephen A. Salvo, Esq. Is a founder and partner of Salvo,  Russell,  and Fichter
specializing in Securities and Exchange  Commission law and is the Company's SEC
counsel.

Rolf Haefeli, a Director of WorldWater, is President of Haefeli Asset Management
based in Switzerland,  principal  investors in the Company.  He is a graduate in
Environmental Economics from the University of Zurich.

Dr.   Russell   L.   Sturzebecker,    a   Director   of   WorldWater   and   its
Consultant-International  Health,  is a retired Director of Health and Education
of West  Chester  University  (Pennsylvania).  He is an author and  publisher of
histories  of World War  II-Pacific  Theater and of the Olympic  Games.  He is a
retired  Colonel,  US Air Force,  who accompanied  General  Douglas  MacArthur's
troops in the  invasion of the  Philippines  and is a close  associate of former
President Fidel V. Ramos of the Philippines.


                                       13
<PAGE>

                           FORM 10-KSB ANNUAL REPORT

Dr. Martin G. Beyer, a Director of WorldWater and its Consultant - International
Marketing,  was  Secretary-General  of the  Global  Consultation  on  Water  and
Sanitation,  sponsored by the United Nations  Development  Program and the World
Bank,  held in New Delhi,  India in 1990 and attended by over 600 delegates from
115  countries.  Previously,  Dr. Beyer was Senior  Advisor for Water Supply and
Sanitation for UNICEF, Chairman of the United Nations Intersecretariat Group for
Water  Resources,  Chairman of the Advisory Panel to the UNDP/World  Bank global
project for testing and developing of hand pumps,  and Deputy Regional  Director
for UNICEF in the  Americas.  Dr. Beyer has a Ph.D.  degree in Economic  Geology
from the  University of Stockholm and speaks ten  languages,  including  French,
Spanish, German, Italian and Portuguese. He resides in Princeton, New Jersey. He
was an Advisor to the Company from 1991 and became a Director in 1995.

Joseph  Cygler has been a Director  of  WorldWater  since  January of 1984 and a
former Vice  President of Marketing  and Executive  Vice-President.  He has been
Chief Executive Officer of the CE&O Group, an organization  assisting  companies
in  operations  management,  since  1986.  Previously  he  was an  executive  at
Kepner-Tregoe,  Inc., an  international  business  consulting firm, an executive
with  Honeywell  Information  Systems,  and  a  marketing   representative  with
International  Business  Machines.  Mr. Cygler has a BS in Engineering  from the
U.S. Military Academy at West Point.

Dr.  Davinder  Sethi,  is an  independent  advisor and investor in the fields of
information   technologies  and  finance,  with  experience  spanning  academia,
research, business and investment banking. Previously, he served as Director and
Senior  Advisor  to  Barclays  de  Zoete  Wedd,  advising  global  providers  of
information technologies.  He has lived and worked in nine overseas countries in
seventeen years in Asia, Latin America and Europe.

Item 10.  Executive Compensation

Quentin T. Kelly,  President  and CEO,  had a contract  for an annual  salary of
$42,000 from 1995-1997. However Mr. Kelly did not receive his full salary during
the year's 1994-1999 and has accrued  salary payments of $76,750  outstanding at
December 31, 1999.  He did not receive any other  compensation  or stock options
during the years  1995-1997 but did receive  Incentive  Stock  Options  totaling
37,975 shares for deferred salary in 1997. No Company  executive earned a salary
plus bonus in excess of $60,000.

<TABLE>
<CAPTION>

Name and Principal Position        Year   Salary     Bonus    Other Annual       All Other
                                                              Compensation
<S>                                <C>   <C>          <C>          <C>               <C>
Quentin T. Kelly                   1999  $42,000      $0           $0                $0
                                   1998  $42,000      $0           $0                $0
                                   1997  $42,000      $0           $0                $0
</TABLE>

Item 11.  Security Ownership of certain Beneficial Owners and Management

The  following  tables set forth the number and  percentage of the shares of the
registrant's Common stock owned as of April 14, 2000 by all persons known to the
registrant who own more than 5% of the outstanding number of such shares, by all
directors of the registrant, and by all officers and directors of the registrant
as a group. Unless otherwise indicated, each of the stockholders has sole voting
and investment power with respect to the shares beneficially owned.


                                       14
<PAGE>

                           FORM 10-KSB ANNUAL REPORT

Common Stock
------------
                                        Number of Shares               Percent
Name                                    Beneficially Owned             of Class
----                                    ------------------             --------

Quentin T. Kelly                        2,800,000                      10.3%
George S. Mennen Rev. Trust             1,583,333                       5.8%
  William G. Mennen IV, Trustee
Rolf Haefeli                              247,530                       1.0%
Joseph Cygler                             550,000                       2.0%
Peter Ferguson                            162,000                       **
Dr. Martin Beyer                          193,000                       **

Dr. Russell Sturzebecker                  136,141                       **

All Directors, executive officers
as a group (6 persons)                  5,672,004                      19.1%

** Less than 1%

(1)  For purposes of this table,  a person or group of persons is deemed to have
     "beneficial  ownership"  of any shares of Common Stock that such person has
     the right to acquire  within 60 days of April 14,  2000.  For  purposes  of
     computing the percentage of outstanding shares of Common Stock held by each
     person or group of persons named above,  any security  which such person or
     persons has or have the right to acquire within such a date is deemed to be
     outstanding  but is  not  deemed  to be  outstanding  for  the  purpose  of
     computing the percentage  ownership of any other person.  Except  community
     property laws, the Company  believes based on information  supplied by such
     persons,  that the  persons  named  in this  table  have  sole  voting  and
     investment  power with  respect to all  shares of Common  Stock  which they
     beneficially own.


