SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  FORM 10-QSB/A

[Mark One]

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

For the quarterly period ended January 31, 1999

                                       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 small business issuer as specified in its charter)

            Delaware                                    06-1528142              
  (State or other jurisdiction             (I.R.S. Employer Identification No.) 
of incorporation or organization)          

3 Great Pasture Road, Danbury, Connecticut                 06813   
  Address of principal executive offices)               (Zip code) 
                                   
Issuer's telephone number including area code: (203) 825-6000     

_____________________________________________________________________
(Former name, former address and former fiscal year, 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 Securities Exchange Act of 1934 during the past 12 months (or
for such shorter  period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

[ ] Yes  [X] No

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares  outstanding of the issuer's common stock,  par value $.01,
as of April 5, 1999, was 2,310,771.

Transitional Small Business Disclosure Format (check one):

[ ] Yes  [X] No


<PAGE>



                                  EVERCEL, INC.

                                  FORM 10-QSB/A

                                      INDEX



PART I - FINANCIAL INFORMATION                                            PAGE

Item 1. Unaudited Condensed Financial Statements:

        Condensed Balance Sheet as of January 31, 1999                      2
                                                                          
        Condensed Statements of Operations for the three                  
        months ended January 31, 1999 and January 31, 1998                  3
                                                                          
        Condensed Statements of Cash Flows for the three                  
        months ended January 31, 1999 and January 31, 1998                  4
                                                                          
        Notes to Unaudited Condensed Financial Statements                   5
                                                                          
Item 2. Management's Discussion and Analysis of Financial                  11
        Condition and Results of Operations                               
                                                                          
              Signatures                                                   14
                                                                        



                                       1
<PAGE>


                                  EVERCEL, INC.
                             CONDENSED BALANCE SHEET
                             (Dollars in thousands)
                                   (Unaudited)


                                                                     January 31,
                                                                        1999
                                                                        ----

                                     ASSETS

 CURRENT ASSETS:
  Cash                                                                  $    1
   Accounts receivable                                                      36
   Inventories                                                             235
                                                                        ------

     Total current assets                                                  272
                                                                        ------

 Property, plant and equipment:
   Cost                                                                  1,892
   Accumulated depreciation                                                866
                                                                        ------
   Net                                                                   1,026

   Other assets                                                            523
                                                                        ------

     TOTAL ASSETS                                                       $1,821
                                                                        ======

                           LIABILITIES AND NET ASSETS

 CURRENT LIABILITIES:
   Accrued liabilities                                                  $   98
   Accounts payable                                                         33
   Notes Payable                                                           821
                                                                        ------

     Total current liabilities                                             952
                                                                        ------

   Deferred income tax liability                                            17
                                                                        ------
     Total liabilities                                                     969

                                                                        ------
 Net assets of Evercel, Inc.                                               852
                                                                        ------

   TOTAL LIABILITIES AND NET ASSETS                                     $1,821
                                                                        ======


                See accompanying notes to financial statements.


                                        2
<PAGE>


                                  EVERCEL, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
           (Dollars in thousands, except share and per share amounts)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                          Three Months Ended January 31,
                                                          ------------------------------
                                                              1999           1998
<S>                                                        <C>            <C>        
Revenues:
  Contracts                                                $      --      $         2
  License fee income                                              --              125
                                                           -----------    -----------

    Total revenues                                                --              127
                                                           -----------    -----------

Cost & expenses:
  Cost of revenues                                                --                4
  Depreciation & amortization                                       11             10
  Administrative and selling expenses                              300            249
  Research & development                                           566            369
                                                           -----------    -----------

                                                                   877            632
                                                           -----------    -----------

(Loss) from operations before income tax (benefit)                (877)          (505)
Income tax (benefit)                                              (360)          (172)
                                                           -----------    -----------

Net (loss)                                                 $      (517)   $      (333)
                                                           ===========    ===========

  Pro forma, net loss per share (basic and diluted)        $      (.37)   $      (.24)
                                                           ===========    ===========

  Pro forma weighted average shares (basic and diluted),     1,389,000      1,389,000
                                                           ===========    ===========

  Pro forma, net loss per share (basic and diluted),
   as adjusted                                             $      (.19)   $      (.12)
                                                           ===========    ===========

  Pro forma weighted average shares (basic and diluted),
   as adjusted                                               2,778,000      2,778,000
                                                           ===========    ===========
</TABLE>


                See accompanying notes to financial statements.



