--------------------------------------------------------------------------------
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
(Mark one)
__X__ Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2003.
_____ Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ______ to ______
Commission file number 1-16165
AQUACELL TECHNOLOGIES, INC.
(Exact Name of Small Business Issuers as Specified in its Charter)
Delaware 33-0750453
(State of Incorporation) (IRS employer identification number)
10410 Trademark Street
Rancho Cucamonga, CA 91730
(Address of Principal Executive Offices)
(909) 987-0456
(Issuer's Telephone Number, Including Area Code)
____________________________________
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the 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 _____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
Securities under a plan confirmed by a court.
Yes _____ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock, $.001 par value 8,726,224 shares outstanding
as of May 12, 2003
Transitional Small Business Disclosure Format (check one):
Yes _____ No __X__
--------------------------------------------------------------------------------
AQUACELL TECHNOLOGIES, INC.
FORM 1O-QSB
FOR THE QUARTER ENDED MARCH 31, 2003
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PAGE
Item 1 Financial Statements:
Condensed Consolidated Balance Sheet as of March 31, 2003 ....... 1
Condensed Consolidated Statements of Operations for the three
and nine month periods ended March 31, 2003 and 2002 ............ 2
Condensed Consolidated Statements of Cash Flow for the nine
month periods ended March 31, 2003 and 2002 ..................... 3
Notes to Condensed Consolidated Financial Statements ............ 5
Item 2 Management's Discussion and Analysis: ........................... 8
Forward-Looking Statements
Overview
Results of Operations
Liquidity and Capital Resources
Item 3 Controls and Procedures .......................................... 10
PART II - OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders ............. 10
Item 6 Exhibits and reports on Form 8-K ................................ 10
Signature ............................................................... 10
Certifications .......................................................... 11
i
AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2003
(Unaudited)
ASSETS
Current assets:
Cash ........................................................ $ 101,000
Receivable from sale of preferred stock ..................... 95,000
Notes receivable, including accrued interest of $69,000 ..... 210,000
Accounts receivable, net of allowance of $4,000 ............. 300,000
Inventories ................................................. 98,000
Prepaid expenses and other current assets ................... 116,000
-------------
Total current assets ................................... 920,000
-------------
Property and equipment, net ...................................... 45,000
-------------
Other assets:
Goodwill .................................................... 1,114,000
Investments ................................................. 274,000
Patents, net ................................................ 104,000
Security deposits ........................................... 14,000
-------------
Total other assets ..................................... 1,506,000
-------------
$2,471,000
-------------
-------------
LIABILITIES
Current liabilities:
Accounts payable ............................................ $ 736,000
Accrued expenses ............................................ 393,000
Loans payable to finance company ............................ 177,000
Loan payable ................................................ 100,000
Customer deposits ........................................... 29,000
Current portion of long-term debt............................ 4,000
Loans payable to related parties............................. 79,000
-------------
Total current liabilities .............................. 1,518,000
Long-term debt, net of current portion............................ 4,000
-------------
Total liabilities ...................................... 1,522,000
-------------
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.00l; 8,130,000 shares authorized;
none issued and outstanding ................................. -
Preferred stock Series A convertible; par value $.00l;
1,870,000 shares authorized; 685,000 shares issued and
outstanding ................................................. 1,000
Common stock, par value $.001; 40,000,000 shares authorized;
8,701,224 shares issued and outstanding ..................... 9,000
Additional paid-in capital ....................................... 13,313,000
Accumulated deficit .............................................. (11,881,000)
-------------
1,442,000
Unamortized deferred compensation ................................ (493,000)
-------------
Total stockholders' equity ............................. 949,000
-------------
$ 2,471,000
-------------
-------------
See notes to condensed consolidated financial statements
1
AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------- -------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Revenue:
Net sales ............... $ 188,000 $ 208,000 $ 1,322,000 $ 360,000
Rental income ........... 1,000 2,000 5,000 6,000
------------ ------------ ------------ ------------
189,000 210,000 1,327,000 366,000
Cost of sales ............. 139,000 103,000 743,000 166,000
------------ ------------ ------------ ------------
Gross profit .............. 50,000 107,000 584,000 200,000
