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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



FORM 10-Q





|    | Mark One                                                                                
|--- | ----------------------------------------------------------------------------------------
|[X] | QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|    |                                                                                         
|    | For the quarterly period ended: March 31, 2001                                          

OR

|[   ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|----- | ----------------------------------------------------------------------------------
|      |                                                                                   
|      | For the transition period from: _____________ to ________________                 
|      |                                                                                   
|      | Commission File Number: 0-25411                                                   



EVERCEL, INC.

(Exact Name of Registrant as Specified in Its Charter)



|DELAWARE                                                       |  | 06-1528142                             
|-------------------------------------------------------------- |  | ---------------------------------------
|(State or Other Jurisdiction
of Incorporation or
Organization) |  | (I.R.S. Employer
Identification Number)

2 LEE MAC AVENUE
DANBURY, CONNECTICUT  06810
(203) 825-3900
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)

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ROBERT L. KANODE, PRESIDENT AND CHIEF EXECUTIVE OFFICER
EVERCEL, INC.
2 LEE MAC AVENUE
DANBURY, CONNECTICUT  06810
(203) 825-3900
(Name, Address Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)

Securities registered pursuant to Section 12(b) of the Act:
NoneSecurities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share(Title of class)

Indicate  by check mark  whether the  registrant  (1) has filed all documents and reports required to be filed by Section 13 or 15(d) of  Securities  Exchange Act of 1934 during the preceding 12 months (or for
such shorter  period that the  registrant was  required  to file such  reports),  and (2) has been  subject to such filing requirements for the past 90 days.
Yes [X]   No [   ]

The number of shares outstanding of the Registrant's Common Stock, par value $.01 as of May 7, 2001 was 10,453,770.



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EVERCEL, INC.
    FORM 10-Q
INDEX



|PART I - FINANCIAL INFORMATION
|------------------------------
|                              
|Item 1.                       
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|                              
|Item 2.                       
|                              
|Item 3.                       
|                              
|PART II
- OTHER INFORMATION   
|                              
|Item 6.                       
|                              
|                              





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EVERCEL, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Dollars in thousands, except per share amounts)



|ASSETS                                                                                                                                                                                                                                          |  | March 31,
 2001
(unaudited) |  | December 31,
 2000
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- |  | ------------------
|                                                                                                                                                                                                                                                |  |                             |  |                   
|Current assets:                                                                                                                                                                                                                                 |  |                             |  |                   
|Cash and cash equivalents                                                                                                                                                                                                                       |  | $    29,573                 |  | $      12,195     
|Accounts receivable                                                                                                                                                                                                                             |  | 624                         |  | 129               
|Inventories                                                                                                                                                                                                                                     |  | 3,405                       |  | 2,246             
|Other current assets                                                                                                                                                                                                                            |  | 1,380                       |  | 470               
|                                                                                                                                                                                                                                                |  |                             |  |                   
|Total current assets                                                                                                                                                                                                                            |  | 34,982                      |  | 15,040            
|                                                                                                                                                                                                                                                |  |                             |  |                   
|Property, plant and equipment, net                                                                                                                                                                                                              |  | 9,085                       |  | 8,337             
|Other assets, including deposits on 
          new equipment, net                                                                                                                                                                               |  | 3,129                       |  | 3,750             
|                                                                                                                                                                                                                                                |  |                             |  |                   
|                                                                                                                                                                                                                                                |  |                             |  |                   
|TOTAL ASSETS                                                                                                                                                                                                                                    |  | $   47,196                  |  | $    27,127       
|                                                                                                                                                                                                                                                |  |                             |  |                   
|                                                                                                                                                                                                                                                |  |                             |  |                   
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                                                                                            |  |                             |  |                   
|Current liabilities:                                                                                                                                                                                                                            |  |                             |  |                   
|Accounts payable                                                                                                                                                                                                                                |  | $         985               |  | $        1,519    
|Accrued salaries and benefits                                                                                                                                                                                                                   |  | 797                         |  | 835               
|Current portion of long term debt                                                                                                                                                                                                               |  | 290                         |  | 302               
|Accrued liabilities                                                                                                                                                                                                                             |  | 1,434                       |  | 1,510             
|                                                                                                                                                                                                                                                |  |                             |  |                   
|Total current liabilities                                                                                                                                                                                                                       |  | 3,506                       |  | 4,166             
|                                                                                                                                                                                                                                                |  |                             |  |                   
|                                                                                                                                                                                                                                                |  |                             |  |                   
|Long term debt                                                                                                                                                                                                                                  |  | 1,123                       |  | 1,195             
|Other non-current liabilities                                                                                                                                                                                                                   |  | 64                          |  | 64                
|Minority interest                                                                                                                                                                                                                               |  | 5,554                       |  | 5,588             
|                                                                                                                                                                                                                                                |  |                             |  |                   
|Total liabilities                                                                                                                                                                                                                               |  | 10,247                      |  | 11,013            
|                                                                                                                                                                                                                                                |  |                             |  |                   
|Shareholders' equity:                                                                                                                                                                                                                           |  |                             |  |                   
|                                                                                                                                                                                                                                                |  |                             |  |                   
|Preferred Stock ($0.01 par value); 1,000,000 
          shares authorized: 190,500 and 196,500 
          issued and outstanding at March 31, 2001 
          and December 31, 2000, respectively (with 
          cumulative dividends at 8%). |  | 2                           |  | 2                 
|Common Stock ($0.01 par value); 30,000,000 
          shares authorized: 10,453,770 and 7,431,952 
          issued and outstanding March 31, 2001 and 
          December 31, 2000, respectively.                                              |  | 105                         |  | 74                
|Additional paid-in-capital                                                                                                                                                                                                                      |  | 58,785                      |  | 33,644            
|Note receivable from shareholder                                                                                                                                                                                                                |  | (300)                       |  | (300)             
|Accumulated deficit                                                                                                                                                                                                                             |  | (21,643)                    |  | (17,306)          
|                                                                                                                                                                                                                                                |  |                             |  |                   
|Total shareholders' equity                                                                                                                                                                                                                      |  | 36,949                      |  | 16,114            
|                                                                                                                                                                                                                                                |  |                             |  |                   
|                                                                                                                                                                                                                                                |  |                             |  |                   
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                                                                                      |  | $   47,196                  |  | $    27,127       
|                                                                                                                                                                                                                                                |  |                             |  |                   



