FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


(Mark  One)

[X]     ANNUAL  REPORT  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
        OF  1934

        For  the  fiscal  year  ended  December 31, 2001

[ ]     TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT  OF  1934

        For  the  transition  period  from  ________  to  ________.

Commission  file  number:  000-26957


                              DCH TECHNOLOGY, INC.
                 (Name of Small Business Issuer in Its Charter)

DELAWARE                                  2810                   84-1349374
----------------------------    --------------------------     ---------------
(State or Jurisdiction of      (Primary Standard Industrial   (I.R.S. Employer
Incorporation or Organization)  Classification Code Number)  Identification No.)

                            24832 Avenue Rockefeller
                           Valencia, California 91355
                                 (661) 775-8120
          (Address and Telephone Number of Principal Executive Offices)

   Securities registered pursuant to Section 12(b) of the Exchange Act:  None
      Securities registered pursuant to Section 12(g) of the Exchange Act:

                                                    Name of each exchange
         Title of each class                         on which registered
         -------------------                        ---------------------
      Common Stock, $.01 par value                         AMEX

Check  whether  the issuer (1) filed all reports required to be filed by Section
13  or  15(d)  of  the  Exchange Act during the preceding 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 [ ]


<PAGE>
Check  if there is no 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 III of this Form 10-KSB
or  any  amendment  to  this  Form  10-KSB.  [_]

Registrant's revenues for the year ended December 31, 2001 were $ 1,143,014.

As of March 5, 2002, the approximate aggregate market value of voting stock held
by  non-affiliates  of  the  registrant  was $ 18,999,863(based upon the closing
price  for shares of the registrant's common stock as reported by the AMEX Stock
Exchange  on  that date). Shares of common stock held by each officer, director,
and  holder  of 5% or more of the outstanding common stock have been excluded in
that  such  persons  may  be  deemed  to  be  affiliates.  This determination of
affiliate  status  is  not  necessarily  a  conclusive  determination  for other
purposes.

APPLICABLE  ONLY  TO  CORPORATE  ISSUERS:

As  of March 5, 2002, the registrant had 33,993,850 shares of common stock, $.01
par  value  per  share,  outstanding.

Documents  Incorporated  by  Reference:  None

Traditional  Small  Business  Disclosure  Format  [ ]  Yes  [X]  No


<PAGE>
<TABLE>
<CAPTION>
                                     DCH TECHNOLOGY, INC.

                                      TABLE OF CONTENTS


                                                                                     Page
                                                                                     ----
                                          PART I.
                                          -------
<S>        <C>                                                                       <C>
ITEM 1.    Description of Business                                                      1

ITEM 2.    Description of Property                                                     19

ITEM 3.    Legal Proceedings                                                           19

ITEM 4.    Submission of Matters to a Vote of Security Holders                         19

                                          PART II.
                                          --------

ITEM 5.    Market For Common Equity and Related Stockholder Matters                    20

ITEM 6.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                                   21

ITEM 7.    Consolidated Financial Statements                                         F-26


                                          PART III.
                                          ---------

ITEM 8.    Changes in and Disagreements With Accountants on Accounting
           and Financial Disclosure                                                    45

ITEM 9.    Directors, Executive Officers, Promoters and Control Persons; Compliance
           With Section 16(a) of the Exchange Act                                      45

ITEM 10.   Executive Compensation                                                      49

ITEM 11.   Security Ownership of Certain Beneficial Owners and Management              53

ITEM 12.   Certain Relationships and Related Transactions                              53

ITEM 13.   Exhibits and Reports on Form 8-K                                            54
</TABLE>


<PAGE>
                                     PART I.
                                     -------

                                     ITEM 1.

                             DESCRIPTION OF BUSINESS

OVERVIEW

     DCH  (Diversified Commercial Hydrogen) Technology, Inc. (DCH) is engaged in
the  acquisition,  development  and  commercial  exploitation  of hydrogen-based
technologies.  Specifically,  we  concentrate  on  fuel cells, hydrogen-specific
sensors  and  hydrogen  safety.

     We  seek  out  patented  technologies,  secure  those patented technologies
through  licensing  agreements  with  the  patent  holders  and  convert  the
technologies  into  viable  products  that we then produce and sell. We focus on
technologies  related to the use of hydrogen, primarily hydrogen gas sensors and
fuel  cells.

     In  this  Annual  Report  on  Form  10-KSB,  the  term  "DCH" refers to DCH
Technology,  Inc.,  a  Delaware corporation, DCH Sensors Corp., our wholly-owned
California  subsidiary,  and  Enable  Fuel  Cell  Corporation,  our wholly-owned
Wisconsin  subsidiary.  We  are  traded on the American Stock Exchange under the
symbol  "DCH."

HISTORY

     DCH  was  formed  in November 1994.  Beginning in mid-1995, we directed our
efforts  toward  the  commercialization of a hydrogen gas detector developed and
patented  by  Sandia  National Laboratories (Sandia) in Albuquerque, New Mexico.

     After  investigating the hydrogen energy industry and related technologies,
the  management of DCH decided to pursue the licensing of the Sandia patent.  In
April  1996,  we  entered into a license with Sandia and began to concentrate on
the  production  and qualification of the hydrogen sensors. We commenced initial
pre-production  and  qualification of the hydrogen sensors in February 1997, and
continued  redesign  of  the  sensors  to  improve performance and reduce costs.

     In  May  1997,  all of the outstanding capital stock of DCH was acquired by
Connection  Sports,  Inc.,  (CSI)  a  publicly  traded  Colorado  corporation in
exchange  for  the  issuance of 6,000,000 shares of CSI common stock in order to
raise  capital  and provide a trading market and liquidity for our stockholders.
At  the time of the acquisition, CSI was a shell corporation with no assets, and
there  was  no pre-existing relationship or affiliation between or among us, CSI
and  its officers and directors. CSI's name was changed after the acquisition to
DCH  Technology,  Inc.  This  stock  exchange  transaction  is  treated  as  an
acquisition  by  us  of  the net tangible book value of the assets of CSI at the
date  of  the  acquisition.

     We  expanded  our  offices  and moved to Valencia, California in June 1998.
This  relocation  allowed  us  to  set  up executive and administrative offices,
manufacturing  and  engineering  areas  (including  a  design  and  engineering
laboratory),  a  test  and  calibration  laboratory and a manufacturing/assembly
area.  We re-incorporated in Delaware in June 2000.  In September 2000, we moved
our  sensor  production  to a new building located in Valencia, California.  Our
principal  executive  offices are located at 24832 Avenue Rockefeller, Valencia,
California  91355;  our  telephone  number  is  (661)  775-8120. Our web site is
located  at  http:\\www.dcht.com.  The  material on our web site does not form a
part  of  this  Annual  Report  on  Form  10-KSB.


                                        1
<PAGE>
GENERAL  /  PRODUCTS

     We  are presently manufacturing and selling a line of hydrogen sensors that
are  both  mobile  (a  hand  held  unit) and stationary (wall ceiling or conduit
mounted  units) to a wide range of industries and customers.  DCH also develops,
manufactures  and  sells  fuel  cells from as small as 12 watts to as large as 5
kWs.  All  these  products  are  consistent  with  our strategic approach to the
growth  of  a  hydrogen-based  economy  and are based upon licenses for patented
technologies.  Those  licenses  are:

     The  Robust Hydrogen Sensor (TM), licensed from Sandia National Laboratory.
We  currently manufacture products based on this technology. The Robust Hydrogen
Sensor (TM) is discussed below under "Hydrogen Gas Sensors---The Robust Hydrogen
Sensor  (TM)."

     The  Thick  Film  Hydrogen  Sensor,  licensed  from  Oak  Ridge  National
Laboratory.  This technology is still under development. The Thick Film Hydrogen
Sensor  is  discussed  below  under  "Hydrogen Gas Sensors---Thick Film Hydrogen
Sensor."

     The  Proton  Exchange  Membrane  (PEM)  Fuel Cell, licensed from Los Alamos
National  Laboratory  has  been developed. We are currently commercializing this
technology.  This  technology  is  in  the early stage of commercialization with
numerous  products  sold  for evaluation in 2001. The PEM Fuel Cell is discussed
below  under  "Fuel  Cells--PEM  Fuel  Cell."

HYDROGEN  GAS  SENSORS

     Our sensors are used to detect gaseous hydrogen, the most plentiful element
in  the  universe.  Hydrogen  appears  in  different  forms, combined with other
elements,  in  plants,  animals, fossil fuels and a wide range of other chemical
compounds.  Hydrogen in the gaseous state is combustible, odorless and colorless
and  is  widely  used  in  industrial, commercial and medical applications. When
hydrogen  burns,  it  generates  only  energy  and  water,  and  thus is a clean
non-polluting  fuel.  Based  on  industry  analyses  and  investments by several
automobile  manufacturers  in  hydrogen-based fuel cells, we believe that in the
future,  hydrogen  may  replace fossil fuels in both electrical power generation
and  as  the  fuel  of  choice  for  the  automotive  industry.

     Hydrogen  is  also  the  key  component  in  the  manufacture of chemicals,
especially  ammonia  and  methanol. It is used in large quantities in refineries
for  manufacturing  gasoline  and  heating  oil, as well as to make fertilizers,
glass,  refined  metals,  vitamins,  cosmetics,  semiconductor  circuits, soaps,
lubricants,  cleaners, margarine, peanut butter and rocket fuel. Our sensors act
to monitor and measure the amount of hydrogen used in processes within these and
other  industries.

     Hydrogen  is  explosive  when  it  reaches  an  approximate  four  percent
concentration  in  air  (this  is  known  as  the  "Lower  Explosive  Limit"  of
hydrogen).  In  order  to  avoid  these  hazards, it is necessary to monitor and
measure  the  concentration  of hydrogen in areas of concern and to either sound
warnings before this danger point is approached or to activate control equipment
which  results  in  the  avoidance  of  hazardous situations. Our sensors act to
alert,  warn,  measure  and/or  control  the  flow  and  use  of  hydrogen.

     Based  on  industry  sources,  we  estimate that the total annual worldwide
sales  of  hydrogen gas detectors amounted to approximately $443 million in 1999
and  is  expected  to  grow  to  $648  million  by  2005.


                                        2
<PAGE>
     Our  technologies  have opened additional markets for hydrogen gas sensors.
For  example, our sensors have been sold to Westinghouse for installation in the
Leningrad Nuclear Power Plant as safety monitors. They are the only economically
priced  hydrogen  gas  sensors that  could  withstand the harsh environment of a
nuclear  power  plant.

     We  have  licensed  these sensor technologies from several sources, and are
currently  developing  products based on these technologies: the Robust Hydrogen
Sensor(TM)  and  the  H2SCAN(TM)  system.

     During  2001,  we granted distribution rights to market and sell our sensor
products  to  SunLine  Services  Group  of  Thousand  Palms,  California,  a
separate  agency  of  SunLine  Transit  Authority,  which  is  a world leader in
alternative  energy  vehicles.  SunLine  Services  Group  is  a  world  hub  for
demonstrating the latest  in  alternative  energy vehicles, including the latest
technologies  from  Stuart  Energy,  Teledyne,  Siemens,  Quest  Air,  and  many
others.  These  technologies  are  showcased  in  a  "Clean  Air  Mall"  at
SunLine's  headquarters.

     We  have  targeted,  for  future  sensor product distribution arrangements,
several  companies  that  operate  businesses  in  multiple  locations  and have
established  distribution  networks  selling  other  industrial  gas  products.

     THE  ROBUST  HYDROGEN  SENSOR(TM)

     The Robust Hydrogen Sensor(TM) technology was invented and patented (patent
number 5,279,795) by the U.S. Department of Energy at Sandia in Albuquerque, New
Mexico.  The  technology,  an  Applications  Specific  Integrated  Circuit,  or
microchip,  was  developed  by  Sandia  for the U.S. Department of Defense for a
classified  nuclear  weapons  application.  After  Sandia  had  patented  the
technology,  it  was made available to the commercial market for licensing. This
process  permits the U.S. government to receive royalties and licensing fees for
the  technology  without  expending  the  resources  required  to  commercialize
products.

     We  licensed the Robust Hydrogen(TM) Sensor technology from Sandia in April
1996.  The  Sandia  license  agreement  expires  on  January 1, 2015 or upon the
expiration  of  Sandia's  patent  rights,  whichever  is  earlier. The agreement
required us to pay an up-front license fee, payable in three equal installments.
All  of  these  installments  have been paid. In addition to the license fee, we
will  pay  a  royalty  to  Sandia  for  every sensor sold (whether sold alone or
installed  in a device or system), subject to certain minimum royalties. In 2000
and  2001,  we  paid  royalties  of $25,793 and $25,000, respectively, to Sandia
under  the  Sandia  license  agreement.

     The  Sandia  license  agreement  defines two fields of use for the licensed
technology.  The  first  field of use, covering the petrochemical, energy, waste
management,  environmental  and  manufacturing  industries,  was exclusive to us
through  April  24,  2001.  After  that  date,  the license in this field became
non-exclusive  for the remaining term of the license agreement. The second field
of  use  covers  all  other  commercial  applications  and  is  non-exclusive.

     The  Robust  Hydrogen Sensor technology consists of an array of two sensing
elements: field effect transistors (FET's) and resistors, both made of palladium
nickel.  Hydrogen  reacts  with  the palladium nickel, and the reactions produce
changes  in the electrical signal of both devices corresponding to the amount of
hydrogen  in  the  environment. The FET's detect hydrogen in concentrations from
approximately 0.0001% to one percent. The resistors allow sensing from about one
percent  to  100%  concentration.  Our  present  sensors  contain  the  resistor
technology.  We plan to add the FET to the sensor products in the second quarter
of  2002.  The  technology  also  includes  a  micro-thermometer


                                        3
<PAGE>
(temperature  diode)  and  micro-heaters  for  maintaining  on-chip temperature
control  and other chip functions.  The heaters are used to temporarily heat the
chip to "boil" off hydrogen molecules, which may adhere to the palladium nickel,
thus  freeing  the  sensor  for  repeated  use.

     We  offer  the Robust Hydrogen Sensor technology in three basic forms.  The
first,  an  integration kit, is used for installation into customized systems as
leak detectors and measurement devices.  The second form consists of a hand-held
unit,  affording  portability  in hydrogen detection and measurement.  The third
form  is  a  sensor  system, a fixed installation arrangement for leak detection
and/or measurement in remote locations. This third product has the ability to be
remotely interrogated whenever desired, and may be coupled with a modem or radio
tag  which  powers  the  sensor  and sends an analog or digital signal back to a
computer  or  other  equipment  at  another  location.

     During  2001,  our line of hydrogen-specific sensors made increased inroads
into  the  semiconductor  manufacturing  industry.  We are currently sole source
suppliers  for  several  companies.  Several  automotive  companies  are  either
testing  or  using our sensors in prototype fuel cell cars or using our handheld
H2SCAN(TM)  unit  (see  below)  for  leak  detection during  fueling at hydrogen
refueling  stations.  We  are continuing to ship sensor products for use in real
time  measurement  for  reformer applications. We have redesigned  a sensor head
for  measuring  the amount of hydrogen in the out gas of the  reformer.  Several
fuel  cell  and automotive companies are currently testing our  Robust  Hydrogen
Sensor(TM)  for  this  application.  Our  sensor  research  and  development
efforts  are  focused  on  working  with  automotive  companies  to  develop  an
effective,  cost-efficient  sensor  for  hydrogen-fueled  cars  and  trucks.

     The  next  generation  of  our  Robust  Hydrogen  Sensor(TM),  a  unique
thin-film-on-integrated  circuit sensor will be sold as a stand-alone product as
well  as  the  sensor  module  for  H2SCAN(TM)  systems. The new Robust Hydrogen
Sensor(TM)  will  contain  a hydrogen-sensing field effect transistor (FET) that
offers  two  orders  of  magnitude greater sensitivity to hydrogen than existing
sensors.  During  the  third quarter, we received the first set of prototypes of
this  second  generation sensor from our supplier, Silicon Valley Sensors, Inc.,
for  evaluation. This evaluation led to several design changes in the sensor. We
plan  to  introduce  the  new, improved Robust Hydrogen Sensor(TM) in the second
quarter  of  2002  to  a much broader customer base requiring hydrogen detection
below  100  ppm  and  precision  sensors  for  manufacturing  process monitoring
applications.

     H2SCAN(TM)  SYSTEM

     Our  state  of the art H2SCAN(TM) hydrogen-specific sensing systems offer a
robust,  high  performance  alternative to gas detectors used in many industries
today,  including  food  processing,  petrochemical  production,  semiconductor
manufacturing,  and  glass  and  metals  processing.  The  H2SCAN(TM)  system
incorporates  our  Robust  Hydrogen Sensor(TM) in a system that gathers analyzes
and  communicates  data to control systems or human interface devices at digital
speed.

     The  H2SCAN(TM)  system  is  packaged  as an application-specific family of
products,  ranging  from  hand-held portable leak detectors to wall mounted leak
detectors  and  process  monitors  and  rack mounted multiple sensor systems. By
combining  efficient  electronics engineering and molded assembly components, we
have shortened assembly time and increased our gross profit margin on the units.
At  the  same  time, we have added to the units over nine new features and three
sensor  components  that  formerly  were  optional  equipment. In April 2001, we
delivered  the  first  H2SCAN(TM)  unit  to  an automotive customer for use at a
hydrogen  refilling  station  in  Sacramento,  California.  Since  then, several


                                        4
<PAGE>
automotive  companies have ordered and are testing H2SCAN(TM) systems for use in
prototype  fuel  cell  cars  and  for  leak detection during fueling at hydrogen
refueling  stations.

     The  H2SCAN(TM)  system  provides  improved resolution and stability over a
greater  environmental  temperature range relative to the DCH wall/ceiling-mount
systems  it  replaces.  We  demonstrated  this  product  as  a  prototype  to L3
Communications  which resulted in a contract to develop an H2SCAN(TM) system for
one  of L3's telecommunications applications. Several units were delivered to L3
during  the  fourth  quarter  of  2001  for testing and evaluation. The L3 units
passed  various  military  specification  tests and have been approved by L3 for
production.  Production  of these units will begin in the first quarter of 2002.

     We  also  shipped  H2SCAN(TM)  sensing systems for monitoring high-pressure
hydrogen  process  applications.  These  applications  require  that  a  40%
concentration  of  hydrogen  gas  be measured at approximately 30 atmospheres of
pressure.  Other  customers are evaluating similar prototype units. Based on the
success  of  these  units,  we  will  introduce  a family of fixed high-pressure
hydrogen  sensors  based  on  H2SCAN(TM)  technology.  Production is planned for
mid-2002.

     THICK  FILM  HYDROGEN  SENSOR

     The  Thick Film Hydrogen Sensor technology was invented and patented (under
U.S. patent numbers 5,367,283 and 5,451,920) by the U.S. Department of Energy at
Oak  Ridge  National  Laboratory  in  Oak  Ridge,  Tennessee (ORNL). The sensor,
developed  by Barbara Hoffheins and Robert Lauf of ORNL, relies on the fact that
palladium  absorbs  and  then  discharges  hydrogen.

     The sensor is fabricated with conventional thick film materials and methods
(primarily  because  of  significant  cost  advantages).  The design consists of
several  electronic  compositions  that  are separately screen-printed and fired
onto  an  alumna  substrate. The key sensor composition is primarily composed of
palladium  metal  because  of  its  documented affinity for hydrogen. Changes in
hydrogen  concentration in the palladium correspond to changes in the electrical
resistance  of  the  palladium  and  can  be  easily  measured.

     We  commenced  the development of the Thick Film Hydrogen Sensor technology
in  September 1996, pursuant to a Cooperative Research and Development Agreement
(CRADA)  (the  ORNL  CRADA) with Lockheed Martin Energy Research (LMER), an ORNL
contractor.  Under  the  ORNL  CRADA,  we  provided  a business plan and product
definition  for  commercialization  of  the  technology,  while  LMER  continued
development efforts for certain products based on the technology. The ORNL CRADA
expired  in  September  2001  and  was  not  renewed.

     Concurrently  with  entering  into  the  CRADA, DCH and LMER entered into a
license  agreement.  The  LMER  license  grants us the sole commercial right and
license  to  manufacture,  use, sell or offer for sale the products based on the
Thick  Film  Hydrogen  Sensor  technology  in  the  following fields of use: (i)
production,  storage and transportation of hydrogen for use in the generation of
power;  (ii)  use  of  hydrogen in fuel cells and high yield energy storage; and
(iii)  safety  applications  in  the  chemical  and  petroleum  industries.