------------ ------------ ------------ ------------
Selling, general and
administrative expenses:
Salaries and wages ...... 329,000 253,000 922,000 720,000
Legal, accounting and
other professional
expenses .............. 36,000 72,000 140,000 339,000
Stock based compensation 56,000 137,000 156,000 587,000
Impairment loss on
investment in Corbett
Water Technologies, Inc - - - 1,226,000
Other ................... 257,000 203,000 779,000 720,000
Recovery of notes
receivable reserve .... (57,000) - (57,000) -
------------ ------------ ------------ ------------
621,000 665,000 1,940,000 3,592,000
------------ ------------ ------------ ------------
Loss from operations before
other (expense) income .. (571,000) (558,000) (1,356,000) (3,392,000)
------------ ------------ ------------ ------------
Other (expense) income:
Amortization of loan fee (58,000) - (58,000) -
Interest expense ........ (14,000) - (36,000) -
Interest income ......... 13,000 30,000 45,000 105,000
Other income ............ - - - 100,000
------------ ------------ ------------ ------------
(59,000) 30,000 (49,000) 205,000
------------ ------------ ------------ ------------
Net loss attributable to
common stockholders ..... $ (630,000) $ (528,000) $(1,405,000) $(3,187,000)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average shares
outstanding- basic and
diluted ................. 8,692,000 8,240,000 8,631,000 8,032,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net loss per common
share- basic and
diluted ................. $ (0.07) $ (0.06) $ (0.16) $ (0.40)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
See notes to condensed consolidated financial statements
2
AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
--------------------------
2003 2002
------------ ------------
Cash flows from operating activities:
Net loss ........................................ $(1,405,000) $(3,187,000)
Adjustment to reconcile net loss to net cash
used in operating activities:
Impairment loss on investment in Corbett Water
Technologies, Inc. .......................... - 1,226,000
Stock based compensation ...................... 156,000 587,000
Amortization of loan fee....................... 58,000 -
Depreciation and amortization ................. 46,000 41,000
Reduction of reserve on notes receivable....... (57,000) -
Changes in:
Accounts receivable ........................... (109,000) (2,000)
Accrued interest receivable ................... (44,000) 18,000
Prepaid expenses and other current assets ..... 100,000 30,000
Inventories ................................... 4,000 (19,000)
Accounts payable .............................. 18,000 304,000
Accrued expenses .............................. 631,000 270,000
Customer deposits ............................. 13,000 32,000
Other ......................................... 5,000 -
------------ ------------
Net cash used in operating activities ... (584,000) (700,000)
------------ ------------
Cash flows from investing activities:
Notes issued for purchased of property and
equipment, net of payments .................. 8,000 -
Collections on notes receivable ............... - 513,000
Purchase of property and equipment ............ (12,000) (4,000)
------------ ------------
Net cash provided by (used in)
investing activities .................. (4,000) 509,000
------------ ------------
Cash flows from financing activities:
Proceeds from private placement of
preferred stock ............................. 311,000 -
Loan from unrelated third party ............... 100,000 -
Proceeds from loans from finance company ...... 438,000 -
Payments on loans from finance company ........ (261,000) -
Loans and advances from related parties, net .. 50,000 (4,000)
------------ ------------
Net cash provided by (used in)
financing activities .................. 638,000 (4,000)
------------ ------------
Increase (decrease) in cash ..................... $ 50,000 $ (195,000)
Cash, beginning of period ....................... 51,000 298,000
------------ ------------
Cash, end of period ............................. $ 101,000 $ 103,000
------------ ------------
------------ ------------
See notes to condensed consolidated financial statements
3
AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
Nine Months Ended
March 31,
--------------------------
2003 2002
------------ ------------
Supplemental disclosure of cash flow information:
Cash paid for interest ........................ $ 20,000 $ -
Supplemental schedule of non-cash investing
and financing activities:
Issuance of preferred stock in private
placement for expenses of the offering ........ $ 25,000 $ -
Note payments of principal and interest made by
management with their shares of the Company's
common stock .................................. $ - $ 251,000
Issuance of common stock as loan fee ............ $ 62,000 $ -
Issuance of common stock in connection with
investment .................................... $ - $ 1,500,000
Issuance of common stock and warrants for
services to the company ....................... $ 55,000 $ 525,000
Retirement of 82,422 shares of treasury stock.... $ 251,000 $ -
Principal payments on notes receivable by
conversion of accrued officers' salaries....... $ 437,000 $ 218,000
Issuance of common stock to acquire subsidiary .. $ - $ 1,000,000
Issuance of common stock to satisfy indebtedness
of acquired subsidiary's vendors .............. $ - $ 189,000
Receivable on preferred stock.................... $ 95,000 $ -
See notes to condensed consolidated financial statements
4
AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 (Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by U. S.
