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, 2000

                                       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                         (I.R.S. Employer
          of Incorporation or                          Identification Number)
             Organization)


                                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)
                         ------------------------------
             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:
                                      None
           Securities 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  Registrants  Common Stock,  par value
$.0001 as of May 12, 2000 was 6,983,258.

                                      -1-
<PAGE>

                                  EVERCEL, INC.
                                    FORM 10-Q
                                      INDEX

PART 1 - FINANCIAL INFORMATION

Item 1.  Unaudited Condensed Financial Statements

            Condensed Balance Sheets as of
            March 31, 2000 and December 31, 1999

            Condensed Statements of Operations
            for the three months ended March 31, 2000
            and March 31, 1999

            Condensed Statements of Cash Flows
            for the three months ended March 31, 2000
            and March 31, 1999

            Notes to Unaudited Condensed
            Financial Statements

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

Item 3. Quantitative and Qualitative Disclosures About
        Market Risk

PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-k

        Signatures

                                      -2-
<PAGE>

                                  EVERCEL, INC.
                            CONDENSED BALANCE SHEETS
           (Dollars in thousands, except share and per share amounts)



                                                 (Unaudited)
                                                   March 31,   December 31,
                      ASSETS                          2000          1999
                                               -----------------------------

Current assets:
   Cash and cash equivalents                      $    3,063     $    6,117
   Accounts receivable                                    21            193
   Inventories                                           292            159
   Other current assets                                  177             35
                                                  ----------     ----------
      Total current assets                             3,553          6,504

   Property, plant and equipment, net                  1,952          1,991
   Other assets, net                                   1,755            315
                                                  ----------     ----------
TOTAL ASSETS                                      $    7,260     $    8,810
                                                  ==========     ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                               $      535     $      391
   Accrued liabilities                                   734            351
                                                  ----------     ----------
      Total current liabilities                        1,269            742

Shareholders'equity:

   Preferred Stock ($0.01 par value);
      1,000,000 shares authorized: 264,000
      issued and outstanding at March 31,
      2000 and December 31, 1999 (with
      cumulative dividends at 8%).                         3              3
   Common Stock ($0.01 par value);
      10,000,000 shares authorized:
      5,733,258 and 5,722,090 issued and
      outstanding at March 31, 2000 and
      December 31, 1999, respectively.                    57             57
   Additional paid-in-capital                         13,986         14,084
   Note receivable from shareholder                     (300)          (300)
   Accumulated deficit                                (7,755)        (5,776)
                                                  ----------     ----------
      Total shareholders'equity                        5,991          8,068
                                                  ----------     ----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        $    7,260     $    8,810
                                                  ==========     ==========




                  See notes to condensed financial statements.

                                      -3-
<PAGE>



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

                                                     Three Months Ended
                                             -----------------------------------
                                                 March 31,         March 31,
                                                   2000              1999
                                             ------------------ ----------------

Revenues                                        $        5        $       -
Cost and expenses:
   Cost of revenues                                      5                -
   Administrative and selling expenses               1,363               465
   Research and development                            679               512
                                                ----------        ----------
      Total operating costs and expenses             2,047               977
                                                ==========        ==========

Loss from operations                                (2,042)             (977)

Interest Expense                                         -               (15)
Interest Income                                         63                 -
                                                ----------        ----------

Loss before income tax benefit                      (1,979)             (992)

Income tax benefit                                      -               (111)
                                                ----------        ----------

Net loss                                            (1,979)             (881)

Preferred stock dividends                             (132)               -
                                                ----------        ----------

Net loss - common shareholders                  $   (2,111)       $     (881)
                                                ==========        ==========

Basic and diluted loss per share                $    (0.37)       $    (0.16)
                                                ==========        ==========

Basic and diluted shares outstanding             5,733,258         5,555,724
                                                ==========        ==========






                  See notes to condensed financial statements.