See condensed  notes to consolidated financial statements.





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EVERCEL, INC. AND SUBSIDIARIESSTATEMENTS OF OPERATIONS(Dollars in thousands, except per share amounts)
(Unaudited)

|                                         | Three Months Ended
|---------------------------------------- | ------------------
|                                         |                   
|                                         | March 31,
2001    
|                                         |                   
|                                         |                   
|Revenues                                 | $      600        
|Cost and expenses:                       |                   
|Cost of revenues                         | 2,651             
|Administrative and selling expenses      | 1,836             
|Research and development                 | 681               
|                                         |                   
|Total operating costs and expenses       | 5,168             
|                                         |                   
|                                         |                   
|Loss from operations                     | (4,568)           
|                                         |                   
|Interest income, net                     | 197               
|Losses attributable to minority interest | 34                
|                                         |                   
|                                         |                   
|Loss before income taxes                 | (4,337)           
|                                         |                   
|Income tax expense                       | -                 
|                                         |                   
|                                         |                   
|Net loss                                 | (4,337)           
|                                         |                   
|Preferred stock dividends                | (97)              
|                                         |                   
|                                         |                   
|Net loss -- common shareholders          | $  (4,434)        
|                                         |                   
|                                         |                   
|Basic and diluted loss per share         | $    (0.48)       
|                                         |                   
|                                         |                   
|Basic and diluted shares outstanding     | 9,176             
|                                         |                   



See condensed notes to consolidated financial statements.







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EVERCEL, INC. AND SUBSIDIARIESSTATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)



