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 August 23, 2001, the Company had 10,296,911shares of its $0.001 par
value common stock outstanding.

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

PART 1. FINANCIAL INFORMATION

INDEX TO FINANCIAL STATEMENTS

| |                                                                                                            | PAGE
| | ---------------------------------------------------------------------------------------------------------- | ----
| | Balance Sheet - March 31, 2001                                                                             | 3   
| | Statements of Operations - For the Three Months Ended March 31, 2001
      and 2000                        | 4   
| | Statement of Changes in Shareholders' Equity - For the Three Months
      Ended 
           March 31, 2001 | 5   
| | Statements of Cash Flows - For the Three Months Ended March 31, 2001
      and 2000                        | 6   

EC POWER, INC.
BALANCE SHEET
MARCH 31, 2001

| |                                                                                                                                                                                                 |                         |  |  |              | March 31,  
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------- |  |  | ------------ | -----------
| |                                                                                                                                                                                                 |                         |  |  |              | 2001       
| |                                                                                                                                                                                                 | ASSETS                  |  |  |              | (Unaudited)
| | Current Assets                                                                                                                                                                                  |                         |  |  |             
| | Cash and cash equivalents                                                                                                                                                                       |                         |  |  | $      1,992
| | Accounts receivable, trade                                                                                                                                                                      |                         |  |  | 149,940     
| | Other receivable                                                                                                                                                                                |                         |  |  | 519,965     
| | Inventory                                                                                                                                                                                       |                         |  |  | 38,827      
| | Total Current Assets                                                                                                                                                                            |                         |  |  | 710,724     
| |                                                                                                                                                                                                 |                         |  |  |              |            
| | Property plant and equipment net of
          accumulated depreciation                                                                                                                          |                         |  |  | 108,144     
| | Deferred charges                                                                                                                                                                                |                         |  |  | 435         
| | Prepaid expenses                                                                                                                                                                                |                         |  |  | 909         
| | Deposits                                                                                                                                                                                        |                         |  |  |              | 47,224     
| | Deferred offering cost                                                                                                                                                                          |                         |  |  | 19,000      
| | Patents and computer software                                                                                                                                                                   |                         |  |  | 58,569      
| | Other assets                                                                                                                                                                                    |                         |  |  | 4,000       
| | Total Assets                                                                                                                                                                                    |                         |  |  | $   949,005 
| |                                                                                                                                                                                                 |                         |  |  |              |            
| |                                                                                                                                                                                                 | LIABILITIES AND CAPITAL |  | 
| | Current Liabilities                                                                                                                                                                             |                         |  |  |             
| | Accounts payable and accrued expenses                                                                                                                                                           |                         |  |  | $   532,885 
| | Deferred revenue                                                                                                                                                                                |                         |  |  | 142,882     
| | Due to related parties                                                                                                                                                                          |                         |  |  | 226,256     
| | Loan payable                                                                                                                                                                                    |                         |  |  | 75,212      
| | Shareholders' loans payable                                                                                                                                                                     |                         |  |  | 87,806      
| | Total Current Liabilities                                                                                                                                                                       |                         |  |  | 1,065,041   
| |                                                                                                                                                                                                 |                         |  |  |              |            
| | Commitments and contingencies                                                                                                                                                                   |                         |  |  | -           
| | Minority interest                                                                                                                                                                               |                         |  |  | -           
| |                                                                                                                                                                                                 |                         |  |  |              |            
| | Stockholders' Equity (Deficit)                                                                                                                                                                  |                         |  |  |             
| | Common stock, 100,000,000 shares
          authorized at $.001 par value; issued and
          outstanding 10,296,911 at March 31, 2001                                                         |                         |  |  | 10,297      
| | 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 March 31, 2001 |                         |  |  | 25,899      
| | Capital in excess of par value                                                                                                                                                                  |                         |  |  | 3,195,137   
| | (Deficit)                                                                                                                                                                                       |                         |  |  |              | (3,277,009)
| | Unearned interest expense                                                                                                                                                                       |                         |  |  | (33,444)    
| | Accumulated comprehensive income                                                                                                                                                                |                         |  |  | (36,916)    
| | Stockholders' (Deficit)                                                                                                                                                                         |                         |  |  | (116,036)   
| |                                                                                                                                                                                                 |                         |  |  |             
| | Total Liabilities and Capital                                                                                                                                                                   |                         |  |  | $   949,005 

See Notes to Financial Statements.