Item 12.  Certain Relationships and Related Transactions

Included in notes payable and long-term  debt at December 31, 1999 and 1998, are
amounts  payable  to  employees,  directors  and their  immediate  relatives  as
follows:

                                                     1999              1998
                                                     ----              ----

      Directors                                 $   4,500         $ 109,400
      Employees                                   110,645            35,000
      Immediate relatives                          17,000            38,000
                                                ---------         ---------
          Total                                 $ 132,145         $ 182,400
                                                =========         =========

Directors notes payable  declined  $104,900  primarily due to conversion of such
debt into common stock.

The Company  occupied  space in 1999 and 1998 that is owned by its  Chairman/CEO
and  leased  this  space on a month  to  month  basis.  The  amount  paid to the
Chairman/CEO amounted to $30,000 in 1999 and 1998.


                                       15
<PAGE>

                           FORM 10-KSB ANNUAL REPORT

Part IV

Item 13. Exhibits List and Reports on Form 8-K

      None

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 14, 2000
   ---------------------
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
------------------------     Officer                          April 14, 2000
Quentin T. Kelly

/s/ John A. Pell             President/Chief Operating        April 14, 2000
------------------------     Officer
John A. Pell

/s/ Joseph Cygler            Director                         April 14, 2000
------------------------
Joseph Cygler

/s/ Martin Beyer             Director                         April 14, 2000
------------------------
Martin Beyer

/s/ Russell Sturzebecker     Director                         April 14, 2000
------------------------
Russell Sturzebecker

/s/ Rolf Haefeli             Director                         April 14, 2000
------------------------
Rolf Haefeli


                                       16
<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                        Consolidated Financial Statements

                           December 31, 1999 and 1998



<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                           December 31, 1999 and 1998

                                Table of Contents

                                                                       Page
                                                                       ----

Independent Auditors' Report                                           F-2

Financial Statements:

    Consolidated Balance Sheet                                         F-3

    Consolidated Statement of Operations                               F-4

    Consolidated Statement of Stockholders' Deficiency                 F-5

    Consolidated Statement of Cash Flows                               F-6

    Notes to Consolidated Financial Statements                      F-7 - F-22


                                       F-1

<PAGE>

                          Independent Auditors' Report

To The Board of Directors and Shareholders,
WorldWater Corp:

We have audited the accompanying  consolidated balance sheet of WorldWater Corp.
and  subsidiaries as of December 31, 1999 and 1998 and the related  consolidated
statements of operations,  stockholders' deficiency and cash flows for the years
then ended.  These consolidated  financial  statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  consolidated  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 our audit provides 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 of WorldWater Corp. and
subsidiaries  as of  December  31,  1999  and  1998,  and the  results  of their
operations  and their cash flows for the years  then  ended in  conformity  with
generally accepted accounting principles.


DeAngelis & Higgins, L.L.C.
Cranbury, New Jersey
April 11, 2000


                                       F-2
<PAGE>


                        WORLDWATER CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>

       Assets                                                       1999           1998
                                                                    ----           ----
<S>                                                            <C>             <C>
Current Assets:
    Cash                                                       $   195,300     $     4,162
    Accounts receivable, net of allowance for
        doubtful accounts of $-0- in 1999 and 1998                 162,061              --
    Marketable securities available for sale                            --          11,875
    Inventory                                                       81,537          97,469
    Prepaid expenses                                                   500           5,335
                                                               -----------     -----------
       Total Current Assets                                        439,398         118,841
                                                               -----------     -----------
    Equipment and leasehold improvements, Net                       37,787          48,268
    Deposits                                                         8,384           8,384
                                                               -----------     -----------
       Total Assets                                            $   485,569     $   175,493
                                                               ===========     ===========

       Liabilities and Stockholders' Deficiency

Current Liabilities:
    Notes payable                                              $   126,181     $   136,181
    Notes payable, related parties                                 112,145         237,400
    Current maturities of long-term debt                           757,736         897,150
    Current maturities of long-term debt, related parties           20,000          20,000
    Accounts payable                                               362,966         371,857
    Accrued interest                                               407,541         332,829
    Accrued salaries                                               191,500         205,200
    Other accrued expenses                                          95,750          53,450
                                                               -----------     -----------
       Total Current Liabilities                                 2,073,819       2,254,067
                                                               -----------     -----------
    Long-term debt                                                 200,000              --
                                                               -----------     -----------
       Total Liabilities                                         2,273,819       2,254,067
                                                               -----------     -----------
Stockholders' Deficiency:
    Common stock, $.001 par value; authorized 50,000,000
       and 30,000,000 shares at December 31, 1999 and 1998;
       issued and outstanding  27,125,854 and 21,984,904
       shares at December 31, 1999 and 1998, respectively           27,126          21,985
    Additional paid-in capital                                   7,628,467       6,576,591
    Unrealized loss on available for sale securities                    --         (20,625)
    Accumulated deficit                                         (9,443,843)     (8,656,525)
                                                               -----------     -----------
       Total Stockholders' Deficiency                           (1,788,250)     (2,078,574)
                                                               -----------     -----------
       Total Liabilities and Stockholders' Defiency            $   485,569     $   175,493
                                                               ===========     ===========
</TABLE>

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


                                       F-3

<PAGE>


                        WORLDWATER CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                   FOR THE YEARS ENDED DECEMBER 1999 AND 1998