     The  license  has  an  initial  term  of five years, with renegotiation for
renewal  every  five  years  thereafter.  It provides for an initial license fee
(paid by DCH in September 1996) and royalties on sales of products incorporating
the  Thick  Film  Hydrogen  Sensor  technology.  To  date, no revenues have been
generated  from such sales. In 2001 we reached an agreement with ORNL to suspend
royalty  payments until such time as a commercially viable product is developed.
We are continuing to conduct research and development on commercial applications
for  this  product.


                                        5
<PAGE>
     FIBER  OPTIC  HYDROGEN  SENSOR

     The  Fiber  Optic  Hydrogen  Sensor  technology  was  invented  by the U.S.
Department  of  Energy  at  the  National  Renewable Energy Laboratory (NREL) in
Golden,  Colorado.  DCH, through Amerisen, a joint venture with Midwest Research
Technology, Inc. (MRT), commenced development of the Fiber Optic Hydrogen Sensor
technology  in  May  1996 pursuant to a CRADA with NREL. The NREL CRADA required
NREL  to  have  primary responsibility for design and development of a prototype
sensor,  while  Amerisen  would develop and manufacture a hydrogen detector test
station  and  demonstrate  the  sensor  to potential customers. Each party would
contribute in-kind support, valued at an aggregate of $1,700,000. The NREL CRADA
expired  in  September  2001  and  was  not  extended  due to technical concerns
regarding  the  ultimate  commercialization  of  the  technology.

     FUEL  CELLS

     The fuel cell was invented by William Robert Grove in 1839.  A fuel cell is
a  device  that  uses  a  fuel  (usually hydrogen) to create electricity from an
electrochemical  process.  To create electricity   Hydrogen is introduced to one
side of the fuel cell (known as the anode). The hydrogen atom is stripped of its
electron  as  it  progresses  through  the  cell.  The  electron  goes through a
conductor  creating  an  electrical  current.

     A  fuel cell produces clean power (electricity) with pure water as the only
byproduct.  The  amount  of  power  that  can  be  created  is significant. ONSI
Corporation,  one  of  our  competitors, has manufactured a fuel cell delivering
200kW of power. Ballard Power Systems, another competitor, makes fuel cells used
in  buses  in the U.S. and Canada which generate 205 kW (275 HP). Fuel cells are
being  considered  for  use  to  power  electric  vehicles  by many of the major
automobile  manufacturers.

     The  fuel  cell industry is generally considered to be in its infancy (even
though the basic technology is over 160 years old). Historically fuel cells have
been  large and extremely expensive to manufacture.  However, rapid improvements
in  technology  and  materials  coupled  with  increasing  energy  concerns have
encouraged development from both government and industry.  As a result, the fuel
cell  is  quickly  becoming  economically  viable  and  physically  practical.

     PEM  FUEL  CELL

     Several  fuel  cell  manufacturers  have  indicated that in addition to the
transportation  sector,  fuel  cells  might be used in markets such as emergency
power  supplies,  medical  applications,  and portable low-power sources. We are
working  with Los Alamos National Laboratory in Los Alamos, New Mexico (LANL) to
commercialize its Proton-Exchange-Membrane (PEM) fuel cell -- a small, stackable
device  (each  unit  is  approximately  the  same  size as a soda can) that will
deliver  low power (less than 50 to 500 watts) reliably and cleanly. The current
configuration  of  the  PEM  fuel  cell  is  not  powerful  enough to operate an
automobile,  but it can provide enough power for people in third world countries
or in an emergency situation or other venue where no power is present to operate
such  items  as  small  medical  equipment,  communication  devices  and camping
equipment.


                                        6
<PAGE>
     We  produce PEM fuel cells in two power ranges, 5 to 50 watt and 1 kilowatt
to  20  kilowatt.  Each  range is supported by licensed technology.  Our 5 to 50
watt  fuel cells (Passive PEM technology) rely on technology relating to annular
feed  air  breathing  fuel cell stacks, invented and patented (under U.S. patent
numbers  5,514,486  and  5,595,834)  by  the  U.S. DOE at LANL. The fuel cell is
designed  to  provide  clean,  economic  low  power.

     We commenced development of the PEM fuel cell technology with LANL in March
1999,  pursuant  to  a  CRADA  (the  LANL  CRADA). Under the LANL CRADA, we have
provided  a  business  plan  and product definition for commercialization of the
technology, while LANL continues development efforts for 50W and 300W fuel cells
based on the technology. The LANL CRADA for the PEM fuel cell technology expires
in October 2002 and contemplates aggregate development expenditures (in cash and
in-kind)  of  $1,200,000.

     In  connection  with  the  LANL CRADA, we received two licenses for the PEM
fuel  cell  technology.  The  first  license  grants us the exclusive license to
manufacture,  have  made, use, import, sell and offer to sell the products based
on  the  patented  technology  (with  sublicense rights) in the fields of use of
power  generation  for  marine,  aerospace,  military,  portable and remote-area
applications.  The exclusive license commenced in March 1999 and continues until
the  expiration  of  the  last  patent  on  the  technology.

     The second license grants us the non-exclusive license to manufacture, have
made,  use,  import,  sell  and offer to sell the products based on the patented
technology  (with  sublicense  rights)  for  all  other  applications.  The
non-exclusive license commenced in March 1999 and continues until the expiration
of  the  last  patent  on  the  technology.

     The  exclusive  and nonexclusive license agreements provide for an up-front
fee  (paid  by DCH in March 1999) and annual license fees due on January 31st of
each  year  of the term of the nonexclusive license; these fees will be credited
against  royalties  on  net  sales of the fuel cells and other payments (such as
sublicense  fees).  This  technology and license provide DCH with the ability to
develop very simple (Passive) small fuel cells that are "solid state" in design.
Capitalizing  on several internally engineered development-derived improvements,
we have commercial products in the 5 to 50 watt range that can operate from -20C
to  +60C. Many of these improvements have patent applications awaiting approval.

     The  Active Technology,  an additional PEM fuel cell technology relating to
adiabatic  fuel cell stacks, was invented and patents were applied for (under US
patent  application  numbers  08/810,119  and 09/135,965) by the US DOE at LANL.
The  fuel  cell  is  designed to provide clean, economic power up to about 20kW.

     In  October  1999,  we  entered  into  a  license  agreement for the Active
Technology.  This  agreement grants us the non-exclusive license to manufacture,
have  made,  use,  import,  sell  and  offer  to  sell the products based on the
technology  (with  sublicense  rights)  in  all fields of use, within the United
States.  The license agreement continues until the expiration of the last patent
on  the  technology.

     The  license  agreement provides for an up-front fee (paid by us in October
1999)  and  annual  license fees due on January 31st of each year of the term of
the  nonexclusive  license; these fees will be credited against royalties on net
sales  of  the  fuel  cells  and  other  payments (such as sublicense fees).  In
cooperation  with  LANL,  we have applied for exclusive license rights in Europe
and  the  Americas  (exclusive  of  the  United  States).


                                        7
<PAGE>
     In  June  of  2000,  we  announced  the  formation  of NeWave(TM) Fuel Cell
Corporation  (NeWave(TM)),  a  joint  venture  with Daido Metal Company, Ltd., a
Japanese  high  volume  production  manufacturer  of precision metal components.
During  the third quarter of 2000, the joint venture agreement was signed and is
now  being implemented. Under the agreement, Daido will manufacture and assemble
fuel  cell  products, initially small portable fuel cells ranging from less than
one watt to 50 watts. The joint venture will also encompass future production of
larger  fuel  cells  for stationary applications. These products will be sold by
NeWave.(TM) NeWave(TM) sold its first 12W/12V portable fuel cells in August 2001
to targeted customers in the Japanese automotive, electronics manufacturing, and
highway  sign  industries.

     In  May  2001,  we  reached  an  agreement  with  IPS  MeteoStar of Aurora,
Colorado,  a  global  supplier  of  remote data-logging systems that communicate
information  back  to  customers  real-time via satellite, to begin distributing
products  with  our  portable  fuel  cells  serving  as  the  internal  electric
power supply. A MeteoStar  monitoring system powered by our 12W/12V fuel cell is
currently  being  used  by  the  State  of  Texas  for  monitoring  water
quality.

     We  received  a  contract  in July 2001 from  the  Texas  Natural  Resource
Conservation  Commission  (TNRCC)  for  10  fourth-generation  DCH  Enable(TM)
portable fuel cell power  systems.  These  30-watt  systems,  enclosed in robust
casings  for  remote  field  operation,  will  provide  electricity on demand to
air  and  water  quality sampling equipment, as well as communications equipment
providing  real-time data feedback  to  the TNRCC. In conjunction with the TNRCC
contract,  we  successfully  completed  development  of  a  portable  fuel  cell
with  an  operating  temperature  range  of  up  to 50 C, expanding the previous
temperature  range  of  the  fuel  cell.

     The  State  of Pennsylvania placed an order for one DCH Enable(TM) portable
fuel  cell  power system in January of 2002.  We shipped the unit in February of
2002.

     In  2001,  we  made  several  key deliveries of Enable(TM) fuel  cells  and
fuel  cell  systems.  We  delivered  a  5  kW  fuel  cell system to UOP LLC - an
international  developer  of  process  technology  and a supplier of natural gas
reformer  technology  to  the  fuel  cell  industry  -  for  integration  with a
natural  gas  fuel  processor.  The  integrated  system  was  delivered  to  a
European  client  of  the  Electric  Power  Research  Institute's (EPRI's) Power
Quality  Program  in  December  of  2001.

     Two  low-temperature portable fuel cells were delivered to Shell Iceland in
2001  as  part  of  an  ongoing  market  study  in  Iceland.  The fuel cells can
operate  at  temperatures  down  to  -20  C,  a critical parameter for practical
implementation  of  portable  fuel  cell  power.

     We  also  delivered  a 5 kilowatt DCH fuel cell with a natural gas reformer
for  testing  and  demonstration  to  the  Houston  Advanced  Research  Center
(HARC).  A  consortium,  organized  by  HARC,  will  test  the  fuel  cell's
performance and reliability as a clean and affordable  energy source. Consortium
members include Dana Corporation, Southern Company, Texaco Energy Systems, Inc.,
and  Walt  Disney Imagineering Research and Development.  Consolidated Edison of
New  York  also  ordered  a  5  kW natural-gas fueled fuel cell  system  in  the
third  quarter  of  2001  for  evaluation.  This unit will be delivered in April
2002.

     In  the  third  quarter  of  2001,  we  changed  our internal materials and
procurement  system  for fuel cells to accommodate future manufacturing needs by
outsourcing  certain  components  to  reduce  costs.  We  have  also  negotiated
significant  price  reductions for stack materials and are in negotiations  with
contract  manufacturers  for  the  balance  of  fuel  cell  system  fabrication
services.


                                        8
<PAGE>
DCH  CENTER  FOR  HYDROGEN  SAFETY  (CHS)

     In  June  2001,  we  formally  established  the  DCH  Center  For  Hydrogen
Safety(TM)  (CHS).  The  CHS  provides  consulting  and  training  services  to
OEMs  of  hydrogen-power  products,  as well as generators and users of hydrogen
and their suppliers. Response to the CHS has been excellent. To date the CHS has
submitted  six  proposals  for  services  and  has  received  awards  on  all
six.

     Under  a  contract  from  a major domestic automobile manufacturer, the CHS
developed  and conducted a seminar on hydrogen safety at the manufacturer's fuel
cell  development  center. The course is based upon the NASA Safety Standard for
Hydrogen  and  Hydrogen  Systems. More than 60 employees attended the class, and
the  customer  indicated  that  it  was very pleased with the program. With this
validation  in hand, the CHS is now aggressively promoting this course. Industry
and  government  have  expressed  growing  interest.

     The CHS is concurrently promoting its services for assessing hydrogen risks
at  existing  facilities.  This  activity  resulted  in  a  contract  for a Risk
Assessment  Report to General Dynamics that analyzed the hydrogen risk exposures
due  to  hydrogen  emissions  from  batteries  in  a communication shelter under
design.  The  report's recommendations included the need for hydrogen sensors to
control  the  shelter  environment.

     CHS senior consultant Dr. Addison Bain authored a white paper for the South
Coast  Air  Quality  Management  District  (SCAQMD)  of California on compressed
natural gas (CNG) and compressed hydrogen gas (CHG), addressing "Best Industrial
Practices  Involving CNG, CHG and CNG/CHG Blends As Automotive Fuels." The paper
clarified  the  evolving  consensus-building  process  for  codes  and standards
dealing  with  hydrogen  and  built  a  strong  case  for  employing  prudent
engineering  judgment  based  upon  applying existing related specifications and
adapting  them  to  hydrogen  specific  properties.

MARKETING  AND  SALES

     HYDROGEN  SENSORS

     Our marketing strategy for hydrogen sensors has three major focuses.

     First,  we are targeting traditional users of hydrogen sensors - those that
today  require  very  precise  sensors  to  monitor hydrogen used or produced in
semiconductor  manufacturing,  petrochemical  manufacturing,  metals  forming,
nuclear  power,  medical  manufacturing,  and defense systems.  These industries
today  settle  for  less-than optimal performance from a variety of gas sensors,
some  of  which also require expensive support equipment. Our H2SCAN(TM) systems
provide  highly  precise robust performance in harsh conditions.  Moreover, they
are  hydrogen-specific,  operating without influence - and false readings from -
other background gases.  Key players in the semiconductor and defense industries
have  recently  joined the National Aeronautics & Space Administration (NASA) in
validating  our  sensors  as  best-in-class.

     Second,  we  are  targeting  off-gas  safety  applications.  Large banks of
lead-acid  batteries  are a standard for remote power, used in a wide variety of
applications  ranging  from  standby  power  systems  for electric utilities, to
transportable power for military systems, to internal power for ocean buoys.  In
many  cases,  for lack of a suitable sensing system, these battery packs are not
monitored  for  explosive  hydrogen  off-gases.  Our  H2SCAN(TM)  sensor systems
provide  a  new  viable  solution.


                                        9
<PAGE>
     Finally,  we  are  targeting the growing vehicle market for hydrogen power,
where  five  automobile  manufacturers have ordered our sensors to validate them
for  onboard  applications.  Fuel  cell  vehicles  running  either  directly  on
hydrogen,  or  on  fossil  fuels  reformatted  to provide hydrogen fuel, require
sensors  for  both  monitoring  the  reformatting  process and as safety systems
continually  canvassing  the  vehicle  for  hydrogen  leaks.  Response  to  our
H2SCAN(TM)  systems  has  been  very  promising.

     Implementing this strategy involves four components: 1) establishing DCH in
the  "hydrogen  community,"  comprised  of  trade  groups  such  as the National
Hydrogen  Association,  the  California  Hydrogen  Business  Council  and  the
Congressional  Hydrogen  Technical  Advisory  Panel; 2) establishing a coalition
with  the  insurance  industry  to require use of hydrogen detection systems; 3)
establishing  strategic  relationships  with original equipment manufacturers in
various  key  markets  such as semi-conductor, battery monitoring and government
aerospace  markets;  and 4) using commissioned independent sales representatives
specializing  in  particular  industries  to  sell  our  products.

     As  part  of  our  overall  business  plan,  we have entered into strategic
partnerships  with several organizations. We believe that strategic partnerships
are  a  key  to  future  growth,  especially  in  the hydrogen gas detection and
measurement  business.  We  have identified 34 industries where hydrogen sensors
are  used. By creating alliances with value added resellers and distributors, we
anticipate that we will be able to penetrate multiple markets and realize higher
sales  volumes.

     During  2001,  we granted distribution rights to market and sell our sensor
products  to  SunLine  Services  Group of Thousand Palms, California, a separate
agency  of  SunLine  Transit  Authority,  which is a world leader in alternative
energy  vehicles.  SunLine  Services  Group is a world hub for demonstrating the
latest  in  alternative  energy vehicles, including the latest technologies from
Stuart  Energy,  Teledyne,  Siemens,  Quest  Air,  and  many  others.  These
technologies  are  showcased  in  a  "Clean Air Mall" at SunLine's headquarters.

     FUEL  CELLS

     We  are  focusing  our  portable Passive fuel cell products on remote power
applications  as battery replacements.  DCH has commercial products in the 12 to
30  watt  range  that  can  operate from -20C to +50C as well as a wide range of
humidities.

     Our  portable  Passive  fuel  cells  offer  power-to-weight advantages over
batteries  that  have  already attracted the interest of the military for use in
field  and  on-body  power.  Fuel cells are emissions free, and require far less
maintenance  than batteries. For this reason our 30-watt fuel cell power pack is
used in the field today by the Texas Natural Resource Conservation Commission to
monitor  water  quality in rivers throughout the state. This product also powers
uplink communications equipment to regularly send data back to central locations
for  real-time analysis. Other near-term potential applications include personal
mobility  applications,  such  as  fuel  cell  powered  electric  bicycles  and
wheelchairs,  and  secondary  vehicle  power  applications,  such  as  power for
refrigerators  used  on  commercial  Class  8  tractor-trailers.

     We  are  focusing  our active fuel cell marketing efforts in the high-value
standby power markets. These markets are ideally suited for the Company's active
fuel  cell systems, which have the reliability and quick response times demanded
of  high-value  standby  power  systems  while  also  offering  other attractive
advantages incumbent technologies cannot. Products for these markets are capable
of  commanding  a  premium price, with incumbent technologies selling for nearly
$5,000  per  kW.


                                       10
<PAGE>
     Of all the markets for high-value stand-by power, two stand out as the best
opportunities  for  DCH.  Based  on  our  utility sales and performance history,
specific attributes of our active fuel cell system technology, and our desire to
focus on the earliest adopters of fuel cell power systems, we are now channeling
our  product  development, marketing, and launch efforts on opportunities in the
electric  utility  and  telecommunication  industries.

     These  market segments - which are being strongly driven by their customers
to  a  higher  level  of  power  quality and require nearly identical high-value
standby  power  products - are expected to have annual standby and back-up power
needs  growing at 15% annually to nearly $1.14 billion in North America and $6.0
billion  worldwide  by  2005.  Advances  made for this industry will position us
well  for  entry  into the telecommunications markets as DCH - and the fuel cell
industry  in  general  -  continues  to drive the cost of products down with new
materials  and  design  for  manufacturing.

     These  strategies  do not preclude DCH from pursuing other opportunities in
other markets in the longer term. On the contrary, they will allow us to deliver
and  prove  products with very high profile customers that will have a myriad of
alternative  applications  in  those markets requiring much larger reductions in
pricing,  for  example,  the  commercial  and  residential  facility markets and
small-scale  personal markets will not develop until later this decade. Our goal
is  to  provide  attractive  returns  on  investment  in  the  near  term  while
positioning DCH to become a major player in fuel cell systems in many markets in
the  decades  to  come.

RESEARCH  AND  DEVELOPMENT

     We  believe  that  continuing  research  and  development  of  our licensed
technology  is critical to penetrating existing markets through superior product
features, opening new markets and obtaining a competitive advantage.  To date, a
significant  portion of our research and development has occurred through CRADAs
with  the U.S. Department of Energy: the ORNL CRADA, the LANL CRADA and the NREL
CRADA.  See  "Business  -  General/Products."

     During  the  years  ended  December  31,  1999,  2000 and 2001, we expended
$841,708, $1,779,964, and $2,482,506, respectively, on research and development.
None  of  these  expenses  were  funded  by  our  customers.

MANUFACTURING

     Our  Robust Hydrogen Sensor product line is currently being manufactured in
Valencia,  California.  All  of  our  engineering,  quality  control  and  final
production  activities  are  conducted  at the Valencia facility. We subcontract
specialty  processes  relating  to  the  Robust  Hydrogen Sensor product line to
several  manufacturers,  including Corlund Electronics which manufactures all of
the  circuit  boards  used in our Robust Hydrogen Sensor(TM).  The subcontracted
components are received, inspected and then processed into completed products at
our  facilities.  We  also manufacture several models of fixed area and portable
hydrogen  detection  sensors  under the H2SCAN(TM) product line.  The production
cycle  of  our  Robust  Hydrogen  Sensor(TM)  products  currently  averages
approximately  two weeks, which is a reduction of six weeks from 1999.  To date,
we  have  not  experienced  any  interruption  in  the manufacture of our sensor
products and we anticipate that sources for each of our subcontracted activities
will  continue  to  be  readily  available.