EC POWER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)

|                                                                            | For the Three Months Ended
      March 31,
|--------------------------------------------------------------------------- | ------------------------------------------
|2001                                                                        | 2000                                      
|Sales revenues                                                              | $      123,718                            
|Cost of sales                                                               | 56,718                                    
|Gross profit                                                                | 67,000                                    
|General and administrative expenses                                         | 269,217                                   
|Stock compensation (general and administrative)                             | 29,230                                    
|Research and development                                                    | 68,611                                    
|                                                                            |                                           
|Loss from operations                                                        | (300,058)                                 
|Other income and expenses                                                   |                                           
|                                                                            | Interest income                           
|                                                                            | Interest expense                          
|Loss before taxes, prior period adjustment and minority
           interest | (320,583)                                 
|Prior period adjustment                                                     | -                                         
|Loss before taxes and minority interest                                     | (320,583)                                 
|Minority interest share of loss                                             | 2,001                                     
|Benefit (Provision) for income taxes                                        | (549)                                     
|Net (loss)                                                                  | (319,131)                                 
|Other comprehensive income (loss)                                           |                                           
|                                                                            | Foreign currency translation adjustment   
|Comprehensive (loss)                                                        | $  (348,684)                              
|Basic and diluted (loss) per share                                          | $        (0.03)                           
|Basic and diluted average shares outstanding                                | 10,000,244                                

See Notes to Financial Statements.

|EC POWER, INC.                                                           
|-------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
      EQUITY(DEFICIT)
|THREE MONTHS ENDED MARCH 31, 2001
      (Unaudited)                      
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Shares                                                                   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         

See Notes to Financial Statements.

EC POWER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

| |                                                                                                          |                         | For the Three Months Ended
| | -------------------------------------------------------------------------------------------------------- | ----------------------- | --------------------------
| |                                                                                                          |                         |                           
| |                                                                                                          |                         |                           
| | Operating Activities                                                                                     |                         |                           
| | Net income or (loss)                                                                                     |                         | $    (319,131)            
| | Adjustments to reconcile net (loss)
      to net cash
                used by operating
      activities |                         |                           
| | Depreciation and amortization                                                                            |                         | 12,578                    
| | Expenses paid for by issuance of stock                                                                   | -                       |                           
| | Expenses paid for by issuance of warrants                                                                | 40,786                  |                           
| | Changes in operating assets and liabilities:                                                             |                         |                           
| | (Increase) decrease in accounts receivable                                                               | 59,866                  |                           
| | (Increase) decrease in other receivables                                                                 | (90,027)                |                           
| | (Increase) decrease in deferred charges                                                                  | 1,428                   |                           
| | (Increase) decrease in prepaid expenses                                                                  | 1,893                   |                           
| | (Increase) decrease in inventory                                                                         |                         | 17,396                    
| | (Increase) decrease in other assets                                                                      |                         | 6,015                     
| | (Increase) decrease in deposits                                                                          |                         | 7,589                     
| | (Increase) decrease in deferred offering cost                                                            | -                       |                           
| | Increase (decrease) in accounts payable,                                                                 |                         |                           
| | accrued expenses and other liabilities                                                                   | (36,043)                |                           
| | Increase (decrease) in deferred revenue                                                                  | (12,796)                |                           
| | Increase (decrease) in due to related parties                                                            | 16,200                  |                           
| | Net cash (used) by operating activities                                                                  | (294,246)               |                           
| | Investing Activities                                                                                     |                         |                           
| | Investment in Neft                                                                                       |                         | -                         
| | Purchase of fixed assets                                                                                 |                         | (57,165)                  
| | Net cash (used) by investing activities                                                                  |                         | (57,165)                  
| | Financing Activities                                                                                     |                         |                           
| | Increase (decrease) in shareholder loans                                                                 | (17,500)                |                           
| | Increase in other loans                                                                                  |                         | 60,022                    
| | Sale of common stock                                                                                     |                         | 290,000                   
| | Sale of preferred stocks                                                                                 |                         | -                         
| | Net cash provided by financing activities                                                                | 332,522                 |                           
| | Increase (decrease) in cash                                                                              |                         | (18,889)                  
| | Cash at beginning of period                                                                              |                         | 20,881                    
| | Cash at end of period                                                                                    |                         | $         
      1,992    
| | Supplemental Disclosures of Cash Flow Information:                                                       |                         |                           
| | Cash paid during year for:                                                                               |                         |                           
| | Interest                                                                                                 |                         | $                 
      -
| | Income taxes (benefits)                                                                                  |                         | $            
      549   
| | Supplemental Disclosures of Cash Flow Information                                                        |                         |                           
| | Non-cash investing and financing activities:                                                             |                         |                           
| | Issuance of 30,000 shares of common stock                                                                |                         |                           
| | for interest payable                                                                                     |                         | $                 
      -
| | Issuance of 503,152 shares of common stock                                                               |                         |                           
| | for settlement of loans payable and interest                                                             |                         |                           
| | payable                                                                                                  |                         | -                         
| | Issuance of 700,001 shares of common stock                                                               |                         |                           
| | for services                                                                                             |                         | -                         
| | Issuance of 93,139 shares of common stock                                                                |                         |                           
| | for interest payable                                                                                     |                         | -                         
| | Issuance of 648,515 shares of common stock                                                               |                         |                           
| | for settlement of loans payable                                                                          |                         | -                         
| | Issuance of 462,965 shares of common stock                                                               |                         |                           
| | for settlement of loans payable                                                                          |                         | -                         
| | Issuance of 17,500 warrants for services                                                                 | $         
      29,230 |                           
| | Issuance of 64,948 warrants for loan interest                                                            | $         
      45,000 |                           