<TABLE>
<CAPTION>

                                                            1999            1998
                                                            ----            ----
<S>                                                    <C>              <C>
Revenue:
    Equipment sales                                    $    153,397     $     45,451
    Technology grant                                        249,967               --
    Service                                                 123,560               --
                                                       ------------     ------------
        Total Revenue                                       526,924           45,451
                                                       ------------     ------------
Cost of Goods Sold                                          251,717          183,921
                                                       ------------     ------------
Gross Profit                                                275,207         (138,470)
                                                       ------------     ------------
Operating Expenses:
    Research and development expense                        386,936          167,563
    Marketing, general and administrative expenses        1,113,871        1,055,982
                                                       ------------     ------------
        Total Expenses                                    1,500,807        1,223,545
                                                       ------------     ------------
Loss from Operations                                     (1,225,600)      (1,362,015)
Other Expense (Income)
    Interest expense                                        108,058          162,402
    Loss on sale of marketable securities                    32,500           50,000
    Interest income                                            (731)          (1,575)
    Other                                                   (52,824)          (6,000)
                                                       ------------     ------------
        Total Other Expense (Income), Net                    87,003          204,827
                                                       ------------     ------------
Net loss before income taxes and extraordinary item      (1,312,603)      (1,566,842)
Benefit for income taxes                                    475,285               --
                                                       ------------     ------------
Net loss before extraordinary item                         (837,318)      (1,566,842)
                                                       ------------     ------------
Extraordinary Item
   Gain on the extinguishment of debt                        50,000               --
                                                       ------------     ------------

Net Loss Applicable to Common Shareholders             $   (787,318)    $ (1,566,842)
                                                       ============     ============

Net Loss Applicable per Common Share:
    Basic                                              $      (0.03)    $      (0.08)
                                                       ============     ============
    Diluted                                            $      (0.03)    $      (0.08)
                                                       ============     ============

Shares used in Per Share Calculation:
    Basic                                                25,703,423       19,126,684
                                                       ============     ============
    Diluted                                              25,703,423       19,126,684
                                                       ============     ============
</TABLE>

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


                                       F-4

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>

                                                                              Accumulated
                                                                Additional       Other
                                         Common Stock            Paid-In     Comprehensive    Accumulated
                                   Shares         Par Value      Capital     Income (Loss)      Deficit          Total
                                   ------         ---------      -------     -------------      -------          -----
<S>                              <C>                <C>         <C>          <C>              <C>             <C>
Balance, December 31, 1997       15,288,502         15,289      4,229,884             --      (7,010,908)     (2,765,735)
Issuance of common stock
  for cash                        2,048,949          2,049        626,412             --              --         628,461
Issuance of common stock
  for warrants exercised            827,500            827        323,378             --              --         324,205
Debt and accrued interest
  converted to common stock       3,329,073          3,329      1,280,111             --              --       1,283,440
Issuance of common stock
  for services                       59,630             60         11,862             --              --          11,922
Issuance of common stock
  for settlement of asserted
  claims                            431,250            431         78,344             --         (78,775)             --
Imputed interest                     26,600             --         26,600
Net loss                                 --             --             --        (20,625)     (1,566,842)     (1,587,467)
                                -----------    -----------    -----------    -----------     -----------     -----------
Balance, December 31, 1998       21,984,904    $    21,985    $ 6,576,591    $   (20,625)    $(8,656,525)    $(2,078,574)
Issuance of common stock
  for cash                        3,346,806          3,347        721,667             --              --         725,014
Issuance of common stock
  for warrants exercised            284,000            284         54,816             --              --          55,100
Debt and accrued interest
  converted to common stock       1,357,397          1,357        211,043             --              --         212,400
Issuance of common stock
  for settlement of asserted
  claims                             15,000             15          5,985             --              --           6,000
Contributed services                     --             --         20,000             --              --          20,000
Issuance of common stock
  for services                      137,747            138         38,365             --              --          38,503
Net loss                                 --             --             --         20,625        (787,318)       (766,693)
                                -----------    -----------    -----------    -----------     -----------     -----------
Balance, December 31, 1999       27,125,854    $    27,126    $ 7,628,467    $        --     $(9,443,843)    $(1,788,250)
                                ===========    ===========    ===========    ===========     ===========     ===========
</TABLE>

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


                                       F-5

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>

                                                                    1999            1998
                                                                    ----            ----
<S>                                                             <C>             <C>
Cash Flows from Operating Activities:
    Net loss                                                    $  (787,318)    $(1,566,842)
    Adjustments to reconcile net loss to
       net cash used in operating activities:
           Depreciation                                              17,187          18,376
           Loss on marketable security                               32,500          50,000
           Gain on extinguishment of debt                           (50,000)             --
           Changes in assets and liabilities:
               Accounts receivable                                 (162,061)         60,529
               Inventory                                             15,932         (13,611)
               Prepaid expenses                                       4,835          (2,708)
               Accounts payable and accrued expenses                 33,409          56,883
               Accrued interest                                      74,712         107,133
               Accrued salaries                                     (13,700)         35,950
                                                                -----------     -----------
                   Net Cash Used in Operating Activities           (834,504)     (1,254,290)
                                                                -----------     -----------

Cash Flows from Investing Activities:
    Proceeds on sale of marketable securities and investment             --         123,973
    Purchase of equipment and leasehold improvements                 (6,706)        (18,769)
                                                                -----------     -----------
                   Net Cash Used in Investing Activities             (6,706)        105,204
                                                                -----------     -----------

Cash Flows from Financing Activities:
    Proceeds from issuance of long-term debt                        200,000          57,500
    Payments on long-term debt                                      (89,414)       (176,000)
    Proceeds from issuance of notes payable                         400,345         269,400
    Payments on notes payable                                      (535,600)        (50,000)
    Proceeds from issuance of stock                               1,057,017         991,188
                                                                -----------     -----------
                   Net Cash Provided by Financing Activities      1,032,348       1,092,088
                                                                -----------     -----------