     We manufacture fuel cells at our Enable Fuel Cell Corporation facilities in
Madison,  Wisconsin.  To  date,  we have not experienced any interruption in the
manufacture of our fuel cell products and we anticipate that sources for each of
our  subcontracted  activities  will  continue  to  be  readily  available.


                                       11
<PAGE>
BACKLOG

     We  had a commercial order backlog of $921,200 for our products at December
31, 2001, compared to $198,000 at December 31, 2000. The backlog at December 31,
2001  was  comprised of orders for our Enable fuel cells.  We generally ship our
sensor  products  within  two weeks of when we receive a purchase order from the
customer.  Our  fuel  cells  take  several  weeks  to assemble, depending on the
customer's  specifications.

COMPETITION

     We  compete  in  both  the  hydrogen  sensor  and  fuel  cell  markets.

     The  hydrogen  sensor  market  is  extremely  competitive,  with  several
manufacturers  competing  for acceptance.  This is due in large part to the rise
in  hydrogen  sales  in  the  United  States, which increased dramatically at an
average  annual  rate  of more than 25% during the period from 1993 to 1997.  In
addition,  although  the  need to monitor hydrogen gas at low concentrations has
been  recognized  for  many  years, the need for monitoring devices continues to
expand  rapidly  as more hazards are identified and more stringent standards are
imposed  upon  the industry.  The market for gas sensors, including hydrogen and
other  gas detection devices, was internally estimated at $1.09 billion in 1997.

     We  believe that our hydrogen sensor products offer several advantages over
our competitors.   These advantages include: 1) hydrogen specific, 2) operate in
any  environment  within  a very broad range of temperatures and pressures, 3) a
faster  reaction  time  of  less than two seconds near the Lower Explosive Limit
(current  detectors  may  take as long as two minutes to return a reading), 4) a
broad  sensing  range  from  50  part per million to 99%, and 5) extended sensor
life.  In addition, our sensors are hydrogen-specific and therefore not prone to
false  readings,  and operate in hostile environments such as radioactive areas.
Finally,  the sensors indicate a complete range of hydrogen presence, similar to
that  offered  by  mass  spectrometers  but  at  a  much  lower  cost.

     Competition  in  the fuel cell industry is comprised primarily of companies
that  do  research,  testing,  and  early commercialization of fuel cells.  This
developing  industry  is estimated  by industry sources to increase to more than
$10,000,000,000  by  the  year  2010. We are competing primarily on the basis of
fuel  cell  efficiency,  environmental  considerations  and cost. We believe our
simple,  Passive  technology  will provide significant economic, utilization and
performance  advantages  over  our  competitors'  technologies.  For example, we
believe  that  our hydrogen fuel cells have significant advantages over existing
low power fuel cells in development at other companies. These advantages include
a  smaller size and weight, no moving parts (it is a completely Passive device),
low  cost and simplicity of design.  Despite this, we can give no assurance that
such  advantages will continue or that our hydrogen fuel cells under development
will  be  commercially  successful.

     Several companies in the United States and Canada are involved in fuel cell
development,  including  Hydrogenics,  Plug  Power,  United  Technology's  ONSI
Corporation  and  Ballard Power Systems. Ballard Power Systems focuses primarily
on  development of fuel cell technology for  larger stationary power systems and
secondarily  for  transportation.  Our  products  focus  primarily  on  smaller,
consumer  sized  fuel  cell  designs  for portable or remote electric power.  In
Japan,  at  least six manufacturers have demonstrated interest in developing and
marketing  fuel cells. In Europe, companies in Germany, Holland, Spain and Italy
are  actively  engaged  in  fuel cell development and are potential competitors,
although  their  efforts  are not as well advanced as the progress of the United
States  and  Japanese  companies.  Almost  all  of  these  companies  are  also
significantly  larger  than we are, possess greater financial resources and have
established  product lines in electric generation equipment and in other fields.


                                       12
<PAGE>
     In  addition  to the hydrogen fuel cell, other types of fuel cells are also
being  developed  by  different companies worldwide. These fuel cells, generally
referred to by the electrolyte medium they use, include phosphoric acid, polymer
electrolyte  and solid oxide systems.  These fuel cells are in various stages of
development  and  aim  at  different  applications  including  stationary power,
transportation  and  portable  power.  The  phosphoric  acid  fuel  cell system,
developed  by  United  Technology's  ONSI Corporation (80kw and higher) is in an
advanced  stage of development and has had limited commercial sales.  We believe
that  this  system  is  significantly  less efficient and is expected to be more
expensive  compared  to  our fuel cell technology, but it is an alternative fuel
cell  product  to  our  own.

GOVERNMENT  REGULATION

     We are permitted to export our hydrogen sensors without restriction, as the
U.S.  Department of Commerce, Bureau of Export Control has designated the sensor
as  an  unrestricted  export item. Our production of hydrogen fuel cells will be
subject  to  various Occupational Safety and Health Administration (OSHA) rules,
other  federal,  state  and  local  laws,  and  insurance companies and industry
professional regulations relating to, among other things, land use, safe working
conditions,  handling  and  disposal  of  hazardous  and  potentially  hazardous
substances and emissions of pollutants into the atmosphere.  To date, we believe
that  we  have  obtained  all  necessary  government  permits  and  have been in
substantial  compliance  with  all  of  these  applicable  laws and regulations.

EMPLOYEES

     As  of  December  31,  2001,  we  employed  41 people on a full-time basis,
consisting  of  24  people  in  engineering/development/manufacturing,  10  in
administration  and  7  in  sales/customer  service.  Our  employees  are  not
represented  by  a  labor  union,  and we have experienced no work stoppages. We
believe  that  our  employee relations are good. The loss of key employees could
cause  delays  in  completing  contracted  work and research and development and
commercialization  activities.

INTELLECTUAL  PROPERTY

     We  have registered the trademark, "Robust Hydrogen Sensor", and are in the
process  of  registering the trademarks, "Hydrogen is the Future -- We Can Sense
It!"  and  "The  Center  for  Hydrogen Safety" with the United States Patent and
Trademark  Office.

     We  regard  the  protection  of  our copyrights, service marks, trademarks,
trade  dress  and  trade secrets as critical to our future success and rely on a
combination  of  copyright,  trademark,  service  mark and trade secret laws and
contractual  restrictions  to  establish  and  protect our proprietary rights in
products  and  services.

     We  have  entered  into confidentiality and invention assignment agreements
with  our  employees  and  contractors,  and  nondisclosure  agreements with our
suppliers  and  strategic partners in order to limit access to and disclosure of
our  proprietary  information.

     We  have  applied  for  patent  protection  on  certain improvements to our
licensed  technology  with  the  United  States  Patent  and  Trademark  Office.


                                       13
<PAGE>
CAUTIONARY  STATEMENTS  REGARDING  FUTURE  RESULTS  OF  OPERATIONS

     You should read the following cautionary statements in conjunction with the
factors  discussed elsewhere in this Annual Report and other of our filings with
the  Securities  and  Exchange  Commission.  These  cautionary  statements  are
intended  to  highlight  certain factors that may affect our financial condition
and  results  of  operations and are not meant to be an exhaustive discussion of
risks  that  apply  to  companies  such  as  DCH.  Like other businesses, we are
susceptible  to  macroeconomic downturns in the United States or abroad that may
affect  the  general  economic  climate and performance of DCH or our customers.
Similarly,  the  price  of  our  securities  is  subject  to  volatility  due to
fluctuations  in  general  market  conditions,  differences  in  our  results of
operations  from estimates and projections generated by the investment community
and  other  factors  beyond  our  control.

RISKS  RELATED  TO  DCH'S  OPERATIONS

WE  MAY  BE UNABLE TO MEET OUR FUTURE CAPITAL REQUIREMENTS, WHICH MAY PREVENT US
FROM  IMPLEMENTING  OUR  BUSINESS  PLAN.

     Based on our current operating plan, we anticipate that our available funds
will  be  sufficient  to  satisfy  our  anticipated  needs  for working capital,
including  our  increased  marketing expenses, capital expenditures and business
expansion,  into  the  second  quarter  of  2002.  After that time, we will need
additional  capital.  We  are  in  the  process of raising additional funds from
investors  in  order to fund more rapid expansion, to increase brand development
and  market  awareness,  to  develop  new  or enhanced technology, to respond to
competitive  pressures  or  to  establish  strategic  relationships. If we raise
additional  funds  by  issuing  equity  or  convertible  debt  securities,  the
percentage  ownership  of  our  shareholders will be diluted. Any new securities
could  have  rights,  preferences  and  privileges senior to those of our common
stock.  Obtaining capital will be challenging in a difficult environment, due to
the economic downturn in the United States economy and the further impact on the
economy  as  a  result  of  recent terrorist attacks.  We cannot be certain that
additional  financing will be available when and to the extent required or that,
if available, it will be on acceptable terms. Recently, certain companies with a
history  of  generating  losses  apparently have been unable to raise additional
financing  to fund such continued losses. If adequate funds are not available on
acceptable  terms,  we  may  not  be  able to fund our expansion, increase brand
development  and  market  awareness,  develop  or enhance our service offerings,
respond  to  competitive  pressures  or  establish  strategic  relationships.

WE HAVE A HISTORY OF LOSSES, AND WE EXPECT LOSSES FOR THE NEXT TWO FISCAL YEARS;
WE  MAY  NOT  BE  ABLE  TO  CONTINUE  AS  A  GOING  CONCERN.

     Since  our  inception  in  November 1994, we have incurred losses.  Our net
loss equaled $3,587,473 for the year ended December 31, 1999, $7,657,413 for the
year  ended  December  31,  2000, and $9,930,099 for the year ended December 31,
2001.  As  of  December  31, 2001, we had an accumulated deficit of $26,202,596.

     We  anticipate  that  our  expenses  relating  to developing, marketing and
supporting  our  current  and  future  products  will  increase  in  the future.
Accordingly,  for  the next two fiscal years, we expect to experience additional
losses  as these increased expenses exceed our total revenues.  These additional
losses  will  increase  our  accumulated  deficit.

     These  conditions  give  rise  to  substantial  doubt  about our ability to
continue as a going concern. Our financial statements do not include adjustments
relating  to  the recoverability and classification of reported asset amounts or
the  amount  and classification of liabilities that might be necessary should we


                                       14
<PAGE>
be unable to continue as a going concern. Our continuation as a going concern is
dependent  upon  our ability to obtain additional financing from the sale of our
common  stock,  as  may  be  required,  and  ultimately to attain profitability.

WE MAY BE UNABLE TO NEGOTIATE RENEWALS OF CERTAIN CRADAS AND TECHNOLOGY LICENSES
UPON  WHICH  WE  RELY.

     We license patented technologies from other parties in order to develop and
commercialize  products  based  on  those  technologies.  In  order  to develop,
commercialize,  manufacture  and  sell our products, we rely upon our ability to
enter  into  agreements  such  as the LANL CRADA which permits us to exploit the
technology  underlying  our PEM fuel cell.  There is no guaranty that we will be
able  to  negotiate  renewals of this or other CRADAs or license agreements upon
which  we  rely.

ECONOMIC, POLITICAL OR MARKET CONDITIONS COULD IMPACT OUR BUSINESS AND CAUSE OUR
REVENUE  TO  BE  LOWER  THAN  ANTICIPATED.

     Our  business  may  be  sensitive to general economic conditions. A reduced
level  of  economic  and  manufacturing  activity  in  the  United  States  may
significantly  and  adversely  affect  the  demand  for  hydrogen  sensors  and
alternative  energy  sources  such  as  fuel  cells. A recession could cause our
customers  to  reduce or postpone their purchases, which could cause our revenue
to  be  lower  than  anticipated  and  negatively  affect  our  business.

FUEL  CELL  TECHNOLOGIES  ARE  NEW AND EVOLVING TECHNOLOGIES, COMPETE WITH OTHER
METHODS  OF  ENERGY  GENERATION,  AND  MAY  NOT  RECEIVE  WIDESPREAD ACCEPTANCE.

     Fuel cell technologies are in their very early stages of commercialization.
Like  many  new  technologies,  they  are  characterized  by  rapidly  evolving
technological  developments,  quickly  changing  marketing and sales strategies,
multiple  and  aggressive  market participants, fluctuating demand and uncertain
market  acceptance  for  products  and  services.

     Businesses  and  consumers  remain  uneducated  about  the  benefits  of
alternative  fuel sources.  This may delay the acceptance and penetration of our
fuel  cell  products  into  markets  that  have  historically  been  served  by
traditional  fuel  sources.    Businesses  and consumers also have the option of
using  other  methods  of  alternative  fuel  generation,  including  carbonate,
phosphoric  acid,  polymer electrolyte or solid oxide fuel cell systems, as well
as  traditional  fossil  fuels  such  as  oil  and  gasoline.  These methods may
maintain or even increase their acceptance to the detriment of our hydrogen fuel
cell  technology.

WE  MAY  NOT BE ABLE TO COMPETE EFFECTIVELY IN THE HYDROGEN SENSOR AND FUEL CELL
MARKETS.

     We  compete  in both the hydrogen sensor and fuel cell markets.  We may not
be  able  to  compete successfully against current and future competitors in our
markets.  The  markets  in  which  we  are engaged are new, rapidly evolving and
intensely  competitive,  and  we  expect competition to intensify further in the
future  both from existing competitors and new market entrants.  We believe that
our  ability  to  compete  depends  on  many  factors both within and beyond our
control,  including:

     -    the  ease  of use, performance, features, price and reliability of our
          solutions  as  compared  to  those  of  our  competitors;
     -    the  timing and market acceptance of new solutions and enhancements to
          existing  solutions  developed  by  us  and  our  competitors;
     -    the  quality  of  our  customer  service  and  support;  and
     -    the  effectiveness  of  our  sales  and  marketing  efforts.


                                       15
<PAGE>
     Many  of  our  current  and  potential  competitors  are  likely  to  enjoy
substantial  competitive  advantages,  including:

     -    longer  operating  histories;
     -    greater  name  recognition;
     -    more  extensive  customer  bases;  and
     -    cooperative  relationships  among  themselves or with third parties to
          enhance  their  products.

     Increased  competition  is  likely  to  result in price reductions, reduced
gross  margins  and  loss  of  market  share,  any one of which could impair our
finances  and  business prospects.  We cannot assure you that we will be able to
compete  successfully  against  existing  or  potential  competitors  or  that
competitive  pressures  will  not  materially  impair  our  finances or business
prospects.

     The  markets  for  our  products  are  at  a  very  early  stage  of
commercialization,  are  rapidly changing and are characterized by an increasing
number  of  market  entrants.  As  is  typical  for  a  new and rapidly evolving
industry,  demand  for and market acceptance of recently introduced products are
subject  to  a  high  level of uncertainty and risk. Acceptance and usage of our
fuel cells is dependent on continued growth in use of alternative energy sources
by  businesses  and consumers. Businesses that already have invested substantial
resources  in  traditional or other energy sources may be reluctant to adopt new
alternative  sources.  Individuals with established patterns of purchasing goods
and  services  may  be reluctant to alter those patterns. Accordingly, it is not
assured  that  sufficient  demand  for  our products will develop to sustain our
business.

THE  LOSS  OF THE SERVICES OF ONE OR MORE OF OUR KEY PERSONNEL OR OUR FAILURE TO
HIRE,  INTEGRATE OR RETAIN OTHER QUALIFIED PERSONNEL COULD DISRUPT OUR BUSINESS.

     We  depend  upon  the  continued  services and performance of our executive
officers  and  other  key  employees,  particularly  John  T. Donohue, our Chief
Executive  Officer, Dr. Johan (Hans) Friedericy, our Chief Operating Officer and
Ronald  L.  Ilsley,  our Chief Financial Officer.  We do not currently carry key
person  insurance  on  Messrs.  Donohue,  Friedericy or Ilsley.  Competition for
qualified  personnel  in  technology, particularly in the fuel cell industry, is
intense and we may not be able to retain or hire necessary personnel as a result
of  the  highly  specialized nature of our products.  In addition, the amount of
our limited working capital may impose compensation restrictions on us that make
it  difficult  to  attract  and  hire  necessary  employees.

WE  MAY  NOT  BE  ABLE  TO  PROTECT  OUR  INTELLECTUAL  PROPERTY.

     We  regard  the  protection  of  our copyrights, service marks, trademarks,
trade  dress  and  trade secrets as critical to our future success and rely on a
combination  of  copyright,  trademark,  service  mark and trade secret laws and
contractual  restrictions  to  establish  and  protect our proprietary rights in
products  and  services.  If  the  protection  of our trademarks and proprietary
rights  is  inadequate,  our brand and reputation could be impaired and we could
lose  customers.

     We  have  entered  into confidentiality and invention assignment agreements
with  our  employees  and  contractors,  and  nondisclosure  agreements with our
suppliers  and  strategic partners in order to limit access to and disclosure of
our  proprietary  information.  There can be no assurance that these contractual
arrangements or the other steps taken by us to protect our intellectual property
will  prove sufficient to prevent misappropriation of our technology or to deter
independent  third-party  development  of  similar  technologies.


                                       16
<PAGE>
     In  addition,  litigation  may  be  necessary  in the future to enforce our
intellectual  property  rights,  to  protect our trade secrets, to determine the
validity  and  scope  of  the proprietary rights of others, or to defend against
claims  of infringement or invalidity. Because laws protecting certain ownership
rights  in  hydrogen  sensor  and  hydrogen fuel cell products are uncertain and
still  evolving,  we cannot give you any assurance about the future viability or
value  of  any  of  our  current technology ownership rights.   Such litigation,
whether  successful or unsuccessful, could have a material and adverse effect on
our  business,  results  of  operations  or  financial  condition.

     While  we intend to pursue registration of our trademarks and service marks
in  the  U.S.  and internationally, effective trademark, service mark, copyright
and  trade  secret protection may not be available in every country in which our
services  are  made  available  online.  We  do  not  currently own any patented
technology  registered  with  the  United  States  Patent  and Trademark Office.

     Although we do not believe that we infringe the proprietary rights of third
parties,  there  can  be  no  assurance  that  third  parties  will  not  claim
infringement  by  us  with  respect to past, current or future technologies.  We
expect  that  participants  in  our  markets  will  be  increasingly  subject to
infringement  claims  as  the number of services and competitors in our industry
segment  grows.  Any  such  claim,  whether  meritorious  or  not,  could  be
time-consuming,  result  in  costly  litigation, cause service upgrade delays or
require  us  to  enter  into  royalty  or  licensing agreements. Such royalty or
licensing agreements might not be available on terms acceptable to us or at all.
As  a  result,  any  such  claim  could  have a material adverse effect upon our
business,  results  of  operations  and  financial  condition.

GOVERNMENTAL REGULATION OF THE HYDROGEN FUEL CELL AND HYDROGEN SENSOR TECHNOLOGY
MAY  RESTRICT  OUR  BUSINESS.

     Government  regulation  of  the use of hydrogen for industrial applications
and  fuel  cell generation varies greatly from country to country. There is some
risk  that  the United States and other countries will increase their regulation
of  these  technologies  in  the  future. As our products are utilized solely in
connection with hydrogen, any new law or regulation pertaining to the commercial
use  of  hydrogen,  or the application or interpretation of existing laws, could
adversely  impact  our  sales,  increase our cost of doing business or otherwise
have  a  material  and adverse effect on our business, results of operations and
financial  condition.

     DCH and our future hydrogen fuel cell manufacturing facilities will also be
subject  to  various  federal, state and local laws and regulations relating to,
among  other things, land use, safe working conditions, handling and disposal of
hazardous  and potentially hazardous substances and emissions of pollutants into
the  atmosphere.  We  believe  that  we  have  obtained all necessary government
permits  and  have  been  in substantial compliance with all of these applicable
laws  and  regulations.

     Since  1991,  the National Environmental Protection Act (NEPA) has required
that  each  local Department of Energy procurement office file and have approved
by  the  Department  of  Energy in Washington, DC, appropriate documentation for
environmental,  safety  and health impacts with respect to procurement contracts
entered  into  by  that local office.  The costs associated with compliance with
environmental  regulations  may or may not be recovered under existing or future
contracts  to  which  we are a party.  In addition, contract work may be delayed
until  such  approval  is  received.