                                       3
<PAGE>


                                  EVERCEL, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)

                                                            Three Months Ended 
                                                                January 31,
                                                            -------------------
                                                              1999        1998
                                                            -------     -------


Cash flows from operating activities:
  Net (loss)                                                $  (517)    $  (333)
    Depreciation and amortization                                11          10
      Changes in operating assets and liabilities:
    Accounts receivable                                         (19)         16
    Inventory                                                  (235)       --
    Other current assets                                       --            42
    Other assets                                               (190)       --
     Accounts payable                                           (20)         13
     Accrued liabilities                                         18          11
                                                            -------     -------

       Net cash(used in)operating activities                   (952)       (241)
                                                            -------     -------

Cash flows from investing activities:
  Capital expenditures                                         (212)       --
                                                            -------     -------

       Net cash (used in)investing activities                  (212)       --
                                                            -------     -------

Cash flows from financing activities:
 Funding of operations provided by ERC                          946         241
 Increase in short term borrowings                              218        --
                                                            -------     -------

       Net cash provided by financing activities              1,164         241

       Net increase/(decrease) in cash                         --          --

Cash, beginning of period                                      --          --

Cash, end of period                                         $  --       $  --
                                                            =======     =======



                 See accompanying notes to financial statements


                                       4
<PAGE>


Part I - Financial Information
Item 1. Financial Statements


                                  EVERCEL, INC.
                          NOTES TO UNAUDITED CONDENSED
                              FINANCIAL STATEMENTS


NOTE 1: BASIS OF PRESENTATION

The  accompanying   condensed  financial  statements  for  Evercel,   Inc.  (the
"Company"),  have been prepared in accordance with generally accepted accounting
principles for interim  financial  information and with the instructions to Form
10-QSB and Item  310(b)of  Regulation  S-B.  In the opinion of  management,  all
adjustments  (consisting  only of normal  recurring  adjustments)  necessary  to
present fairly the financial  position of the Company as of January 31, 1999 and
the results of  operations  for the three months ended January 31, 1999 and 1998
and cash flows for such three month periods have been included.

The  accompanying  financial  statements  are  presented  as if the  Company had
existed as a corporation  separate from Energy Research Corporation ("ERC"), the
former  parent  of the  Company,  for the  periods  presented  and  include  the
historical assets, liabilities,  revenues and expenses that are directly related
to the business that comprise the Company's operations.

For the periods presented certain general and administrative  expenses reflected
in the financial  statements  include  allocations of certain corporate expenses
from ERC,  which took into  consideration  personnel,  space,  estimates of time
spent to provide services,  or other appropriate bases.  Management believes the
foregoing  allocations  were made on a reasonable  basis;  however,  they do not
necessarily  equal the costs  which  would have been or will be  incurred by the
Company on a stand-alone basis.

The  financial  information  included  herein may not  necessarily  reflect  the
financial  position  and results of  operations  of the Company in the future or
what the financial  position and results of operations of the Company would have
been had it been a separate, stand-alone company during the periods covered.

In September 1998, the ERC Board of Directors approved a restructuring  program.
This  program  included an  intention  to separate  ERC into two  publicly  held
companies:  Evercel, Inc., a newly formed corporation which will own and operate
the Battery  Business Group, and ERC, which will continue to own and operate its
fuel cell business.  On February 22, 1999 the ERC Board of Directors  declared a
special  distribution  (the  "Distribution")  of one  share of  common  stock of
Evercel,  Inc.  for every  three  shares of ERC common  stock  outstanding.  The
Distribution was treated as a tax-free dividend for tax reporting purposes.  The
"Company"  refers to  Evercel,  Inc. or the  Battery  Business  Group of ERC, as
appropriate.