Net Increase (Decrease) in Cash                                     191,138         (56,998)
Cash at Beginning of Year                                             4,162          61,160
                                                                -----------     -----------

Cash at End of Year                                             $   195,300     $     4,162
                                                                ===========     ===========
</TABLE>

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


                                       F-6

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(1)   Formation of the Company

      WorldWater  Corp.  ("Company") was  incorporated in the State of Nevada on
      April 3, 1985 under the name Golden Beverage Company ("Golden").  In April
      1997, the Company completed a reverse acquisition with WorldWater, Inc., a
      Delaware  corporation  formed  in  January  1984 and  changed  its name to
      WorldWater Corp. in June 1997. Pursuant to the acquisition agreement,  the
      Company issued on a  share-for-share  basis 8,141,126  post-reverse  split
      shares of Golden $0.001 par value voting common stock for 8,141,126 shares
      of WorldWater,  Inc.  $0.001 par value voting common stock,  which equaled
      eighty percent (80%) of all WorldWater, Inc. issued and outstanding common
      stock. The remaining  shareholders were offered one share of the Company's
      common  stock for one share of  WorldWater,  Inc.'s  common  stock and are
      reflected as issued and outstanding  common stock of the Company.  Holders
      of approximately  ninety-one  percent (91%) of WorldWaters,  Inc.'s common
      stock have agreed to the stock exchange and tendered their shares.

      Prior to the reverse merger transaction described above, the Company was a
      non-operating  publicly held company.  As of the closing date,  all assets
      and  liabilities  of  Golden  Beverage  Company  were  transferred  to  an
      unrelated  entity.  Therefore,  the reverse  acquisition had the effect of
      transferring  the assets and  liabilities  of  WorldWater,  Inc.  into the
      publicly held entity. In consideration  for this, the former  shareholders
      of Golden Beverage Company received 113,501 shares of the Company's common
      stock.

(2)   Going Concern Alleviated

      The financial  statements for the year ended December 31, 1998,  expressed
      substantial  doubt about the ability of the  Corporation  to continue as a
      going concern.  These concerns were based on the Company's working capital
      deficit,  default on loan agreements,  stockholders' deficiency and a lack
      of  adequate  sales.  Management  has worked  with debt  holders,  and has
      converted approximately $903,000 of debt and accrued interest into equity,
      has raised $999,950 through the private sale of preferred stock,  $185,000
      through a private  equity  placement and an  additional  $100,000 from the
      exercise of Warrants. These actions have alleviated these concerns.

(3)   Summary of Significant Accounting Policies

      Principles of Consolidation

      The consolidated  financial statements include the accounts of the Company
      and its controlled subsidiary companies.


                                       F-7

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(3)   Summary of Significant Accounting Policies (continued)

      Description of the Business

      The Company is 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's  primary  customers  are  developing
      countries,  which require non-traditional means of fulfilling their energy
      and water needs.

      Use of Estimates

      The  preparation  of financial  statements  in conformity  with  generally
      accepted  accounting  principles requires management to make estimates and
      assumptions  that affect the amounts that are reported in the consolidated
      financial   statements  and  accompanying   disclosures.   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.

      Revenue Recognition

      The Company  recognizes  revenue  when it is  realizable  and earned.  The
      Company reduces revenue for estimated customer returns and allowances. The
      following  are the specific  revenue  policies for each major  category of
      revenue.

      Equipment

      Revenue from equipment sales is recognized when the product is shipped and
      title has passed.

      Service

      Revenue from time and material  service  contracts  is  recognized  as the
      services  are  provided.   Revenue  from  fixed  price  long-term  service
      contracts is recognized  over the contract term based on the percentage of
      service  that are  provided  during  the  period  compared  with the total
      estimated  services to be  provided  over the entire  contract.  Losses on
      fixed price  contracts are recognized  during the period in which the loss
      first becomes apparent. Revenue in excess of billings on service contracts
      is  recorded  as unbilled  receivables  and is  included in trade  account
      receivable.  Billings in excess of revenue that is  recognized  on service
      contracts  are  recorded  as  deferred  income  until  the  above  revenue
      recognition criteria are met.


                                       F-8

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(3)   Summary of Significant Accounting Policies (continued)

      Revenue Recognition (continued)

      Technology Grants

      Technology grants made on the basis of entitlement periods are recorded as
      revenue when entitlement occurs.

      Income Taxes

      Income tax expense  (benefit) is based on reported  income  (loss)  before
      income  taxes.  Deferred  income  taxes  (benefit)  reflect  the effect of
      temporary  differences  between assets and liabilities that are recognized
      for financial  purposes and the amounts that are recognized for income tax
      purposes.  In accordance with Statement of Financial  Accounting Standards
      (SFAS) No. 109  "Accounting  for Income  Taxes" these  deferred  taxes are
      measured by applying current enacted tax laws.

      Cash Equivalents

      All, highly-liquid  instruments with a maturity at the time of acquisition
      of three months or less are carried at fair value and are considered to be
      cash equivalents.

      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  and  are
      depreciated  for  financial  reporting  purposes  using the  straight-line
      method. Depreciation for income tax purposes is computed using accelerated
      methods.  The  principal  useful  lives  are:  computers  and  information
      equipment,  5 years;  office  furniture,  vehicles,  and test and assembly
      fixtures, 5 to 7 years; leasehold  improvements,  7 years. 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 charged  against income as
      incurred.  Expenditures which significantly increase asset value or extend
      useful lives are capitalized.