                                       17
<PAGE>
PRODUCT DEFECTS AND PRODUCT LIABILITY CLAIMS RELATED TO OUR HYDROGEN SENSORS AND
HYDROGEN  FUEL  CELL  PRODUCTS  COULD  EXPOSE  US  TO  SIGNIFICANT  LIABILITY.

     Although  we test our products extensively prior to introduction, we cannot
assure  you  that  our  testing  will  detect  all  serious  defects, errors and
performance  problems  prior to commercial release of our future sensor and fuel
cell  products.  Any  future  defects, errors or performance problems discovered
after  commercial release could result in the diversion of scarce resources away
from  customer  service  and  product  development,  lost  revenues or delays in
customer acceptance of our products and damage to our reputation, which, in each
case,  could  have  a  material  and  adverse effect on our business, results of
operations  or  financial  condition.

     We have not experienced any product liability claims to date, but we may be
subject to such claims in the future.  A product liability claim brought against
us  could  have  a  material  and  adverse  effect  on  our business, results of
operations  or  financial  condition.

WE  ARE  HEAVILY RELIANT ON THIRD PARTIES FOR CERTAIN COMPONENTS AND ANY DELAYS,
DEFECTS  OR  OTHER PROBLEMS IN SUPPLYING THESE COMPONENTS COULD ADVERSELY AFFECT
OUR  BUSINESS.

     We are heavily reliant on the ability of Corlund Electronics to manufacture
the electronic circuit boards for our Robust Hydrogen Sensor(TM).  Sensor casing
and  other  hardware are fabricated by various small manufacturers. WR Gore Inc.
is  our  preferred  supplier  of  fuel  cell  membranes,  however we continue to
evaluate  other  sources.  Measurement  Systems  manufactures  silicon  wafers
containing  our  individual  sensor  chips.  Although delays in the shipment and
receipt  of our component parts may occur, historically we have experienced only
those  delays  that  tend  to  occur  in  the  normal  course  of  business.

     Growth  in the volume of orders for our products may strain the capacity of
these component suppliers, and delays or other problems with component suppliers
could  have a material and adverse effect on our business.  Although we test the
component  parts  that  we receive from our suppliers, we cannot be assured that
our  components  will  be  completely  free  of  all  defects.

SOME  OF  THE  INFORMATION  IN  THIS  ANNUAL  REPORT  ON  FORM  10-KSB  CONTAINS
FORWARD-LOOKING  STATEMENTS.

     Some  of  the  information  in  this  Annual Report on Form 10-KSB contains
forward-looking  statements  that  involve  risks  and  uncertainties.  You  can
identify  these  statements  by  forward-looking  words  such  as "may," "will,"
"expect,"  "anticipate,"  "believe," "estimate" and "continue" or similar words.
You  should  read  statements  that  contain these words carefully because they:

     -     discuss  our  expectations  about  our  future  performance;

     -     contain  projections of our future operating results or of our future
financial condition;  or

     -     state  other  "forward-looking"  information.

     We  believe  it  is  important  to  communicate  our  expectations  to  our
stockholders.   There may be events in the future, however, that we are not able
to predict accurately or over which we have no control.  The risk factors listed
in  this  section,  as  well  as  any cautionary language in this Annual Report,
provide  examples  of  risks, uncertainties and events that may cause our actual
results  to  differ  materially  from  the  expectations  we  describe  in  our
forward-looking  statements.  You  should  be


                                       18
<PAGE>
aware  that  the occurrence of any of the events described in these risk factors
and  elsewhere in this Annual Report could have a material and adverse effect on
our  business,  results  of  operations  and  financial  condition.


                                     ITEM 2.

                             DESCRIPTION OF PROPERTY

     Our  principal  executive,  administrative,  and engineering operations are
located  in  one  16,900  square-foot  facility  in  Valencia,  California. This
facility  also  houses  our  advanced  sensor  development  and  full  scale
manufacturing  activities,  and  will  include  on-site  hydrogen  production
capabilities.  In  August  2001,  we sold this property, originally purchased in
2000,  to  Rediger  Investment Corporation.  We received $1,420,000 from Rediger
for  the  property,  of  which  $1,256,000  was  paid in cash and the balance of
$164,000  received as a credit against future lease payments.  Subsequent to the
closing  of  the  sale  of  the property, we entered into a ten-year, triple net
lease with Rediger for the facilities.  The lease provides for a monthly rate of
$0.617  per square foot, which includes the above-referenced credit of $0.08 per
month.  In 2001, we consolidated our Valencia operations into this facility, and
terminated  two  other  leases  for  property  in  the  area.

     We  also  lease  approximately  3,300  square  feet  of  space  in Madison,
Wisconsin  for  our  Enable Fuel Cell Corporation, where we conduct research and
development  on  our  fuel  cell  products  and  plan  to  expand  into  limited
production.  This  lease expires on December 31, 2002. Management considers that
the current facilities are adequate for the present level of operations and that
additional  office  and  factory  space  is available in the immediate vicinity.


                                     ITEM 3.

                                LEGAL PROCEEDINGS

     We are not involved in any litigation.


                                     ITEM 4.

               SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     In  January  of  2002,  we  requested shareholder approval of a proposal to
increase our authorized shares of common stock to 100,000,000, and a proposal to
increase  the  number  of shares of our common stock reserved for issuance under
our  2001  Stock  Option  Plan  to 10,000,000.  In February of 2002, we received
shareholder  approval  of  the  proposal to increase the number of shares of our
authorized  common stock.  As of March 1, 2002, we had not received the approval
of  our shareholders authorizing the increase of shares of common stock reserved
for  issuance under the 2001 Stock Option Plan.  Our Board of Directors extended
the  deadline  for  receiving  approval  of  this  proposal  to  April  2, 2002.


                                       19
<PAGE>
                                    PART II.
                                    --------

                                     ITEM 5.

                    MARKET FOR THE REGISTRANT'S COMMON STOCK
                         AND RELATED STOCKHOLDER MATTERS

PRICE  RANGE  OF  COMMON  STOCK  AND  DIVIDEND  POLICY

     Since  August  10,  2000,  our common stock has been traded on the American
Stock Exchange under the symbol "DCH"; from May 16, 1997 until that date, it was
traded  on  the  OTC Bulletin Board under the symbol "DCHT." The following table
sets  forth,  for  the  periods  indicated,  the high and low bid prices for the
common  stock  as  reported  by the American Stock Exchange and the OTC Bulletin
Board. The quotations do not reflect adjustments for retail mark-ups, markdowns,
or  commissions  and  may  not  necessarily  reflect  actual  transactions.

<TABLE>
<CAPTION>
Period                                        Low Bid   High Bid
------                                        -------   --------
<S>                                           <C>       <C>
Fiscal 2001
  Fourth Quarter                              $   0.30  $    0.90
  Third Quarter                               $   0.50  $    2.05
  Second Quarter                              $   1.47  $    3.05
  First Quarter                               $   1.56  $    3.75

Fiscal 2000
  Fourth Quarter                              $   1.25  $    6.19
  Third Quarter                               $   2.97  $    8.13
  Second Quarter                              $   3.94  $    9.03
  First Quarter                               $   2.97  $   16.50
</TABLE>


     On  March  5, 2002, the closing price of our common stock on the Amex Stock
Exchange was $ 0.56 per share and there were approximately 391 holders of record
of  our common stock. However, we believe, based on stockholder records, that we
have  in  excess  of  19,000  individual  stockholders.

     Our  common  stock price is likely to be highly volatile.  The market price
of  our  common stock has been, and is likely to continue to be, highly volatile
as  the  stock  market  in  general,  and the market for technology companies in
particular, has been highly volatile.  Investors may not be able to resell their
shares  of  our  common  stock  following  periods  of volatility because of the
market's  adverse  reaction to volatility. The trading prices of many technology
companies'  stocks  have  been highly volatile within the last 52 weeks and have
recorded  lows  well below historical highs. We cannot assure you that our stock
will  trade  at  the  same  levels of other technology stocks or that technology
stocks  in  general  will  sustain  their  current  market  prices.

     Factors  that  could cause such volatility may include, among other things:

     -  actual  or  anticipated fluctuations in our quarterly operating results;

     -  announcements  of  technological  innovations  and further developments;

     -  changes  in  financial  estimates  by  securities  analysts;


                                       20
<PAGE>
     -  conditions  or  trends  in  the  hydrogen  sensor and hydrogen fuel cell
industries;

     -  changes  in  the  market  valuations  of  other  technology  companies,
especially  our  partners  and  competitors;  and

     -  general  market  conditions.

     To  date,  no  dividends have been declared or paid on our common stock. We
currently  intend to retain earnings, if any, to fund the development and growth
of  our business and do not anticipate paying cash dividends on our common stock
in  the foreseeable future.  Payment of future dividends, if any, will be at the
discretion  of our Board of Directors after taking into account various factors,
including  our  financial  condition, operating results, current and anticipated
cash  needs  and  plans  for  expansion.

RECENT  SALES  OF  UNREGISTERED  SECURITIES

     We  have  previously  disclosed  all information regarding shares of common
stock  issued  and options and warrants and other convertible securities granted
by us during the year ended December 31, 2001.  Please see our Quarterly Reports
on  Form  10-QSB  for  the  quarters  ended  March  31,  2001, June 30, 2001 and
September  30,  2001.


                                     ITEM 6.
                                     -------

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

     DCH  is  engaged  in  the acquisition, development and commercialization of
hydrogen-based  technologies.

     DCH  develops  and/or  licenses  patented  technologies  and  converts  the
technologies  into  viable  products that we then produce and sell.  We focus on
technologies  related  to  the  use of hydrogen, primarily hydrogen-specific gas
sensors  and  hydrogen-based proton exchange membrane (PEM) fuel cells.  We also
provide  hydrogen  safety  services.

     We  introduced  our  first  hydrogen  gas detector product line, the Robust
Hydrogen  Sensor  product  line,  in  November  1998.  We  currently offer eight
hydrogen  sensor  products,  including our new family of H2SCAN sensing systems.
We  began development of a low power (up to 10 kWs) fuel cell in 1998.  In March
2000,  we  created  a  wholly-owned subsidiary, Enable Fuel Cell Corporation, to
focus on this development and create channels to market.  We currently offer and
have  placed  into the market alpha and beta fuel cell products ranging in power
from  less  than  one  watt  to  5  kW.

     We  currently  obtain our funding from equity financings and product sales.
As  production  activity  increases  and  we  implement  our  complete marketing
strategy,  we expect revenues from sales of products to increase as a proportion
of  our  funding.

     On  August  10,  2000, our common stock began trading on the American Stock
Exchange  under  the  symbol  "DCH."


                                       21
<PAGE>
RESULTS  OF  OPERATIONS

YEAR ENDED DECEMBER 31, 2001 COMPARED WITH YEAR ENDED DECEMBER 31, 2000

     For  the year ended December 31, 2001, we had sales of $1,143,014, compared
to sales of $961,551 for the year ended December 31, 2000. The increase in sales
for  the  year was due to the delivery of several fuel cell units in 2001. Sales
of  sensors  in  2001 remained at a level consistent with the previous year. The
cost  of  products  sold increased to $1,043,611 for the year ended December 31,
2001,  compared to $729,147 for the year ended December 31, 2000.  In percentage
terms,  cost  of  goods sold represented 91.3% of total sales for the year ended
December  31,  2001,  versus  75.8% for the same period in 2000.  The percentage
increase  of  cost  of goods sold in 2001 versus 2000 is due to the fact that in
2001,  fuel  cell  sales,  with lower margins, comprised a larger portion of our
revenues.  We produced a gross profit of $99,403 for the year ended December 31,
2001,  compared to a gross profit of $232,404 for the same period ended December
31,  2000.

     Selling,  general  and administrative expenses were $2,765,183 for the year
ended  December  31,  2001,  compared to $4,446,006 for the comparable period in
2000.  During  the year, management exercised tight control over expenses. Items
such  as  trade  shows  and travel, which were not contributing to the near term
commercialization  of our products, were eliminated. Salaries were not increased
during  the  year  and  the  number  of  employees  decreased.  The result was a
reduction  of  selling,  general  and  administrative  expense  by  $1,680,823.

     The  reduction in selling, general and administrative expense was offset by
an  increase  in  the  cost  of stock options issued for services, which equaled
$4,476,666  for  the year ended December 31, 2001 compared to $1,279,874 for the
year  ended  December 31, 2000. The increase was due to management's offer early
in  2001  of  increased  stock  options for employees who elected to continue or
increase  the amount of stock options received in lieu of cash compensation. The
accounting  guidelines  require  that we treat the difference between the option
granted  and our stock price for the corresponding period as a non-cash expense.
During 2001 we realized a cash savings, due to this reduced cash requirement, of
approximately  $500,000.

     Depreciation  and  amortization  increased  to $ 285,360 for the year ended
December  31,  2001,  compared to $234,715 for the year ended December 31, 2000.
The  increase  was  primarily  due  to  the  fact  that we owned the Rockefeller
building  for  a  longer  period  of  time  in  2001  than  in  2000.

     A total of $2,482,506 was spent on research and development during the year
ended  December  31, 2001, compared to expenditures of $1,779,964 for the period
ending  December  31,  2000.  The  increase in research and development expenses
during  the  period  was  due  to  a  greater  focus  on  commercialization  and
development  of  products.  In  order to continue to improve our sensor products
and  bring  our  fuel  cell  products into the market, it is likely that we will
continue  to  spend  substantial  funds  on  research  and  development.

     We  had  interest  income of $32,459 and interest expense of $49,539 in the
year  ended  December  31,  2001,  compared  to  interest income of $128,581 and
interest  expense  of $46,642 in the year ended December 31, 2000.  The interest
income  decline  in 2001 was due to a decreased amount of funds on deposit while
the  increased  interest  expense  in 2001 was due to the financing costs of our
Valencia  facility.

     In  the year ended December 31, 2001 we also experienced a loss on disposal
of  assets  of $50,218 due to our sale of certain equipment not required for our
business,  compared  to  $25,089  for  the  year  ended  December  31, 2000.  In
addition,  we  incurred a loss of $22,982 for the year ending


                                       22
<PAGE>
December 31, 2001, compared to $12,788 for the year ended December 31, 2000 from
our  investments  in  limited  liability companies and a joint venture. We wrote
down  the  carrying value of an investment by an additional $10,000 and received
rents  from  customers  of  $69,000  for  the  year  ended  December  31,  2001.

     As  a result of these factors, we had a net loss of $9,930,099 for the year
ended December 31, 2001, compared to a net loss of $7,654,093 for the year ended
December  31,  2000.

     Offset  in  part  by an increase in the number of shares outstanding during
the period (we had 31,696,118 weighted average common shares outstanding for the
year  ended December 31, 2001, as compared to 23,929,000 weighted average common
shares outstanding for the year ended December 31, 2000), the net loss per share
decreased  to  $0.31 per share for the year ended December 31, 2001, as compared
to  a  loss  of  $0.32  per  share  for  the  comparable  period  in  2000.

LIQUIDITY  AND  CAPITAL  RESOURCES

     To date, we have funded our operations primarily through private placements
of  equity  securities,  product  sales  and  loans  from officers and principal
stockholders.  We  generated  a  total  of $4,254,299 in net cash from financing
activities  for  the  year ended December 31, 2001, as compared to net cash from
financing  activities  of  $7,378,842  generated during the comparable period in
2000.  Substantially all of the financing activities for the year ended December
31,  2001  consisted  of  sales  of  common stock, together with the exercise of
warrants  and stock options.  In addition, we retired $766,525 of long-term bank
debt.

     We  utilized  $5,808,057  of  net cash for operating activities in the year
ended  December  31, 2001, compared to the utilization of $5,308,547 of net cash
for operating activities for the comparable period in 2000.  The increase in net
cash  used  for operating activities reflects the reduction of accounts payable,
accrued  compensation  and  the  accounting  treatment of the issuance of common
stock  for  services.  We  received  $1,834,739  of  net  cash  from  investing
activities in the year ended December 31, 2001, compared to use of $3,188,079 of
net  cash  for  investing  activities  in the year ended December 31, 2000.  The
primary  source  of  these funds in the year ending December 31, 2001 related to
the  sale  and lease back of our manufacturing facility in Valencia, California.
In  the  prior  year cash was used for the purchase of production facilities and
equipment.

     At  December  31,  2001,  we had $356,281 in unrestricted cash, compared to
$75,300  in  cash  at  December 31, 2000.  We had working capital of $628,161 at
December  31,  2001,  compared  to  a  working  capital deficit of $1,005,411 at
December  31, 2000.  We also had accounts receivable of $230,192 at December 31,
2001,  compared  to  accounts  receivable  of  $175,047  at  December  31, 2000.
Investment  in  inventory  totaled $528,442 at December 31, 2001 versus $528,816
for  the  same  period in 2000.  The growth in 2001 in receivables is consistent
with  the  overall  increase  in  sales  for  the  year.

     We  have  taken measures to preserve our available cash.  In February 2001,
we  laid-off four employees of our sensor division and one in Washington DC.  In
2001,  consultants  to  our  fuel  cell division and certain employees agreed to
receive  options  to  purchase  shares  of  our  common  stock  in  lieu of cash
compensation.  We  believe  that these measures enabled us to save approximately
$500,000  in  the  year  ended  December  31,  2001.

     We  remain  dependent  upon our ability to obtain outside financing through
the  issuance  of additional securities until we achieve sustained profitability
through  increased  sales.  Management believes that we will require significant
resources for the remainder of the year ending December 31, 2002, principally to
fund  our working capital needs to support the commercialization of our


                                       23
<PAGE>
hydrogen  sensor  and fuel cell products and continuing research and development
efforts.  At  the  present  time, we estimate that we will require approximately
$4,500,000  to  fund  our  operations  (including  the  commercialization of our
products  and  ongoing  research  and development) through 2002. We have already
raised  $829,000  of  this  amount  through  February 15, 2002, and we expect to
generate  the  necessary  resources  for  our  2002  business  plan  through  a
combination  of the contribution from sales of our products and additional sales
of equity securities. In April of 2001, we entered into a Sales Agency Agreement
with  Delano  Group Securities, LLC (Delano). Under the terms of this agreement,
Delano  agreed  to act as our exclusive sales agent, on a best efforts basis, to
sell  up  to 900,000 shares of our common stock. In December of 2001, Delano had
sold all 900,000 shares subject to the agreement. We entered into a second Sales
Agency Agreement with Delano in December of 2001 for the sale of up to 1,000,000
shares  of our common stock under terms similar to those of the prior agreement.
In  January  of 2002, we amended the second agreement to provide for the sale of
an  additional  1,000,000  shares  of  our  common  stock.  In February 2002, we
obtained  the  approval  of  our  shareholders to increase our authorized common
stock  to  100,000,000 shares, thus making available additional common stock for
use in raising capital. There can be no assurance, however, that we will be able
to  generate  capital  sufficient  to meet these needs. Our capital requirements
depend  on  many  factors,  including  but  not  limited  to  the  following:

     -    the  rate  at  which  we  develop  and  introduce  our  products;

     -    the  market  acceptance  and  competitive  position  of  our products;

     -    the level of promotion and advertising required to market our products
          and  to  attain  a  competitive  position  in  the  marketplace;  and

     -    the  response  of  competitors  to  our  products.

     If  we  require  additional funding, such funding might not be available on
terms  favorable to our stockholders or us, and might not be adequate to address
our  needs.  If  adequate  funds  are  not  available  or  are  not available on
acceptable  terms,  we  may  not  be  able  to fund expansion, take advantage of
unanticipated acquisition opportunities, develop or enhance services or products
or  respond  to  competitive  pressures.

     If we are unsuccessful in generating anticipated resources from one or more
of  the  anticipated  sources  and  we  are unable to replace any shortfall with
funding  from  another  source,  we  may  be able to extend the period for which
available  resources  would  prove  adequate  by  deferring  the satisfaction of
various  commitments  or otherwise scaling back operations. If we were unable to
generate  the  required  resources,  our  ability to meet our obligations and to
continue  our  operations  would  be  adversely  affected.

     These  conditions  give  rise  to  substantial  doubt  about our ability to
continue  as  a  going  concern.  Our  financial  statements  do  not  include
adjustments  relating to the recoverability and classification of reported asset
amounts  or the amount and classification of liabilities that might be necessary
should we be unable to continue as a going concern.  Our continuation as a going
concern  is  dependent  upon our ability to obtain additional financing from the
sale  of  our  common  stock,  as  may  be  required,  and  ultimately to attain
profitability.