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the nine months ended March 31, 2003 are not
necessarily indicative of the results to be expected for the full year. For
further information, refer to the Company's annual report filed on Form 10-KSB
for the year ended June 30, 2002.
NOTE B - RECEIVABLE FROM SALE OF PREFERRED STOCK
At March 31, 2003, the receivable from sale of preferred stock represented
the amount owed for the sale of shares of Series A convertible preferred stock
in the private placement (see Note J). The investor's payment was received on
April 9, 2003.
NOTE C - NOTES RECEIVABLE
At March 31, 2003, the notes receivable consist of $50,000 from a non-
affiliated party and $399,000 from non-director/employee stockholders and
entities owned by them at an annual interest rate of 8%. Notes totaling
$1,750,000 maturing August 16, 2001 were extended to September 16, 2001. At
September 16, 2001 the notes were restructured into twelve-month installment
notes collateralized by marketable securities with the first installment due
October 16, 2001. Officers/stockholders of Aquacell, have personally guaranteed
up to $1,750,000 of the notes and have offered as collateral designated assets
and have paid $1,005,000 in principal and $32,000 in interest through
contribution of salaries in the amount of $786,000 and surrender of 82,422
shares of the Company's common stock, valued at $251,000, on a cumulative basis
through March 31, 2003. Such shares were recorded as treasury stock and
retired by the Company at December 31, 2002. During March 2003 the officers/
stockholders contributed accrued salaries totaling $153,000 as payment under
the guaranty provisions of the notes receivable. The Company recorded an
adjustment to reflect a reduction in the estimated fair value of these notes of
$365,000 at June 30, 2001. At March 31, 2003 the adjustment was decreased by
$57,000 to equal the remaining principal balances of the notes. Such recovery
has been reported in the Statement of Operations. The balance of the notes are
unsecured and matured between March 2002 and October 2002. The note that
matured in October 2002 was extended for one year. Interest receivable at
March 31, 2003 amounted to $8,000 from a non-affiliated party and $61,000 from
non-director/employee stockholders and entities owned by them.
NOTE D - INVENTORIES
Inventories consist of the following at March 31, 2003:
Raw materials ............... $ 76,000
Work in progress ............. 22,000
---------
$ 98,000
---------
---------
5
AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 (Unaudited)
NOTE E - PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows at March 31, 2003:
Furniture and fixtures ................... $ 35,000
Equipment - office ....................... 95,000
Machinery and equipment .................. 122,000
Rental units ............................. 9,000
Leasehold improvements ................... 10,000
Truck .................................... 11,000
-----------
282,000
Less accumulated depreciation ............ 237,000
-----------
$ 45,000
-----------
-----------
NOTE F - LOANS PAYABLE TO FINANCE COMPANY
On August 24, 2002 the Company entered into a credit facility agreement to
finance the receivables of its largest customer, Corbett Water Technologies,
Inc. The agreement is for a one-year term, and calls for interest at the rate
18 1/4% per annum in addition to the payment of certain processing fees.