See Notes to Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|Note 1- | UNAUDITED INTERIM FINANCIAL STATEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |            
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -----------
|        | The accompanying financial information as of March 31, 2001 and for the
      three months ended March 31, 2001 and 2000 is 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 2- | INVENTORY                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|        | Work in progress                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |            
|        | Raw materials                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |            
|        | Finished goods                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|Note 3- | PROPERTY AND EQUIPMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|        | Equipment and leasehold consists of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | March 31,  
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|        | Lab equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |            
|        | Office furniture and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |            
|        | Lab improvements                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |            
|        | Other in progress                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|        | Less: Accumulated depreciation and amortization:                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|        | Lab equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |            
|        | Office furniture and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |            
|        | Lab improvements                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |            
|        | Other in progress                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|Note 4- | LOANS PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |            
|        | Loans payable were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Origination
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Date       
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | 10/15/2000 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | 01/09/2001 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | 01/10/2001 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | 01/18/2001 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |            
|        | (*) Lenders were granted warrants to purchase common
      stock of the company with exercise prices ranging from $0.27 to $1.00 per
      share.                                                                                                                                                                                                                                                                                                                                   

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              |                |            
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | -------------- | -----------
|Note 5- | SHAREHOLDERS' LOANS PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              |                |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              |                |            
|        | Shareholders' loans payable were as follows:                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 2001         |                |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              |                |            
|        | Chairman of the Board                                                                                                                                                                                                                                                                                                                                                                                                          | 10% Demand Loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              | $  33,426      |            
|        | Former President                                                                                                                                                                                                                                                                                                                                                                                                               | 10% Demand Loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              | 39,380         |            
|        | Other shareholders                                                                                                                                                                                                                                                                                                                                                                                                             | 10% Demand Loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              | 15,000         |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              |                |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             
|        | Note 6-                                                                                                                                                                                                                                                                                                                                                                                                                        | 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.                   
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              | March 31, 2001 |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              | Carrying       |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                | Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |              | Amount         |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |              | $    1,992     |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                | Accounts receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |              | 149,940        |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                | Other receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |              | 519,965        |            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                | 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 7- | INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              |                |            
|        | The provision (benefit) for income taxes consisted of the following (in
      thousands):                                                                                                                                                                                                                                                                                                                                     
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                | Three Months ended March 31,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | Current:                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 2001         |                | 2000       
|        | Federal tax expense                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | $    (52)    |                | $     (90) 
|        | State tax expense                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | (8)          |                | (13)       
|        | Foreign R&D credit                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | -            |                | 2          
|        | Deferred:                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              |                |            
|        | Federal tax expense                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 52           |                | 90         
|        | State tax expense                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 8            |                | 13         
|        | Foreign R&D credit                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | -            |                | (2)        
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | $          - |                | $         -
|        | A reconciliation of differences between the statutory U.S. federal
      income tax rate and the Company's effective tax rate follows:                                                                                                                                                                                                                                                                                        
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                | Three Months ended March 31,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 2001         |                | 2000       
|        | Statutory federal income tax                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 34%          |                | 34%        
|        | State income tax-net of                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |              |                |            
|        | federal benefit                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 5%           |                | 5%         
|        | Valuation allowance                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | -39%         |                | -39%       
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 0%           |                | 0%         
|        | The components of deferred tax assets and liabilities were as follows
      (in thousands):                                                                                                                                                                                                                                                                                                                                   
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                | March 31,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | Deferred tax assets:                                                                                                                                                                                                                                                                                                                                                                                                           | 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | Net operating loss carryforward                                                                                                                                                                                                                                                                                                                                                                                                | $   1,215                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | Total deferred tax assets                                                                                                                                                                                                                                                                                                                                                                                                      | 1,215                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | Valuation allowance                                                                                                                                                                                                                                                                                                                                                                                                            | (1,215)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 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 March 31, 2001 , 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 March 31, 2001 . The
      amount of available additional net operating loss carryforwards are
      approximately $60,000 for 2001, $103,000 for 2000, $375,000 for 1999 and
      $464,000 for 1998. 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 8-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | DUE TO RELATED PARTIES                                                                                                                                                                                                                                                                                                                                                                                                                    |           |            | 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Due to related parties consists of the following:                                                                                                                                                                                                                                                                                                                                                                                         | March 31, |           
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                           |           |            | 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Consulting fee payable to Former President                                                                                                                                                                                                                                                                                                                                                                                                |           | $   50,925 | 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Directors' fees payable                                                                                                                                                                                                                                                                                                                                                                                                                   |           |            | 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Compensation payable                                                                                                                                                                                                                                                                                                                                                                                                                      |           |            | 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                           |           |            | 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                           |           |            | 