     The  report  of  our  independent certified public accountants, included in
this Annual Report on Form 10-KSB, contains a paragraph regarding our ability to
continue  as  a  going  concern.


                                       24
<PAGE>
                                     ITEM 7.

                              FINANCIAL STATEMENTS




                          INDEPENDENT AUDITORS' REPORT



To the Stockholders and Board of Directors of
DCH  Technology,  Inc.

We  have  audited the accompanying consolidated balance sheet of DCH Technology,
Inc.  and  Subsidiaries  as  of  December  31,  2001  and  2000  and the related
consolidated  statements  of  operations  and  comprehensive loss, stockholders'
equity  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 financial statements based on
our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audits  to obtain reasonable assurance about whether the financial
statements  are free of material misstatement. An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  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 DCH Technology, Inc.
and  Subsidiaries as of December 31, 2001, and 2000 and the consolidated results
of  their operations and cash flows for the years then ended, in conformity with
accounting  principles  generally  accepted  in  the  United  States of America.

The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue  as  a  going  concern.  As  discussed  in Note 1 to the
financial  statements,  the  Company  has  incurred  substantial  net losses and
utilized  substantial  amounts of cash in its operating activities over the past
several  years  and  as  of  December  31,  2001  has  an accumulated deficit of
$26,202,596.  These  matters,  among  other,  raise  substantial doubt about the
Company's  ability to continue as a going concern.  Management's plans regarding
those  matters are described in Note 1.  The financial statements do not include
any  adjustments  that  might  result  from  the  outcome  of  this uncertainty.




Los Angeles, California
February 1, 2002




--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-25

<PAGE>
<TABLE>
<CAPTION>
DCH TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

DECEMBER 31,                                                          2000           2001
---------------------------------------------------------------------------------------------

                                            ASSETS

CURRENT ASSETS
<S>                                                              <C>            <C>
  Cash and cash equivalents                                      $     75,300   $    356,281
  Accounts receivable                                                 175,047        230,192
  Inventory                                                           528,816        528,442
  Prepaid expenses                                                     84,261        444,643
  Other receivables                                                    17,076          6,392
                                                                 -------------  -------------
          Total current assets                                        880,500      1,565,950
                                                                 -------------  -------------

PROPERTY AND EQUIPMENT,  net                                        2,362,357        633,040
                                                                 -------------  -------------

OTHER ASSETS
  Intangible assets, net of accumulated amortization                  134,536        135,608
  Restricted cash deposit                                             700,000              -
  Investments with no readily determinable fair value                  25,000         15,000
  Investment in joint venture                                          41,623         32,696
  Other                                                                10,190        119,156
                                                                 -------------  -------------
          Total other assets                                          911,349        302,460
                                                                 -------------  -------------

                                                                 $  4,154,206   $  2,501,450
                                                                 =============  =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                               $    659,053   $    469,292
  Accrued expenses                                                    427,563        167,116
  Accrued compensation                                                728,805        212,919
  Unearned revenue                                                          -         75,000
  Current portion of note payable                                      55,867              -
  Current portion of capital lease obligations                         14,623         13,462
                                                                 -------------  -------------
          Total current liabilities                                 1,885,911        937,789

LONG-TERM LIABILITIES, net of current portion
  Note payable                                                        710,658              -
  Capital lease obligations                                            14,662              -

MINORITY INTEREST                                                           -          3,544
STOCKHOLDERS' EQUITY
  Preferred stock, $.10 par value, 5,000,000 shares authorized,
    no shares issued or outstanding                                         -              -
  Common stock, $.01 par value, 50,000,000 shares authorized,
    25,560,616 and 32,148,730 shares issued and outstanding           255,606        321,487
  Additional paid in capital                                       17,631,900     27,514,120
  Investment in limited liability companies                           (68,714)       (64,554)
  Other comprehensive loss                                             (3,320)        (8,340)
  Accumulated deficit                                             (16,272,497)   (26,202,596)
                                                                 -------------  -------------
          Total stockholders' equity                                1,542,975      1,560,117
                                                                 -------------  -------------

                                                                 $  4,154,206   $  2,501,450
                                                                 =============  =============
</TABLE>


--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-26

<PAGE>
<TABLE>
<CAPTION>
DCH TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

YEARS ENDED DECEMBER 31,                                      2000          2001
------------------------------------------------------------------------------------
<S>                                                       <C>           <C>

SALES                                                     $   961,551   $ 1,143,014

COST OF GOODS SOLD                                            729,147     1,043,611
                                                          ------------  ------------

          Gross profit                                        232,404        99,403

OPERATING EXPENSES
  Selling, general and administrative expenses              4,446,006     2,765,183
  Stock options issued for services                         1,279,874     4,476,666
  Depreciation and amortization                               234,715       285,360
  Research and development                                  1,779,964     2,482,506
                                                          ------------  ------------

          Total operating expenses                          7,740,559    10,009,715
                                                          ------------  ------------

          Loss from operations                             (7,508,155)   (9,910,312)
                                                          ------------  ------------

OTHER INCOME (EXPENSE)
  Interest expense                                            (46,642)      (49,539)
  Interest income                                             128,581        32,459
  Loss on disposal of assets                                  (25,089)      (50,218)
  Loss in limited liability companies and joint venture       (12,788)      (22,982)
  Impairment loss on investments                             (190,000)      (10,000)
  Other income                                                      -        69,000
                                                          ------------  ------------

          Total other income (expense)                       (145,938)      (31,280)
                                                          ------------  ------------

NET LOSS BEFORE MINORITY INTEREST                          (7,654,093)   (9,941,592)

MINORITY INTEREST                                                   -        11,493
                                                          ------------  ------------
NET LOSS                                                   (7,654,093)   (9,930,099)
OTHER COMPREHENSIVE LOSS
  Foreign currency translation adjustments                     (3,320)       (5,020)
                                                          ------------  ------------

COMPREHENSIVE LOSS                                        $(7,657,413)  $(9,935,119)
                                                          ============  ============


NET LOSS PER SHARE
  Basic                                                   $     (0.32)  $     (0.31)
                                                          ============  ============
  Diluted                                                 $     (0.32)  $     (0.31)
                                                          ============  ============

WEIGHTED AVERAGE SHARES OUTSTANDING                        23,929,000    31,696,118
                                                          ============  ============
</TABLE>


--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-27

<PAGE>
<TABLE>
<CAPTION>
DCH TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                         YEARS ENDED DECEMBER 31, 2000 AND 2001
-------------------------------------------------------------------------------------------------------------------------------

                                              Common stock                   Additional     Stock                     Other
                                         --------------------  ------------   Paid-in    Subscription  Investment Comprehensive
                                           Shares     Amount    Subscribed     Capital    Receivable    in LLCs        Loss
                                         ----------  --------  ------------  -----------  -----------  ---------  -------------
<S>                                      <C>         <C>       <C>           <C>          <C>          <C>        <C>
BALANCE - DECEMBER 31, 1999              19,325,995  $193,259   $  131,000   $ 9,775,433  $         -  $(79,445)  $          -

  Issuance of common stock, options
    and warrants for services               216,500     2,165            -     1,279,874            -         -              -

  Issuance of common stock and warrants
    for cash, net of commissions paid     2,490,000    24,900            -     5,070,031            -         -              -

  Issuance of common stock for
    patent purchase                           3,061        31            -         9,535            -         -              -

  Issuance of common stock pursuant
    to exercise of options and warrants   3,379,504    33,795            -     1,367,483            -         -              -

  Issuance of stock subscribed              145,556     1,456     (131,000)      129,544            -         -              -

  Foreign currency translation loss               -         -            -             -            -         -         (3,320)

  Loss on investment in LLC                       -         -            -             -            -    10,731              -

  Net loss                                        -         -            -             -            -         -              -
                                         ----------  --------  ------------  -----------  -----------  ---------  -------------

BALANCE - DECEMBER 31, 2000              25,560,616   255,606            -    17,631,900            -   (68,714)        (3,320)
                                         ----------  --------  ------------  -----------  -----------  ---------  -------------

  Issuance of common stock, options
    and warrants for services               241,592     2,416            -     4,896,840            -         -              -

  Issuance of common stock and warrants
    for cash, net of commissions paid     2,522,054    25,220            -     3,540,240            -         -              -

  Issuance of common stock for
    litigation settlement                    10,000       100            -        12,100            -         -              -

  Issuance of common stock pursuant
    to exercise of options and warrants   3,814,468    38,145            -     1,433,040            -         -              -

  Issuance of stock subscribed                    -         -            -             -            -         -              -

  Foreign currency translation loss               -         -            -             -            -         -         (5,020)

  Loss on investment in LLC                       -         -            -             -            -     4,160              -

  Net loss                                        -         -            -             -            -         -              -
                                         ----------  --------  ------------  -----------  -----------  ---------  -------------

BALANCE - DECEMBER 31, 2001              32,148,730  $321,487  $         -   $27,514,120  $         -  $(64,554)  $     (8,340)
                                         ==========  ========  ============  ===========  ===========  =========  =============


                                                            Total
                                          Accumulated   Stockholders'
                                            Deficit        Equity
                                         -------------  ------------
<S>                                      <C>            <C>
BALANCE - DECEMBER 31, 1999               $(8,618,404)  $ 1,401,843

  Issuance of common stock, options
    and warrants for services                       -     1,282,039

  Issuance of common stock and warrants
    for cash, net of commissions paid               -     5,094,931

  Issuance of common stock for
    patent purchase                                 -         9,566

  Issuance of common stock pursuant
    to exercise of options and warrants             -     1,401,278

  Issuance of stock subscribed                      -             -

  Foreign currency translation loss                 -        (3,320)

  Loss on investment in LLC                         -        10,731

  Net loss                                 (7,654,093)   (7,654,093)
                                         -------------  ------------

BALANCE - DECEMBER 31, 2000               (16,272,497)    1,542,975
                                         -------------  ------------

  Issuance of common stock, options
    and warrants for services                       -     4,899,256

  Issuance of common stock and warrants
    for cash, net of commissions paid               -     3,565,460

  Issuance of common stock for
    litigation settlement                           -        12,200

  Issuance of common stock pursuant
    to exercise of options and warrants             -     1,471,185

  Issuance of stock subscribed                      -             -

  Foreign currency translation loss                 -        (5,020)

  Loss on investment in LLC                         -         4,160

  Net loss                                 (9,930,099)   (9,930,099)
                                         -------------  ------------

BALANCE - DECEMBER 31, 2001              $(26,202,596)  $ 1,560,117
                                         =============  ============
</TABLE>


--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-29

<PAGE>
<TABLE>
<CAPTION>
DCH TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31,                                        2000          2001
--------------------------------------------------------------------------------------
<S>                                                         <C>           <C>

CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                  $(7,654,093)  $(9,930,099)
  Adjustments to reconcile net loss to net cash
      used in operating activities:
    Depreciation and amortization                               234,715       285,360
    Loss on disposal of property and equipment                   25,089        50,218
    Issuance of stock, warrants and options for services      1,282,039     4,546,455
    Loss from investment in partnerships and joint venture       12,788         8,069
    Minority interest                                                 -       (11,493)
    Impairment loss on investments                              190,000        10,000
    Changes in assets and liabilities:
      Accounts receivable                                       (31,919)      (55,145)
      Inventory                                                (401,497)          374
      Prepaid expenses                                            5,987        53,617
      Other receivables                                          43,024        10,684
      Accounts payable                                          414,514      (189,761)
      Accrued expenses                                          158,873      (145,449)
      Accrued compensation                                      411,933      (515,887)
      Unearned revenue                                                -        75,000
                                                            ------------  ------------

      Net cash used in operating activities                  (5,308,547)   (5,808,057)
                                                            ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Restricted cash deposit                                      (700,000)      700,000
  Minority interest in LLC                                            -        15,037
  Deposits on equipment leases                                  (10,190)        5,385
  Investment in joint venture                                   (47,000)            -
  Purchase of licenses and intellectual property                (57,257)      (37,684)
  Purchase of property and equipment                         (2,373,632)     (114,489)
  Proceeds from sale of property and equipment                        -     1,266,490
                                                            ------------  ------------

      Net cash used in investing activities                  (3,188,079)    1,834,739
                                                            ------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from sale of common stock and warrants             5,094,931     3,565,462
  Principal payments on capital leases                          (14,892)      (15,823)
  Proceeds from long-term debt                                  800,000             -
  Principal payments on long term debt                          (33,475)     (766,525)
  Proceeds from exercise of options and warrants              1,401,278     1,471,185
  Proceeds from common stock subscriptions receivable           131,000             -
                                                            ------------  ------------

      Net cash received from financing activities             7,378,842     4,254,299
                                                            ------------  ------------

NET INCEASE (DECREASE) IN CASH                               (1,117,784)      280,981

CASH, beginning of year                                       1,193,084        75,300
                                                            ------------  ------------

CASH, end of year                                           $    75,300       356,281
                                                            ============  ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the year for:
      Interest                                              $    46,642   $    49,539
                                                            ============  ============
      Income taxes                                          $     1,600   $     4,374
                                                            ============  ============
</TABLE>


--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-30

<PAGE>
DCH TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2000 AND 2001
--------------------------------------------------------------------------------

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCIAL ACTIVITIES -

     During the year ended December 31, 2000, the Company issued 3,061 shares of
common  stock  with  a  fair market value of $9,566 for the purchase of a patent
license.

     During  the  year  ended  December 31, 2001, the Company issued $115,000 of
stock  options  for settlement of certain obligations.

     During  the  year  ended  December  31,  2001,  prepaid  services  under  a
consulting  agreement  of  $250,000 were paid with the issuance of common stock.

     During  the year ended December 31, 2001, the Company settled a legal issue
through  issuance  of  $12,100  of  common  stock.



--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-31

<PAGE>
DCH  TECHNOLOGY,  INC.  AND  SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

                           NOTE 1 - NATURE OF BUSINESS

     OPERATIONS  -  DCH  Technology,  Inc.  (the  Company),  was incorporated on
February  23,  1996.  The Company seeks out patented technologies, secures those
patented  technologies  through licensing agreements with the patent holders and
converts  the  technologies into viable products which the Company then produces
and  sells.  The Company focuses on technologies related to the use of hydrogen,
primarily  hydrogen  gas  sensors  and  fuel  cells.

     DCH  Technology,  Inc.  and  an unrelated entity formed Center for Hydrogen
Safety,  LLC,  a  California  limited  liability company, organized on April 12,
2001.  Its  primary  purpose  is  to  provide  hydrogen  reliability  and safety
consulting  services.  DCH  Technology,  Inc.  owns  70%  and  consolidates  the
accounts  of  the  LLC.

     GOING  CONCERN  -  The  Company  has  experienced  net losses over the past
several  years  and  as  a  result  has  an accumulated stockholders' deficit of
approximately $26,203,000 as of December 31, 2001. Additionally, the Company had
negative  cash  flow  from  operations  of approximately $5,808,000 for the year
ended  December 31, 2001 and $5,309,000 for the year ended December 31, 2000. To
date,  the  Company  has relied primarily on funding from the issuance of equity
securities  and  stock  options  in  lieu  of  cash  compensation to sustain its
operations.  Based  upon  the  companies  current  operating  plan,  management
anticipates  that funds will be sufficient to satisfy working capital needs into
the  second  quarter  of  2002,  after  which  time,  additional capital will be
required.  It is anticipated that raising additional capital will be challenging
and  difficult,  and  there  is  no  certainty that additional financing will be
obtained  in  amounts  sufficient to sustain the company at its current level of
operations.  These  matters  give rise to substantial doubt about the ability of
the Company to continue as a going concern. The Company's ability to continue as
going  concern is dependent upon its ability to obtain additional financing, and
ultimately,  to  attain  profitability.

Management  has  taken  certain  actions  and is pursuing additional measures to
support  the  Company's  current  operating  plan,  including  the  following:

     -    Strict  budgetary  controls  have  been  implemented  with  the
          implementation  of  a  new  accounting  and  information  system.
     -    Through  private  placements  of equity securities, the Company raised
          approximately  $828,000  subsequent  to  December  31,  2001.
     -    The  Company is continuing to pursue equity and/or debt financing from
          various sources, including sources who have invested in DCH Technology
          in  the  past.  Currently,  the  Company  is in active discussion with
          several  potential  investors  and  strategic  merger  candidates.
     -    Discretionary  research,  development  and  other  expenditures may be
          curtailed,  as  necessary,  in  the  event  the  Company  is unable to
          generate  or  raise  sufficient  funds  to  sustain  current operating
          levels.


--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-32

<PAGE>
DCH  TECHNOLOGY,  INC.  AND  SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

     PRINCIPALS OF CONSOLIDATION - The consolidated financial statements include
the  accounts  of  DCH  Technology,  Inc. and its wholly owned subsidiaries, DCH
Sensors  Corporation  and  Enable  Fuel Cells Corporation and its majority owned
(70%)  subsidiary, Center for Hydrogen Safety LLC. All intercompany transactions
and  balances  have  been  eliminated  in  consolidation.

     CASH  AND  CASH  EQUIVALENTS  -  For  purposes  of  cash flows, the Company
considers  all  highly liquid investments purchased with an original maturity of
three  months  or  less to be cash equivalents.  The carrying amount of cash and
cash  equivalents  approximates  their  fair  market  value.

     PROPERTY  AND  EQUIPMENT  - Property and equipment are stated at cost, less
accumulated  depreciation  and  amortization.  Depreciation  and amortization of
property  and equipment are provided using straight-line and accelerated methods
over  the  estimated useful lives, which range from 5 to 10 years. Leasehold and
building  improvements  are  amortized  over their estimated useful lives, which
range  from  5  to  10  years.

     INVENTORY  -  Inventory  is stated at the lower of cost or market using the
first-in,  first-out method (FIFO).  Inventories consist of parts and assemblies
that  are  included  in  the  final  product.

     INVESTMENTS  WITH NO READILY DETERMINABLE FAIR VALUE - The Company acquired
shares  of  two  privately  held  companies  without readily determinable market
values  in  exchange  for  services  rendered.  The  Company  accounts for these
transactions  as  prescribed  by  Accounting Principles Board (APB) 18 under the
"cost  method."

     Under  this method, the Company's investment balance remains unchanged with
respect  to  the  earnings  of the investee and is impacted only with respect to
dividend  distributions and permanent impairment of the value of the investment.

     For  the  year  ended  December  31,  2001,  management determined that the
investments  were impaired, and wrote the investments down an additional $10,000
from  an  original  cost  of $215,000 to their estimated net realizable value of
$15,000.

     REVENUE  RECOGNITION - Revenue from product sales is recognized at the time
the  product  is  shipped  to  its  customer.  Provision is made at the time the
related  revenue  is  recognized  for  estimated  product  returns.  The Company
provides for the estimated cost of post-sale support and product warranties upon
shipment.  When  other  significant  obligations  remain  after  products  are
delivered,  revenue  is  recognized  only  after such obligations are fulfilled.
Customers  do  not have unconditional right of return on product sales.  Service
revenue  is  recognized  ratable  over  the  contractual  period as services are
performed.

     ACCOUNTS  RECEIVABLE  AND  ALLOWANCES  -  Accounts receivable are stated at
gross amounts invoiced less estimated allowance for doubtful accounts of $10,300
at  December  31,  2001  and  $0  at  December  31,  2000.



--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-33

<PAGE>
DCH  TECHNOLOGY,  INC.  AND  SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     INTANGIBLES  -  Intangible  assets,  principally  licensing agreements, are
amortized on the straight-line method over the remaining life of the agreements.
The  carrying  amounts of the intangible assets are assessed for impairment when
operating  profits from the related assets indicates carrying amounts may not be
recoverable.  Carrying  values are reviewed periodically for impairment whenever
events  or  changes in circumstances indicate the carrying amounts of assets may
not  be  recoverable.

     ADVERTISING  -  Advertising  and  promotion costs are expenses as incurred.

     RESEARCH  AND  DEVELOPMENT  -  Research  and  development  expenditures are
charged  to  operations  as  incurred.

     INCOME  TAXES - Income tax expense is computed using an asset and liability
method,  using expected annual effective tax rates.  Under this method, deferred
income  taxes are recorded resulting from differences in the financial reporting
basis  and  the  income  tax  reporting basis of assets and liabilities.  Income
taxes  are  further  explained  in  Note  10.

     CONCENTRATION  OF  CREDIT  RISK  -  Financial  instruments that potentially
subject  the  Company to credit risk are primarily cash equivalents and accounts
receivable.  The Company has placed its cash and cash equivalents with one major
financial  institution.  At  times,  the  cash  in  the financial institution is
temporarily  in  excess  of  the amount insured by the Federal Deposit Insurance
Corporation  (FDIC).