                                       F-9

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(3)   Summary of Significant Accounting Policies (continued)

      Research and Development Costs

      Research and  development  costs consist of expenses  associated  with the
      basic and applied  research in the sciences and engineering and the design
      and  development  of prototypes and  processes.  Research and  development
      costs are charged to operations when incurred.

      Long-Lived Assets

      Long-lived  assets  are  comprised  of  equipment.  Long-lived  assets are
      reviewed  for  impairment  whenever  events or  changes  in  circumstances
      indicate that the carrying amount of the asset may not be recoverable.  An
      estimate  of  undiscounted  future  cash  flows  produced  by the asset is
      compared to the carrying amount to determine whether impairment exists.

      Common Stock

      Common stock refers to the $0.001 par value capital stock as designated in
      the Company's Certificate of Incorporation.

      Net Loss Per Common Share

      Basic  earnings  (net) per  share is based  upon  weighted-average  common
      shares  outstanding.  Dilutive  earnings  per share is computed  using the
      weighted-average  common shares outstanding plus any potentially  dilutive
      securities  including  stock  options,  warrants,  and  convertible  debt.
      Options,   warrants  and  convertible   debt  were  not  included  in  the
      computation  of diluted  net loss per common  share  because the effect in
      years with a net loss are antidilutive.

      Reclassification

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

(4)   Accounting Changes

      Standards implemented

      Effective  January 1, 1998, the company  adopted SFAS No. 130,  "Reporting
      Comprehensive  Income"  which  establishes  standards  for  reporting  and
      displaying in a full set of general-purpose financial statements the gains
      and losses not affecting  retained earnings.  The disclosures  required by
      SFAS No. 130 are presented in the Accumulated Other  Comprehensive  Income
      (Loss) section in the Consolidated Statements of Stockholder's Deficiency.


                                      F-10

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(5)   Equipment and Leasehold improvements

      Equipment and leasehold  improvements consist of the following at December
      31:

                                                       1999         1998
                                                       ----         ----

      Computers                                     $ 24,633     $ 24,633
      Office furniture and equipment                  37,531       31,537
      Test and assembly fixtures                      33,550       32,838
      Vehicles                                         7,721        7,721
      Leasehold improvements                           8,123        8,123
                                                    --------     --------
                                                     111,558      104,852
      Less: Accumulated depreciation                  73,771       56,584
                                                    --------     --------
      Equipment and leasehold improvements, net     $ 37,787     $ 48,268
                                                    ========     ========

(6)   Notes Payable

      The Company has outstanding several notes payable in the aggregate amounts
      of $238,326 and $373,581 at December 31, 1999 and 1998, respectively.  The
      effective  interest  rates on these  notes  range from  0.00% to 10%.  All
      outstanding notes payable are unsecured.

(7)   Long-Term Debt

      Long-term debt consist of the following at December 31:

<TABLE>
<CAPTION>

                                                                            1999             1998
                                                                            ----             ----
      <S>                                                                 <C>              <C>
      Loans payable to individuals, with no stated interest
      rate or maturity date. These uncollateralized notes are
      convertible at the rate of $0.495 per common share for
      146,465 shares of common stock. These loans mature at a
      date six months after the closing of the Company's first
      public offering.                                                    $53,500          $ 72,500

      Loan payable to corporation, with no stated interest
      rate or maturity date. The loan will be repaid with the
      proceeds of the Company's first public offering. The
      uncollateralized loan has a conversion option which is
      exercisable at the option of the holder at $0.495 per
      common share for a total conversion option of 101,010
      shares of common stock.                                                  --            50,000
                                                                          -------          --------

      Subtotal                                                            $53,500          $122,500
</TABLE>


                                      F-11

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(7)   Long-Term Debt (continued)

<TABLE>
<CAPTION>

                                                                            1999             1998
                                                                            ----             ----
      <S>                                                                 <C>              <C>
      Balance Carryforward                                                $53,500          $122,500

      Loan payable to an individual dated October 14, 1992,
      with an original maturity date of October 14, 1997,
      bearing interest at 8.00 percent per annum. The loan is
      uncollateralized. Payment of principal and accrued
      interest were due at maturity. The loan 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

      Loan payable to an Investment Trust, dated September 28,
      1994, maturing March 31, 1998, bearing interest at 9.00
      percent per annum. The loan is collateralized by
      inventory and accounts receivable. Payment of principal
      and interest were due at maturity. The note is
      convertible at the option of the holder at the rate of
      $0.50 per common share for a total conversion amount of
      270,000 shares of common stock.                                     133,236           135,000

      Loans payable to individuals dated June 28, 1995 through
      May 30, 1996. The loans are due upon demand and bear
      interest at 10 percent per annum. The loans are
      uncollateralized and are convertible at the option of
      the holder at the rate of $0.50 per common share. During
      1998, $125,000 of the loans and $29,369 accrued interest
      were converted by the borrowers for 859,667 shares of
      common stock at a rate of $0.18 per share (692,983
      shares for principal and 166,684 shares for interest).
      At December 31, 1998, the loans are convertible at the
      option of the holders at the rate of $0.50 per common
      for a total liquidation amount of 510,000 shares of
      common Stock. In addition, all loan holders were granted
      485,100 warrants for the purchase of common stock at the
      price of $0.40 per share for signing a Forbearance
      Agreement.                                                          250,000           255,000
                                                                         --------          --------

      Subtotal                                                           $486,736          $562,500
</TABLE>


                                      F-12

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

(7)   Long-Term Debt (continued)

<TABLE>
<CAPTION>

                                                                           1999              1998
                                                                           ----              ----
      <S>                                                                <C>               <C>
      Balance Carryforward                                               $486,736          $562,500

