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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB-A
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AMENDMENT NO. 1
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(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, 2005.
___ 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.
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(Exact Name of Small Business Issuers as Specified in its Charter)
Delaware 33-0750453
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(State of Incorporation) (IRS Employer Identification Number)
10410 Trademark Street
Rancho Cucamonga, CA 91730
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(Address of Principal Executive Offices)
(909) 987-0456
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(Issuer's Telephone Number, Including Area Code)
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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
18,880,465 shares outstanding as of May 16, 2005.
Transitional Small Business Disclosure Format (check one): Yes ___ No _X_
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PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
During the nine months ended March 31, 2005 the Company incurred a net loss
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of $872,000 and has aggregate net losses of $20,000,000 since inception of which
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non-cash losses amounted to approximately $6,500,000. As of March 31, 2005 we
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had a cash balance of $80,000 and a working capital deficiency of $1,205,000.
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The Company presently has in excess of 7,000,000 warrants, at prices ranging
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from $.75 to $8.25, which if exercised would generate approximately $10,750,000.
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As of March 31, 2005, 250,000 warrants generating $42,000 were in the money. We
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could reprice warrants and complete private placements to raise necessary equity
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to fund continued placement of our billboard coolers and generate additional
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advertising revenues from those coolers.
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The Company has developed a plan to address liquidity, in connection with
its ability to continue as a going concern, in several ways. It intends to
continue to raise capital through the sale or exercise of equity securities.
Toward that end the Company raised net equity of approximately $1,320,000
through the exercise of warrants to purchase common shares and a private
placement of common shares during the nine months ended March 31, 2005. The
Company has continued to pursue the placement of our water cooler billboards in
various locations and the Company is seeking to increase its revenues through
the sale of advertising on the band of the cooler's permanently attached five-
gallon bottle as outlined in the Overview section of Management's Discussion.
The spinoff of our Aquacell Water, Inc. subsidiary will have no material
effect on the financial statements because this is an inactive company without
assets, liabilities or operations.
Cash used by operations during the nine months ended March 31, 2005
amounted to $1,738,000. Net loss of $2,595,000 was reduced by non-cash stock
based compensation in the amount of $745,000, depreciation and amortization of
$41,000 and a bad debt provision of $4,000. Cash used by operations was further
increased by a decrease in accounts payable in the amount of $72,000 and an
increase in accounts receivable of $46,000. Net loss was further decreased by an
increase in accrued liabilities of $126,000 and by net changes in prepaid
expenses, accrued liabilities, customer deposits, unearned income and
inventories aggregating $59,000.
Cash used by investing activities during the nine months ended March 31,
2005 represented capital expenditures in the amount of $359,000 primarily for
billboard coolers and by payments on notes issued for the purchase of equipment
in the amount of $3,000.
Cash provided by financing activities was approximately $1,320,000.
Proceeds from a private placement of common stock amounted to $170,000. Proceeds
from sales of common stock purchase warrants amounted to $1,113,000 and expenses
amounted to $3,000. Proceeds from subscriptions receivable were $40,000.
We have granted warrants, subsequent to our initial public offering, in
connection with private placements, consulting, marketing and financing
agreements that remain outstanding at the date of this filing and may generate
additional capital of up to approximately $10,750,000 if exercised. As of March
31, 2005 250,000 warrants generating $42,000 were in the money and 6,879,000
warrants generating $10,793,000 were out of the money. Historically, the Company
has repriced out of the money warrants issued in connection with equity
placements to generate additional capital. There is no assurance however, that
any of the warrants will be exercised.
At March 31, 2005 two tax liens have been filed; one Federal tax lien
against the Company in the amount of $53,000 and a state tax lien against an
inactive subsidiary in the amount of $26,000. We are in negotiations to reach
settlement agreements with the appropriate tax agencies. There are no assurances
that these negotiations will result in successful agreements and the Company's
assets could be subject to enforcement action.
Management believes that its present cash position combined with subsequent
equity raises and conversion of warrants and cash flows expected to be generated
from future operations will be sufficient to meet presently anticipated needs
for working capital and capital expenditures through at least the next 12
months; however, there can be no assurance in that regard. The Company
presently has no material commitments for future capital expenditures.
PART II. OTHER INFORMATION
ITEM 3. CONTROLS AND PROCEDURES
As of the end of the period covered by this Report the Company carried out
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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 Rules 13a-15(e) and 15d-15(e)
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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 as of the date of their evaluation.
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