                                       5
<PAGE>


Immediately after the Distribution, the Company granted at no cost to holders of
its common stock as of February 22, 1999,  transferable  subscription  rights to
subscribe  for and  purchase  additional  shares of the Company  common stock (a
"Right").  Each holder of common stock of the Company  received one transferable
Right for each  share of common  stock  held.  Each  Right  was  exercisable  to
purchase one share of common  stock of the Company at a purchase  price of $6.00
per share ("Subscription Price").

Each  holder of Rights who elected to  exercise  his right to  purchase  for the
Subscription  Price  a share  of  common  stock  for  each  Right  held  ("Basic
Subscription Privilege"),  could also subscribe at the Subscription Price for an
unlimited  number  of  additional   Underlying  Shares  (the   "Oversubscription
Privilege") that were not otherwise purchased pursuant to the Basic Subscription
Privilege.

In connection  with the  Distribution  1,388,856  shares of Company common stock
were issued.  In connection  with the closing of the Rights offering on April 5,
1999,  921,915  shares of common  stock were issued  pursuant to the exercise of
Rights.  Pursuant  to the  Standby  Underwriting  Agreement  with Loeb  Partners
Corporation and Burnham  Securities  Inc., an additional  466,941 shares will be
issued on or about April 12, 1999.

The Company  intends to use the net proceeds  from the Rights  offering to lease
and equip a new facility for limited production and manufacturing  purposes,  to
repay  outstanding  indebtedness,  and for  working  capital  and other  general
corporate purposes.

The Company  operates  as a separate,  publicly  held  corporation.  In order to
effect the segregation of these businesses, prior to the Distribution, effective
February 16, 1999 ERC transferred to the Company the principal assets related to
its Battery Business Group and certain liabilities related to those assets.

The results of  operations  for the three months ended January 31, 1999 and 1998
are not necessarily indicative of the results to be expected for the full year.

The reader should  supplement the information in this document with  disclosures
in   the   Company's   Registration   Statement   on   Form   SB-2   (File   No.
333-64931)declared effective on February 19, 1999.


NOTE 2: LICENSE AGREEMENTS AND SIGNIFICANT CONTRACTS

On May 29, 1998,  ERC entered into a  Technology  Transfer and License  Contract
(the "License  Contract")  with Xiamen Three Circles Co.,  Ltd.  ("Xiamen").  In
connection with this transaction,  ERC received $3,000 in payment for granting a
license of its  nickel-zinc  ("Ni-Zn")  batteries to Xiamen.  As required by the
License Contract,  ERC entered into a Joint 


                                       6
<PAGE>


Venture  Contract  with  Xiamen  on July  24,  1998  for the  construction  of a
manufacturing  facility  for the  production  of Ni-Zn  batteries.  As a result,
Xiamen Three  Circles-ERC  Battery Corp., Ltd. (the "Joint Venture") was formed.
The Joint Venture will manufacture  batteries for electric  bicycles,  scooters,
wheel  chairs,  miners  cap lamps and other  applications  for sale  within  the
licensed territories. In accordance with the License Contract requirements,  ERC
contributed  the $3,000 license fee received plus an additional $80 to the Joint
Venture in exchange for a 50.5% ownership interest.

In  connection  with the  spin-off,  ERC and the Company  entered into a License
Assistance Agreement pursuant to which the Company will provide all services and
assistance  necessary for the Company to effectively  fulfill, on behalf of ERC,
all of ERC's  obligations  under  the Joint  Venture  Contract  and the  License
Contract,  until such time as ERC obtains the approval for the assignment of the
agreements  to the  Company.  In return  for such  assistance,  ERC will pay the
Company  an  amount  equal  to  the  sum  of  all  money,  dividends,   profits,
reimbursements,  distributions  and payments  actually paid to ERC in cash or in
kind or otherwise accruing to ERC pursuant to the Joint Venture Contract and the
License Contract.  All expenses and costs incurred by the Company in meeting the
obligations under the License Assistance  Agreement shall be solely those of the
Company, and ERC shall not be liable for their payment. The Company will account
for its involvement in the Joint Venture under the License Assistance  Agreement
in a manner similar to the equity method of accounting.

