SECURITIES AND EXCHANGE COMMISSION

FORM 10-QSB

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]For the transition period from ____________ to ____________

Commission file number 000-32365

E.C. POWER,
INC.                     (Exact Name of Registrant as Specified in its Charter)

| | Delaware(State or other jurisdiction
      of incorporation or organization) | 91-162385I.R.S. Employer
      Identification number
| | ---------------------------------------------------------------------------- | ----------------------------------------------------

236 West 27th Street, 3rd Floor, New
York, New York 10001

Registrant's telephone number, including area code: (212)
399-6688

_________________________________________________________
(Former Name or Address if Changed Since Last Report)

Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Issuer was required to file such reports), and (2) has
been subject to filing requirements for the past 90 days. Yes [ ] No [X ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the Registrant has filed all documents and reports required to
be filed by Sections 12, 13, or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.
Yes [ ] No [ ] *** not applicable ***

APPLICABLE ONLY TO CORPORATE ISSUERS

As of January 30, 2002, the Company had 10,296,911
shares of its $0.001 par value common stock outstanding.

Transitional Small Business Disclosure Format (Check one) Yes [ ] No [X]

|Part I - Condensed Consolidated Financial
      Statements |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  | 
|---------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                           | Item 1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  | 
|                                                           | Condensed Consolidated Financial
      Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  | 
|                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  | 
|                                                           | The consolidated financial statements of
      the EC Power, Inc. and subsidiary (collectively, the "Company"),
      included herein were prepared, without audit, pursuant to rules and
      regulations of the Securities and Exchange Commission. Because certain
      information and notes normally included in financial statements prepared
      in accordance with accounting principles generally acccepted in the United
      States of America were condensed or omitted pursuant to such rules and
      regulations, these financial statements should be read in conjunction with
      the financial statements of the Company as included in the Company's Form
      10-SB for the year ended December 31, 2000.
|                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  | 

|EC POWER, INC.                     |                                                                    |        |                |        |                         |               |                       
|---------------------------------- | ------------------------------------------------------------------ | ------ | -------------- | ------ | ----------------------- | ------------- | ----------------------
|CONSOLIDATED BALANCE SHEETS        |                                                                    |        |                |        |                         |              
|                                   |                                                                    |        |                |        |                         |               |                       
|                                   |                                                                    |        |                |        |                         | September 30, | December 31,          
|                                   |                                                                    |        |                |        |                         | 2001          | 2000                  
|                                   | ASSETS                                                             |        |                |        |                         | (Unaudited)   |                       
|                                   | Current Assets                                                     |        |                |        |                         |               |                       
|                                   | Cash and cash equivalents                                          |        |                |        | $         
      19,400 |               | $        
      20,881
|                                   | Accounts receivable, trade                                         |        |                |        | 55,412                  |               | 209,806               
|                                   | Other receivable                                                   |        |                |        | 565,878                 |               | 429,938               
|                                   | Inventory                                                          |        |                |        | 82,623                  |               | 89,625                
|                                   | Total Current Assets                                               |        |                |        | 723,313                 |               | 750,250               
|                                   |                                                                    |        |                |        |                         |               |                       
|                                   | Property plant and equipment net of
      accumulated depreciation | 89,645 |                | 61,709 |                        
|                                   | Deferred charges                                                   |        |                |        | 450                     |               | 1,863                 
|                                   | Prepaid expenses                                                   |        |                |        | 8,054                   |               | 2,802                 
|                                   | Deposits                                                           |        |                |        |                         | 48,734        |                       
|                                   | Deferred offering cost                                             |        |                |        | 104,500                 |               | 19,000                
|                                   | Patents and computer software                                      |        |                |        | 97,830                  |               | 64,584                
|                                   | Advances to employees                                              |        |                |        | 7,000                   |               | 4,000                 
|                                   | Total Assets                                                       |        |                |        | $    1,079,526          |               | $       959,021       
|                                   |                                                                    |        |                |        |                         |               |                       
|                                   | LIABILITIES AND CAPITAL                                            |        |                |        |                         |               |                       
|                                   | Current Liabilities                                                |        |                |        |                         |               |                       
|                                   | Accounts payable and accrued expenses                              |        | $      581,342 | $      | 568,928                 |              
|                                   | Deferred revenue                                                   |        |                |        | 93,367                  |               | 155,678               
|                                   | Due to related parties                                             |        |                |        | 213,835                 |               | 210,056               
|                                   | Loan payable                                                       |        |                |        | 436,122                 |               | 15,190                
|                                   | Shareholders' loans payable                                        |        |                |        | 39,380                  |               | 105,306               
|                                   | Total Current Liabilities                                          |        |                |        | 1,364,046               |               | 1,055,158             
|                                   |                                                                    |        |                |        |                         |               |                       
|                                   | Commitments and contingencies                                      |        |                |        | -                       |               | -                     
|                                   | Minority interest                                                  |        |                |        | 15,691                  |               | 2,001                 
|                                   |                                                                    |        |                |        |                         |               |                       
|                                   | Stockholders' Equity (Deficit)                                     |        |                |        |                         |               |                       
|                                   | Common stock, 100,000,000 shares authorized
      at $.001         |        |                |        |                         |              
|                                   | par value; issued and outstanding
      10,296,911 at September    |        |                |        |                        
|                                   | 30, 2001, and 9,996,911 at December 31,
      2000                 |        | 10,297         |        | 9,997                   |              
|                                   | Preferred stock 50,000,000 shares in total
      authorized at     |        |                |        |                         |              
|                                   | $.01 par value: Series A 5,000,000 shares
      authorized,        |        |                |        |                         |              
|                                   | issued and outstanding 2,589,815 at
      September 30,            |        |                |        |                         |              
|                                   | 2001 and December 31, 2000                                         |        |                |        | 25,899                  |               | 25,899                
|                                   | Capital in excess of par value                                     |        |                |        | 4,865,932               |               | 4,502,002             
|                                   | (Deficit)                                                          |        |                |        |                         | (4,356,445)   |                       
|                                   | Unearned interest expense                                          |        |                |        | (9,965)                 |               | -                     
|                                   | Unearned compensation expense                                      |        |                |        | (771,947)               |               | (952,708)             
|                                   | Accumulated comprehensive income                                   |        |                |        | (63,982)                |               | (7,363)               
|                                   | Stockholders' (Deficit)                                            |        |                |        | (300,211)               |               | (98,138)              
|                                   | Total Liabilities and Capital                                      |        |                |        | $     1,079,526         |               | $       959,021       
|See Notes to Financial Statements.

|EC POWER, INC.                        |                                                       |            |                            |                           |               |               |                       |             |                       
|------------------------------------- | ----------------------------------------------------- | ---------- | -------------------------- | ------------------------- | ------------- | ------------- | --------------------- | ----------- | ----------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS |                                                       |            |                            |                           |               |               |                      
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      |                                                       |            | For the Three Months Ended | For the Nine Months Ended |              
|                                      |                                                       |            |                            | September 30,             |               | September 30, |                      
|                                      |                                                       |            |                            | 2001                      |               | 2000          |                       | 2001        |                       
|                                      |                                                       |            |                            | (Unaudited)               |               |               |                       | (Unaudited) |                       
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Sales revenues                                        |            | $      82,041              |                           | $     114,068 |               | $     337,443         |             | $     302,033         
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Cost of sales                                         |            | 185,062                    |                           | 44,164        |               | 249,697               |             | 158,516               
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Gross profit                                          |            | (103,021)                  |                           | 69,904        |               | 87,746                |             | 143,517               
|                                      | Licensing revenues                                    |            | (3,953)                    |                           | -             |               | 442,839               |             | -                     
|                                      | Total revenue                                         |            | (106,974)                  |                           | 69,904        |               | 530,585               |             | 143,517               
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | General and administrative expenses                   |            | 215,199                    |                           | 234,925       |               | 714,326               |             | 715,998               
|                                      | Stock compensation (general and
      administrative) | 60,253     |                            | 131,698                   |               | 209,991       |                       | 395,094     |                       
|                                      | Research and development                              |            | 94,084                     |                           | 37,946        |               | 233,528               |             | 114,899               
|                                      |                                                       |            |                            | 369,536                   |               | 404,569       |                       | 1,157,845   |                       
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Loss from operations                                  |            | (476,510)                  |                           | (334,665)     |               | (627,260)             |             | (1,082,474)           
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Other income and expenses                             |            |                            |                           |               |               |                       |             |                       
|                                      | Interest income                                       |            | 4,970                      |                           | 8             |               | 5,015                 |             | 8                     
|                                      | Interest expense                                      |            | (20,230)                   |                           | (1,439)       |               | (54,649)              |             | (6,506)               
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Loss before taxes, prior period adjustment            |            |                            |                           |               |               |                       |             |                       
|                                      | and minority interest                                 |            | (491,770)                  |                           | (336,096)     |               | (676,894)             |             | (1,088,972)           
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Prior period adjustment                               |            | -                          |                           | -             |               | -                     |             | -                     
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Loss before taxes and minority interest               |            | (491,770)                  |                           | (336,096)     |               | (676,894)             |             | (1,088,972)           
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Minority interest share of loss (income)              |            | 8,360                      |                           | (13,645)      |               | (409)                 |             | 4,509                 
|                                      | Benefit (Provision) for income taxes                  |            | (2,628)                    |                           | 4,549         |               | (3,177)               |             | 26,225                
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Net (loss)                                            |            |                            | (486,038)                 |               | (345,192)     |                       | (680,480)   |                       
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Other comprehensive income(loss)                      |            |                            |                           |               |               |                       |             |                       
|                                      | Foreign currency translation adjustment               |            | 42,912                     |                           | (29,494)      |               | (56,619)              |             | 52,105                
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Comprehensive (loss)                                  |            | $ (443,126)                |                           | $ (374,686)   |               | $   (737,099)         |             | $(1,006,133)          
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Basic and diluted (loss) per share                    |            | $       (0.05)             |                           | $      (0.04) |               | $       
      (0.07) |             | $        
      (0.14)
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|                                      | Basic and diluted average shares
      outstanding    | 10,296,911 |                            | 8,706,540                 |               | 10,198,386    |                       | 7,608,691   |                       
|                                      |                                                       |            |                            |                           |               |               |                       |             |                       
|See Notes to Financial Statements.   