     USE  OF  ESTIMATES  -  The  preparation  of  the  financial  statements  in
conformity  with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

     IMPAIRMENT  ON LONG-LIVED ASSETS - Certain long-lived assets of the Company
are  reviewed  at least annually as to whether their carrying values have become
impaired  in  accordance with Statement of Financial Accounting Standards (SFAS)
121,  "Accounting  for the Impairment of Long-Lived Assets and Long-Lived Assets
to  be Disposed Of."  Management considers assets to be impaired if the carrying
value  exceeds  the  undiscounted  projected  cash  flows  from  operations.  If
impairment  exists,  the  assets are written down to fair value or the projected
cash  flows  from  related  operations.  As  of  December  31, 2001, the Company
expects  the  remaining  carrying  value  of  assets  to  be  fully recoverable.



--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-34

<PAGE>
DCH  TECHNOLOGY,  INC.  AND  SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     STOCK  BASED  COMPENSATION  -  As  permitted  by  SFAS 123, "Accounting for
Stock-Based  Compensation",  the  Company  continues to apply APB Opinion No. 25
(APB  25)  and  related  Interpretations in accounting for its options issued to
employees.  The  Company  accounts  for  stock-based  compensation  issued  to
consultants and vendors as prescribed by SFAS 123.  Under SFAS 123, a fair value
method  is  used  to  determine  compensation  cost for stock options or similar
equity  instruments.  Compensation  is  measured  at  the  grant  date  and  is
recognized  over the service or vesting period.  Under APB 25, compensation cost
is  the  excess,  if  any,  of  the  quoted  market  price  of  the stock at the
measurement  date  over  the amount that must be paid to acquire the stock.  The
standard  allows the Company to continue to account for stock-based compensation
issued  to  employees  under APB 25, with disclosure of the effects of SFAS 123.
The  proforma  effect  on  income  as  if  the  Company  had adopted SFAS 123 is
disclosed  in  Note  11.

     RECLASSIFICATIONS  -  Certain  prior year amounts have been reclassified to
conform with the current year presentation.  These changes have no effect on net
earnings.

     EARNINGS PER SHARE - Earnings per share are based upon the weighted average
number of shares of common stock outstanding during the period.  The Company has
not  included  the  effect of assumed conversions and exercises of stock options
and  warrants  since  the  effect  of  such  an inclusion would be antidilutive.
Equity  instruments, including stock options and warrants, which are exercisable
into  13,680,338 shares of common stock at December 31, 2001, have been excluded
because  their  effect  would be antidilutive.  However, these instruments could
potentially  dilute  earnings  per  share  in  future  years.

     NEW  ACCOUNTING  PRONOUNCEMENTS  -  During  2001,  the Financial Accounting
Standards  Board  issued  Statements  of  Financial  Accounting Standard No. 144
("Accounting  for  Impairment  or  Disposal  of  Long-Lived  Assets"),  No.  143
("Accounting  for  Assets Retirement Obligations"), No. 142 ("Goodwill and Other
Intangible  Assets")  and  No. 141 ("Business Combinations") which are effective
for fiscal 2001 and 2002. Management believes these pronouncements do not have a
material  effect  on  the  Company's  financial  statements  or  disclosures.

NOTE  3  -  INVENTORY

<TABLE>
<CAPTION>
                   2000      2001
                 --------  --------
<S>              <C>       <C>
Raw Materials    $393,158  $296,560
Work-in-process   124,797   221,630
Finished goods     10,861    10,252
                 --------  --------
                 $528,816  $528,442
                 ========  ========
</TABLE>



--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-35

<PAGE>
DCH  TECHNOLOGY,  INC.  AND  SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

NOTE  4  -  PROPERTY  AND  EQUIPMENT

<TABLE>
<CAPTION>
                                                2000         2001
                                             -----------  -----------
<S>                                          <C>          <C>
  Land                                       $  270,000   $        -
  Building                                    1,081,760            -
  Automobiles                                    34,260            -
  Equipment                                     813,281      788,327
  Furniture and Fixtures                         21,635       22,311
  Building improvements                         358,640            -
  Leasehold improvements                         36,137      235,055
                                             -----------  -----------

                                              2,615,713    1,045,693
  Accumulated depreciation and amortization    (253,356)    (412,653)
                                             -----------  -----------

                                             $2,362,357   $  633,040
                                             ===========  ===========
</TABLE>


          Depreciation  and  amortization expense  on property and equipment for
the  year  ended  December  31,  2000  and  2001,  were  $203,853  and $248,748,
respectively.  As  described in Note 9, in 2001, the Company sold a building and
land.

NOTE  5  -  INTANGIBLE  ASSETS

     The  Company  has  entered  into  various license and intellectual property
agreements.  The  patent  license  agreements require the Company to pay initial
license  fees, which are being amortized over the remaining lives of the license
agreements.  In  addition  to  the annual payments for the licenses, the Company
has  agreed  to  pay  royalties  based  on  various  factors  included  in these
agreements.  The  patent  license  agreements  generally  contain  performance
benchmarks.  If  the Company fails to meet the benchmarks, the agreements may be
kept  in  place  at  the  sole  discretion  of  the  licensor.

     The  total  amortization  expense  related  to  intangibles was $30,862 and
$36,613  for  the  years  ended  December  31,  2000  and  2001,  respectively.

     Future  minimum  royalty  payments  under  these  license  agreements  are:

<TABLE>
<CAPTION>
<S>                 <C>
2002               $   82,000
2003                   82,000
2004                   82,000
2005                   82,000
2006                   82,000
Thereafter            698,000
                   ----------

                   $1,108,000
                   ==========
</TABLE>


--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-36

<PAGE>
DCH  TECHNOLOGY,  INC.  AND  SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

NOTE  6  -  INVESTMENTS  IN  LIMITED  LIABILITY  COMPANIES  AND  JOINT  VENTURES

     The  Company  has invested in two limited liability companies (LLC) and one
joint  venture  (JV),  which  are  accounted  for  using  the  equity  method of
accounting.  Under  the  equity  method  of  accounting, the Company adjusts the
carrying amount of an investment for its share of the earnings and losses of the
LLCs  and JV and reports the recognized earnings and losses in income. Dividends
received,  if  any,  would  reduce  the  carrying  amount  of these investments.

     During  the  year ended December 31, 2000, the Company entered into a joint
venture  (NeWave  (TM))  with Daido Metal Company, Ltd., a Japanese company. The
initial  investment  was  $47,000  or  5,000,000  Japanese  Yen.

     The  financial  position  and results of operations of the Company's equity
investments  (Infrasol,  LLC, Renewable Energies Group, LLC and NeWave (TM)) as
of  December  31,  2001  and for the years ended December 31, 2000 and 2001 are:

<TABLE>
<CAPTION>
                                                                Renewable
                                                   Infrasol,     Energies
                                                      LLC       Group, LLC     NeWave (TM)
                                                  -----------  ------------  --------------
<S>                                               <C>          <C>           <C>
FINANCIAL POSITION as of December 31, 2001
  Assets
    Cash                                          $   16,268   $     4,991   $      76,248
    Investments, available for sale                   31,800        15,900               -
                                                  -----------  ------------  --------------

                                                      48,068        20,891          76,248

  Liabilities
    Accounts payable                                  45,466        38,286          10,856
                                                  -----------  ------------  --------------
  Net assets                                      $    2,602   $   (17,395)  $      65,392
                                                  ===========  ============  ==============
  DCH Technology, Inc. investment in LLCs and JV  $    1,301   $    (5,793)  $      32,696
                                                  ===========  ============  ==============

FINANCIAL POSITION as of December 31, 2000
  Assets
    Cash                                          $   16,943   $     4,991   $      83,246
    Investments, available for sale                   90,000        45,000               -
                                                  -----------  ------------  --------------

                                                     106,943        49,991          83,246

  Liabilities
    Accounts payable                                  45,002        27,515               -
                                                  -----------  ------------  --------------
  Net assets                                      $   61,941   $    22,476   $      83,246
                                                  ===========  ============  ==============
  DCH Technology, Inc. investment in LLCs and JV  $   30,971   $     7,485   $      41,623
                                                  ===========  ============  ==============

RESULTS OF OPERATIONS
  Year ended December 31, 2000
  Revenues                                        $      348   $         -   $           -
  Operating expenses                                  21,371           666           4,114
                                                  -----------  ------------  --------------
    Net loss                                      $  (21,023)  $      (666)  $      (4,114)
                                                  ===========  ============  ==============
  DCH Technology, Inc. allocated loss             $  (10,512)  $      (222)  $      (2,057)
                                                  ===========  ============  ==============

  Year ended December 31, 2001
  Revenues, net                                   $        -   $         -   $      62,463
  Operating expenses                                   3,251        10,771          70,217
                                                  -----------  ------------  --------------
    Net loss                                      $   (3,251)  $   (10,771)  $      (7,754)
                                                  ===========  ============  ==============
  DCH Technology, Inc. allocated loss             $   (1,626)  $    (3,587)  $      (3,877)
                                                  ===========  ============  ==============
</TABLE>



--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-37

<PAGE>
DCH  TECHNOLOGY,  INC.  AND  SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

NOTE  6  -  INVESTMENTS  IN  LIMITED  LIABILITY  COMPANIES  AND  JOINT  VENTURES
(CONTINUED)

     THE DIFFERENCE IN THE AMOUNT CARRIED ON THE BALANCE SHEET AS INVESTMENTS IN
LIMITED  LIABILITY  COMPANIES  AND  THE AMOUNT OF NET ASSETS ATTRIBUTABLE TO THE
COMPANY  IS  ATTRIBUTABLE TO UNREALIZED HOLDING GAINS AND LOSSES OFFSET BY STOCK
SUBSCRIPTION  RECEIVABLES.  UNREALIZED HOLDING GAINS AND LOSSES ARE ATTRIBUTABLE
TO  THE CHANGES IN VALUE OF THE COMPANY'S COMMON STOCK, WHICH HAVE BEEN EXCLUDED
FROM  THE  STATEMENT OF OPERATIONS. SINCE THE PRIMARY ASSET OF THE LLCS IS THEIR
INVESTMENT  IN  THE  COMPANY,  THE  LLCS  HAVE  BEEN  RECORDED AS A REDUCTION TO
STOCKHOLDERS'  EQUITY.

NOTE  7  -  ACCRUED  EXPENSES

<TABLE>
<CAPTION>
                             2000      2001
                           --------  --------
<S>                        <C>       <C>
Board of Director's fees   $112,000  $ 31,129
Legal and settlement fees   238,772         -
Royalty and license fees     51,249    55,856
Consulting services               -    29,166
Other                        25,542    50,965
                           --------  --------

                           $427,563  $167,116
                           ========  ========
</TABLE>

NOTE     8  -  CAPITAL  LEASES

     The  Company  leases  various computer equipment under non-cancelable lease
agreements.  Future  minimum  lease payments under capital leases as of December
31,  2001  are:

     Total minimum  payments                              16,803
     Amount representing interest at 12% to 13%           (3,341)
                                                     ------------

     Present value of net minimum lease payments     $    13,462
                                                     ============


     As  of December 31, 2000 and 2001, equipment under capital lease agreements
amounted  to  $43,638  and  accumulated  amortization  amounted  to  $21,315 and
$31,348,  respectively.  Amortization expense under capital leases for the years
ended  December  31,  2000  and  2001,  was  $17,052  and $10,033, respectively.


--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-38

<PAGE>
                      DCH TECHNOLOGY, INC. AND SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

NOTE   9  -  SALES  AND  LEASEBACK  TRANSACTION

     During  the  year  ended  December  31,  2001,  the Company sold land and a
building  for  cash  consideration  of  $1,256,000,  less  selling expenses, and
$164,000  in  rent  credit,  resulting  in  a  loss on the sale of approximately
$50,000.  The  Company  repaid  the mortgage note of approximately $730,000, and
received  from  the lender a $700,000 Certificate of Deposit which had been held
as  collateral.  In  connection  with  the  sale,  the  Company  entered into an
operating  lease with the buyer, in which the Company leases the building over a
ten-year  period.  The  $164,000 rent credit is amortized ratably over the lease
term  (See  also  Note  15).

NOTE  10  -  INCOME  TAXES

     Deferred  income  taxes reflect the net tax effects of temporary difference
in  the  carrying  amounts of assets and liabilities for financial reporting and
income  tax reporting purposes.  The Company's deferred tax assets are comprised
of  the  following  items:

<TABLE>
<CAPTION>
                                     2000          2001
                                 ------------  -------------
<S>                              <C>           <C>
Net operating loss carryforward  $ 6,858,300   $ 10,469,000
Stock option compensation            842,100      1,344,900
Impairment losses                     76,000         80,000
Other                                319,500        121,300
                                 ------------  -------------
                                   8,095,900     12,015,200
Valuation allowance               (8,095,900)   (12,015,200)
                                 ------------  -------------
Net deferred tax asset           $         -   $          -
                                 ============  =============
</TABLE>

     At  December  31,  2000 and 2001, the valuation allowance of $8,095,900 and
$12,015,200 represent increases of $6,244,600 and $3,919,300, respectively, over
the  preceding  year.


--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-39

<PAGE>
DCH  TECHNOLOGY,  INC.  AND  SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

NOTE  10  -  INCOME  TAXES  (CONTINUED)

     A reconciliation between the effective tax rate and the statutory tax rates
for  the  years  ended  December  31,  2000  and  2001 is as follows:

<TABLE>
<CAPTION>
                                                   2000      2001
                                                  ------    ------
<S>                                               <C>       <C>
Federal tax benefit                               (34.0) %  (34.0) %
State tax benefit, net of federal tax              (5.8)     (5.8)
Change in valuation allowance on deferred taxes    66.8      39.8
Change in effective rates on valuation allowance  (27.0)        -
                                                  ------    ------
                                                      -  %      -  %
                                                  ======    ======
</TABLE>


     During  the year ended December 31, 2000, the Company changed its estimated
effective federal tax rate for the future reversal of temporary differences from
15%  to  34%.

     The  Company  has  approximately  $26,000,000 of federal net operating loss
carryforwards available to reduce future federal and state tax liabilities which
will  begin  to  expire  at  various times starting 2013 and 2002, respectively.


--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-40

<PAGE>
DCH  TECHNOLOGY,  INC.  AND  SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

NOTE  11  -CAPITAL  TRANSACTIONS

     STOCK  OPTION  PLANS - The Company has an incentive stock option plan.  The
options  granted  under  the  plan  are  intended  to qualify as incentive stock
options  under  existing  tax  regulations.  In addition, the Company has issued
non-qualified  stock  options  to  employees, members of the Board of Directors,
consultants  and  vendors.  Non-qualified  options  issued  to  employees  and
Directors are valued under the intrinsic-value method in accordance with APB No.
25.  Options  issued  to  consultants  and  vendors are valued based on the fair
value  of the considerations received or the fair value of the equity instrument
issued,  whichever  is  more  reliably  determinable.

     For  the  year ended December 31, 2000 and 2001, the Company has recognized
compensation  expense  of $760,080 and $3,652,636, respectively, for stock-based
awards  issued  to  employees and Directors under APB No. 25. For the year ended
December 31, 2000 and 2001, the Company has recorded consulting fees of $225,771
and  $824,030,  respectively,  for  stock-based  awards  issued  to consultants.

     The  following table summarizes the activity of incentive and non-qualified
stock  options  for  the  years  ended  December  31,  2000  and  2001:

<TABLE>
<CAPTION>
                                Outstanding Options
                            ----------------------------
                              Number     Exercise Price
                            -----------  ---------------
<S>                         <C>          <C>
Balance, December 31, 1994     534,333   $          2.48
  Granted                       60,000             11.25
  Exercised                   (162,766)             1.66
                            -----------  ---------------

Balance, December 31, 1999   6,278,023   $          0.43
Granted                      1,673,011              2.20
Exercised                   (1,231,851)             0.59
                            -----------  ---------------

Balance, December 31, 2000   6,719,183              0.84
Granted                      8,196,397              1.37
Exercised                   (2,170,817)             0.31
                            -----------  ---------------

Balance, December 31, 2001  12,744,763   $          1.16
                            ===========  ===============
</TABLE>

     The  following  summarizes  information  about stock options outstanding at
December  31,  2001:

<TABLE>
<CAPTION>
                    -----------  ---------------------------  -----------------
Range of exercise     Number     Weighted average remaining   Weighted average
prices              outstanding       contractual life         exercise price
------------------  -----------  ---------------------------  -----------------
<S>                 <C>          <C>                          <C>

0.22 - $0.25         2,835,730                   5.97 years  $            0.25
0.26 - $1.00         5,334,121                   3.81 years               0.68
1.01 - $8.82         4,574,912                   4.14 years               2.29
                    -----------  --------------------------  -----------------

                    12,744,763                   4.41 years  $            1.16
                    ===========  ==========================  =================
</TABLE>


--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-41

<PAGE>
DCH  TECHNOLOGY,  INC.  AND  SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

NOTE  11  -CAPITAL  TRANSACTIONS  (CONTINUED)

     Had  compensation  cost  for  the Company's options granted been determined
consistent  with  SFAS  123,  the Company's net loss and loss per share would be
affected  as  follows:

<TABLE>
<CAPTION>
                    Year Ended December 31
                 ----------------------------
                     2000           2001
                 -------------  -------------
<S>              <C>            <C>
Net loss
  As reported    $ (7,654,093)  $ (9,930,099)
                 =============  =============
  Pro Forma      $(10,797,799)  $(18,534,836)
                 =============  =============

Loss per share:
  As reported    $       (.32)  $       (.31)
                 =============  =============
  Pro Forma      $       (.45)  $       (.58)
                 =============  =============
</TABLE>

          The fair value of each option granted is estimated on grant date using
the  Black-Scholes option pricing model which takes into account as of the grant
date  the  exercise  price and expected life of the option, the current price of
the  underlying  stock  and  its  expected volatility, expected dividends on the
stock  and the risk-free interest rate for the term of the option. The following
is  the  average  of  the  data  used  to  calculate  the  fair  value:

<TABLE>
<CAPTION>
  Risk-free                     Expected   Expected
Interest rate   Expected life  volatility  dividends
--------------  -------------  ----------  ---------
<S>             <C>            <C>         <C>
 1.84% - 4.19%        5 years  87% - 127%     N/A
</TABLE>


STOCK  WARRANTS  -The  following  table summarizes the activity in common shares
subject  to  warrants:

<TABLE>
<CAPTION>
                              Shares      Price range
                            -----------  -------------
<S>                         <C>          <C>
Balance, December 31, 1999   2,275,306   $0.40 - $2.00
Granted                      2,400,000     0.25 - 2.90
Exercised                   (2,185,306)    0.40 - 0.75
                            -----------  -------------

Balance, December 31, 2000   2,490,000     0.25 - 2.90
Granted                        100,000            0.83
Exercised                   (1,654,428)    0.25 - 2.90
                            -----------  -------------

Balance, December 31, 2001     935,572   $0.25 - $2.90
                            ===========  =============
</TABLE>



--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-42

<PAGE>
DCH  TECHNOLOGY,  INC.  AND  SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

NOTE  12  -  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

     The Company has used market information for similar instruments and applied
judgment  to  estimated  fair  values of financial instruments.  At December 31,
2001,  the  fair  values  of  cash,  accounts  receivable,  and accounts payable
approximates  carrying  values  based  on  the  short  maturity  of these items.

NOTE    13   -   SEGMENT  INFORMATION

     Operating  segments  are defined as components of an enterprise about which
separate  financial  information is available that is evaluated regularly by the
chief  decision  maker,  or  decision  making group, in deciding how to allocate
resources  and  in  assessing  performance.  The  operating segments are managed
separately  because  each operating segment represents a strategic business unit
whose  function  and  purpose  differs  from  the  other  segments.


          The  Company's main reportable operating segments include the hydrogen
fuel  cell  division located in Wisconsin and hydrogen sensor operations located
in  California.  The  Company  also generates revenue activities from consulting
services  incidental  to  the  core Sensor and Fuel Cell segment activities. The
accounting policies of the operating segments are the same as those described in
the  summary  of  significant  accounting  policies.  The  Company  evaluates
performance  based  operations.