|         | Note 9-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                             |           |            | 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Cash flows from operating activities are insufficient to
      meet the Company's cash flow requirements. The Company is extremely
      dependent on its majority stockholders contributing capital and outside
      financing to enable the Company to continue operating. The majority
      stockholders of the Company intend to finance the Company until the
      Company can generate sufficient cash flows to maintain itself.
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                           |           |            | 
|Note 10- | 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 three months ended March 31,
      2001, the Company incurred losses from operations of $319,131 and
      generated negative cash flows from operations of $294,246. Additionally,
      the Company is financing operations with short term demand notes which if
      called would have an adverse effect on company operations. 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 11- | COMPREHENSIVE INCOME (LOSS)       |                                                                                                                                                                                                                  |                                       |           |                |                    
|         |                                   | Accumulated other comprehensive income (loss) consists of the
      following:                                                                                                                                  
|         |                                   |                                                                                                                                                                                                                  | March 31,                             |          
|         |                                   |                                                                                                                                                                                                                  |                                       | 2001      |                | 2000               
|         |                                   | Foreign currency translation                                                                                                                                                                                     |                                       |           |                |                    
|         |                                   | adjustment                                                                                                                                                                                                       | $                                     | (29,553)  | $              | 71,228             
|         |                                   |                                                                                                                                                                                                                  |                                       |           |                |                    
|         |                                   | A summary of the components of other comprehensive income (loss) for
      the three months ended
      March 31, 2001 and 2000 is as follows (unaudited):                                                      
|         |                                   |                                                                                                                                                                                                                  |                                       |           |                | Before-Tax         
|         |                                   |                                                                                                                                                                                                                  |                                       |           |                | Amount             
|         |                                   | March 31, 2001                                                                                                                                                                                                   |                                       |           |                |                    
|         |                                   | Net foreign currency translation                                                                                                                                                                                 |                                       | $(29,553) |                | $          -       
|         |                                   | Other comprehensive income                                                                                                                                                                                       |                                       |           | $(29,553)      |                    
|         |                                   |                                                                                                                                                                                                                  |                                       |           |                |                    
|         |                                   |                                                                                                                                                                                                                  |                                       |           |                | Before-Tax         
|         |                                   |                                                                                                                                                                                                                  |                                       |           |                | Amount             
|         |                                   | March 31, 2000                                                                                                                                                                                                   |                                       |           |                |                    
|         |                                   | Net foreign currency translation                                                                                                                                                                                 |                                       | $71,228   |                | $          
      -
|         |                                   | Other comprehensive income                                                                                                                                                                                       |                                       |           | $71,228        |                    
|         |                                   |                                                                                                                                                                                                                  |                                       |          
|Note 12- | COMMON STOCK WARRANTS AND OPTIONS |                                                                                                                                                                                                                  |                                       |          
|         |                                   | During the first quarter of 2001 the Company granted warrants to
      lenders in connection with loans made to the 
 Company as follows:                                                                       
|         |                                  
|         |                                   |                                                                                                                                                                                                                  |                                       |           |                |                    
|         |                                   |                                                                                                                                                                                                                  |                                       |           |                |                    
|         |                                   |                                                                                                                                                                                                                  |                                       |           |                |                    
|         |                                   |                                                                                                                                                                                                                  |                                       |           | Exercise Price | December 31,       
|         |                                   |                                                                                                                                                                                                                  |                                       |           | per Share      |                    
|         |                                   |                                                                                                                                                                                                                  |                                       |           | $0.23          |                    
|         |                                   |                                                                                                                                                                                                                  |                                       |           | $0.35          |                    
|         |                                   |                                                                                                                                                                                                                  |                                       |           | $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      |                    
|         |                                   |                                                                                                                                                                                                                  | Granted during the period             |           |                | 82,448             
|         |                                   |                                                                                                                                                                                                                  | Outstanding and eligible for exercise | 2,141,351 |                |                    
|         |                                   |                                                                                                                                                                                                                  |                                       |           |                |                    
|         |                                   |                                                                                                                                                                                                                  |                                       |           | Number         |                    
|         |                                   |                                                                                                                                                                                                                  | Exercise                              |           | Exercisable at | Range of           
|         |                                   |                                                                                                                                                                                                                  | Price                                 |           | March 31,      |                    
|         |                                   |                                                                                                                                                                                                                  | Per Share                             | 2001      |                | Prices             
|         |                                   |                                                                                                                                                                                                                  | $       0.20                          |           | 617,026        |                    
|         |                                   |                                                                                                                                                                                                                  | 0.27                                  |           | 1,054,169      |                    
|         |                                   |                                                                                                                                                                                                                  | 0.27                                  |           | 387,708        |                    
|         |                                   |                                                                                                                                                                                                                  | 0.27-1.00                             |           | 82,448         |                    