|EC POWER, INC.                        |                                                          |          |                            |                           |               |               |                      |         |               
|------------------------------------- | -------------------------------------------------------- | -------- | -------------------------- | ------------------------- | ------------- | ------------- | -------------------- | ------- | --------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS |                                                          |          |                            |                           |               |               |                     
|                                      |                                                          |          |                            |                           |               |               |                      |         |               
|                                      |                                                          |          | For the Three Months Ended | For the Nine Months Ended |              
|                                      |                                                          |          |                            | September 30,             |               | September 30, |                     
|                                      |                                                          |          |                            | 2001                      |               | 2000          |                      | 2001    |               
|                                      |                                                          |          |                            | (Unaudited)               |               |               | (Unaudited)          |         |               
|                                      | Operating Activities                                     |          |                            |                           |               |               |                      |         |               
|                                      | Net income or (loss)                                     |          | $    (486,038)             |                           | $   (345,192) |               | $   (680,480)        |         | $  (1,058,238)
|                                      | Adjustments to reconcile net (loss)                      |          |                            |                           |               |               |                      |         |               
|                                      | to net cash used by operating activities:                |          |                            |                           |               |               |                      |         |               
|                                      | Depreciation and amortization                            |          | 24,648                     |                           | 31,801        |               | 46,438               |         | 94,093        
|                                      | Expenses paid for by issuance of stock                   |          | -                          |                           | -             |               | -                    |         | 220,333       
|                                      | Expenses paid for by issuance of warrants                |          | 60,253                     |                           | 131,698       |               | 221,547              |         | 180,761       
|                                      | Changes in operating assets and
      liabilities:       |          |                            |                           |               |               |                      |         |               
|                                      | (Increase) decrease in accounts receivable               | (17,077) |                            | (32,509)                  |               | 154,394       |                      | 31,552  |               
|                                      | (Increase) decrease in other receivables                 |          | (126,653)                  |                           | 85,045        |               | (147,390)            |         | 166,744       
|                                      | (Increase) decrease in deferred charges                  |          | 1,230                      |                           | 1,665         |               | 1,413                |         | 4,907         
|                                      | (Increase) decrease in prepaid expenses                  |          | 7,175                      |                           | (11,295)      |               | (5,252)              |         | (12,156)      
|                                      | (Increase) decrease in inventory                         |          | 3,148                      |                           | 6,370         |               | 7,002                |         | (71,762)      
|                                      | (Increase) decrease in other assets                      |          | -                          |                           | (3,248)       |               | -                    |         | (4,801)       
|                                      | (Increase) decrease in deposits                          |          | (38,723)                   |                           | 8,377         |               | 3,079                |         | 13,788        
|                                      | (Increase) decrease in patents                           |          | 60,632                     |                           | -             |               | (33,246)             |         | -             
|                                      | (Increase) decrease in deferred offering
      cost      | 44,500   |                            | -                         |               | (85,500)      |                      | -       |               
|                                      | Increase (decrease) in accounts payable,                 |          |                            |                           |               |               |                      |         |               
|                                      | accrued expenses and other liabilities                   |          | 169,282                    |                           | (216,568)     |               | 11,972               |         | (245,916)     
|                                      | Increase (decrease) in deferred revenue                  |          | (5,302)                    |                           | (17,280)      |               | (62,311)             |         | (17,280)      
|                                      | Increase (decrease) in due to related
      parties      | (54,054) |                            | 148,195                   |               | (3,779)       |                      | 171,205 |               
|                                      | Net cash (used) by operating activities                  |          | (356,979)                  |                           | (212,941)     |               | (572,113)            |         | (526,770)     
|                                      |                                                          |          |                            |                           |               |               |                      |         |               
|                                      | Investing Activities                                     |          |                            |                           |               |               |                      |         |               
|                                      | Investment in Neft                                       |          | -                          |                           | -             |               | -                    |         | -             
|                                      | Purchase of fixed assets                                 |          | 10,907                     |                           | (5,683)       |               | (74,374)             |         | (5,683)       
|                                      | Net cash (used) by investing activities                  |          | 10,907                     |                           | (5,683)       |               | (74,374)             |         | (5,683)       
|                                      |                                                          |          |                            |                           |               |               |                      |         |               
|                                      | Financing Activities                                     |          |                            |                           |               |               |                      |         |               
|                                      | Increase (decrease) in shareholder loans                 |          | (48,426)                   |                           | (62,000)      |               | (65,926)             |         | (20,620)      
|                                      | Increase in other loans                                  |          | 43,907                     |                           | 50,000        |               | 420,932              |         | (50,000)      
|                                      | Sale of common stock                                     |          | -                          |                           | 488,000       |               | 290,000              |         | 820,400       
|                                      | Sale of preferred stocks                                 |          | -                          |                           | -             |               | -                    |         | -             
|                                      | Net cash provided by financing activities                |          | (4,519)                    |                           | 476,000       |               | 645,006              |         | 749,780       
|                                      | Increase (decrease) in cash                              |          | (350,591)                  |                           | 257,376       |               | (1,481)              |         | 217,327       
|                                      | Cash at beginning of period                              |          | 369,991                    |                           | 15,990        |               | 20,881               |         | 56,039        
|                                      | Cash at end of period                                    |          | $    19,400                |                           | $  273,366    |               | $   19,400           |         | $  273,366    
|                                      |                                                          |          |                            |                           |               |               |                      |         |               
|                                      | Supplemental Disclosures of Cash Flow
      Information: |          |                            |                           |               |               |                      |        
|                                      | Cash paid during year for:                               |          |                            |                           |               |               |                      |         |               
|                                      | Interest                                                 |          | $            
      -      |                           | $      1,441  |               | $           
      - |         | $     6,508   
|                                      | Income taxes (benefits)                                  |          | $            
      -      |                           | $   (4,550)   |               | $       549          |         | $(26,226)     

|                                   | Non-cash investing and financing
      activities:                                                                                                                                                              |   |   |                      |        |                       |        |                        |        
|---------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | - | -------------------- | ------ | --------------------- | ------ | ---------------------- | -------
|                                   |                                                                                                                                                                                                                 |   |   |                      |        |                       |        |                        |        
|                                   | Issuance of 30,000 shares of common stock
      for interest payable                                                                                                                                            |   |   |                      |        |                      
|                                   |                                                                                                                                                                                                                 |   |   | $           
      - |        | $            
      - |        | $             
      - |        
|                                   |                                                                                                                                                                                                                
|                                   | Issuance of 128,152 shares of common stock
      for the three 
           months and 503,152 shares of common stock for the nine 
          
      months for settlement of loans payable and interest payable |   | - |                      | 34,601 |                       | -      |                        | 109,601
|                                   |                                                                                                                                                                                                                 |   |   |                      |        |                       |        |                        |        
|                                   | Issuance of 17,500 warrants for services                                                                                                                                                                        |   | - |                      | -      |                       | 29,230 |                        | -      
|                                   |                                                                                                                                                                                                                 |   |   |                      |        |                       |        |                        |        
|                                   | Issuance of 64,948 warrants for loan
      interest                                                                                                                                                             | - |   | -                    |        | 45,000                |        | -                      |        
|                                   |                                                                                                                                                                                                                 |   |   |                      |        |                       |        |                        |        
|                                   | Issuance of 94,677 incentive stock options
      for the three months and 290,781 for the nine months                                                                                                           | - |   | 216,147              |        | -                     |        | 648,441                |        
|                                   |                                                                                                                                                                                                                 |   |   |                      |        |                       |        |                        |        
|See Notes to Financial Statements.