|                                                                                  |  | Three Months Ended
|--------------------------------------------------------------------------------- |  | ------------------
|                                                                                  |  |                   
|                                                                                  |  | March 31,
 2001   
|                                                                                  |  |                   
|                                                                                  |  |                   
|Cash flows from operating activities:                                             |  |                   
|Net loss                                                                          |  | $  (4,337)        
|Adjustments to reconcile net loss to net cash used 
     in operating activities: |  |                   
|Depreciation and amortization                                                     |  | 327               
|Other non-cash expenses                                                           |  | 17                
|Minority interest                                                                 |  | (34)              
|(Increase) decrease in operating assets:                                          |  |                   
|Accounts receivable                                                               |  | (495)             
|Inventories                                                                       |  | (1,159)           
|Other current assets                                                              |  | (910)             
|Increase (decrease) in operating liabilities:                                     |  |                   
|Accounts payable                                                                  |  | (534)             
|Accrued liabilities                                                               |  | (104)             
|Other long term assets                                                            |  | 41                
|                                                                                  |  |                   
|Net cash used in operating activities                                             |  | (7,188)           
|                                                                                  |  |                   
|                                                                                  |  |                   
|Cash flows from investing activities:                                             |  |                   
|Capital expenditures                                                              |  | (455)             
|                                                                                  |  |                   
|Net cash used in investing activities                                             |  | (455)             
|                                                                                  |  |                   
|                                                                                  |  |                   
|Cash flows from financing activities:                                             |  |                   
|Repayments on loans payable                                                       |  | (71)              
|Repayments on leases payable                                                      |  | (13)              
|Preferred stock dividends paid                                                    |  | (107)             
|Net proceeds from common stock issued                                             |  | 25,212            
|                                                                                  |  |                   
|Net cash provided by financing activities                                         |  | 25,021            
|                                                                                  |  |                   
|Net increase in cash and cash equivalents                                         |  | 17,378            
|Cash and cash equivalents - beginning of period                                   |  | 12,195            
|                                                                                  |  |                   
|Cash and cash equivalents - end of period                                         |  | $  29,573         
|                                                                                  |  |                   
|                                                                                  |  |                   
|Cash paid during the period for:                                                  |  |                   
|Income taxes                                                                      |  | $           -     
|                                                                                  |  |                   
|Interest paid                                                                     |  | $        41       
|                                                                                  |  |                   



See condensed notes to consolidated financial statements.



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EVERCEL, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(1) Basis of Presentation

The accompanying financial statements represent our financial position
as of March 31, 2001 and December 31, 2000 and results of operations for the three months ended March 31, 2001 and 2000.



Comparative amounts for the three months ended March 31 are unaudited.  In the opinion of management, the information presented in the unaudited three-month statement reflects all adjustments
necessary for a fair presentation of our results of operations for those periods.

(2) Summary of Significant Accounting Policies

Nature of Business

We are engaged in the design and manufacture of innovative, patented nickel-zinc rechargeable batteries, as well as the research and design of other advanced battery technologies. The
nickel-zinc battery has commercial applications in markets requiring long cycle life, light weight and relative cost efficiency. Prior to the first quarter of 2001 our operations had mainly consisted of research and development activities. We are
currently manufacturing and selling our batteries in two markets: 1) at our manufacturing facility in Newport News, Virginia, we are producing Evertroll brand batteries for electric trolling motors used in sport fishing boats, and 2) we own a
majority interest in a joint venture in the People's Republic of China (PRC) that manufactures rechargeable nickel-zinc batteries for scooter markets in Europe and Asia.  In addition to our current target markets, we believe our battery technology has
future applications in other markets, including: neighborhood electric vehicles, such as golf carts; wheelchairs; electric bicycles; uninterruptible power supplies, such as back-up power supplies for computers; yard tools, including lawn mowers and
trimmers; and 42-volt battery systems for automobiles and trucks.

Principles of Consolidation

The accompanying consolidated financial statements include our accounts and the accounts of our two subsidiaries -- the Xiamen Three Circles-ERC Battery Corp. joint venture and the Xiamen-ERC
High Technology joint venture -- consolidated subsequent to December 1, 2000. Prior to that date, the Xiamen Three Circles-ERC Battery Corp subsidiary was accounted for under the equity method.



(3) Capitalization

On February 9, 2001 we completed a stock offering of 3,000,000 common shares at $9.00 per share, resulting in total net proceeds of $25,212,000 after commissions and other expenses.



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EVERCEL, INC.



|Item 2: | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

This report contains forward looking statements, including statements regarding the Company's plans and expectations regarding the
development and commercialization of its nickel-zinc battery technology.  When used in this Report, the words "expects", "anticipates", "estimates", "should", "will", "could", "would", "may", and similar expressions are intended to identify
forward-looking statements.  All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.  Factors that could cause such a difference include, without limitation, the risk
that cost reduction in the manufacturing process will not be achieved to the extent necessary to facilitate commercialization, the risk that the company will not initiate commercial sales as currently scheduled, the risk that the Company's manufacturing
capacity will not be increased as planned, general risks associated with product development, manufacturing and introduction, rapid technological changes and competition as well as other risks set forth in the Company's filings with the Securities and
Exchange Commission.  The forward-looking statements contained herein speak only as of the date of this Report.  The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect
any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based.

Overview

We develop, design and have begun to manufacture high-performance rechargeable batteries.  Prior to 2001, our operations mainly consisted
of research and development. We recognize revenue on the date our products are shipped.