Payments are made directly to the lender by Corbett Water and the financing is
collateralized by the Company's accounts receivable from Corbett Water
Technologies, Inc. (See Note J)
NOTE G - LOAN PAYABLE
On January 6, 2003 the Company borrowed $100,000 from an unrelated party for
a period of three months. Terms of the loan call for interest at the rate of
18% per annum and the payment of 100,000 shares of the Company's common stock
valued at $62,000. For the nine months ended March 31, 2003 amortization of
this loan fee amounted to $58,000. On April 6, 2003 the Company repaid $50,000
of the loan, together with all interest due to that date and extended the
remaining $50,000 principal for an additional thirty day period at the same rate
of interest. The Company issued an additional 25,000 shares of its common stock
as consideration for the extension.
NOTE H - LOANS PAYABLE TO RELATED PARTIES
At March 31, 2003 the loans payable to related parties consist of unsecured
demand interest free loans of $79,000.
NOTE I - LONG TERM DEBT
At March 31, 2003 long-term debt consists of an installment note, secured by
a truck, payable in monthly payments of $342 through February 2005. Maturities
on the note follows:
Twelve months ending March 31, 2004 $ 4,000
March 31, 2005 4,000
---------
$ 8,000
---------
---------
6
AQUACELL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 (Unaudited)
NOTE J - EQUITY TRANSACTIONS
In connection with a one-year credit facility agreement entered into in
August 2002, the lender was granted warrants to purchase 160,000 shares of
common stock, at an exercise price of $0.78 per share, whose total value is
estimated at approximately $43,000. The estimated value of the warrants is
being amortized to expense over one year. Amortization for the nine months
ended March 31, 2003 was $32,000.
On December 4, 2002 stockholders approved the adoption of the Company's 2002
Directors Stock Option Plan. The plan covers an aggregate of 500,000 shares of
the Company's common stock for non-employee directors.
In connection with a one-year consulting agreement entered into in March
2003, the Company issued 150,000 warrants to purchase common stock of the
Company at an exercise price of $1.00 per share, whose total value is estimated
at approximately $12,000. The estimated value of the warrants is being
amortized to expense over one year. Amortization for the nine months ended
March 31, 2003 was $1,000.
During March 2003 the Company completed a private placement of 685,000 shares
of a newly designated Series A Convertible Preferred Stock. The offering
consists of one share of preferred stock at a price of $0.63 per share and one
Class A common stock purchase warrant exercisable at $1.16 per share. The
Series A Convertible Preferred Stock carries an 8% dividend and is convertible
into the Company's common stock on a one for one basis. The Series A
Convertible Preferred carries a mandatory conversion feature. In connection
with this offering the Company received gross proceeds of $311,000 exclusive of
$95,000 received in April 2003. As part of this offering 40,000 shares were
issued to the Company's attorney as consideration for expenses of the offering.
NOTE K - SUBSEQUENT EVENT
Subsequent to March 31, 2003 the Company raised net proceeds of
approximately $329,000 through the sale of 500,000 shares of Series A
Convertible Preferred Stock at $0.75 per share and 500,000 Class A Common
Stock Purchase Warrants exercisable at $1.60 per share.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward-Looking Statements
When used in this Form 10-QSB and in future filings by the Company with the
Commission, statements identified by the words "believe", "positioned",
"estimate", "project", "target", "continue", "will", "intend", "expect",
"future", "anticipates", and similar expressions express management's present
belief, expectations or intentions regarding the Company's future performance
within the meaning of the Private Securities Litigation Reform Act of 1995.
Readers are cautioned not to place undue reliance on any such forward-looking
statements, each of which speaks only as of the date made. Such statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from historical earnings and those presently anticipated or
projected. The Company has no obligations to publicly release the result of any
revisions which may be made to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances occurring after the date of
such statements.