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |  |  |  |  |  | 
|-------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Note 13- | SUBSEQUENT EVENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  |  |  | 
|         | In May 2001, Sorapec entered into a technology license agreement with a
      French corporation. This agreement grants the French corporation the
      rights to some of Sorapec's PEM fuel cell patents to produce fuel cells
      for specific applications, in specified territories in consideration for a
      front payment of 500,000 Euros, which have been received by Sorapec S.A.,
      and royalties on future sales. The French corporation also extended a loan
      of 500,000 Euros to EC Power, Inc. This loan is to be repaid within
      fourteen months with interest at the rate of 7%.

Item 6.       Management's Discussion and
Analysis of Financial Condition and Results of

General



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
bi-polar 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 $2.6 million in cash
and $603,000 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 1999, 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 2002. We
also expect to start setting up our pilot plant in early 2002 and have
pre-production manufacturing capabilities by late 2002. We do not expect
significant product sales until 2003.

From inception
through March 31, 2001, we incurred losses of $3,277,009. 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 Three Months Ended March 31, 2001 And March
31, 2000

Revenues.
Through March 31, 2001, our revenues were again derived mostly from cost
reimbursement government contracts relating to the research and development of
proton exchange membrane fuel cell and nickel- zinc battery technology.

Contract revenues
increased by 35.8% from $91,113 for the three months ended March 31, 2000 to
$123,718 for the three months ended March 31, 2001. If we eliminate the effect
of a 6.9 % increase of the US dollar to the French franc exchange rate, revenues
for 2001 are 45.1% above 2000. This relative increase is mostly attributable to
the fact that first quarter 2000 revenues were adversely affected by government
delays in granting certain contracts that we expected to secure in that quarter,
but only came to grant later in 2000 and in 2001.