                                       -4-
<PAGE>

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

                                                        Three Months Ended
                                                --------------------------------
                                                    March 31,         March 31,
                                                      2000               1999
                                                -----------------  -------------

Cash flows from operating activities:
Net loss                                           $    (1,979)       $    (881)
Adjustments to reconcile net loss to net
   cash used in operating activities:
     Depreciation and amortization                          89                9
     (Increase) decrease in operating assets:
       Accounts receivable                                 172                -
       Inventories                                        (133)            (159)
       Other current assets                               (142)               -
     Increase (decrease) in operating
       liabilities:
       Accounts payable                                    144              146
       Accrued liabilities                                 251              165
     Other, net                                              -             (262)
                                                     ----------        ---------
   Net cash used in operating activities                (1,598)            (982)
                                                     ----------        ---------
Cash flows from investing activities:
   Capital expenditures                                 (1,490)            (446)
                                                     ----------        ---------
   Net cash used in investing activities                (1,490)            (446)
                                                     ----------        ---------
Cash flows from financing activities:
   Borrowings from FuelCell                                 -             1,126
   Proceeds from common stock issued                        34              669
   Contributions from FuelCell                              -              (340)
                                                     ----------        ---------
     Net cash provided by  financing activities             34            1,455
                                                     ----------        ---------
Net decrease (increase) in cash and cash
   equivalents                                          (3,054)              27
Cash and cash equivalents - beginning of period          6,117                1
                                                     ----------        ---------
Cash and cash equivalents - end of period          $     3,063        $      28
                                                     ==========        =========
Cash paid during the period for:
   Income taxes                                    $        -         $       -




                  See notes to condensed financial statements.

                                      -5-
<PAGE>
                                  EVERCEL, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(1) Basis of Presentation

On October 6, 1999,  the Board of Directors  voted to change the fiscal year end
of  Evercel,   Inc.  (the  "Company")  from  October  31  to  December  31.  The
accompanying  financial  statements  represent  the  financial  position  of the
Company as of March 31,  2000 and 1999,  and the  results of the Company for the
three months ended March 31, 2000, and of the operations of the Battery Group of
FuelCell Energy,  Inc.  ("FuelCell") for the period from January 1, 1999 through
February  21, 1999 and of the Company from  February 22, 1999 through  March 31,
1999;

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 the
Company's results of operations for that period.

(2) Summary of Significant Accounting Policies

Nature of Business

The Company is 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 Company believes the nickel-zinc battery has
commercial  applications in markets  requiring long cycle life, light weight and
relative cost efficiency.

Spin-off from FuelCell Energy, Joint Ventures and License Agreements

On  February  22,  1999,   FuelCell  effected  a  spin-off  of  the  Company  by
deconsolidating the financial statements of the Company and a Joint Venture from
its consolidated  financial statements.  As part of the spin-off of the Company,
FuelCell  transferred  capital assets (net),  prepaid  spin-off costs,  accounts
receivable and short-term liabilities amounting to $1,228,000, $501,000, $36,000
and  $1,096,000,  respectively.  FuelCell  distributed to its  shareholders in a
tax-free  distribution  one share of Evercel common stock for every three shares
of common stock of FuelCell  held on the record date of February  22,  1999.  On
April 5, 1999,  the Company  completed a rights  offering of its shares at $3.00
per share and began trading.

In February  1998,  FuelCell  entered into the Nan Ya License  Agreement  with a
joint venture between Nan Ya Plastics  Corporation of Taiwan, a Formosa Plastics
Group company,  and Xiamen Three Circles Co., Ltd. of Xiamen,  China for the use
of the Company's  nickel-zinc batteries in electric 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. The license agreement
calls for the  payment  of $5.0  million in three  stages and a royalty  for the
exclusive  and  non-exclusive  territories.  The  payments  include $1.5 million
received  by  FuelCell  in  1998,  of  which  $1.3  million  and  $0.2  million,
respectively were recorded on FuelCell's  financial statements in 1999 and 1998.
A further $2.0 million is to be paid to the Company based on completion of cycle
life  testing  that was  substantially  achieved in  December,  1999 and a final
payment of $1.5 million to be paid to the Company upon completion of duplication
of the battery at its facilities in China. The Nan Ya License Agreement provides
that the  Company  has the right to invest  the final  payment  in equity in the
joint  venture  manufacturing  and  sales  organization  formed  between  Nan Ya
Plastics and Xiamen Three Circles Co., Ltd.