In February  1998,  ERC entered  into a license  agreement  (the "NanYa  License
Agreement")  with a joint venture  between NanYa Plastics  Corporation of Taiwan
and Xiamen for the use of the Company's Ni-Zn batteries in electric vehicles and
hybrid electric vehicles in China,  Taiwan,  Hong Kong and Macao on an exclusive
basis and for certain other Southeast Asian countries on a non-exclusive  basis.
Under the NanYa  License  Agreement,  which was  assigned  by ERC to the Company
pursuant to the Distribution  Agreement,  the joint venture would be required to
pay $2,000 to the Company upon  completion  of certain  conditions,  and a final
payment  of  $1,500  upon  completion  of  duplication  of  the  battery  at its
facilities  in China.  In addition,  the NanYa  License  Agreement  requires the
licensee to pay to the Company  royalties on sales of batteries  during the term
of the Agreement. The NanYa License Agreement provides that the licensor has the
right to invest the final payment in equity in the joint  venture  manufacturing
and sales organization  formed between NanYa Plastics and Xiamen. ERC has agreed
to seek the consent of the other parties to the NanYa  License  Agreement to the
assignment of such agreement to the Company.

As part of the  separation  of the  Company's  business  from ERC,  the  Company
entered into various agreements with ERC including a Distribution Agreement, Tax
Sharing Agreement, Service Agreement and License Assistance Agreement.


                                       7
<PAGE>


The  Distribution  Agreement  provides for,  among other  things,  the principal
corporate transactions required to effect the Distribution,  the transfer to the
Company of the assets of the battery business,  the division between ERC and the
Company of certain  liabilities and obligations,  the distribution by ERC of all
outstanding  shares of the Company common stock to ERC  stockholders and certain
other agreements  governing the  relationship  between ERC and the Company after
the  Distribution.  Subject to certain  exceptions,  the Distribution  Agreement
provides for assumptions of obligations  and  liabilities and  cross-indemnities
designed  to  allocate   financial   responsibility   for  the  obligations  and
liabilities  arising out of or in  connection  with the battery  business to the
Company and financial responsibility for the obligations and liabilities arising
out of or in connection with the fuel cell business to ERC.

The Tax Sharing  Agreement  defines the  parties'  rights and  obligations  with
respect to the filing of returns,  payments, etc. relating to ERC's business for
periods prior to and including the  Distribution and with respect to certain tax
attributes of ERC after the distribution.

The Services  Agreement  provides  that ERC will provide to the Company  certain
management and  administrative  services,  as well as the use of certain office,
research and development,  manufacturing and support  facilities and services of
ERC. The Services Agreement shall continue until terminated by either party upon
120 days' notice. In addition,  the Company may terminate the Services Agreement
as to one or more of the Services upon 60 days' notice to ERC.

The types of  services  provided  pursuant  to the  Services  Agreement  by ERC,
through its employees, include financial reporting,  accounting,  auditing, tax,
office services, payroll, human resources, analytical lab, microscopic analysis,
machine shop and drafting, as well as the part time management services of ERC's
Chief Executive Officer and Chief Financial  Officer.  ERC also provides office,
research and development and manufacturing space for the Company.  The method of
calculating the applicable  charges paid by the Company for each type of service
are set forth in the Services Agreement; such charges are payable quarterly.

The Company estimates that the net fees to be paid to ERC for services performed
will initially be  approximately  $160 per quarter,  excluding  certain services
billed on the basis of usage,  such as purchasing,  analytical  lab,  microscope
analysis,  machine shop and  drafting,  which  amount  takes into account  ERC's
additional  costs related to providing  such  services,  and will decline as the
services  performed  decrease.  The Company  presently expects that most of such
services will be provided by ERC for approximately one year.