|EC POWER, INC.                                      |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|--------------------------------------------------- | ------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  | 
|                                                    |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS          |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  | 
|(Amounts and Disclosures at and for the Nine Months |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 
|Ended September 30, 2001 and 2000 Are Unaudited)    |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 
|                                                    |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|                                                    | Note 1- | DESCRIPTION OF BUSINESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |  | 
|                                                    |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|                                                    |         | EC Power, Inc (the "Company") was incorporated
      in Delaware on March 25, 1999. On March 29, 1999 the Company acquired all
      the membership interests of EC Power LLC for an exchange of stock.                                                                                                                                                                                                                                                                                                                           
|                                                    |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|                                                    |         | In April, 1999 the Company merged with Neft Acquisition
      Corp. ("Neft"), a shell corporation having no assets or
      operations. EC Power, Inc. became the surviving entity.                                                                                                                                                                                                                                                                                                                                               
|                                                    |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|                                                    |         | The Company currently operates in one business segment
      that is engaged in the development of PEM (Proton Exchange Membrane) fuel
      cells and Ni-Zn batteries and performs applied research and development in
      electrochemistry.                                                                                                                                                                                                                                                                                   
|                                                    |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|                                                    |         | In late 1997, the shareholders of Sorapec S.A. ("Sorapec")
      agreed to issue and sell to the founders of EC Power, LLC. 35,000 new
      shares representing a 90% stake in Sorapec, the balance of the shares
      being held by key employees.                                                                                                                                                                                                                                                                             
|                                                    |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|                                                    |         | For accounting purposes, the acquisition has been treated
      as an acquisition of EC Power, Inc. by Sorapec and as a recapitalization
      of Sorapec. The historical financial statements prior to January 1, 1998
      are those of Sorapec giving effect to the acquisition as if the
      acquisition took place on January 1, 1997.                                                                                                                                                                                    
|                                                    |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|                                                    |         | In March 2000, the Company purchased additional Sorapec
      shares for $25,000 and converted $989,684 of loans, which increased its
      ownership interest in Sorapec to 94%. In September 2000, additional
      Sorapec employees converted their interest in Sorapec for 178,626 shares
      of common stock of the Company, thereby increasing the Company's interest
      to 96.05% in Sorapec. In June 2001, the Company converted $557,500 of
      loans which increased its ownership interest in Sorapec to 97.2%.
|                                                    |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|                                                    | Note 2- | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|                                                    |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|                                                    | a.      | Principles of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  | 
|                                                    |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|                                                    |         | The consolidated financial statements include the accounts
      of EC Power, Inc. and its 97.2% owned subsidiary Sorapec. All significant
      intercompany accounts and transactions are eliminated in consolidation.                                                                                                                                                                                                                                                                                                          
|                                                    |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 

|b. | 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.                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  | 
|c. | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |  |  |  | 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  | 
|   | The Company generally classifies as cash equivalents all
      highly liquid instruments with a maturity of three months or less at the
      time of purchase.                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  | 
|d. | Property, Plant and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |  |  |  |  | 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  | 
|   | Property and equipment are accounted for at cost and are
      depreciated over their estimated useful lives on a straight-line basis.
      Lab equipment and office furniture and equipment have estimated useful
      lives of five to seven years while lab improvements have estimated useful
      lives of five to fifteen years.                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  | 
|e. | Research and Development Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  | 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  | 
|   | Research and development costs are charged to operations
      as incurred.                                                                                                                                                                                                                                                                                                                                                                                                       | 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  | 
|f. | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |  |  |  | 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  | 
|   | The Company accounts for research and development
      contracts and grants on the percentage-of-completion method, and income is
      recognized as work on contracts progresses, but estimated losses on
      contracts are charged to operations immediately. The Company records sales
      when goods are delivered and profit is recognized at that time. The
      Company recognized revenue from the non refundable licensing fee front
      payment when received.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  | 
|g. | Deferred Revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |  |  |  |  |  | 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  | 
|   | Deferred revenue represents the unearned portion of
      research and development grants received by the Company.                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  |  | 

|h. | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |  |  |  | 
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  | 
|   | The Company previously adopted Statement of Financial
      Accounting Standards No. 109, "Accounting for Income Taxes", (SFAS
      No. 109") which requires the asset and liability method of accounting
      for income taxes. Enacted statutory tax rates are applied to temporary
      differences arising from the differences in financial statement carrying
      amounts and the tax basis of existing assets and liabilities. Due to the
      uncertainty of the realization of income tax benefits, (Note 9), the
      adoption of SFAS 109 had no effect on the financial statements of the
      Company.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  | 
|i. | Translation of Foreign Currencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |  | 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  | 
|   | Asset and liability accounts are translated into U.S.
      dollars using exchange rates in effect at the date of the consolidated
      balance sheet; revenue and expense accounts are translated at average
      monthly exchange rates. Translation adjustments are reflected as a
      component of shareholders' equity.                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  | 
|j. | Fair Value of Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |  | 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  | 
|   | The Company's cash represents a financial instrument as
      defined by Statement of Financial Accounting Standards No. 107,
      "Disclosures About Fair Value of Financial Instruments." The
      carrying value of this financial instrument is a reasonable approximation
      of fair value, due to its current maturity.                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  | 
|k. | Earnings (Loss) Per Common Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |  | 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  | 
|   | During 1998 the Company adopted SFAS No. 128,
      "Earnings Per Share"' which requires the reporting of both basic
      and diluted earnings per share. Net income per share-basic is computed by
      dividing income available to common shareholders by the weighted average
      number of common shares outstanding for the period. Shares issuable under
      conversion of preferred stock and stock warrants are excluded from
      computations as their effect is antidilutive.                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  | 
|l. | Comprehensive Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  |  |  | 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  | 
|   | Effective January 1, 1998 the Company adopted Statement of
      Financial Accounting Standards No. 130, "Reporting Comprehensive
      Income" ("SFAS No. 130"). SFAS No. 130 requires an entity
      to report comprehensive income and its components and increases financial
      reporting disclosures.                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  |  |  |  | 

|        | Comprehensive income is the total of (1) net income plus
      (2) all other changes in net assets arising from non-owner sources. The
      Company has presented a statement of operations that includes other
      comprehensive income.                                                                                                                                                                                                                                                                                                                                                                                      
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|m.      | Stock Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | The Company accounts for stock-based compensation using
      the intrinsic value method described in Accounting Principles Board
      Opinion No. 25, "Accounting for Stock Issued to Employees"
      ("APB No.25") and related interpretations. Accordingly,
      compensation cost for stock options is measured as the excess, if any, of
      the quoted market price of the Company's Common Stock at the date of the
      grant over the amount an employee must pay to acquire the stock. The
      Company has adopted the disclosure requirements of SFAS No. 123,
      "Accounting for Stock Based Compensation."
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|n.      | Interim Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | The accompanying financial information as of September 30,
      2001 and for the nine months ended September 30, 2001 and 2000 are
      unaudited and, in the opinion of management, all adjustments, consisting
      only of normal recurring adjustments considered necessary for a fair
      presentation, have been included. Operating results for any interim period
      are not necessarily indicative of the results for any other interim period
      or for an entire year.                                                                                                                                      
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Note 3- | INVENTORY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | Work in progress                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | Raw materials                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | Finished goods                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Note 4- | ADVANCES TO EMPLOYEES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | Advances to employees are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | Travel advances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|Note 5- | PROPERTY AND EQUIPMENT                             |                 |             |                        |        |             |              |               |              
|------- | -------------------------------------------------- | --------------- | ----------- | ---------------------- | ------ | ----------- | ------------ | ------------- | -------------
|        |                                                    |                 |             |                        |        |             |              | September 30, |              
|        | Equipment and leasehold consists of the following: |                 | 2001        |                        |        | 2000        |             
|        |                                                    |                 |             |                        |        |             |              |               |              
|        | Lab equipment                                      |                 |             |                        |        | $   463,871 |              |               | $     430,016
|        | Office furniture and equipment                     |                 |             |                        | 66,766 |             |              | 62,734        |              
|        | Lab improvements                                   |                 |             |                        |        | 201,131     |              |               | 208,134      
|        | Other in progress                                  |                 |             |                        |        | 506         |              |               | 524          
|        |                                                    |                 |             |                        |        |             |              | 732,274       |              
|        | Less: Accumulated depreciation and amortization:   |                 |             |                        |        |             |             
|        |                                                    |                 |             |                        |        |             |              |               |              
|        | Lab equipment                                      |                 |             |                        |        | 392,721     |              |               | 389,906      
|        | Office furniture and equipment                     |                 |             |                        | 55,477 |             |              | 54,136        |              
|        | Lab improvements                                   |                 |             |                        |        | 193,925     |              |               | 195,133      
|        | Other in progress                                  |                 |             |                        |        | 506         |              |               | 524          
|        |                                                    |                 |             |                        |        |             |              | 642,629       |              
|        |                                                    |                 |             |                        |        |             |              | $    89,645   |              
|        |                                                    |                 |             |                        |        |             |              |               |              
|Note 6- | LOANS PAYABLE                                      |                 |             |                        |        |             |              |               |              
|        |                                                    |                 |             |                        |        |             |              |               |              
|        | Loans payable are as follows:                      |                 |             |                        |        |             |              |               |              
|        |                                                    |                 |             |                        |        |             |              | Balance       |              
|        |                                                    |                 | Origination | Interest               |        | Due         |              | September 30, |              
|        |                                                    |                 | Date        | Rate                   |        | Date        |              | 2001          |              
|        |                                                    |                 |             |                        |        |             |              |               |              
|        |                                                    |                 | 10/15/2000  | 6%                     |        | Demand      |              | $     1,322   |              
|        |                                                    |                 | 05/15/2001  | 7%                     |        | 07/15/02    |              | 434,800       |              
|        |                                                    |                 |             |                        |        |             |              | $ 436,122     |              
|        |                                                    |                 |             |                        |        |             |              |               |              
|Note 7- | SHAREHOLDERS' LOANS PAYABLE                        |                 |             |                        |        |             |              |               |              
|        |                                                    |                 |             |                        |        |             |              | September 30, |              
|        | Shareholders' loans payable are as follows:        |                 |             | 2001                   |        |             | 2000         |              
|        |                                                    |                 |             |                        |        |             |              |               |              
|        | Chairman of the Board                              | 10% Demand Loan |             | $             
      - |        |             | $     50,926 |              
|        | Former President                                   | 10% Demand Loan |             | 39,380                 |        |             | 39,380       |              
|        | Other shareholders                                 | 10% Demand Loan |             | -                      |        |             | 15,000       |              
|        |                                                    |                 |             |                        |        |             |              | $    39,380   |              
|        |                                                    |                 |             |                        |        |             |              |               |              