Overview
The following discussions and analysis should be read in conjunction with
the Company's condensed consolidated financial statements and the notes
presented following the condensed consolidated financial statements. The
discussion of results, causes and trends should not be construed to imply any
conclusion that such results or trends will necessarily continue in the future.
For the nine-months ended March 31, 2003 we increased revenues by 263% to
$1,327,000 while cutting our per share losses by 60% and decreasing our selling,
general and administrative expenses by 46% to $1,940,000. This increase in
revenues is primarily attributable to the growing acceptance of our flagship
Purific Water Cooler in the marketplace.
Revenues for the quarter ended March 31, 2003 fell short of the Company's
target and expectations as a result of the Company's restructuring of its
exclusive working relationship with Corbett Water Technologies, Inc. We are
restructuring our exclusive relationship with Corbett to allow us to implement
a national marketing program. The Company will be setting up various channels of
distribution and each of these selling groups will be responsible for payment of
their own expenses. As a result, the Company does not anticipate incurring
significant marketing costs as a result of the above arrangements.
We recently completed, through our AquaCell Media subsidiary, a successful
product test of our Purificr Water Cooler as the first phase of a project funded
by a Fortune 100 company and conducted by a consultant group they hired for its
implementation. Given these favorable results, we are collectively proceeding
to the next phase for the funding of the market test, in order to find the most
effective means for marketing the Purificr cooler to the residential community,
the fastest growing segment of the bottled water industry.
Results of Operations
During the nine months ended March 31, 2003 on a consolidated basis, we
increased revenues by 263% to $1,327,000 as compared to $366,000 for the similar
period of the preceding year. This increase is primarily attributable to an
increase in sales to Corbett Water in the amount of approximately $303,000,
sales to Connecticut Water of approximately $48,000, and a sales increase by our
Water Science Technologies (WST) subsidiary in the approximate amount of
$405,000. Net loss on a consolidated basis for the nine months ended March 31,
2003 was decreased by 56% to $1,405,000 or $0.16 per share, as compared to
$3,187,000 or $0.40 per share for the same period of the prior year. The
decrease in the loss is primarily attributable to the increase in revenues, as
well as a reduction in selling, general and administrative expenses of
$1,652,000 or 46%. The significant decrease in the selling, general and
administrative expenses was principally a result of a $1,226,000 impairment
charge impacting only the prior period.
8
On a consolidated basis gross margin percentage decreased to 44% for the nine
months ended March 31, 2003 as compared to 56% for the prior period. This
decrease is attributable to the 25% gross margin maintained by our WST
subsidiary. Our Global Water-Aquacell subsidiary continued to reflect a gross
margin of approximately 55%.
Salaries and wages increased by $202,000 for the nine months ended March 31,
2003 over the comparable prior year period. This increase is primarily
attributable to salaries incurred by our WST subsidiary of approximately
$145,000 and payments to senior management in the approximate amount of $75,000.
Legal, accounting and other professional expenses decreased by approximately
$199,000 for the nine months ended March 31, 2003 primarily attributable to
terminated consulting agreements. Stock based compensation decreased by
$431,000 to $156,000 for the nine months ended March 31, 2003. Other selling,
general and administrative expenses, consisting primarily of rent-$120,000,
telephone and utilities- $58,000, travel- $45,000, business promotion- $117,000,
insurance- $70,000 and vehicle expenses- $70,000, increased by approximately
$59,000 to $779,000 for the nine months ended March 31, 2003.
Liquidity and Capital Resources
During the nine months ended March 31, 2003 we financed our operations
primarily from the collections of receivables in the normal course of business;
the financing of certain receivables due from Corbett Water Technologies and the
sale of equity securities. During March 2003 the Company received gross
proceeds of $311,000 from the sale of its preferred stock and an additional
$95,000 in April 2003. A net increase in loans from officers and others amounted
to $50,000 during the period. The Company borrowed $100,000 from an unrelated
party.