                                       8
<PAGE>


In order for ERC to transfer the Joint  Venture  contract and the Three  Circles
License  Agreement to the  Company,  ERC must obtain the consent of Xiamen Three
Circles  Co.,  Ltd. and the Joint  Venture and the  approval of the  appropriate
examination and approval  authority of the People's  Republic of China.  ERC has
agreed to seek these consents and approvals,  however, there can be no assurance
that these  consents and approvals will be obtained on a timely basis or at all.
Pending  receipt of these  consents  and  approvals,  ERC and the  Company  have
entered into a License  Assistance  Agreement pursuant to which ERC has retained
the Company to provide all services and assistance  necessary for the Company to
effectively  fulfill, on behalf of ERC, all of ERC's obligations under the Joint
Venture contract and Three Circles License  Agreement in exchange for payment to
the Company by ERC of all remuneration  paid and other benefits  accruing to ERC
pursuant to such agreements.

On December 22,  1998,  The Company  entered  into a commitment  to borrow up to
$1,000 from First Union National Bank (the "First Union Line of Credit") for the
purpose of acquiring  machinery and equipment for the new battery  manufacturing
plant.  On February 17, 1999, the Company entered into a commitment to borrow up
to an additional  $647 from First Union National Bank. On February 17, 1999, the
Company had total  borrowings  of $860 against  these two  commitments.  ERC has
unconditionally  guaranteed  the  commitments  and has  pledged  $1,647  of cash
against  the  Notes.  The Notes are  payable  from the  proceeds  of the  Rights
Offering to be received on April 5, 1999.

On January 15, 1999, the Company,  Inc.  entered into a lease for  manufacturing
and office space in Danbury,  CT. The lease term is five years with an option to
extend for an additional five years. The annual rent is $171 for the first three
years  and  increases  to $178 in  year  four  and  $185 in year  five.  ERC has
guaranteed the performance of the lease (the "Lease Guaranty").  In the event of
a  default  by  Evercel,  ERC's  liability  is  limited  to  $500  reduced  each
anniversary  date of the  lease  by $100.  Notwithstanding  the  foregoing,  the
guaranty  terminates after the first anniversary of the lease upon Evercel's net
worth exceeding $3,000.

On  February 5, 1999,  the Company  entered  into a Loan  Agreement  and Line of
Credit Note (the "Line of Credit") to borrow up to $3,450 (including  borrowings
noted above) from ERC for working capital and proposed capital expenditures. Any
outstanding  borrowings  will be secured by all of the tangible  and  intangible
personal property and bear interest at the London Interbank Offered Rate (LIBOR)
plus 1 1/2%,  payable monthly in arrears.  The $3,450 Line of Credit  represents
the maximum  borrowing limit and is reduced by the sum of the following:  a) any
outstanding  advances  under the First Union Line of Credit;  b) any amounts ERC
has paid on account  of the Lease  Guaranty;  c) the net  proceeds  received  on
account  of any  sale or  issuance  of any  equity  securities  by the  Company,
including the Rights  Offering;  and d) the amount of any loans  (excluding  the
First Union Line of Credit) obtained


                                       9
<PAGE>


by the Company after the date of this agreement,  including the present value of
the Company's lease obligations. The Line of Credit terminates on August 5, 2000
or the date on which the Company has received net proceeds  from items c) and d)
of at least $3,450,  whichever is earlier.  In connection with the completion of
the Rights offering,  the Company anticipates receiving $5,531 from the issuance
of common  stock on April 5, 1999.  Upon  receipt of these  proceeds the line of
credit  terminates  pursuant  to its  terms.  In  addition,  under  its  Standby
Underwriting  Agreement,  the Company expects to receive an additional $2,342 on
or about April 12, 1999 from the sale to the  Underwriters  of shares  remaining
unsubscribed in the Rights offering (after deducting  underwriting discounts and
fees).