|Note 8- | FAIR VALUE OF FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                    |  |  |              |                   
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------------ | ------------------
|        |                                                                                                                                                                                                                                                                                                                        |  |  |              |                   
|        | The following estimated fair value amounts have been
      determined using available market information and appropriate valuation
      methodologies. However, considerable judgment is necessarily required in
      interpreting market data to develop the estimates of fair value.                              
|        |                                                                                                                                                                                                                                                                                                                        |  |  |              |                   
|        | Accordingly, the estimates presented herein are not
      necessarily indicative of the amounts that the Company could realize in a
      current market exchange. The use of different market assumptions and/or
      estimation methodologies may have a material effect on the estimated fair
      value amounts.
|        |                                                                                                                                                                                                                                                                                                                        |  |  |              |                   
|        |                                                                                                                                                                                                                                                                                                                        |  |  |              | December 31, 2000 
|        |                                                                                                                                                                                                                                                                                                                        |  |  |              | Carrying          
|        | Assets:                                                                                                                                                                                                                                                                                                                |  |  |              | Amount            
|        | Cash and cash equivalents                                                                                                                                                                                                                                                                                              |  |  | $     20,881 |                   
|        | Accounts receivable                                                                                                                                                                                                                                                                                                    |  |  |              | 209,806           
|        | Other receivable                                                                                                                                                                                                                                                                                                       |  |  |              | 429,938           
|        |                                                                                                                                                                                                                                                                                                                        |  |  |              |                   
|        |                                                                                                                                                                                                                                                                                                                        |  |  |              | September 30, 2001
|        |                                                                                                                                                                                                                                                                                                                        |  |  |              | Carrying          
|        | Assets:                                                                                                                                                                                                                                                                                                                |  |  |              | Amount            
|        | Cash and cash equivalents                                                                                                                                                                                                                                                                                              |  |  | $    19,400  |                   
|        | Accounts receivable                                                                                                                                                                                                                                                                                                    |  |  |              | 55,412            
|        | Other receivable                                                                                                                                                                                                                                                                                                       |  |  |              | 565,878           
|        |                                                                                                                                                                                                                                                                                                                        |  |  |              |                   
|        | The carrying amounts of cash and cash equivalents,
      accounts receivable and other receivable are a reasonable estimate of
      their fair value because of the short maturity of those instruments.                                                                                                             
|        |                                                                                                                                                                                                                                                                                                                        |  |  |              |                   

|Note 9- | INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                            |                   |                     |                         |                     |           |                      |              |                      
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | ------------------- | ----------------------- | ------------------- | --------- | -------------------- | ------------ | ---------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   |                     |                         |                     |           |                      |              |                      
|        | The provision (benefit) for income taxes consists of the
      following (in thousands):                                                                                                                                                                                                                                                                                                                                                                |                  
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Nine Months ended |                     |                         |                     |          
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         | September 30,     |                     | Year ended December 31,
|        | Current:                                                                                                                                                                                                                                                                                                                                                                                                                                                |                   | 2001                |                         | 2000                |           | 2000                 |              | 1999                 
|        | Federal tax expense                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   | $    (150)          |                         | $     (99)          |           | $     (322)          |              | $      (116)         
|        | State tax expense                                                                                                                                                                                                                                                                                                                                                                                                                                       |                   | (21)                |                         | (15)                |           | (47)                 |              | (17)                 
|        | Foreign R&D credit                                                                                                                                                                                                                                                                                                                                                                                                                                      |                   | -                   |                         | 26                  |           | -                    |              | 54                   
|        | Deferred:                                                                                                                                                                                                                                                                                                                                                                                                                                               |                   |                     |                         |                     |           |                      |              |                      
|        | Federal tax expense                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   | 150                 |                         | 99                  |           | 322                  |              | 116                  
|        | State tax expense                                                                                                                                                                                                                                                                                                                                                                                                                                       |                   | 21                  |                         | 15                  |           | 47                   |              | 17                   
|        | Foreign R&D credit                                                                                                                                                                                                                                                                                                                                                                                                                                      |                   | -                   |                         | (26)                |           | -                    |              | (54)                 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   | $          
      - |                         | $          
      - |           | $           
      - |              | $            
      -
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   |                     |                         |                     |           |                      |              |                      
|        | A reconciliation of differences between the statutory U.S.
      federal income tax rate and the Company's effective tax rate follows:                                                                                                                                                                                                                                                                                                                 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   |                     |                         |                     |           |                      |              |                      
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Nine Months ended |                     |                         |                     |          
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         | September 30,     |                     | Year ended December 31,
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   | 2001                |                         | 2000                |           | 2000                 |              | 1999                 
|        | Statutory federal income tax                                                                                                                                                                                                                                                                                                                                                                                                                            |                   | 34%                 |                         | 34%                 |           | 34%                  |              | 34%                  
|        | State income tax-net of                                                                                                                                                                                                                                                                                                                                                                                                                                 |                   |                     |                         |                     |           |                      |              |                      
|        | federal benefit                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   | 5%                  |                         | 5%                  |           | 5%                   |              | 5%                   
|        | Valuation allowance                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   | -39%                |                         | -39%                |           | -39%                 |              | -39%                 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   | 0%                  |                         | 0%                  |           | 0%                   |              | 0%                   
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   |                     |                         |                     |           |                      |              |                      
|        | The components of deferred tax assets and liabilities are
      as follows (in thousands):                                                                                                                                                                                                                                                                                                                                                             
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   |                     |                         |                     |           |                      |              |                      
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   |                     |                         |                     |           | September 30,        | December 31,
|        | Deferred tax assets:                                                                                                                                                                                                                                                                                                                                                                                                                                    |                   |                     |                         |                     |           | 2001                 |              | 2000                 
|        | Net operating loss carryforward                                                                                                                                                                                                                                                                                                                                                                                                                         |                   |                     |                         |                     | $     673 |                      | $     502   
|        | Total deferred tax assets                                                                                                                                                                                                                                                                                                                                                                                                                               |                   |                     |                         |                     |           | 673                  |              | 502                  
|        | Valuation allowance                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   |                     |                         |                     |           | (673)                |              | (502)                
|        | Net deferred tax assets                                                                                                                                                                                                                                                                                                                                                                                                                                 |                   |                     |                         |                     |           | $         
      -   |              | $         
      -   
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   |                     |                         |                     |           |                      |              |                      
|        | SFAS No, 109 requires a valuation allowance to be recorded
      when it is more likely than not that some or all of the deferred tax
      assets will not be realized. At September 30, 2001 and December 31, 2000,
      a valuation allowance for the full amount of the net deferred tax asset
      was recorded because of continuing losses and uncertainties as to the
      amount of taxable income that would be generated in future years.
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                   |                     |                         |                     |           |                      |              |                      