In July 1998,  FuelCell  also  entered  into a  Technology  Transfer and License
Contract (the "Three Circles License  Agreement") with Xiamen Three  Circles-ERC
Battery  Corp.,  Ltd.  for the use of the  Company's  nickel-zinc  batteries  in
electric  bicycles,  scooters,  three-wheel  vehicles,  off-road  vehicles,  and
miner's  safety lamps in China on an  exclusive  basis and  Southeast  Asia on a
non-exclusive  basis.  The license included an initial payment to FuelCell of $3
million.  In connection with the Three Circles License Agreement,  FuelCell also
entered into a joint venture agreement with Xiamen Three Circles Co., Ltd., used
this  $3.0  million  as  its  initial   investment  in  the  joint  venture  and
subsequently  contributed an additional  $80,500 to receive a 50.5% share of the
joint  venture  called  Xiamen  Three  Circle-ERC   Battery  Corp.  (the  "Joint
Venture").  Through  December 31, 1999,  the results of  operations of the Joint
Venture are  immaterial.  Pursuant to the Three Circles License  Agreement,  the
Joint  Venture must also pay the Company  certain  royalties  based upon the net
sales of  nickel-zinc  batteries  sold,  leased or transferred in the applicable
territories.  In  addition  the Joint  Venture  may  sub-license  the  Company's
technology  to  third  parties  in  China,  Hong  Kong,  Taiwan  and  Macao on a
non-exclusive basis.
                                      -6-
<PAGE>

In  accordance  with a License  Assistance  Agreement  entered  into between the
Company  and  FuelCell,  the  Company  has agreed to provide  all  services  and
assistance necessary for it to effectively  fulfill, on behalf of FuelCell,  all
of  FuelCell's  obligations  under the Joint  Venture  and the  related  license
agreement  until such time as  FuelCell  obtains the  approval  from the Chinese
partner and  appropriate  Chinese  governmental  authority for the assignment of
such agreements to the Company. In return for such assistance, FuelCell will pay
to the Company and the Company  will pay to FuelCell an amount  equal to the sum
of all money,  dividends,  profits,  reimbursements,  distributions and payments
actually  paid to FuelCell  or paid by FuelCell in cash or in kind or  otherwise
accruing to FuelCell  pursuant to the Joint Venture contract and related license
agreement.  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  FuelCell  shall not be  liable  for their  payment.  The  Company
accounts for its  involvement in the Joint Venture under the License  Assistance
Agreement in a manner  similar to the equity method of accounting as a result of
the fact that it does not have significant control over the Joint Venture.



(3) Inventory

Inventories consists of the following:
                                       March 31,      December 31,
                                         2000             1999
                                         ----             ----

        Raw Materials                  $    226         $    123
        Work in Progress                     42               23
        Finished Goods                       24               13
                                        -------          -------
        Total Inventories              $    292         $    159
                                        =======          =======




(4) Subsequent Events

On May 12, 2000 the Company  completed a secondary  stock  offering of 1,250,000
common shares at $12.50 per share, from which the Company received approximately
$14.1 million of proceeds, net of expenses.

                                      -7-

<PAGE>
                                  EVERCEL, INC.