<TABLE>
<CAPTION>
                                                         Center for
                               Hydrogen fuel   Hydrogen   Hydrogen
December 31, 2001                  cells        sensors    Safety    Corporate     Total
-----------------------------  --------------  ---------  ---------  ----------  ----------
<S>                            <C>             <C>        <C>        <C>         <C>

Total gross sales              $      350,816  $ 700,831  $  54,867  $   43,000  $1,149,514
Propery and equipment, net     $      131,086  $ 172,897  $       -  $  329,057  $  633,040
Depreciation and amortization  $       78,035  $  60,466  $       -  $  146,859  $  285,360
Capital expenditures           $        2,887  $ 103,278  $       -  $   15,355  $  121,520
</TABLE>


NOTE  14  -  CONCENTRATIONS  OF  CREDIT  RISK

     Sales  to  two  major  customers  were  $293,000, or 25% of the total sales
during  the  year  ended December 31, 2001.  The outstanding receivable balances
from  the  customers  were  $129,000  at  December  31,  2001.  The  outstanding
receivable  balance  from  a  major  customer  was $72,000 at December 31, 2000.


--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-43

<PAGE>
DCH  TECHNOLOGY,  INC.  AND  SUBSIDIARIES

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

NOTE  15  -  COMMITMENTS  AND  CONTINGENCIES

     LEASES  -  The Company leases various operating facilities under agreements
expiring  through  2011.  In September 2001, the Company entered into a sale and
leaseback  transaction whereby the Company leases the building that it sold over
a  ten-year  period  with  monthly  rentals  of approximately $9,100 net of rent
credit.  Certain leases contain escalation based primarily on the consumer price
index.  Minimum annual payments under noncancellable operating leases for future
years  ending  December  31  are:

          2002                        $    159,190
          2003                             130,617
          2004                             135,189
          2005                             139,920
          2006                             139,920
          Thereafter                       764,538
                                      ------------

                                      $  1,469,374
                                      ============

     Rent  expense  for  the years ended December 31, 2000, and 2001 amounted to
$96,692,  and  $116,846,  respectively.

     LITIGATION  -  On  December 31, 2000 the Company was involved in litigation
with a corporate marketing resource company who alleged breach of contract.  The
full  amount  of  $12,100  of  the settlement was accrued in 2000 and settled in
2001.

NOTE  16  -  EMPLOYEE  BENEFIT  PLAN

          Effective  January  1,  2000,  the  Company  adopted  a  401K
profit-sharing/savings  plan  that covers substantially all employees.  Eligible
employees  may  contribute on a tax deferred basis a percentage of compensation,
up  to  the maximum allowable under tax law.  Employee contributions and related
earnings  are  always  fully  vested.  Matching contributions by the Company are
discretionary.  Company  matching  contributions amounted to $56,081 and $83,603
for  the  years  ended  December  31,  2000  and  2001,  respectively.


--------------------------------------------------------------------------------
The  accompanying  notes  are  an  integral part of these consolidated financial
statements
                                      F-44

<PAGE>
                                    PART III.
                                    ---------

                                     ITEM 8.

                  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                      ON ACCOUNTING AND FINANCIAL DISCLOSURE

                                      None.

                                     ITEM 9.

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

DIRECTORS,  EXECUTIVE  OFFICERS  AND  KEY  EMPLOYEES

     The  following  table  sets  forth  certain information, as of December 31,
2001,  concerning  our  executive  officers,  directors  and  key  employees:

<TABLE>
<CAPTION>
NAME                         AGE                       POSITION(S)
---------------------------  ---  -----------------------------------------------------
<S>                          <C>  <C>
John Donohue                  54  Chief Executive Officer and Director
---------------------------  ---  -----------------------------------------------------
David P. Haberman             40  Chairman of the Board of Directors (1)
---------------------------  ---  -----------------------------------------------------
Dr. Johan (Hans) Friedericy   72  Vice President, Chief Operating Officer and Director
---------------------------  ---  -----------------------------------------------------
Ronald L. Ilsley              60  Vice President, Finance and Chief Financial Officer
---------------------------  ---  -----------------------------------------------------
Steven A. Huenemeier          53  Vice President and General Manager, Sensor Division
---------------------------  ---  -----------------------------------------------------
Daniel Teran                  48  Director
---------------------------  ---  -----------------------------------------------------
Robert S. Walker              59  Director
---------------------------  ---  -----------------------------------------------------
Raymond N. Winkel             73  Director
---------------------------  ---  -----------------------------------------------------
</TABLE>

--------------------
(1)  Mr.  Haberman  retired as a member of our Board of Directors on February 8,
2002.

     DAVID  P.  HABERMAN  served as the Chairman of our Board of Directors since
co-founding DCH with David A. Walker in November 1994. He retired from our Board
of  Directors  on  February 8, 2002.  He was also our Vice President, Technology
and Planning from November 1994 through June 30, 2001. Mr. Haberman served as an
engineering  consultant  at CBOL Corporation between 1993 and 1994 and served in
various  technical  capacities  at  the Astronautics Corporation of America from
1983 to 1993. He is an experienced applications engineer and has a background in
the design and development of hardware. In addition, Mr. Haberman was elected to
the  Board  of  Directors of the National Hydrogen Association in April 1999 and
previously  served  on that Board between 1996 and 1998. Since October 1998, Mr.
Haberman  has  also served as a member of the Hydrogen Technical Advisory Panel,
which  reports  to Congress on hydrogen-related issues. Mr. Haberman also serves
as  an  American  delegate  to the International Standards Organization (ISO) on
hydrogen  safety.


                                       45
<PAGE>
     JOHN  T.  DONOHUE has been a Member of our Board of Directors since October
2001  and has served as our President and Chief Executive Officer since March 1,
2001.  In  February  2002, he was named Vice Chairman of our Board of Directors.
From  1999  to  March  2001, Mr. Donohue served as President of the $1.2 billion
Spirit  Energy  76,  Unocal  Corporation's  Lower  48 exploration and production
business.  During  his  tenure  as President, Mr. Donohue exceeded financial and
performance  goals  for  the first time in the four year history of the business
unit  with  pretax  earnings  exceeding  $500 million in year 2000.  Mr. Donohue
joined  Unocal  Corporation  in  1980  and subsequently held numerous management
positions  in  Operations, Exploration, and Information Services.  Of particular
note,  Mr.  Donohue  was named General Manager of the Louisiana Onshore Business
Unit, a  $110 million development and operations business based in Lafayette, LA
in  1992.   In  1995, he was appointed General Manager of the Alaska Oil and Gas
Division,  a  $250  million  Alaskan exploration and production operation.  From
1996  until  1999,  he  served as Vice President of Agriculture Products, a $650
million business consisting of oil and gas exploration and production in Alaska,
fertilizer  manufacturing  in  Alaska,  Washington,  and  California,  and
international  and  domestic  sales.  Mr. Donohue is a Director of both the U.S.
Oil and Gas Association and the National Ocean Industries Association. He served
in  the United States Air Force from 1970 to 1974. Mr. Donohue holds a MS degree
in  geophysics from the Rensselaer Polytechnic Institute in Troy, New York and a
BS  degree  in  physics  from  Siena  College  in  Loudonville,  New  York.

     DR.  JOHAN  (HANS)  FRIEDERICY  has been a member of our Board of Directors
since  April  2000  and  currently  serves as Vice President and Chief Operating
Officer.  Dr.  Friedericy served as our Interim President and CEO from June 2000
through February 2001.  Prior to joining DCH, Dr Friedericy held the position of
Director  of  Research  and  Technology  for  Defense  and  Space  at  Honeywell
International's  Washington office, having served in this capacity since January
1989.  Dr.  Friedericy  began  his  career  with Honeywell International when he
joined the Garrett Corporation, later AlliedSignal, in 1968. Over the years, Dr.
Friedericy  has  been responsible for the technical and administrative direction
of  all  phases of a 500-person engineering and laboratory department, including
design,  development,  program management, sales and product support, as well as
being  responsible  for  technology  planning  and  transfer.  A graduate of the
University  of  Illinois,  he  received  his Ph.D. in Applied Mechanics from the
University  of  Illinois  in  1960. Dr. Friedericy has 30 publications and seven
patents  to  his  credit,  and  is a member of Sigma Xi and SAE and is currently
listed  in  American  Men of Science. Dr. Friedericy is a founding member of the
National  Hydrogen  Association.

     RONALD  L.  ILSLEY has served as Vice President and Chief Financial Officer
since  his appointment in August 2000.   Mr. Ilsley joined DCH from his position
of  Chairman,  Chief  Financial  Officer,  and  Director  of Ceatech USA Inc., a
successful,  technology-based  aquaculture  company  supplying  food products to
domestic  and international markets. In this role he provided hands-on operating
and  financial leadership with responsibility for audits, shareholder relations,
corporate  finance,  treasury,  tax, accounting, management information systems,
and  risk  management.  Prior  to  this,  he  served  as  Vice President & Chief
Financial  Officer of Chemoil Corp., the largest independent integrated supplier
of  marine  fuels  in  the  U.S., with substantial international operations. His
responsibilities have also included serving as Treasurer and Director of Finance
for  Santa  Fe International Corporation, a multinational energy company; and as
Senior  Vice  President  &  Manager,  National Corporate Group, for the European
American  Bank.

     STEVEN  A.  HUENEMEIER  has served as Vice President and General Manager of
our  sensors  division since his appointment in March of 2000.  Prior to joining
DCH  in  March  2000, Mr. Huenemeier was President of R.J. Lison Co., a regional
distributor  of  industrial equipment from 1987 to 1999.  Throughout his career,
Mr.  Huenemeier  has  held  several  top  management  positions  in which he was
responsible  for  establishing  and  overseeing  business  operations.    Mr.
Huenemeier


                                       46
<PAGE>
holds  a  BA  degree  in  Business Administration and also holds several network
related  certifications  including  Microsoft Certified Systems Engineer (MCSE),
Microsoft  Certified  Professional  (MCP)+ Internet, and CISCO Certified Network
Associate  (CCNA).

     DANIEL  TERAN  has  served  as  a  member  of  our Board of Directors since
December 1997.  Mr. Teran is a Certified Public Accountant licensed in the state
of California and has had his own practice in the City of Los Alamitos in Orange
County  since  July  1989.  He  offers services in accounting, systems setup and
design  and  taxation.  He also provides tax planning and tax return preparation
for  individuals  and  businesses,  and  represents  clients  in audits with the
Internal  Revenue Service and the California Franchise Tax Board.  Prior to July
1989,  he  worked as Chief Financial Officer for the Stephen Hopkins Development
Company  (a  shopping  center  developer) and as Controller for NRC Construction
Company.  He also served as an auditor for Seidman and Seidman (a large national
public  accounting  firm).  He  is an active member of the American Institute of
Certified  Public  Accountants  and  the  California Society of Certified Public
Accountants,  and  has  served  on  various committees within these professional
organizations.  He  received  a  B.S. degree in Accounting from California State
University  at  Long  Beach.

     ROBERT  S.  WALKER  has  served as a member of our Board of Directors since
January 1999, and was named Chairman of our Board of Directors in February 2002.
Mr. Walker is Chairman of Wexler & Walker Public Policy Associates, a Washington
D.C.-based lobbying firm, where he has served since his retirement from Congress
in  1997  where  he had served as a representative from Pennsylvania since 1977.
During  his tenure in the House, he authored the Hydrogen Future Act of 1996 and
served  as  Chairman  of  the  House  Science Committee. Also, he served as Vice
Chairman  of  the Budget Committee, Chairman of the Republican Leadership, Chief
Deputy  Minority  Whip,  and  a  member  of  Speaker  Newt Gingrich's six person
Advisory  Group.  For many years, he was an active and influential member of the
Republican majority in Congress. Mr. Walker also serves on the Board of Trustees
of  the  Aerospace  Corporation, the United States Space Science Foundation, and
the  Susquehana  Center  for  Public Policy. He is also a member of the Advisory
Board  for  the  Imax Corporation. He is a fellow at Millersville University and
Franklin  and  Marshall  College,  and serves as a regular academic lecturer. In
addition,  he  continues to be a frequent guest on CNBC's "Hardball," PBS's "The
Lehrer  Newshour,"  and  other  C-SPAN,  CNN, FOX and MSNBC programs. Mr. Walker
began  his career as a high school teacher and congressional aide. He received a
B.S.  degree  in  Education  from  Millersville  University,  an  M.A. degree in
Political Science from the University of Delaware and an Honorary Doctor of Laws
from  Franklin  and  Marshall  College.

     RAYMOND  N.  WINKEL, a retired US Navy Rear Admiral, has served as a member
of  our  Board  of Directors since December 1996. He served as Vice President of
Programs  for  Astronautics  Corporation of America in Milwaukee, Wisconsin from
1984  until  his retirement in 1995. Prior to this, he was Vice President of the
Telephonics  Corporation  between  1980  to  1983.  However, the majority of his
career was spent in the United States Navy, working his way up as one of the few
enlisted  men  to  ever reach flag Rank. Admiral Winkel joined the Navy in 1947,
flew  the  four engine P4Y2 Privateer Anti-Submarine Warfare Aircraft during the
Korean  War  and  later served in several important capacities until joining the
Naval Air Systems Command in Washington in 1971. Admiral Winkel has been awarded
the  Air  Medal,  the  Naval  Aviator's  Gold  Wings,  the  Legion of Merit, the
Presidential  Meritorious  Service Medal, the Secretary of the Navy Commendation
Medal,  the  Good  Conduct  Medal,  the National Defense Service Medal (with the
Bronze  Star),  the  China  Service Medal, the Korean Presidential Unit Citation
Ribbon  and  a  number  of other medals and citations. Adm. Winkel earned a B.S.
degree at Naval Post Graduate School in Monterey, California, a M.S. degree from
Villanova  University,  and  graduated  from  the Advanced Management Program at
Harvard  University.


                                       47
<PAGE>
     In  February  2002,  we engaged Dr. Sanjiv Malhotra as our Vice President -
Business  Development and Marketing. Dr. Malhotra is a well-known participant in
the  hydrogen  energy  industry,  most  recently  serving  as Director, Business
Development,  Marketing  and  Sales  for  H  Power Corporation.  While serving H
Power,  Malhotra  spearheaded  the  formation  of  several  strategic  business
alliances  -  forging  financial,  joint  development  and  marketing agreements
generating substantial revenues and establishing significant channels to market.
He  also  negotiated  revenue-generating  research contracts and licensing fees.

     All  of  our  officers  serve  at the discretion of the Board of Directors.
Directors  serve  until  the  next  annual meeting of our shareholders, or until
their  successors  have  been  duly  elected  and  qualified.

COMMITTEES  OF  THE  BOARD  OF  DIRECTORS

     The  Board  of  Directors of DCH currently has a Compensation Committee, an
Audit  Committee,  a  Public  Policy  Committee  and a Technical Committee.  The
functions  of each of these committees are described and the members of each are
listed  below.

     The  Compensation Committee is chaired by Raymond N. Winkel.   Daniel Teran
and  Robert  S.  Walker  serve as the other Committee members.  The Compensation
Committee  renders  advice  with respect to compensation matters and administers
our  equity  and  incentive  compensation  plans.

     The  Audit Committee is chaired by Daniel Teran.  Robert Walker and Raymond
N.  Winkel  serve  as  the  other  members of the Committee. The Audit Committee
oversees  our financial reporting processes and is responsible for reviewing our
financial  condition.

     The  Public  Policy  Committee  is  chaired by Robert S. Walker. Raymond N.
Winkel and John Donohue serve as the other members of the Committee.  The Public
Policy  Committee  is  responsible  for  monitoring  and  reporting  on activity
occurring in government relating to hydrogen and other matters that could affect
us,  our  products  and/or  our  marketing  strategies.

     The  Technical  Committee is chaired by Raymond N. Winkel. John Donohue and
Dr.  Johan  (Hans)  Friedericy  also  serve  as  members  of  the Committee. The
Technical Committee examines new and existing technologies and renders advice to
us  regarding  potential  products  based  on  those  technologies.

SECTION  16(A)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE.

     Section  16  of the Securities Exchange Act of 1934 requires our directors,
executive  officers  and  holders  of  10%  or  more of our common stock to file
reports  of ownership (Form 3) and changes in ownership (Forms 4 and 5) with the
SEC  and  to  furnish  us with copies of all such forms which they file with the
SEC.  To  the best of the Company's knowledge, all Forms 4 and 5 were filed in a
timely  manner. In making the foregoing disclosure, we have relied solely on our
review  of  copies  of  forms  filed  by  such  persons  with  the  SEC.


                                       48
<PAGE>
                                    ITEM 10.

                             EXECUTIVE COMPENSATION

EXECUTIVE  COMPENSATION  SUMMARY

     The  following  table  provides  compensation  information  for  the period
indicated with respect to the persons who served as our Chief Executive Officers
for  the  years  ended December 31, 2001, 2000 and 1999, and all other executive
officers  of  DCH  receiving total salary and bonus in excess of $100,000 during
the  years  ended  December  31,  2001,  2000 and 1999 (collectively, the "Named
Executive  Officers"):

<TABLE>
<CAPTION>
                              SUMMARY COMPENSATION TABLE

--------------------------------------------------------------------------------------
                                 ANNUAL COMPENSATION            LONG TERM COMPENSATION
--------------------------------------------------------------------------------------
NAME AND              YEAR  SALARY ($)   BONUS ($)  RESTRICTED   NUMBER OF SECURITIES
PRINCIPAL                                              STOCK     UNDERLYING WARRANTS/
POSITION                                             AWARDS($)        OPTIONS (#)
--------------------  ----  -----------  ---------  -----------  ---------------------
<S>                   <C>   <C>          <C>        <C>          <C>
John Donohue,         2001            -          -            -                673,584
Chief Executive
Officer
--------------------  ----  -----------  ---------  -----------  ---------------------
Dr. Johan (Hans)      2001  $    57,692          -            -                596,662
Friedericy,           2000            -          -            -                 35,077
Chief Executive
Officer  and  Chief
Operating
Officer(1)
--------------------  ----  -----------  ---------  -----------  ---------------------
David A. Walker,      2001  $   133,779          -            -              1,049,813
Vice President (2)    2000  $   218,615          -            -                      -
                      1999
--------------------  ----  -----------  ---------  -----------  ---------------------
David Haberman,       2001  $   222,741          -            -                978,882
Vice President (3)    2000  $     7,692          -      167,500                      -
                      1999            -          -            -                      -
--------------------  ----  -----------  ---------  -----------  ---------------------
Dr. William L.        1999            -          -            -                675,000
Firestone (4)
--------------------  ----  -----------  ---------  -----------  ---------------------
</TABLE>

(1)  Mr.  Friedericy  served  as  our  Chief  Executive  Officer  from June 2000
through  February  2001.
(2)  Mr.  Walker  served  as  our  Chief  Executive  Officer  from April 1999 to
March  2000.  He  resigned  as  Vice  President  on  June 30, 2001.  He received
$10,563  during the year ended December 31, 1999 as reimbursement for automobile
expenses.
(3)  Mr.  Haberman  served  as our Vice President, Technology and Planning, from
November  1994 through June 30, 2001.  On February 8, 2002, Mr. Haberman retired
as  Chairman  of  our  Board  and  as  a  Director.
(4)  Dr.  Firestone  resigned  as  our Chief  Executive  Officer  in April 1999.


                                       49
<PAGE>
EMPLOYMENT  AGREEMENTS

     Effective  March 1, 2001, we entered into an employment agreement with John
T. Donohue, our President and Chief Executive Officer. This employment agreement
terminates  on  December  31,  2002,  and  provides for an annual base salary of
$40,000  and  the  grant  of options to purchase up to an aggregate of 2,500,000
shares  of  our  common stock pursuant to the terms of a stock option agreement.
This  stock  option agreement contains provisions for the vesting of the options
based  on  certain  performance criteria relating to the closing market price of
our  common  stock.  In  addition, the employment agreement provides alternative
vesting  schedules for the options in the event that Mr. Donohue's employment is
terminated  due  to  a  change in control or otherwise. The employment agreement
defines  a "change in control" as a change that would be required to be reported
under  certain  provisions  of  the  Securities  Exchange  Act  of  1934.