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |  |  | 
|-------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|         | The Company recognized a loss for the period ended
      September 30, 2001 and for the year ended December 31, 2000. The amount of
      available additional net operating loss carryforwards are approximately
      $171,000 for 2001, $369,000 for 2000, $133,000 for 1999. The net operating
      loss carryforwards, if not utilized, will expire in the years 2013 through
      2021. The net operating loss of the Company's foreign subsidiary may not
      be used to offset any income earned by the Company. Additionally the
      foreign subsidiary is claiming all refundable income tax credits resulting
      from its operating losses.                                                                                        
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |  |  | 
|Note 10- | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  |  | 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |  |  | 
|         | The Chairman of the Board and a stockholder of the Company
      loaned money to the Company for the purpose of providing working capital.
      The loan is payable on demand and bears interest at a rate of 10% per
      annum. The interest is payable in shares of the Company's common stock. As
      of September 30, 2001 and December 31, 2000, the Company owed a balance of
      approximately none and $51,000 respectively to its Chairman of the Board.
      Additionally, other officers and stockholders of the Company loaned money
      to the Company for the purpose of providing working capital. These loans
      bear interest at a rate of 10% per annum that is payable in cash or in
      shares of the Company stock.
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |  |  | 
|         | During 2000, the Former President purchased 814,816 shares
      of common stock for $220,000. Other stockholders purchased 2,223,704
      shares of common stock for $600,400. In addition, the Company issued
      250,000 shares of common stock to settle $50,000 of loans payable and
      issued 125,000 shares of common stock to another stockholder who paid
      $25,000 directly to the lender. The Company issued 30,000 shares of common
      stock to pay the interest due on the above loan. A company controlled by
      the Chairman of the Board converted $34,601 of loans into 128,152 shares
      of common stock.                                                                                                         
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |  |  | 
|         | During 1999, the Chairman of the Board converted $50,000
      of loans into 250,000 shares of common stock and $25,000 of loans into
      92,593 shares of preferred stock. In addition, a corporation controlled by
      the Chairman of the Board converted $15,080 and $60,241 of accounts
      payable into 75,400 and 223,114 shares of common stock, respectively. The
      Former President of the Company converted $40,000 of loans into 148,148
      shares of preferred stock. Two other shareholders converted $20,000 of
      loans into 100,000 shares of common stock.                                                                                                                                                           
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |  |  | 

| | In 1999, the Chairman of the Board and the Former
      President received 12,500 shares and 20,000 shares respectively of common
      stock as a fee for their conversion of loans into preferred stock. The
      common stock was valued at $3,375 and $5,400, respectively.                                
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                 
| | During 1998, EC Power, LLC issued to its officers a
      membership interest for services rendered by those officers. The LLC
      interest was converted to shares of EC Power, Inc. common stock and
      distributed to the following officers of the Company who formerly were
      officers of the LLC.
| |                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                 
| | Chairman of the Board                                                                                                                                                                                                                                                                                           
| | Former President                                                                                                                                                                                                                                                                                                
| | Chief Executive Officer                                                                                                                                                                                                                                                                                         
| | Director                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                 
| | Also, during 1998, EC Power, LLC issued membership
      interests for interest expense to stockholders of the Company which were
      converted to shares of common stock by the stockholders.                                                                                                                
| |                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                 
| | During 1999, the Company issued shares of common stock for
      the payment of interest expense to the following officers and stockholders
      of the Company:                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                 
| | Chairman of the Board                                                                                                                                                                                                                                                                                           
| | Former President                                                                                                                                                                                                                                                                                                
| | Other stockholders                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                 
| | In 1999, the Company issued shares of common stock for the
      payment of compensation to the following officers and stockholders of the
      Company:                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                 
| | Chairman of the Board                                                                                                                                                                                                                                                                                           
| | Former President                                                                                                                                                                                                                                                                                                
| | Chief Executive Officer                                                                                                                                                                                                                                                                                         
| | Director & President of Sorapec SA                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                 

|         | In 2000 and 1999, the Company issued warrants to purchase
      common stock of the Company at $0.27 and $0.20 per share, respectively, to
      the following officers and directors of the                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|         | Company:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|         | Chairman of the Board                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|         | Former President                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|         | Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|         | Directors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|         | The additional compensation is being amortized over five
      years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|         | Due to related parties consists of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|         | Consulting fee payable to Former President                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|         | Directors' fees payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|         | Compensation payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Note 11- | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|         | Cash flows from operating activities are insufficient to
      meet the Company's cash flow requirements. The Company is extremely
      dependent on both capital contributions from majority stockholders and
      outside financing in order to enable the Company to continue operations.
      The majority stockholders intend to finance the Company until it can
      generate sufficient cash flows to maintain itself.                                                                                                                                                                                                                    
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Note 12- | STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|         | Prior to incorporation, EC Power, LLC had issued 6.884
      membership interests and owned 22,255 of the 38,900 shares outstanding of
      Sorapec. 3,900 of Sorapec shares were owned by employees and the remaining
      12,745 were held by other investors who were committed to exchange the
      shares for an additional 2.913 membership interest in EC Power, LLC,
      bringing the total membership interest to 9.797.                                                                                                                                                                                                                
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|         | In November 1997, the shareholders of Sorapec agreed to
      issue and sell to the founders of EC Power, LLC. 35,000 new shares
      representing a 90% stake in Sorapec, the balance of the shares being held
      by key employees. To facilitate this, Sorapec effected a reorganization,
      thereby reducing its outstanding shares to 3,900 with corresponding
      reduction in capital of $649,990 and deficit of $703,504. The issuance of
      35,000 new shares to EC Power, LLC was effected in two equal transactions
      in March 1998 and September 1998, resulting in a net capital increase of
      approximately $530,000.
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

| | In March 2000 EC Power, Inc. purchased new shares in
      Sorapec S.A. for $25,000 and converted $989,684 of loans for new shares,
      thereby increasing their ownership interest in Sorapec to 94%. In June
      2001, the Company converted $557,500 of loans which increased its
      ownership interest to 97.2%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | During 2001, the Company converted $290,000 of foreign
      investor loans into 300,000 shares of common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | During 2000, the Company sold 3,038,520 shares of common
      stock to some of its stockholders for $820,400. The Company also issued
      503,152 shares of common stock to settle $109,601 in loans and 30,000
      shares of common stock to settle $6,000 in interest payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | EC Power, Inc. Shares Issued in Exchange for Membership
      Interests:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Following the incorporation of EC Power, Inc. on March 25,
      1999, with authorized capital stock consisting of 100,000,000 shares of
      $0.001 par value common stock, the Company authorized the issuance of
      4,999,933 shares to be exchanged against the 9.797 Membership interests
      (6.884 + 2.913) held by all Members following conversion, on the basis of
      510.360 shares of EC Power, Inc. per interest, pro rata. For accounting
      purposes this transaction and the prior transactions are accounted for as
      an acquisition of EC Power, Inc. by Sorapec. The historical financial
      statements presented are restated to reflect the acquisition as if it took
      place on January 1, 1997. The Company issued 1,451,464 shares of common
      stock in March, 2000 to the former stockholders of Sorapec. In September
      2000, one of Sorapec's former stockholders sold 178,626 of the Company's
      stock to the Chairman of the Board of EC Power, Inc. for an undisclosed
      amount.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| | Neft Acquisition Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |  |  | 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  | 
| | Neft Acquisition Corp. ("Neft") was incorporated
      in Delaware in October 1997 and never had any business operations prior to
      the merger with EC Power, Inc. As of March 30, 1999, Neft had 1,081
      stockholders of record, no assets and no liabilities. The authorized
      capital stock of Neft consisted of 20,000,000 shares of $0.001 par value
      common stock, of which 8,573,337 was validly issued and outstanding. On
      March 22, 1999, seven stockholders of Neft agreed to sell a total of
      6,858,670 shares of EC Power, Inc. for an aggregate amount of $35,500. On
      March 26, 1999, the Board of Directors of Neft and the holders of a
      majority of Neft shares (EC Power, Inc.) approved the issuance and
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  | 
| | sale, to EC Power, Inc., of 11,426,663 new Neft shares for
      $11,427. Following approval by the Board of Directors of both Neft and EC
      Power, Inc., Neft was then merged with and into EC Power, Inc. The
      effective date of the merger was April 5, 1999. As a result of the merger,
      EC Power, Inc. was the surviving corporation and Neft ceased to exist as a
      separate corporate entity. The investment in Neft by EC Power, Inc. caused
      a reduction in EC Power, Inc.'s capital of $46,927.                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  | 
| | Under the terms of the merger, all stockholders of Neft
      are entitled to receive one share of EC Power, Inc. common stock for every
      fourteen shares of Neft common stock owned. Accordingly, EC Power, Inc.
      issued 1,428,571 shares to the Neft stockholders in exchange for their
      Neft shares. This transaction created 1,093,965 shares of Treasury Stock.
      The Company then sold 185,192 shares of common stock from the Treasury for
      gross proceeds of $50,002.                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  | 
| | In connection with the issuance of the Convertible
      Preferred Stock, the Company issued 325,000 shares of common stock from
      the Treasury valued at $87,750 as additional consideration for purchasing
      the preferred stock. At the year end, the Company retired the balance of
      583,773 shares of Treasury Stock.                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  | 
| | In 1998, EC Power, LLC ("LLC") issued 3.34
      membership interest in LLC to the promoters of LLC for services. This
      interest was converted to 1,704,603 shares of common stock of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  | 
| | Also, in 1998, LLC issued .70 membership interest in LLC
      for interest expense. This converted to 357,252 shares of common stock of
      the Company. One half of these shares was donated back to the Company
      during the year 2000. The Company recorded the $35,000 credit as a prior
      period adjustment.                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |  | 