FuelCell has licensed the rights to manufacture scooter batteries through the Joint Venture.  Under our license assistance agreement with
FuelCell, we have assumed the rights, benefits and obligations of Fuel Cell's 50.5% ownership of the Joint Venture.  We accounted for our involvement in the Joint Venture under the License Assistance Agreement using the equity method of accounting, in
which we record our share of earnings or losses from the Joint Venture in our statement of operations prior to December 1, 2000. On that date, the company received foreign governmental approval of the transfer and subsequently we account for the
investment the Joint Venture by consolidating in our financial statements.

On February 16, 1999, FuelCell transferred the principal assets, intellectual property and liabilities related to its battery business
group to us.  On February 22, 1999, FuelCell distributed to its shareholders shares of our common stock in a tax-free distribution.

We have located our North American manufacturing operation in a 97,600 square foot building in Newport News, Virginia. We have completed
installing our first automated manufacturing line. The initial product to come off this new line is our trolling motor marine battery for the North America sport fishing market.

Results of Operations

Three Months Ended March 31, 2001 Compared with Three Months Ended March 31, 2000

We had revenues of $600,000 for the three months ended March 31, 2001 compared to $5,000 for the three months ended March 31, 2000.
The revenues in the 2001 period were the result of our scooter and marine batteries sold, and in 2000 were due to consumer samples sold in our efforts to commercialize our nickel-zinc batteries.  Cost of revenues of $2,651,000 for the three months ended
March 31, 2001 increased as a result of increased personnel costs and other manufacturing expenses, including manufacturing costs associated with the new Virginia facility, related to the commercialization of Evercel's nickel-zinc batteries.

Administrative and selling expenses increased 35% to $1,836,000 for the three months ended March 31, 2001 from $1,363,000 for the three
months ended March 31, 2000.  The increase is the result of additional staffing of administrative, financial and sales and marketing functions, relocation, and other employee costs, in addition to increased legal and financial costs.

Research and development expenses increased less than 1% to $681,000 for the three months ended March 31, 2001 from $679,000 for the
three months ended March 31, 2000.

Net interest income of $197,000 for the three months ended March 31, 2001 increased from $63,000 for three months ended March 31, 2000
due to interest income on funds received from the February 2001 offering.

Liquidity and Capital Resources

We have funded our operations primarily through cash generated from sales of equity.  On February 9, 2001 we concluded a stock offering
of 3 million shares of our common stock resulting in total net proceeds of $25,212,000.

At March 31, 2001 we had working capital of $31,476,000, including cash and cash equivalents of $29,573,000, compared to working capital
of $10,874,000, including cash and cash equivalents of $12,195,000 at December 31, 2000.  In compliance with the terms of the Newport News, Virginia lease signed July 10, 2000 with Oakland Investors, LLC., we have executed a $1,000,000 letter of credit as
a form of rent security, which will restrict our use of cash and cash equivalents by the same amount.

Preferred stock dividends accrued on the Series A Preferred Stock issued in December 1999 were $97,000 in the three month period ended
March 31, 2001. Dividend payments for each quarter are due and payable 15 days after the quarter end. As part of the December 1999 preferred offering, investors and the underwriter, Burnham Securities Inc., were issued warrants to purchase our common
stock.  If our common stock reaches certain price levels, we can redeem the warrants.  If all the warrants were exercised, we would receive approximately $4.6 million in gross proceeds.

Our capital expenditures are incurred primarily for production equipment in Newport News, Virginia.  Capital expenditures were $455,000
for the three month period ended March 31, 2001.

We anticipate that our existing capital resources will be adequate to satisfy existing financial requirements and agreements.



|Item 3: | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. The investment portfolio
includes money market accounts in U.S. financial institutions. Cash is invested overnight with high credit quality financial institutions. Based on the Company's overall interest exposure, including all interest rate sensitive instruments, a near-term
change in interest rate movements of 100 basis points would increase or decrease our net loss for the quarter ended March 31, 2001 by $74,000.



PART II -- OTHER INFORMATION

Item 6: EXHIBITS AND REPORTS ON FORM 8-K

(A)EXHIBITS

None

(B)REPORTS ON FORM 8-K

None



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SIGNATURES

In accordance with the requirements of the Securities Exchange of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                   | EVERCEL, INC.                    
|------------------ | ---------------------------------
|                   | (Registrant)                     
|                   | By: /s/ Daniel J. Samela         
|                   | Name:  Daniel J. Samela          
|Date: May 15, 2001 | Title:    Chief Financial Officer