NOTE 3: PRO FORMA LOSS PER SHARE

The pro forma weighted  average shares of 1,389,000  reflect the distribution of
one share of common stock of Evercel,  Inc. for every three shares of ERC common
stock outstanding as of February 22, 1999. The pro forma weighted average shares
as adjusted of 2,778,000 reflect both the distribution and the subsequent rights
offering.

The  computation  of diluted loss per share for the first quarter of fiscal 1999
follows the basic calculation since common stock equivalents were  antidilutive.
The weighted average number of options outstanding for the period ending January
31, 1999 is 166,666.


                                       10
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Results of Operations
Comparison Three Months Ended January 31, 1999 and January 31, 1998

The Company  had no revenues in the first  quarter of fiscal 1999 as compared to
$127,000  for the same  period  last  fiscal  year.  The  decline was due to the
termination in May 1998 of a license agreement with Corning, Inc.

The  Company  had no cost of  revenues  in the first  quarter of fiscal  1999 as
compared to $4,000 for the same period  last  fiscal  year.  The lack of cost is
attributable to having no revenues as previously mentioned.

Administrative  and  selling  expense  increased  20% to  $300,000  in the first
quarter of fiscal 1999 from  $249,000 in the same period last fiscal  year.  The
current  quarter  costs  reflect  an  increase  in costs  related  to efforts to
commercialize the Company's battery technology. These costs allocated based upon
research and  development  activity and  administrative  activity.  Depreciation
remained relatively unchanged quarter to quarter.

Research and development  expense increased 53% to $566,000 in the first quarter
of fiscal 1999 from  $369,000 in the same  period last fiscal  year.  This was a
result of  increased  costs as  compared  to the same  period  last  fiscal year
relating to the commercialization of the Company's battery technology.

The  Company has  recorded a tax  benefit for its losses in each  quarter at the
rate of 41% and 34% respectively.  Subsequent to the Distribution, the Company's
income tax provision  will be recorded on a separate  company basis  pursuant to
the requirements of Financial Accounting Standard No. 109 "Accounting for Income
Taxes."

Liquidity and Capital Resources

Historically,  the Company has obtained all of its financial needs from ERC. ERC
has provided funding for all battery research  activities under its research and
development expense budget. ERC has also provided all of the funding for capital
expenditures  for the  purchase  of  machinery  and  equipment  for all  battery
activities.

Working  capital at January  31,  1999 was a negative  $680,000 as compared to a
negative  $718,000 at October 31,  1998.  To date,  ERC has  provided all of the
working capital needs of the Company.

The Company has entered into a Services  Agreement  with ERC to provide  certain
management and administrative  services and office, research and development and
manufacturing support facilities and services to the Company.


                                       11
<PAGE>


The Company  has  entered  into a lease for  manufacturing  and office  space in
Danbury, CT. The lease term is five years with a five-year option to extend. The
annual rent is $171,000  for the first three years and  increases to $178,125 in
year  four  and  $185,250  in  year  five.  ERC  has  guaranteed  the  Company's
performance  of this  lease.  In the event of a default  by the  Company,  ERC's
liability is limited to $500,000  reduced each  anniversary date of the lease by
$100,000.  Notwithstanding  the foregoing,  ERC's guaranty  terminates after the
first   anniversary  of  the  lease  upon  the  Company's  net  worth  exceeding
$3,000,000.

The Company has entered into an agreement  pursuant to which it can borrow up to
$1,000,000 from First Union National Bank for the purpose of acquiring machinery
and equipment for the Company's new battery  manufacturing  plant. As of January
31, 1999, the Company had borrowed $821,000 under this facility. On February 17,
1999, the Company  entered into a commitment to borrow up to an additional  $647
from First Union  National  Bank.  On February 17,  1999,  the Company had total
borrowings  of $860  against  these  two  commitments.  ERC has  unconditionally
guaranteed the commitments and has pledged $1,647,000 of cash against the Notes.
The Note are payable from the proceeds of the Rights  offering to be received on
April 5, 1999.