| | In 1999 the Company issued 648,515 shares of common stock
      to pay $145,321 of loans payable and 55,883 shares of common stock in
      payment of $14,202 of interest expense.                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The Company also issued 375,001 and 37,256 shares of
      common stock for compensation and additional interest valued at $238,894
      and $10,059, respectively.                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Series A Convertible Preferred Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | In June 1999, the Company authorized 5,000,000 shares of
      Series A Convertible Preferred Stock ("Preferred Stock"). $0.01
      par value. The Preferred Stock has a cumulative annual dividend of $0.0135
      per share and restricts the payment of dividends to holders of Common
      Stock if any Preferred Stock dividends are in arrears. The Series A
      Convertible Preferred Stock has liquidation rights of $0.27 per share plus
      an amount equal to all accrued and unpaid dividends.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Stockholders of both common and preferred Stock have equal
      voting rights.                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The preferred stock is convertible into common stock of
      the Company at the rate of one share of preferred stock for each share of
      common stock subject to certain adjustments.                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Private Placement of Series A Convertible Preferred Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | During 1999 the Company sold in a private placement
      2,126,850 shares of Series A Convertible Preferred Stock at $0.27 per
      share for gross proceeds of $574,250.                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The Company also issued 462,965 shares of the Series A
      Convertible Preferred Stock for payment of a $125,000 loan.                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (See Note 10 Related Party Transactions.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|Note 13- | GOING CONCERN MATTERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  | 
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  | 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  |  |  | 
|         | The accompanying financial statements have been prepared
      on a going concern basis, which contemplates the realization of assets and
      the satisfaction of liabilities in the normal course of business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  |  |  | 
|         | As shown in the financial statements for the years ended
      December 31 1999 and 2000, and the nine months ended September 30, 2001,
      the Company incurred losses from operations of $1,053,858, $1,368,248 and
      $627,260, after non cash expenditures for stock compensation of $390,353,
      $526,763 and $209,991, respectively and generated negative cash flows from
      operations of $868,964, $813,994 and $572,113 respectively. These factors
      raise substantial doubt about the Company's ability to continue as a going
      concern. The financial statements do not include any adjustments relating
      to the recoverability and classification of liabilities that might be
      necessary should the Company be unable to continue in existence.
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  |  |  | 
|         | The Company's continuation as a going concern is dependent
      upon its ability to generate sufficient cash flow to meet its obligations
      on a timely basis and to obtain additional financing or refinancing as may
      be required to ultimately attain profitability. The Company is also
      actively pursuing additional equity financing through stock sales and when
      necessary, management has loaned money to the Company for working capital.
      Management believes that actions presently being taken to revise the
      Company's operating and financial requirements provide the opportunity for
      the Company to continue as a going concern.                                                                                                       
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  |  |  | 

|Note 14- | COMPREHENSIVE INCOME (LOSS)                                                                                                                                   |  |                |  |                |  |                     
|-------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- |  | -------------- |  | --------------------
|         |                                                                                                                                                               |  |                |  |                |  |                     
|         | Accumulated other comprehensive income (loss) consists of
      the following:                                                                                |  |               
|         |                                                                                                                                                               |  |                |  |                |  |                     
|         |                                                                                                                                                               |  | September 30,  |  | December 31,  
|         |                                                                                                                                                               |  | 2001           |  | 2000           |  | 2000                
|         | Foreign currency translation                                                                                                                                  |  |                |  |                |  |                     
|         | adjustment                                                                                                                                                    |  | $     (56,619) |  | $      52,105  |  | $      26,806       
|         |                                                                                                                                                               |  |                |  |                |  |                     
|         | A summary of the components of other comprehensive income
      (loss) for the nine months ended September 30, 2001 and 2000 is as follows
      (unaudited):
|         |                                                                                                                                                               |  |                |  |                |  |                     
|         |                                                                                                                                                               |  |                |  | Before-Tax     |  | Income              
|         |                                                                                                                                                               |  |                |  | Amount         |  | Tax                 
|         | September 30, 2001                                                                                                                                            |  |                |  |                |  |                     
|         | Net foreign currency translation                                                                                                                              |  |                |  | $     (56,619) |  | $          
      - 
|         | Other comprehensive income                                                                                                                                    |  |                |  | $     (56,619) |  | $          
      - 
|         |                                                                                                                                                               |  |                |  |                |  |                     
|         |                                                                                                                                                               |  |                |  | Before-Tax     |  | Income              
|         |                                                                                                                                                               |  |                |  | Amount         |  | Tax                 
|         | September 30, 2000                                                                                                                                            |  |                |  |                |  |                     
|         | Net foreign currency translation                                                                                                                              |  |                |  | $    52,105    |  | $           
      -
|         | Other comprehensive income                                                                                                                                    |  |                |  | $    52,105    |  | $           
      -
|         |                                                                                                                                                               |  |                |  |                |  |                     
|         | A summary of the components of other comprehensive income
      (loss) for the years ended December 31, 2000 and 1999 is as follows:                         
|         |                                                                                                                                                               |  |                |  |                |  |                     
|         |                                                                                                                                                               |  |                |  | Before-Tax     |  | Income              
|         |                                                                                                                                                               |  |                |  | Amount         |  | Tax                 
|         | December 31, 2000                                                                                                                                             |  |                |  |                |  |                     
|         | Net foreign currency translation                                                                                                                              |  |                |  | $     26,806   |  | $           
      -
|         | Other comprehensive income                                                                                                                                    |  |                |  | $     26,806   |  | $           
      -
|         |                                                                                                                                                               |  |                |  |                |  |                     
|         |                                                                                                                                                               |  |                |  | Before-Tax     |  | Income              
|         |                                                                                                                                                               |  |                |  | Amount         |  | Tax                 
|         | December 31, 1999                                                                                                                                             |  |                |  |                |  |                     
|         | Net foreign currency translation                                                                                                                              |  |                |  | $   (20,071)   |  | $           
      -
|         | Other comprehensive income                                                                                                                                    |  |                |  | $   (20,071)   |  | $           
      -

|Note 15- | COMMON STOCK WARRANTS AND OPTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |  |         |           |         |        
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------- | --------- | ------- | -------
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |         |           |         |        
|         | Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |         |           |         |        
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |         |           |         |        
|         | In 1999 the Company adopted the 1999 Equity Incentive Plan
      (the "1999 Plan") under which 1,000,000 shares of common stock
      are available for issuance with respect to awards granted to officers,
      management, other key employees of the Company, directors and consultants.                                                                                                                                                                                                                                                                                                                                                     
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |         |           |         |        
|         | Under the 1999 Plan the option price may not be less than
      the market value of the Company's stock at the time the option is granted.
      Options granted under the 1999 Plan will vest in accordance with the
      option agreement determined by the Board of Directors at the time of the
      option grant. Replacement options may be granted under the 1999 Plan in
      connection with a participant's payment of part or all of the exercise
      price of a stock option with previously acquired shares of common stock.
      Proceeds from exercise of stock options are credited to the Company's
      capital accounts.
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |         |           |         |        
|         | On December 31, 1999 the Company granted to key employees
      under the 1999 Plan, 300,000 options with an exercise price of $0.27 per
      share, that were fully vested and immediately exercisable. The options
      expire five years from the date of grant.                                                                                                                                                                                                                                                                                                                                                                             
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |         |           |         |        
|         | On December 31, 1998 the Company granted 255,180 options
      with an exercise price of $0.20 to key employees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |         |           |         |        
|         | Information with respect to all stock options is
      summarized below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |         |           |         |        
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |         | 1999 Plan |         | Other  
|         | Outstanding at January 1, 1998                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |  |         | -         |         | -      
|         | Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |         | -         |         | 255,180
|         | Outstanding at December 31, 1998                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  | -       |           | 255,180 |        
|         | Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |         | 300,000   |         | -      
|         | Outstanding at December 31, 1999                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  | 300,000 |           | 255,180 |        
|         | Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |         | -         |         | -      
|         | Outstanding at December 31, 2000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  | 300,000 |           | 255,180 |        
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |         |           |         |        