Cash used by operations during the nine months ended March 31, 2003 amounted
to $584,000. Net loss of $1,405,000 was reduced by a non-cash stock based
compensation and loan fee amortization in the amount of $214,000, depreciation
and amortization of $46,000 and increased by a reduction in notes receivable
reserve of $57,000. Cash used by operations was further increased by an
increase in accounts receivable in the amount of $109,000 and decreased by
accounts payable and accrued expenses in the amount of $649,000. Net loss was
further decreased by net changes in accrued interest receivable, prepaid
expenses, customer deposits, inventories and other amounting to $78,000.
Cash used in investing activities during nine months ended March 31, 2003
represented expenditures for property and equipment in the amount of $12,000
decreased by notes issued for the purchase of equipment in the amount of $8,000,
net of repayments.
Cash provided by financing activities was approximately $638,000. The Company
borrowed $100,000 from an unrelated party and $50,000 from related parties.
Sales of equity securities amounted to $311,000 and net proceeds from accounts
receivable financing amounted to $177,000.
Subsequent to March 31, 2003 the Company raised net proceeds of $329,000
from the sale of equity securities.
We have granted warrants, subsequent to our initial public offering in
connection with consulting, marketing and financing agreements and the sale of
equity securities that may generate additional capital of up to approximately
$6,200,000 if exercised. There is no assurance however, that any of the warrants
will be exercised.
The principal payments of $153,000, which consisted of contributed accrued
officers' salaries, reduced the balance on the $1,750,000 installment notes
receivable to $307,000 at March 31, 2003.
Management believes that the collections on notes receivable, cash flows
expected to be generated from future operations and anticipated additional
equity financings will be sufficient to meet presently anticipated needs for
working capital and capital expenditures through at least the next 12 months;
however, there can be no assurance in that regard. The Company presently has no
material commitments for future capital expenditures.
9
ITEM 3. CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this Report the Company carried out
an evaluation, under the supervision and with the participation of the Company's
management, including the Company's chief executive officer and chief financial
officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Rule 13a-14 adopted under the
Securities Exchange Act of 1934. Based upon that evaluation, the chief
executive officer and chief financial officer concluded that the Company's
disclosure controls and procedures are effective. There were no significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
DURING THE PERIOD COVERED BY THIS REPORT ON FORM 10-QSB THERE WERE NO REPORTS
FILED ON FORM 8-K.
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AquaCell Technologies, Inc.
-----------------------------------------
Registrant
Date: May 15, 2003 /s/ Gary S. Wolff
-----------------------------------------
Gary S. Wolff
Chief Financial Officer
10
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of AquaCell Technologies, Inc. (the
"Company") on Form 10-QSB for the third fiscal quarter ended March 31, 2003 as
filed with the Securities and Exchange Commission (the "Report"), each of the
undersigned, in the capacities and on the dates indicated below, hereby
certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:
1. the Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. the information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations
of the Company.
Dated: May 15, 2003 /s/ James C. Witham
-----------------------------------------
Name: James C. Witham
Title: Chief Executive Officer
Dated: May 15, 2003 /s/ Gary S. Wolff
-----------------------------------------
Name: Gary S. Wolff
Title: Chief Financial Officer
11
CERTIFICATION PURSUANT TO RULE 13a-14 AND 15d-14
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, James C. Witham, Chief Executive Officer of AquaCell Technologies, Inc.,
certify that:
1. I have reviewed this quarterly report on Form 10-QSB of AquaCell
Technologies, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days of the filing date of this
quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Dated: May 15, 2003 /s/ James C. Witham
-----------------------------------------
Name: James C. Witham
Title: Chief Executive Officer
12
CERTIFICATION PURSUANT TO RULE 13a-14 AND 15d-14
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Gary S. Wolff, Chief Financial Officer of AquaCell Technologies, Inc.,
certify that:
1. I have reviewed this quarterly report on Form 10-QSB of AquaCell
Technologies, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days of the filing date of this
quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Dated: May 15, 2003 /s/ Gary S. Wolff
-----------------------------------------
Name: Gary S. Wolff
Title: Chief Financial Officer
13