      Loans payable to individuals dated July 17, 1995 through
      February 25, 1997. The loans are due upon demand and
      bear interest at 10 percent per annum. The loans are
      uncollateralized and are convertible at the option of
      the holder at the rate of $0.50 per common share. During
      1998, $246,000 of the loans were converted by the
      holders for 560,354 shares of common stock at a rate of
      $0.50 per share (492,000 shares for principal and 68,354
      shares for interest). At December 31, 1998, the
      remaining loans are convertible at a rate of $0.50 per
      common share for a total liquidation amount of 594,300
      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.                              291,000           297,150

      Note payable to an individual dated December 1998,
      maturing on the earlier of April 30, 1999 or receipt
      from the sale of tax certificates, bearing interest at
      6.00 percent per annum. Payment of principal and
      interest is due at maturity. The uncollateralized note
      is convertible at the sole option of the holder at the
      rate of $0.15 per share for a total conversion amount of
      333,333 shares of common stock. The loan holder was
      granted warrants for the purchase of common stock at the
      price of $0.25 per share. In the event of full
      conversion of this note the warrant entitles the holder
      to purchase 166,667 shares; in the event of loan
      repayment, the warrant entitles the holder to purchase
      50,000 shares                                                            --            50,000
                                                                         --------          --------

      Subtotal                                                           $777,736          $909,650
</TABLE>


                                      F-13

<PAGE>


                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(7)   Long-Term Debt (continued)

<TABLE>
<CAPTION>
                                                                           1999             1998
                                                                           ----             ----
      <S>                                                                <C>              <C>
      Balance Carryforward                                               $777,736         $909,650

      Note payable to an individual dated December 1998,
      maturing on the earlier of March 31, 1999 or receipt
      from the sale of tax certificates, bearing interest at
      6.00 percent per annum. Payment of principal and
      interest due at maturity. The uncollateralized note is
      convertible at the sole option of the holder at the rate
      of $0.15 per share for a total conversion amount of
      50,000 shares of common stock. The loan holder was
      granted warrants for the purchase of common stock at the
      price of $0.25 per share. In the event of full
      conversion of this note the warrant entitles the holder
      to purchase 25,000 shares; in the event of loan
      repayment, the warrant entitles the holder to purchase
      7,500 shares.                                                            --            7,500

      Notes payable to an individual dated September 24, 1999
      Maturing on September 23, 2002, bearing interest at 8.00
      Percent per annum. Payment of principal and interest due
      at maturity. The uncollateralized note is convertible at
      the sole option of the holder at the rate of $0.50 per
      share For a total conversion amount of 400,000 shares of
      common Stock. The loan holder was granted a three year
      warrant for The purchase of 25,000 shares of common stock
      at the price of $0.75 per share.                                    200,000               --
                                                                         --------          -------

      Total                                                              $977,736         $917,150

      Less current maturities                                             777,736          917,150
                                                                         --------         --------
      Total long-term debt                                               $200,000         $     --
                                                                         ========         ========
</TABLE>

      Principal repayments of $200,000 on this debt is required in 2002.


                                      F-14

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(8)   Income Taxes

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

                                                      1999            1998
                                                      ----            ----
               Federal:
                Current                           $      --         $    --
                Deferred                                 --              --
                                                  ---------         -------
                                                  $      --         $    --
                                                  =========         =======

               State:
                Current                           $(475,285)        $    --
                Deferred                                 --              --
                                                  ---------         -------

                                                  $(475,285)        $    --
                                                  ==========        =======

      Total income tax benefit for the years ended is different  from the amount
      computed by  multiplying  total loss before  income taxes by the statutory
      Federal income tax rate of 34%.

      The reason for this difference and the related tax effects are as follows:



                                                      1999            1998
                                                      ----            ----

      Expected tax benefit at 34%                  $429,285         $390,832
      State tax benefit before allowance             75,000          151,167
      Officer life insurance                          4,420            4,760
      Change in differed tax valuation allowance    508,705          434,053
      Sale of state net operation loss and
      Research & development credit                (475,285)              --
                                                  ---------         --------

      Income tax (benefit)                        $(475,285)        $     --
                                                  =========         ========

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

                                                      1999             1998
                                                      ----             ----

         Net operating losses carryforwards       $3,507,905       $2,999,200
         Valuation allowance                       3,507,905        2,999,200
                                                  ----------       ----------

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


                                      F-15

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(8)   Income Taxes (continued)

      At December 31, 1999,  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:

<TABLE>
<CAPTION>

                                             Net Operating Loss            Research and Development
             Year Expiring                     Carryforwards                     Tax Credits
        Federal           State           Federal         State            Federal          State
        -------           -----           -------         -----            -------          -----
        <S>               <C>            <C>              <C>              <C>              <C>
         2000                --          $  64,376             --               --              --
         2001                --             27,481             --               --              --
         2002                --             14,778             --               --              --
         2003                --             29,505             --               --              --
         2004                --             95,302             --               --              --
         2005                --             94,557             --               --              --
         2006                --            402,684             --               --              --
         2007                --            251,079             --               --              --
         2008                --            641,341             --               --              --
         2009              2001            887,929             --           19,646          14,973
         2010              2002            912,453             --           15,207          23,395
         2011              2003            981,193        205,518           15,387          23,673
         2012              2004          1,263,193        361,993           12,923           2,485
         2013              2005          1,337,702         69,867           20,398              --
         2014              2006            660,000        660,000           16,100           8,050
</TABLE>


      In 1999, the Company  applied and was eligible to participate in the State
      of New Jersey's Technology Tax Certificate Transfer Program.  This program
      allowed  the  Company  to  sell a  portion  of its  authorized  state  net
      operating loss and New Jersey research and  development  tax credits.  The
      Company was able to sell  $5,678,519 of its state net  operating  loss and
      $16,973 of its  research  and  development  tax credit and  received a tax
      benefit of $475,285.