| | The Company applies Accounting Principles Board Opinion
      25, "Accounting for Stock Issued to Employees" and the related
      interpretations in accounting for its stock option grants.                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | In accordance with the SFAS 123, "Accounting for
      Stock Based Compensation", the Company has elected to provide the
      proforma disclosure. Had compensation cost for options granted been
      determined based upon the fair value of the options at the date of grant,
      as prescribed by SFAS 123, the Company's pro forma net loss and pro forma
      net loss per share would have been as follows for the years ended December
      31, 2000 and 1999:      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Net loss, as reported                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | Net loss, proforma                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | Basic and diluted loss per common share,                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | as reported                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | Basic and diluted loss per common share,                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | proforma                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The fair value of each option grant is estimated on the
      date of grant using the Black-Scholes option pricing model with the
      following weighted average assumptions for the years ended December 31,
      2000 and 1999:                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Risk-free interest rate                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Expected dividend yield                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Expected life                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Expected volatility                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The value of the options issued after November 1, 1999 is
      determined based upon a fair value of $2.50 per share, the offering price
      of the stock in this prospectus.                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Under APB 25, no compensation was recognized in the
      consolidated financial statements for the value of the stock options
      issued to employees with an exercise price in excess of the estimated fair
      value of the Company stock at the time of grant. In situations where the
      fair value of the stock options was considered compensation, compensation
      expense was recorded and a corresponding amount recorded as additional
      paid in capital.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| | Common Stock Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |  |                |  |              |          |           |               
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | -------------- |  | ------------ | -------- | --------- | --------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  |              |          |           |               
| | During 2000 and 1999, warrants to purchase 387,708 and
      1,054,169 shares of common stock at $0.27, respectively, were granted. The
      exercise price was equal to the current market price of the stock on the
      date granted. All warrants expire five years after the date of issue, if
      not exercised. Warrants to purchase 2,141,351 shares of common stock were
      exercisable at September 30, 2001. The per share exercise prices of these
      warrants are as follows:
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  |              |          |           |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  | Year of      |          |           |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  | Issue        |          | Shares    |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  | 1998         |          | 617,026   |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  | 1999         |          | 1,054,169 |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  | 2000         |          | 387,708   |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  | 2001         |          | 18,519    |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  | 2001         |          | 21,429    |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  | 2001         |          | 25,000    |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  | 2001         |          | 17,500    |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  |              |          | 2,141,351 |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  |              |          |           |               
| | During the first quarter of 2001 the Company granted
      warrants to lenders in connection with loans made to the Company as
      follows:                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  |              |          |           |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  | Number       |          |           |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  | Exercisable  | Range of |           | Outstanding at
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  | Exercise Price |  | December 31, | Exercise |           | December 31,  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  | per Share      |  | 2000         |          | Prices    |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  | $0.23          |  | 18,519       |          | $0.27     |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  | $0.35          |  | 21,429       |          | $0.35     |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  | $1.00          |  | 25,000       |          | $1.00     |               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  |              |          |           |               
| | The Company charged $45,000 for the cost of issuing these
      warrants and is expensing the cost over the life of the loans.                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  |              |          |           |               
| | During the first quarter of 2001, the Company issued
      17,500 warrants for services and charged $29,230 to operations. These
      warrants have an exercise price of $1.00 and expire on December 31, 2003.                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |                |  |              |          |           |               

| |  | The following is a summary of warrant transactions: |  |                |          |                     
| |  | --------------------------------------------------- |  | -------------- | -------- | --------------------
| |  |                                                     |  |                |          |                     
| |  |                                                     |  |                |          |                     
| |  |                                                     |  |                |          |                     
| |  | Outstanding at beginning of period                  |  | 2,058,903      |          | 1,671,195           
| |  | Granted during the period                           |  |                |          | 82,448              
| |  | Outstanding and eligible for exercise               |  | 2,141,351      |          | 2,058,903           
| |  |                                                     |  |                |          |                     
| |  | Warrants Exercisable                                |  |                |          | Warrants Outstanding
| |  |                                                     |  |                |          |                     
| |  |                                                     |  | Number         |          |                     
| |  | Exercise                                            |  | Exercisable at |          | Range of            
| |  | Price                                               |  | December 31,   |          | Exercise            
| |  | Per Share                                           |  | 1999           |          | Prices              
| |  | $0.20                                               |  | 617,026        |          | $0.20               
| |  | 0.27                                                |  | 1,054,169      |          | 0.27                
| |  |                                                     |  |                |          |                     
| |  |                                                     |  |                |          |                     
| |  |                                                     |  | Number         |          |                     
| |  | Exercise                                            |  | Exercisable at |          | Range of            
| |  | Price                                               |  | December 31,   |          | Exercise            
| |  | Per Share                                           |  | 2000           |          | Prices              
| |  | $0.20                                               |  | 617,026        |          | $0.20               
| |  | 0.27                                                |  | 1,054,169      |          | 0.27                
| |  | 0.27                                                |  | 387,708        |          | 0.27                
| |  |                                                     |  |                |          |                     
| |  |                                                     |  |                |          |                     
| |  |                                                     |  | Number         |          |                     
| |  | Exercise                                            |  | Exercisable at |          | Range of            
| |  | Price                                               |  | September 30,  | Exercise |                     
| |  | Per Share                                           |  | 2001           |          | Prices              
| |  | $0.20                                               |  | 617,026        |          | $0.20               
| |  | 0.27                                                |  | 1,054,169      |          | 0.27                
| |  | 0.27                                                |  | 387,708        |          | 0.27                
| |  | 0.27-1.00                                           |  | 82,448         |          | 0.27-1.00           

Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations

The following discussion should be
read in conjunction with our financial statements, the notes to those financial
statements and other financial information appearing elsewhere in this
prospectus. In addition to historical information, the following discussion and
other parts of this prospectus contain forward-looking statements that reflect
our plans, estimates, intentions, expectations, and beliefs. Our actual results
could differ materially from those discussed in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those set forth in the "Risk Factors" section and
contained elsewhere in this prospectus.

EC Power, Inc. was incorporated in
Delaware on March 25, 1999. On March 29, 1999, we acquired all of the membership
interests of EC Power LLC in exchange for 3,513,319 shares of our stock. The
members of the LLC had contributed $284,341 in cash into the LLC. In April 1999
we merged with Neft Acquisitions, Inc., a shell corporation having no assets or
operations, and issued the shareholders of Neft 334,606 shares of our stock. We
became the surviving entity.

In late 1997, the shareholders of
Sorapec S.A. agreed to issue and sell to the founders of EC Power LLC 35,000 new
shares representing a 90% interest in Sorapec. We accomplished that by issuing
the Sorapec shareholders that owned that 90% interest 950,467 EC Power shares,
which we valued at $186,235. For accounting purposes, that transaction has been
treated as an acquisition of EC Power Inc. by Sorapec and as a recapitalization
of Sorapec. The historical financial statements prior to January 1, 1998, are
those of Sorapec, giving effect to the acquisition as if the acquisition took
place on January 1, 1997. In March 2000, we purchased additional shares of
Sorapec for $25,000 and converted $989,684 of loans to Sorapec into Sorapec
shares, which increased our ownership in Sorapec to 94%.

Overview

We are engaged in the development
and manufacture of proton exchange membrane fuel cells and bipolar nickel-zinc
batteries through our French subsidiary, Sorapec. The technology has been
developed over a period of years by Sorapec, which is considered a European
leader in applied research and development in electrochemistry. During the past
twenty-five years, Sorapec has been a party to over 100 patents and has
undertaken over 300 research contracts for corporate accounts and government
agencies such as Renault, Peugeot, Autosil, Electricite de France, the French
state-owned utility, Commissariat a l'Energie Atomique, the French atomic energy
authority, the French armament agency, and others.

In the proton exchange membrane
fuel cell arena, we have focused on applications requiring portable power supply
up to 2 kW to 5kW. We have identified a number of such applications in the oil
& gas, military, back-up power, and outdoor recreation markets. However, we
are accelerating our power scale-up to 50kW in consideration of the cooperation
agreement we recently entered with Helion S.A. Because Helion's parent company,
Technicatome S.A., operates in markets where it has identified a need for fuel
cell systems of 50kW and over, this opportunity justifies that we adapt our plan
accordingly.

Because of the large variety of end
uses, we will focus on stack development and production, while our customers
will integrate them into complete fuel cell systems, as Helion plans to do for
its selected applications. This approach, and the ability to supply stacks in a
broad power range, will allow faster market diversification. Once we establish
our presence in a given market, through one or several system integrators
serving such market, we will be able to react faster to new market
opportunities, for instance in the residential and small commercial sectors.