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.  To date,  our  operations  have  mainly  consisted  of
research and development activities with commercial and manufacturing operations
continuing  to  accelerate  in year 2000.  We recognize  revenue on the date our
products are shipped. To date, revenues have primarily resulted from shipment of
sample products to potential customers.
         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 will account 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.
         On February  16,  1999,  FuelCell  transferred  the  principal  assets,
intellectual  property and liabilities  related to its battery business group to
its subsidiary Evercel,  Inc. On February 22, 1999, FuelCell  distributed to its
shareholders  shares of our common  stock in a tax-free  distribution.  In April
1999,  we received  $7.8  million from the sale of shares of our common stock at
$3.00 per share pursuant to a rights  offering.  We continue to pay FuelCell for
certain administrative services in accordance with a services agreement. Results
shown  before the period of the  spin-off  reflect  our  activity as the Battery
Group of FuelCell.

Results of Operations

Three Months Ended March 31, 2000 Compared with Three Months Ended
March 31, 1999

         We had  revenues  of $5,000 for the three  months  ended March 31, 2000
compared to none for the three months ended March 31, 1999.  The revenues in the
2000 period were due to consumer  samples  sold in our efforts to  commercialize
our nickel-zinc batteries. Cost of revenues of $5,000 for the three months ended
March 31, 2000 were due to the cost of the samples shipped.
         Administrative  and selling  expenses  increased  from $465,000 for the
three months ended March 31, 1999 to $1,363,000 for the three months ended March
31,  2000.  The  increase is the result of the full  staffing of  administrative
functions  during the latter  half of 1999,  including  the  addition of a Chief
Executive Officer,  Chief Financial Officer and other administrative  personnel,
the  costs  of  being an  independent  publicly  traded  company,  and  selling,
marketing and administrative activities to ready us for commercialization of our
nickel-zinc battery technology.
         Research and development  expenses  increased 33% to $679,000 for three
months  ended March 31, 2000 from  $512,000 for the three months ended March 31,
1999 due to product development  activity relating to the  commercialization  of
our battery technology.

                                       -8-
<PAGE>

         Interest  income of $63,000 for the three  months  ended March 31, 2000
increased from none for three months ended March 31, 1999 due to interest income
on funds  received  from the 1999  offerings.  We  recognized  a tax  benefit of
$111,000 in the three  months  ended March 31, 1999 due to our  inclusion in the
consolidated  tax return of  FuelCell.  We have not  recorded the tax benefit of
operating losses for the same period in 2000,  pursuant to Financial  Accounting
Standard No. 109, "Accounting for Income Taxes."




Liquidity and Capital Resources

The Company has funded its  operations  primarily  through cash  generated  from
sales of equity.  On May 12, 2000 we concluded a secondary stock offering of our
common stock with net proceeds of $14,113,000.

At March 31, 2000 the Company had working capital of $2,284,000,  including cash
and cash  equivalents of $3,063,000,  compared to working capital of $5,762,000,
including cash and cash equivalents of $6,117,000 at December 31, 1999.

Preferred  stock  dividends  accrued on the Series A Preferred  Stock  issued in
December 1999 were $132,000 in the three months ended March 31, 2000 compared to
none in the three months ended March 31, 1999.

The  Company's  capital  expenditures  are  incurred  primarily  to support  the
expected  commencement of full scale  production.  Capital  expenditures for the
first quarter were $1,490,000.

The Company  anticipates  that its existing capital  resources,  including those
mentioned above,  together with anticipated revenues will be adequate to satisfy
existing  financial  requirements  and  agreements  for at least the next twelve
months.



Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company's  exposure to market risk for  changes in interest  rates  relates
primarily  to the  Company's  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 would not materially
affect the results of operations or financial position of the Company.


PART II - OTHER INFORMATION

Item 6: EXHIBITS AND REPORTS ON FORM 8-K

(A)      EXHIBITS

27 Financial Data Schedule

(B)      REPORTS ON FORM 8-K

None

                                      -9-
<PAGE>



                                   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/ GREGORY SCHULTE
                                        ---------------------------
                                    Name:  Gregory Schulte       Date: 5/15/00
                                    Title: Chief Financial and Accounting
                                              Officer, Treasurer and Secretary



                                      -10-