     We have an employment agreement with Dr. Johan (Hans) Friedericy, our Chief
Operating  Officer.  The  employment  agreement commenced on January 1, 2001 and
terminates  on January 1, 2002.  The employment agreement provides for an annual
base  salary  of  $60,000  and  the equivalent of $90,000 in non-qualified stock
options; it further provides for additional equity compensation to be determined
upon  the  achievement of certain quarterly financial milestones.  As of January
1,  2002,  we  have  converted  our  employment  agreement with Dr. Johan (Hans)
Friedericy  to  a  month  to month agreement, terminable upon 30 days' notice by
either  party.  All  other  terms  of  the  agreement  remain  unchanged.

     Effective July 1, 2001, we entered into an employment agreement with Ronald
Ilsley,  our  Chief  Financial  Officer.  The employment agreement terminates on
July  1,  2002  and  provides for annual compensation of $190,000 of which up to
$120,000  may  be paid in the form of stock options.  The agreement provides for
the  grant  of  options  to Mr. Ilsley for the purchase of 500,000 shares of our
common stock.  This includes options to purchase 100,000 shares of common stock,
which  options  vested  upon  the  execution  of  the employment agreement.  The
remaining  options  to purchase 400,000 shares of common stock vest according to
certain performance criteria based on equity financing. The employment agreement
provides  alternative  vesting  schedules  for the options in the event that Mr.
Ilsley's  employment  is terminated due to a change in control or otherwise. The
employment  agreement  defines  a  "change in control" as a change that would be
required  to be reported under certain provisions of the Securities Exchange Act
of  1934.

     Until  June  1,  2001,  we had an Employment Agreement with David Haberman.
Under the terms of the Agreement, Mr. Haberman was required to serve as our Vice
President  and  to manage marketing, research and development, and certain other
activities.  The  Agreement provided for an annual salary of $350,000 to be paid
in  cash and/ or options, and quarterly option grants in the amount of $162,500.
The  Agreement  also provided for an incentive bonus equal to 1% of net profits.
Effective June 1, 2001, we entered into a Consulting Agreement with Mr. Haberman
pursuant  to  which  Mr. Haberman agreed to provide certain services to DCH.  On
October  1,  2001 we executed an agreement terminating Mr. Haberman's Consulting
Agreement.  Under  the Termination Agreement, we have agreed to pay Mr. Haberman
$48,509.68  in  back  salary  owed  under  the  Employment Agreement, $87,500 in
consulting  fees  owed  under  the  Consulting  Agreement,  and  $23,501.68  as
reimbursement  for  expenses  Mr.  Haberman  incurred while providing consulting
services.

     Until June 1, 2001, we had an Employment Agreement with David Walker. Under
the terms of the Agreement, Mr. Walker was required to provide certain advice to
our  officers  and to oversee implementation of our business plan. The Agreement
provided  for  an  annual salary of $350,000 to be paid in cash and/ or options,
and  quarterly  option  grants  in  the  amount  of $162,500. The Agreement also
provided for an incentive bonus equal to 1% of net profits. In the third quarter


                                       50
<PAGE>
of 2001, Mr. Walker resigned from his position as an employee of DCH. On June 1,
2001,  we  executed a Consulting Agreement with Mr. Walker pursuant to which Mr.
Walker continues to provide us with certain advice and consulting services at an
hourly  rate  of  $250.

     Effective  as of February 19, 2002, we entered into an employment agreement
with Dr. Sanjiv Malhotra, our Vice President Business Development and Marketing.
The  employment  agreement  terminates in February 2003, and provides for annual
compensation  of  $130,000.

FISCAL  YEAR  OPTION  GRANTS

     The  following table sets forth information concerning warrants and options
granted  to  the  named  executives  during  2001.

<TABLE>
<CAPTION>
                 WARRANT AND OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 2001(1)
                 ----------------------------------------------------------------

------------------  ------------------  -----------------  -------------------  ------------------
                        NUMBER OF          % OF TOTAL      EXERCISE PRICE PER    EXPIRATION DATE
NAME                    SECURITIES      WARRANTS/ OPTIONS     SHARE ($/SH)
                        UNDERLYING         GRANTED TO
                    WARRANTS/ OPTIONS   EMPLOYEES IN 2001
                       GRANTED (#)
------------------  ------------------  -----------------  -------------------  ------------------
<S>                 <C>                 <C>                <C>                  <C>
John Donohue                   673,584               10.4        0.24 to $2.00  3/23/06 - 12/31/06

------------------  ------------------  -----------------  -------------------  ------------------
David P. Haberman              978,882                 15        0.40 to $4.21  2/23/06 - 12/31/06

------------------  ------------------  -----------------  -------------------  ------------------
David A. Walker              1,049,813               16.1        0.40 to $4.21  2/23/06 - 12/31/06

------------------  ------------------  -----------------  -------------------  ------------------
Dr. Johan (Hans)               596,662                9.2        0.24 to $1.52  3/31/06 - 12/31/06
Friedericy

------------------  ------------------  -----------------  -------------------  ------------------
Ronald Ilsley                  602,370                9.3        0.24 to $2.03   3/31/06- 12/31/06
------------------  ------------------  -----------------  -------------------  ------------------
</TABLE>

FISCAL  YEAR  OPTION  EXERCISES  AND  FISCAL  YEAR-END  OPTION  VALUES

     Shown  below  is  information  regarding  options  exercised  by  the Named
Executive  Officers  during  the  year  ended December 31, 2001, and unexercised
stock  options  held  by  the  Named  Executive  Officers  at December 31, 2001.

<TABLE>
<CAPTION>
                      AGGREGATE OPTION EXERCISES IN 2001 AND YEAR END OPTION VALUES
                      -------------------------------------------------------------

NAME              SHARES     VALUE          NUMBER OF UNEXERCISED         VALUE OF UNEXERCISED IN-THE
                  ACQUIRED   REALIZED ($)   OPTIONS AT YEAR END(#)        MONEY OPTIONS AT YEAR
                  ON                                                      END($)(1)
                  EXERCISE                  -------------  -------------  --------------  --------------
                  (#)                       EXERCISABLE    UNEXERCISABLE    EXERCISABLE   UNEXERCISABLE
----------------  ---------  -------------  -------------  -------------  --------------  --------------
<S>               <C>        <C>            <C>            <C>            <C>             <C>
John Donohue            -0-            -0-        673,584            -0-  $       22,755             -0-
----------------  ---------  -------------  -------------  -------------  --------------  --------------
David A. Walker   1,139,500  $   1,608,675        358,300        750,000  $       19,238  $      397,500
----------------  ---------  -------------  -------------  -------------  --------------  --------------
David Haberman          -0-            -0-      1,433,882        750,000  $      340,344  $      397,500
----------------  ---------  -------------  -------------  -------------  --------------  --------------
Dr. Johan (Hans)        -0-            -0-        631,739            -0-  $       97,580             -0-
Friedericy

----------------  ---------  -------------  -------------  -------------  --------------  --------------
Ronald Ilsley           -0-            -0-        419,185        200,000  $       50,127  $      106,000
----------------  ---------  -------------  -------------  -------------  --------------  --------------
</TABLE>


                                       51
<PAGE>
 (1)     Based  on  a per share fair market value of our common stock equal to $
0.53  at  December 31, 2001, the closing price for our common stock on that date
as  reported  by  various  market  makers for our common stock on the Amex Stock
Market.

DIRECTOR  COMPENSATION

     Compensation  for  members of the Board of Directors (regardless of whether
such  members  are  employees  of  DCH)  is  as  follows:

For serving on the Board of Directors, $10,000 per year;
For each Board meeting, $1,000;
For chairing a committee (excluding Audit Committee), $500;
For chairing the Audit Committee, $1,000;
For serving on a committee, $1,000; and
For each working Audit Committee meeting, $1,000.

     At  our option, the above compensation, payable at the end of the year, may
be  paid  in  cash  or  in  options  to  purchase  shares  of  our common stock.

     In  addition,  each  non-employee  director  receives reimbursement for the
expenses  that  he  incurs in traveling to meetings of the Board of Directors or
any  of  its  committees.

                                    ITEM 11.

                          SECURITY OWNERSHIP OF CERTAIN
                        BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding the beneficial
ownership  of  our common stock as of February 8, 2002,  (i) by each director of
DCH; (ii) by each person known by DCH to own beneficially more than five percent
of  our  common  stock;  (iii)  by  the  executive officers named in the Summary
Compensation  Table  set  forth  in  "Executive  Compensation"  and  (iv) by all
directors  and  executive  officers  of  DCH  as  a  group.

     Unless  otherwise  indicated  in  the footnotes to the table, the following
individuals  have  sole  vesting and sole investment control with respect to the
shares they beneficially own. The address of all persons listed below is c/o DCH
Technology,  Inc.  24832  Avenue  Rockefeller,  Valencia,  California  91355.

     The  number  of shares beneficially owned by each stockholder is determined
under  rules  promulgated  by  the  Securities  and Exchange Commission, and the
information  is not necessarily indicative of beneficial ownership for any other
purpose.  Under such rules, beneficial ownership includes any shares as to which
the individual has sole or shared voting or investment power and also any shares
which  the  individual has the right to acquire within 60 days after February 8,
2002.  The  inclusion  herein  of  such  shares, however, does not constitute an
admission that the named stockholder is a direct or indirect beneficial owner of
such shares. Unless otherwise indicated, each person named in the table has sole
voting  and  investment power (or shares such power with his or her spouse) with
respect  to all shares of common stock listed as owned by such person. The total
number  of outstanding shares of common stock at February 8, 2002 is 33,665,810.

     Unless  indicated  otherwise,  the address for each officer and director in
the  following  table  is  care of DCH Technology, Inc. 24832 Avenue Rockefeller
Valencia,  California  91355.


                                       52
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL              AMOUNT AND NATURE OF      PERCENT OF CLASS
OWNER                                       BENEFICIAL OWNERSHIP

EXECUTIVE OFFICERS AND DIRECTORS:
------------------------------------------  ------------------------  -----------------
<S>                                         <C>                       <C>
John Donohue                                                 673,584               1.9%
------------------------------------------  ------------------------  -----------------
Dr. Johan (Hans) Friedericy                                  636,739               1.8%
------------------------------------------  ------------------------  -----------------
Daniel Teran                                                 309,109                 *
------------------------------------------  ------------------------  -----------------
Robert S. Walker                                             254,903                 *
------------------------------------------  ------------------------  -----------------
Raymond Winkel                                               362,962               1.1%
------------------------------------------  ------------------------  -----------------
All executive officers and Directors as a
group (5 persons)                                          2,237,297               6.6%
------------------------------------------  ------------------------  -----------------
</TABLE>

*    Less  than  one  percent.

     The shares listed as owned by John Donohue include 673,584 shares of common
stock  issuable  to  him pursuant to options exercisable on or within 60 days of
February  8,  2002.

     The  shares  listed as owned by Dr. Johan (Hans) Friedericy include 631,739
shares  of  common  stock  issuable to him pursuant to options exercisable on or
within  60  days  of  February  8,  2002.

     The shares listed as owned by Daniel Teran include 309,109 shares of common
stock  issuable  to  him pursuant to options exercisable on or within 60 days of
February  8,  2002.

     The  shares  listed  as owned by Robert S. Walker include 254,703 shares of
common  stock  issuable  to  him pursuant to options exercisable on or within 60
days  of  February  8,  2002.

     The  shares  listed  as  owned  by Raymond Winkel include 181,172 shares of
common  stock  issuable  to  him pursuant to options exercisable on or within 60
days  of  February  8,  2002.

     The  shares listed as owned by all executive officers and directors include
an  aggregate  of  2,050,307 shares of common stock issuable to them pursuant to
options  exercisable  on  or  within  60  days  of  February  8,  2002.

                                    ITEM 12.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In  the  year  ended  December  31,  2000,  we  granted  Dr.  Johan  (Hans)
Friedericy,  our  Chief  Executive  Officer, options to purchase an aggregate of
35,077 shares of common stock at exercise prices ranging from $1.50 per share to
$5.81  per  share.  All  of  these  options  vested  immediately  upon  grant.

     In  the  years ended December 31, 2001 and 2000, we also granted options to
purchase  shares of our common stock to certain of our officers and directors as
consideration  for services performed during 2001and 2000. Some of these options
were  fully  vested  on  the  date  of  grant,  and  are  set  forth  below:


                                       53
<PAGE>
<TABLE>
<CAPTION>
                              OPTIONS GRANTED
                              FOR SERVICES IN
                              FISCAL YEAR
                              ---------------
NAME                           2001     2000    EXERCISE PRICE
----------------------------  -------  -------  --------------
<S>                           <C>      <C>      <C>
John Donohue                  673,584      -0-   0.24 to $2.00
Dr. Johan (Hans) Friedericy   596,662   35,077   1.50 to $5.81
Ronald Ilsley                 602,370   16,815   0.24 to $4.51
Stephanie Hoffman             191,374   38,005   0.24 to $6.10
Steven Huenemeier             161,482   39,318   0.24 to $8.82
Dan Teran                     159,687    6,204   0.24 to $5.67
William Firestone (1)             -0-  430,000   0.24 to $2.00
Randall Firestone(1)              -0-   73,000   0.75 to $0.92
Raymond Winkel                114,422   66,750   0.40 to $1.52
Robert Walker                 111,775  142,928   0.40 to $1.52
</TABLE>

--------------------
(1)  William  and  Randall Firestone resigned as Board members in November 2000.

     In  June  of  2000,  we entered into an agreement with H2OR Ltd. (H2OR), an
Israeli  company,  pursuant  to  which  H2OR  agreed  to  act  as  the exclusive
distributor  of  our  fuel  cell  and Robust Hydrogen Sensor(TM) products in the
territories of Israel, Cyprus, Turkey and Africa.  David P. Haberman, the former
Chairman  of  our  Board  of Directors, and Mark Lezell, a former Director, were
also shareholders of H2OR.  To date, this arrangement with H2OR has not resulted
in  sales  of  our  products  in  these  territories, and the parties are in the
process  of  terminating  the  agreement  at  no  additional  cost  to  DCH.

     We  believe that all of the transactions set forth above were made on terms
no  less  favorable  to us than could have been obtained from unaffiliated third
parties. We intend that all future transactions, including loans, between us and
our  officers,  directors,  principal  stockholders and their affiliates will be
approved  by  a  majority of the board of directors, including a majority of the
independent  and disinterested directors, and will be on terms no less favorable
to  us  than  could  be  obtained  from  unaffiliated  third  parties.

                                    ITEM 13.

                    EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
                             AND REPORTS ON FORM 8-K

Documents filed as part of this Report:

1.     Financial  Statements.   The  following  financial  statements of DCH are
included  in  a separate section of this Annual Report on Form 10-KSB commencing
on  the  pages  referenced  below.

2.     Financial  Statement  Schedules. The financial statement schedules of DCH
have  been  omitted  because  they  are  not  applicable,  not  required, or the
information  is  included  in  the  consolidated  financial  statements or notes
thereto.

3.     Exhibits.  Except  as  indicated below, the following exhibits were filed
with  our  Form 10-SB as amended on October 7, 1999, and are incorporated herein
by  reference:


                                       54
<PAGE>
<TABLE>
<CAPTION>
Form 10-SB Exhibit No.   Description
----------------------   -----------
<S>                      <C>

2.1                      Certificate of Incorporation of DCH Technology, Inc. (4)

2.2                      Bylaws of DCH Technology, Inc. (4)

3.1                      Specimen certificate for the Registrant's common stock. (1)

6.1                      License Agreement, dated April 24, 1996, by and between
                         Registrant and Sandia Corporation. (1)(2)

6.2                      Limited Exclusive Field of Use Patent License Agreement,
                         dated March 15, 1999, by and between Registrant and The
                         Regents of the University of California. (1)(2)

6.3                      Nonexclusive Field of Use Patent License Agreement, dated
                         March 15, 1999, by and between Registrant and The Regents
                         of the University of California. (1)(2)

6.4                      LANL Modular CRADA Stevenson-Wydler Cooperative
                         Research and Development Agreement No. LA98C10384,
                         dated October 30, 1998, by and between Registrant and The
                         Regents of the University of California. (1) (2)

6.5                      Stevenson-Wydler Cooperative Research and Development
                         Agreement No. ORNL 96-0454, dated September 26, 1996, as
                         amended, by and between Registrant and Lockheed Martin
                         Energy Research Corporation. (1)(2)

6.5(a)                   Amendment B to Cooperative Research and Development
                         Agreement No. ORNL 96-0454. (1) (2)

6.6                      Sole Commercial Patent License Agreement, dated September
                         26, 1996, by and between Registrant and Lockheed Martin
                         Energy Research Corporation. (1) (2)

6.7                      Exclusive License Agreement, effective as of May 15, 1998, by
                         and between Registrant and Simon Fraser University. (1) (2)

6.8                      Stevenson-Wydler Cooperative Research and Development
                         Agreement, dated May 6, 1996, as amended, by and between
                         Amerisen and Midwest Research Institute. (1) (2)

6.8(a)                   Modification Number 3 to Cooperative Research and
                         Development Agreement No. CRD-96-046. (1) (2)

6.9                      Agency Agreement, dated January 18, 1999, by and between
                         Registrant and Horiba, Ltd. (1)

6.10                     Employment Agreement, dated December 31, 1994, by and
                         between Registrant and David A. Walker. (1)


                                       55
<PAGE>
6.11                     Employment Agreement, dated December 31, 1994, by and
                         between Registrant and David P. Haberman. (1)

6.12                     Limited Liability Company Operating Agreement, dated July
                         31, 1998, of Renewable Energies Group LLC. (1)

6.13                     Operating Agreement of Infrasol LLC, dated July 31, 1998. (1)

6.14                     Standard Industrial/Commercial Multi-Tenant Lease-Gross,
                         dated April 28, 1998, by and between Registrant and Bradmore
                         Realty Investment Company, Ltd. (1)

6.15                     Standard Industrial/Commercial Multi Tenant Lease- Gross,
                         dated April 2, 1999, by and between Registrant and Valencia
                         Gardens. (1)

6.16                     Lease Agreement, dated as of April 22, 1999, by and between
                         Registrant and Welton Family Limited Partnership. (1)

6.17                     Purchase and Sale Agreement and Joint Escrow Instructions (3)

6.18                     Purchase and Sale Agreement dated August 31, 2001 between
                         the Registrant and Rediger Investment. (5)
                         Corporation

6.19                     Standard Industrial/Commercial Single-Tenant Lease dated
                         September 24 between Registrant and Rediger Investment
                         Corporation. (5)

23.1                     Consent of Moss Adams LLP (4)
</TABLE>

--------------------
(1)  Incorporated  by  reference  from Registrant's Registration Statement on
Form  10-SB (File  No.  000-26957)

(2)  Portions  omitted  pursuant  to a request for confidentiality filed with
the  Commission.

(3)  Incorporated  by reference from Registrant's Current Report on Form 8-K,
filed  with  the  Commission  on  June  9,  2000.

(4)  Filed  herewith.



                                       56
<PAGE>
(5)  Incorporated  by reference from Registrant's Current Report on Form 8-K,
filed  with  the  Commission  on  October  5,  2001.

4.  Reports  on  Form 8-K:  No reports on Form 8-K were filed during the quarter
ended  December  31,  2001.



                                       57
<PAGE>
SIGNATURES

     Pursuant  to  the  requirements  of  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,  in the City of
Valencia,  State  of  California,  on  March  29,  2002.
                                       ---------

DCH  TECHNOLOGY,  INC.

/s/ John  T.  Donohue
---------------------------
John  T.  Donohue
President and Chief Executive Officer


     In  accordance with the Exchange Act, this Annual Report on Form 10-KSB has
been  signed  by  the  following  persons  on  behalf  of  the Registrant in the
capacities  and  on  the  dates  indicated.

SIGNATURE                        TITLE                              DATE
---------                        -----                              ----


/s/ John  T.  Donohue
------------------------------   President  and  Chief             3/29/02
John  T.  Donohue                Executive Officer and Director

/s/ Ronald  L.  Ilsley
------------------------------   Vice President, Finance and       3/29/02
Ronald  L.  Ilsley               Chief Financial Officer
(principal accounting officer)

/s/ Dr. Johan Friedericy
------------------------------   Vice  President,                  3/29/02
Dr. Johan (Hans) Friedericy      Chief Operating Officer
     and  Director

/s/ Daniel  Teran
------------------------------   Director                          3/29/02
Daniel  Teran

/s/ Robert  S.  Walker
------------------------------   Director  and  Chairman           3/29/02
Robert  S.  Walker

/s/ Raymond  N.  Winkel
------------------------------   Director                          3/29/02
Raymond  N.  Winkel


                                       58
<PAGE>