      The Tax Reform Act of 1986 (the "Act")  provides for a  limitation  on the
      annual use of NOL and research and  development  tax credit  carryforwards
      that could  significantly  limit the  Company's  ability to utilize  these
      carryforwards.  The Company has experienced and expects in the foreseeable
      future anticipated financing. 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  attributes  for
      Federal and state income tax purposes.


                                      F-16

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(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
      advisors to the  Company.  The Company may grant up to  2,780,000  shares,
      with an option term not to exceed seven years.

      Effective January 1999, the Board of Directors approved a reduction in the
      exercise  price on the  493,931  Incentive  Stock  Options  awarded  as of
      December 31, 1998.

      The following summarizes stock options activity and related information:


<TABLE>
<CAPTION>
                                                      1999                   1998
                                                      ----                   ----

                                                     Weighted Average        Weighted Average
                                                         Exercise                Exercise
                                               Shares      Price       Shares      Price
                                               ------    --------      ------    --------
           <S>                                 <C>        <C>          <C>       <C>
           Outstanding at beginning
               of the year                     493,931    $0.15        322,200     $0.40
           Granted                             498,373     0.26        171,731      0.40
           Cancelled                           (18,000)    0.15             --        --
           Exercised                           (34,000)    0.15             --        --
                                               -------     ----       --------     -----
           Outstanding at end
               of the year                     940,304    $0.21        493,931     $0.40
                                               =======    =====        =======     =====

                                                1999                    1998
                                                ----                    ----

           Number of shares
               Exercisable at
               December 31,                    830,635    $0.18        493,931     $0.40
                                               =======    =====        =======     =====

           Weighted-Average Remaining
           Contractual Life (Years)                          4.15                       3.62
                                                            =====                       ====
</TABLE>


      The Company  adopted the provisions of Financial  Accounting  Standards No
      123,  "Accounting for Stock-Based  Compensation," that calls for companies
      to measure  Stock  compensation  expense based on the fair value method of
      accounting.  However, as allowed by the Statement, the Company elected the
      continued use of Accounting Principles Board (APB) Opinion 25, "Accounting
      for Stock Issued to  Employees,"  with pro forma  disclosure of net income
      and earnings  (loss) per share  determined as if the fair value method had
      been applied in measuring  compensation  costs.  Had the fair value method
      been  applied,  the  impact  on net loss per  share  for the  years  ended
      December 31, 1999 and 1998, was immaterial.


                                      F-17

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(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, 1999,  warrants to purchase  4,691,345  common  shares are
      outstanding;  1,462,985 warrants  exercisable during the year 2000, with a
      strike price of $0.20 - $0.50,  457,600  warrants  exercisable  during the
      year  2001,  with a strike  price of  $0.40 -  $0.60,  1,663,130  warrants
      exercisable during the year 2002, with a strike price of $0.10 - $0.60 and
      1,107,630  warrants  exercisable during the year 2003, with a strike price
      of $0.50 - $0.75.

(11)  Employment and Consultant Agreements

      On June 8, 1998, the Company entered into a one-year employment  agreement
      with the  President/Chief  Operating  Officer  ("COO").  The agreement was
      automatically  extended for an additional  year, upon mutual  agreement of
      the  parties.  Compensation  under the  agreement  is  $24,000  and annual
      bonuses as determined by the  Company's  Board of Directors.  The extended
      agreement  also  provides,  five-year  Incentive  Stock  Options  (ISO) to
      purchase  100,000  shares of the  Company's  common  stock at $0.57 (fifty
      cents)  per  share.  The ISO  vest  monthly  during  employment  in  equal
      installments of 8,333 shares per month. The agreement  provides a covenant
      not to disclose any proprietary information.  If the Employee's employment
      is terminated by reason of death or disability, the Employee's estate will
      be entitled to continued compensation under the terms of this agreement.

      The Company  has  employment  agreements  with the  Chairman/CEO  and Vice
      Presidents. Aggregate compensation under these agreements are $114,000.

      The Company has unpaid  salaries of $191,500  which have been  deferred by
      the officers as of December 31, 1999.  During the year ended  December 31,
      1999, an officer of the Company  exchanged  $20,000 of unpaid salaries for
      52,632 warrants exercisable at $0.38.

      The Company has agreements  effective  through  December 31, 2005 with its
      Chairman,  a senior  executive  and a  consultant,  which  provides for an
      incentive  fee of up to five  percent  (0.5%)  on  revenues  earned by the
      Company  with an  annual  cap of  $250,000  per  individual.  The  Company
      incurred  incentive  fee  expenses  of $500  and  $-0- in 1999  and  1998,
      respectively.


                                      F-18

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(11)  Employment and Consultant Agreements(continued)

      The Company has entered into consulting  agreements with key personnel for
      the Company.  Compensation  under these agreements  totaled  $88,000.  The
      agreements  also  provide,  five-year  Incentive  Stock  Options  (ISO) to
      purchase  shares of the  Company at $0.50  (fifty  cents)  per share,  and
      reimbursement of professional fees and dues up to $2,000 per year. The ISO
      vest monthly during  employment in equal  installments of 4,000 shares per
      month.

(12)  Technology Grant

      In 1999 the Company  entered into a recoverable  grant  agreement with New
      Jersey Commission on Science and Technology (Commission).  Under the terms
      of the agreement  the Company was awarded  $249,967  under the  Technology
      Transfer Program for the development and  commercialization of an off-grid
      drip irrigation system powered by photovoltaic  power.  Under the terms of
      the  agreement  the Company is required  to make  royalty  payments to the
      Commission  for a  period  of ten  years  based on the net  income  of the
      product up to the amount of the award.