Cost Of Revenues.
Cost of contract revenue was $59,272 for the three months ended March 31, 2000
as compared to $56,718 for the three months ended March 31, 2001. Accordingly,
our gross margin increased from 35.0% to 54.2%.

Research And
Development. Research and development expenses increased from $41,299
for the three months ended March 31, 2000 to $68,611 for the three months ended
March 31, 2001. As a percentage of revenues, they increased from 45.3% for the
three months ended March 31, 2000 to 55.5% for the three months ended March 31,
2001.

We expect to
increase our spending on research and development in the future to approximately
$400,000 to $500,000 per year 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 increased slightly
by 1.8% from $264,492 for the three months ended March 31, 2000 to $269,217 for
the three months ended March 31, 2001. The increase is principally attributable
to professional services used in conjunction with the preparation of our initial
public offering. In 2001 we also accrued cash compensation for our American
executives instead of issuing shares and warrants to them as compensation.

Loss From
Operations. Our operating loss increased from $273,950 for the three
months ended March 31, 2000 to $300,058 for the three months ended March 31,
2001. The increase was principally due to the compensation expense we incurred
in 2001.

Compensation
Expense. Our total expenses and related net loss for the three month
period ended March 31, 2001, included compensation expense related to the
issuance of 17,500 warrants. Compensation expense was $29,230 for the three
months ended March 31, 2001.

Liquidity and Capital Resources

Cash Flow
Information. For the three months ended March 31, 2001 and 2000, net
cash used in operations was $294,246 and $225,681, respectively, an
increase of 30.4% from 2000 to 2001. Net cash used in investing activities,
the purchase of fixed assets, during the three months ended March 31,
2001, was $57,165, up from $0 for the prior period. During the three months
ended March 31, 2001 and 2000, cash from financing activities included
borrowings of $60,022 and $6,380, respectively, before note payable
payments of $17,500 for the three months ended March 31, 2001. Additionally, net
cash from financing activities included net proceeds of $177,000 from the
sale of common stock during the three months ended March 31, 2000 and
$290,000 during the three months ended March 31, 2001.

For the year ended
December 31, 2000, and 1999, net cash used in operations was $813,994 and
$868,964, respectively. Net cash used in investing activities in the year
ended December 31, 2000, for the purchase of fixed assets was $13,145
compared to $16,876 in the prior year. In fiscal 1999 we also made a
$46,927 investment in Neft Acquisition pursuant to the merger with it. During
the years ended December 31, 2000, and 1999, cash from financing activities
included borrowings of $56,391 and $356,606, respectively, before note
payments of $84,810 for the period ended December 31, 2000. We also received
$820,400 in the year ended December 31, 2000, from the sale of common stock, and
$632,196 from the sale of common and preferred stock for the year ended December
31, 1999.

Future
Liquidity Considerations. At March 31, 2001, we had cash and cash
equivalents of $1,992, and a working capital deficit of $354,317. 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 accounts
receivable of $669,905 at March 31, 2001, include $519,965 from the French
government for grants and R&D tax credits receivable. Our accounts payable
and accrued expenses were $532,885 as of March 31, 2001.

We have financed
our operations to date primarily through the private sale of equity
securities and borrowings from our shareholders and other parties. During
the year ended December 31, 2000, we sold 3,571,672 shares of our common
stock for $936,000 in cash and forgiveness of indebtedness.

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 a public offering to supply us with needed
working capital. Since we are conducting the offering ourselves, we are
uncertain that the 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 $290,000 from overseas institutional investors and borrowed
$60,022. We also owed $314,062 to officers, directors, and other related
parties. Those persons have informed us that they will offer to convert part of
their debt into equity at the conclusion of this offering, but we have no
commitment to do so. Management believes that those persons would extend their
loans until we are able to pay them if they are not converted. However,
approximately $90,000 from the proceeds of this offering may be used to pay one
of our former directors and our CEO part of the amounts we owe them, if at least
$1,500,000 is raised in our public offering.

In May 2001 we
received a license fee of 500,000 euros. We used those proceeds to finance our
French operations and to reduce our accounts payable. In June 2001, we received
approval of a long term, interest-free 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 our public 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. If only the minimum
offering of $1,000,000 is raised, we may have to postpone some of our planned
investments.

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: August 30, 2001 | By: /s/ Michel Morin      Michel Morin, CEO