We are also involved in the
development of an advanced battery system because we believe that some
applications are more likely to be powered by batteries than other power
sources, at least in the foreseeable future. We further believe that nickel-zinc
batteries, the technology that we are developing, has the potential to
completely displace nickel-cadmium (Ni-Cd) batteries in large markets such as
scooters, bicycles, cordless power tools, and other applications requiring
small, high-performance, rechargeable batteries. Our immediate focus is to
develop such a battery system for an electric scooter program pursued with
Peugeot Motocycles (France), PML Flightlink (UK), Citelec (Belgium), and the
University of Brussels in a 50% cost-share contract awarded by the EU.

EC Power was formed to acquire a
controlling interest in Sorapec and to further the development of Sorapec's
advanced technology in fuel cells and nickel-zinc batteries. To date, our
existing stockholders in the aggregate have invested $2.7 million in cash and
$550,000 in in-kind contributions (services paid in shares). Since inception, we
have devoted substantially all of our resources toward the development of our
proton exchange membrane fuel cell and nickel-zinc battery systems.

We are a product development
company and expect to bring our first commercial products to market in the 2003
to 2004 time frame. We have derived most of our revenues from French and EU
government research and development contracts. Substantially all of these
government contracts related to proton exchange membrane fuel cell and
nickel-zinc battery research and development, and the technology developed under
these contracts is directly applicable to our product development goals.

Since inception, we have raised
capital through the issuance of equity, formed co-development alliances, entered
into several consortium arrangements, and, in the second quarter of 2001,
entered into cooperation and license agreements with Helion. We completed our
first proton exchange membrane fuel cell stack prototypes in late 2000. We
expect to manufacture our first Ni-Zn battery prototypes by the end of the first
quarter of 2002. We also expect to start setting up our pilot plant in mid 2002
and have pre-production manufacturing capabilities by late 2002. We do not
expect significant product sales until 2003.

From inception through September
30, 2001, we incurred losses of $4,356,445. We expect to continue to incur
losses as we expand our product development and commercialization program and
prepare for the commencement of manufacturing operations. We expect that losses
will fluctuate from quarter to quarter and that such fluctuations may be
substantial as a result of, among other factors, the number of systems we
produce and supply for internal and external testing, the related service
requirements necessary to monitor those systems and potential design changes
required as a result of tests. There can be no assurance that we will
manufacture or sell fuel cell and/or battery systems successfully or ever
achieve or sustain product revenues or profitability.

Results of Operations

Comparison of the Nine Months Ended September 30, 2001 and September 30, 2000

Revenues. Through September 30, 2001, our revenues were derived from
three sources including: cost reimbursement government contracts relating to the
research and development of proton exchange membrane fuel cell and nickel- zinc
battery technology, limited product sales, and the front fee of a licensing
transaction.

Contract revenues increased by 11.6% from $279,835 for the nine months ended
September 30, 2000 to $312,367 for the nine months ended September 30, 2001. If
we eliminate the effect of a 5.1 % increase of exchange rate, revenues for 2001
are 17.3% above 2000. This relative increase is mostly attributable to the fact
that 2000 revenues were adversely affected by government delays in granting
certain contracts that we expected to secure in the first half of 2000, but only
came to grant later in that year and in 2001.

Product sales remain a small, yet growing, component of total revenues. The
main reason is that the products we ship are not accounted for separately when
they constitute one of the deliverable items under a government contract. This
situation is changing as we start receiving orders for stacks and related test
equipment. For the nine months ended September 30, 2001 we collected payments on
a 2kW stack and on a test bench for which we recognized revenue of $25,076 an
increase of 13% over the same period in 2000. Product sales are expected to
increase more substantially in the fourth quarter as we complete the stack and
test bench orders.

During the nine months ended September 30, 2001 our revenues also included a
non-recurring amount of $442,839 for the front payment of a license sold to
Helion S.A. As a result of this, total revenues for the period increased 158%
over the same period in 2000.

Cost of Revenues. Cost of revenue, excluding license fee, was
$249,697for the nine months ended September 30, 2000 as compared to $158,516 for
the nine months ended September 30, 2001. Accordingly, our gross margin
decreased from 47.5% to 26%. The reason for the decrease is mostly attributable
to the much higher material cost as a percentage of total contract cost as we
cannot allocate any overhead to the material cost component

Research and Development. Research and development expenses increased
from $114,899 for the nine months ended September 30, 2000 to $233,528 for the
nine months ended September 30, 2001. As a percentage of revenues, excluding
license fee, they increased from 38% for the nine months ended September 30,
2000 to 69% for the nine months ended September 30, 2001.

We expect to further increase our spending on research and development in the
future to approximately $400,000 to $500,000 in order to accelerate the
prototype production and testing program, to design our pilot-plant facilities,
and to commence procurement of custom equipment. Beyond 2001, we plan to
continue development activities related to performance improvements of our fuel
cells and Nickel Zinc batteries, and to start planning our volume production
plant.

General and Administrative. General and administrative expenses of
$714,326 for the nine months ended September 30, 2001, excluding approximately
$29,000 of non-cash expenses paid to a consultant, remained unchanged as
compared to $715,998 for the nine months ended September 30, 2000.

Loss from Operations. Our operating loss decreased from $1,082,474
for the nine months ended September 30, 2000 to $627,260 for the nine months
ended September 30, 2001. The decrease was principally due to the license fee
earned in 2001, as well as the lower stock compensation expense incurred in
2001.

Stock Compensation: Our total expenses and related net loss include
executive cash and non-cash compensation. Executive cash compensation for the
nine-months ended September 30, 2001 was $209,991 as compared to $395,094 for
the same period in 2000.

Liquidity and Capital Resources

Cash Flow Information. For the nine months ended September 30, 2001
and 2000, net cash used in operations was $572,113 and $526,770,
respectively, an increase of 8.6% from 2000 to 2001. Net cash used in
investing activities, the purchase of fixed assets, during the nine months ended
September 30, 2001, was $74,374, up from $5,683 for the prior period.
During the nine months ended September 30, 2001 and 2000, cash from
financing activities included borrowings of $420,932 and $0, respectively,
before note payable payments of $65,926 for the nine months ended September 30,
2001 and $70,620 for the nine months ended September 30, 2000. Additionally, net
cash from financing activities included net proceeds of $820,400 from the
sale of common stock during the nine months ended September 30, 2000 and
$290,000 during the nine months ended September 30, 2001.

Future Liquidity Considerations. At September 30, 2001, we had cash
and cash equivalents of $19,400, and a working capital deficit of $640,733. Our
independent auditors have included in their audit report an explanatory
paragraph that states that our recurring losses from operations raise
substantial doubt about its ability to continue as a going concern. We have
generated operating cash losses from 1997. Additionally, we require and will
continue to require, cash to fund the net losses and capital requirements
associated with our planned growth. The cash required to fund such
activities will be substantial and beyond what we currently hold in cash
and cash equivalents. Management believes that approximately $2,600,000 of
cash will be required to fund planned operations for the next twelve
months.

Our receivables of $621,290 at September 30, 2001, are primarily from major
corporations and the French government. Our accounts payable and accrued
expenses were $581,342 as of September 30, 2001.

Since we began operations, we have experienced a shortage of
working capital. We need additional working capital in order to support our
growth.  We are depending upon the proceeds of this offering to supply
us with needed working capital. Unfortunately, since we are conducting
the offering ourselves, we are uncertain that this offering will be
successful in providing us with the needed funds. It is likely that
additional financings will be necessary in the future, which may involve
either the sale of additional equity or debt. In either case, the terms of
future financings could have an adverse effect on the value of our
securities.

Our working capital needs continue. In the first quarter of 2001, we sold
300,000 shares of our common stock for $300,000 and borrowed $45,000, primarily
from institutional investors. We also owed $253,215 to officers, directors, and
other related parties. Management believes that those persons would extend their
loans until we are able to pay them if they are not converted. However,
approximately $150,000 from the proceeds of this offering may be used to pay
accrued compensation, but only from the proceeds of this offering that exceed
$1,500,000.

In May 2001 we received a license fee of approximately $500,000 from Helion
SA. We used those proceeds to reduce our accounts payable. In June 2001, we
received approval of a loan from the French government pursuant to which it will
reimburse us 40% of the cost of building our pilot manufacturing facility for
the fuel cell stacks. Management anticipates that if we receive net proceeds
from this offering of at least $1,900,000, together with internally
generated funds from operations and the French government loan, we will be able
to meet our presently projected cash and working capital requirements for
the next 12 months. The minimum offering is $1,000,000. Pending use of the
proceeds, we intend to invest the net proceeds of the offering
in investment grade, interest-bearing securities. See "Use of
Proceeds" for a more detailed discussion of our expected use of
proceeds.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 2. Changes in Securities

None.

Item 3. Default Upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K

Exhibits:

None.

SIGNATURE



|                            | E.C. POWER, INC.                                 
|--------------------------- | -------------------------------------------------
|Date:February
      4, 2002 | By: /s/ Michel
      MorinMichel
      Morin, CEO