(13)  Feasibility Study

      During 1999, the Company entered into a contract in the amount of $235,470
      with the  Philippine  Department of the Interior and Local  Governments to
      prepare  a  feasibility  study  on the  installation  of  community  water
      supplies using solar  electric  systems in Cebu,  Philippines.  Revenue on
      this contract is recognized as the services are provided.  At December 31,
      1999, the Company had recognized $123,560 on this contract.

(14)  Gain on the Extinguishment of Debt

      During 1999, the Company recognized as an extraordinary item in the amount
      of $50,000 the gain on the cancellation of a loan  obligation.  Since 1989
      the Company has exhausted all avenues of contacting the debt holder. Based
      on the advise of the Company's  legal counsel it has been  determined that
      the statue of limitations has expired.

(15)  Leases

      The Company leases its  production,  service and  administrative  premises
      under a five-year lease  agreement  expiring June 14, 2002, with a renewal
      option for an additional  five-year period.  The lease requires the lessee
      to pay taxes, maintenance,  insurance and certain other operating costs of
      the  leased  property.  Rent  expense  for 1999 and 1998 was  $62,500  and
      $52,500 respectively.


                                      F-19

<PAGE>

                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(15)  Leases (continued)

      The minimum future rental payments under this lease are as follows:

                     2000                                        $ 51,500
                     2001                                          61,000
                     2002                                          27,500
                                                                 --------

              Total minimum future rental payments               $140,000
                                                                 ========

(16)  Related Party Transactions

      Included in notes payable and  long-term  debt at December 31, are amounts
      payable to employees, directors and their immediate relatives as follows:

                                                         1999            1998
                                                         ----            ----

        Directors                                      $  4,500        $109,400
        Employees                                       110,645         110,000
        Immediate relatives                              17,000          38,000
                                                       --------        --------
            Total                                      $132,145        $257,400
                                                       ========        ========

      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
      $30,000 for 1999 and 1998.

      In 1999,  the Company  entered  into an  agreement  with a Director of the
      Company to provide investor  relation  services to the Company.  Under the
      terms  of the  agreement,  the  Director  received  50,000  shares  of the
      Company's common stock value at $12,000.

(17)  Marketable Securities Available for Sale

      In 1997, the Company acquired 50,000 shares of Proformix Systems,  Inc., a
      NASDAQ traded  company as part of its  settlement  with Royal Capital Inc.
      and recorded these securities as marketable  securities available for sale
      at then market value of $162,500.

      During 1998,  the Company sold 40,000  shares of the stock.  Proceeds from
      the sale were  $80,000  and the Company  recognized  a loss on the sale of
      marketable  securities of $50,000.  These marketable securities are stated
      at fair value with any  unrealized  holding gains or losses  included as a
      component of  stockholders'  deficiency  until  realized.  At December 31,
      1998, the Company had an unrealized holding loss of $20,625.

      During  1999,  the Company  determined  the stock had no market  value and
      recognized a loss of $32,500.


                                      F-20
<PAGE>


                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(18)  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.  Sales to two major
      customers  accounted  for 31% and 21% of the  Company's  sales in 1999. In
      1998,  sales to major  customers  accounted  for 48%,  22%, and 22% of the
      Company's sales.

(19)  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 carrying value of marketable securities
      available for sale is carried at a fair value based upon the quoted market
      prices.  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.  The estimated fair values of the Company's
      debt instruments are as follows:

                                                  Carrying             Fair
                                                   Amounts             Value
                                                   -------             -----

                    1999                         $1,016,062         $1,016,062
                    1998                          1,290,731          1,258,081

(20)  Contingencies

      The Company is occasionally subject to various claims and suits that arise
      from  time to time  in the  ordinary  course  of its  business,  including
      actions with respect to contracts and intellectual  property.  The Company
      does not believe  that any current  action will have a material  effect on
      the Company's business, financial condition or results of operations.

(21)  Supplemental Disclosure of Cash Flow Information

                                                       1999         1998
                                                       ----         ----
      Cash paid during the year for:

               Interest                             $  32,971      $4,761
                                                    =========      ======

               Income taxes (benefit)               $(475,285)     $   --
                                                    =========      ======


                                      F-21

<PAGE>


                        WORLDWATER CORP. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(15)  Supplemental Disclosure of Cash Flow Information

      Supplemental schedule of non-cash investing and finance activities:

      In 1999, the Company's debt holders converted $1,011,000 of debt principal
      and $272,440 of accrued  interest  (total of  $1,283,440)  into  3,329,073
      shares of the  Company's  common stock at rates  between $0.15 - $0.50 per
      share.

      In 1998, the Company's debt holders  converted  $212,400 of debt principal
      into 1,357,397 shares of the Company's common stock at rates between $0.15
      - $0.25 per share.

(16)  Subsequent Events (Unaudited)

      Subsequent to December 31, 1999, the Company converted,  at the consent of
      its  debt  holders,  $702,000  of notes  payable  and  long-term  debt and
      $200,900  of accrued  interest  into  2,364,807  shares of the  Company's'
      common stock.

      Subsequent to December 31, 1999, the Company sold,  1,111,056 shares of 7%
      convertible  preferred  stock through a private  placement for $999,950 at
      the rate of $0.90 per share.

      In February,  2000,  WorldWater  (Phils) Inc. was formed as a wholly owned
      subsidiary  of WorldWater  Holdings  Inc. of Delaware,  which is a holding
      company owned 100% by WorldWater Corp.


                                      F-22