Additionally, on February 5, 1999, the Company entered into a Loan Agreement and
Line of Credit  Note to  borrow up to  $3,450,000  (including  borrowings  noted
above) from ERC for working capital and capital expenditures. The line of credit
is  anticipated to terminate on April 5, 1999 the date on which the Company will
receive proceeds from the Rights Offering.

The Company  anticipates  that is will raise at least $7,873,000 of net proceeds
from  the  Rights  Offering  including  funds  to be  received  from the sale of
unsubscribed  shares to Loeb Partners  Corporation  and Burnham  Securities Inc.
pursuant to a Standby  Underwriting  Agreement.  The Company believes that these
net proceeds,  together with license  payments  anticipated to be received under
the  NanYa  License  Agreement,  will  be  sufficient  to  support  its  planned
operations  for at least the next twelve months.  The Company  estimates that it
will use at least  $3,450,000  of cash to support  its  operations  during  this
period,  primarily to lease and equip a new facility for limited  production and
manufacturing  purposes,  to repay  outstanding  indebtedness,  and for  working
capital and other general  corporate  purposes.  The Company's cash requirements
will vary  depending  upon a number of  factors,  many of which are  beyond  the
control of the Company,  including  the demand for the Company's  products,  the
efforts and success of the Company's  licensees  and joint  venture  partners in
developing and marketing products  incorporating the Company's  technology,  the
development of battery  markets,  the level of competition  faced by the Company
and the ability of the Company to develop,  market and license new  products and
effectively  manage operating  expenses.  If and when the Company is required to
raise additional funds,  there can be no assurance that the Company will be able
to do so on  favorable  terms if


                                       12
<PAGE>


at all. Failure of the Company to raise funds required to support its operations
would  have a  material  adverse  effect on the  Company's  business,  financial
condition and results of operations.

Under the NanYa License  Agreement,  the Company  expects to receive license fee
income upon the  successful  completion  of two battery  tests  required by that
Agreement.  The Company  expects to receive a portion of this license fee income
during fiscal 1999,  assuming the first test's  successful  completion,  and the
remainder of the license fee income in fiscal year 2000 upon the  duplication of
the  battery  and the first  test's  results.  The amount of these  payments  is
expected  to be  $2,000,000  and  $1,500,000  in  fiscal  years  1999 and  2000,
respectively.

The  Company  expects  that to  continue to enter into  license  agreements,  to
participate  in  joint   manufacturing   ventures  and  to  expand  its  battery
manufacturing facilities, for which the Company may require additional capital.

Year 2000 Compliance

The Year 2000 issue is a computer  programming concern that may adversely affect
the Company's  information  technology systems. The Company believes that it has
taken reasonable  steps to implement a Year 2000 compliance  program designed to
ensure that the  Company's  computer  systems  and  applications  will  function
properly  beyond 1999.  The Company  believes that adequate  resources have been
allocated  for this  purpose.  The Company does not expect to incur  significant
expenditures to address this issue. However,  there can be no assurance that the
Company will identify all Year 2000  problems in advance of their  occurrence or
that the  Company  will be able to  successfully  remedy any  problems  that are
discovered.  The expenses of the Company's efforts to address such problems,  or
the expenses or  liabilities to which the Company may become subject as a result
of  such  problems,  could  have a  material  adverse  effect  on the  Company's
business,  results of  operations  and  financial  condition.  In addition,  the
revenue stream and financial  stability of existing or future  licensees,  joint
venture  partners or customers may be adversely  impacted by Year 2000 problems,
which  could  cause   fluctuations  in  the  Company's  revenues  and  operating
profitability.


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<PAGE>


                                   SIGNATURES


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


                                        EVERCEL, INC.


                                        \s\ Joseph G. Mahler
                                        --------------------

                                        Joseph G. Mahler
                                        Acting Chief Financial Officer, 
                                        Treasurer and Secretary


Dated: April 9, 1999




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