Commission File Number:  001-14919

(Exact Name of Registrant as Specified in Its Charter)

5 POND PARK ROAD
HINGHAM, MASSACHUSETTS 02043
(781) 741-8800
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)

GARRY A. PRIME, PRESIDENT AND CHIEF EXECUTIVE OFFICER
EVERCEL, INC.
5 POND PARK ROAD
HINGHAM, MASSACHUSETTS 02043
(781) 741-8800
(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)

The number of shares outstanding of the Registrant's Common Stock, par value $.01 as of July 20, 2002 was 10,404,041.

EVERCEL, INC.
FORM 10-Q
INDEX

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

See condensed notes to consolidated financial statements.

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

See condensed notes to consolidated financial statements.

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

See condensed notes to consolidated financial statements.

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

See condensed notes to consolidated financial statements.

EVERCEL, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The accompanying financial statements represent our financial position as of June 30, 2002 and December 31, 2001 and results of operations for the three and six months ended June 30, 2002 and 2001.

Comparative amounts for the three and six months ended June 30 are unaudited. In the opinion of management, the information presented in the unaudited three and six month statements reflect all adjustments necessary for a fair presentation of our results of operations for those periods.

We have made a number of estimates and assumptions relating to the assets and liabilities and the reporting of revenues and expenses to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates. The Unaudited Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2001.

We are engaged in the design and manufacture of innovative, patented nickel-zinc rechargeable batteries. The nickel-zinc battery has commercial applications in markets requiring long cycle life, light weight and relative cost efficiency. We manufacture our batteries at our majority owned subsidiary, the Xiamen Three Circles-ERC Battery Corp., Ltd. in the People's Republic of China (PRC).

We believe our battery technology has applications in the small electric vehicle market such as scooters; neighborhood electric vehicles, golf carts; wheelchairs, electric bicycles and bass fishing boats. Additional potential applications are in medical devices and yard tools, including lawn mowers and trimmers.

          In July 2001, the FASB issued Statement No. 142, Goodwill and Other Intangible Assets. Statement 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of Statement 142. Statement 142 requires that intangible assets with finite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company adopted the provisions of Statement 142 effective January 1, 2002. In connection with the adoption of Statement 142, the Company evaluated the life of its intangible asset. As a result of this evaluation, the Company has determined that its intangible asset does not have an indefinite life and that the existing useful life is app ropriate. This intangible asset, which is included in other assets, represents purchased technology rights with a net book value of $2,617,000 and $2,702,000 at June 30, 2002 and December 31, 2001, respectively. Amortization expense for the three-months and six-months ended June 30, 2002 and 2001 was $42,000 and $85,000, respectively. This intangible asset continues to be subject to amortization, which is anticipated to be approximately $170,000 annually through December 31, 2007.

          Also, in October 2001, the FASB issued Statement No. 144, Accounting for Impairment or Disposal of Long-Lived Assets. Statement 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Statement also extends the reporting requirements to report separately as discontinued operations, components of an entity that have either been disposed of or classified as held for sale. The Company adopted the provisions of Statement 144 effective January 1, 2002 and such adoption had no effect on its financial statements.

The accompanying consolidated financial statements include our accounts and the accounts of our majority owned joint venture -- the Xiamen Three Circles-ERC Battery Corp.

All intercompany account balances have been eliminated.

In January 2002 we entered into a lease for 4,000 square feet of office space in Hingham, MA to be used as our corporate headquarters. In April 2002 we negotiated the termination of the Connecticut lease at a cost of $175,000 for which we had previously recorded a reserve.

Included in cash and cash equivalents is $6,173,000 held by our joint venture subsidiary in Xiamen, in the Peoples Republic of China.

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 $25,107,000 after commissions and other expenses.

          When used in this report, the words "expects", "anticipates", "believes", "estimates", "should", "will", "could", "would", "may", and similar expressions are intended to identify forward-looking statements. Such statements include statements relating to Evercel's continued development and commercialization schedule for its patented nickel-zinc ("Ni-Zn") rechargeable battery technology and its joint venture partner, expansion plans, licensing opportunities and the expected cost competitiveness of its technology. These and other forward-looking statements contained in this report are subject to risks and uncertainties, known and unknown, that could cause actual results to differ materially from those forward-looking statements, including, without limitation, general risks associated with product development and introduction, changes in worldwide environmental laws and policies, potential volatility of material costs, gover nment appropriations, rapid technological change, and competition, as well as other risks. The forward-looking statements contained herein speak only as of the date of this Report. Evercel Inc. (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.

          We have developed and, through our joint venture in the Peoples Republic of China, are manufacturing rechargeable nickel-zinc batteries. The nickel-zinc battery technology is suited for applications requiring long cycle life, light weight and relative cost efficiency. We believe that we will be able to develop markets that utilize nickel-zinc technology both in the U.S. and internationally. However, to date there has not been wide spread acceptance of our technology.

          We are focusing our marketing efforts on specialty applications of our rechargeable nickel-zinc batteries where our technology has competitive advantages and where the channels of distribution are relatively narrow. At the present time, we are principally addressing applications in transportation, including:

• the small electric vehicle market, principally scooters, bicycles, wheelchairs and neighborhood electric vehicles; and
• the electric trolling motor market, primarily focused on bass fishing boats.

We believe our rechargeable nickel-zinc battery has a variety of other applications. We are continuing to look at additional applications such medical devices, portable power tools and lawn equipment.

          In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ significantly from those estimates and assumptions. We believe that the following discussion addresses the Company's most critical accounting policy, and is that which is most important to the portrayal of the Company's financial condition and results and requires management's most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

          Long-lived assets, including fixed assets and intangibles other than goodwill, are reviewed by the Company for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. If the sum of the undiscounted cash flows (excluding interest) is less than the carrying value, the Company recognizes an impairment loss, measured as the amount by which the carrying value exceeds the fair value of the asset. The estimate of undiscounted cash flow is based upon, among other things, certain assumptions about expected future operating performance. The Company's estimates of undiscounted cash flow may differ from actual cash flow due to, among other things, technological changes, economic conditions, changes to its business model or changes in its operating performance. In those cases where the Company determines that the useful life of other long-lived assets should be shortened, the Compa ny would depreciate the net book value in excess of the salvage value (after testing for impairment as described above), over the revised remaining useful life of such asset thereby increasing amortization expense.

          We had revenues of $19,000 for the three months ended June 30, 2002 compared to $88,000 for the three months ended June 30, 2001. The revenues in the 2002 and 2001 periods were from the sale of our scooter and marine batteries. The reduction in revenue is due in large part to the temporary unavailability of the trolling motor battery as we transitioned production from Newport News VA to our joint venture in China. Cost of revenues of $102,000 for the three months ended June 30, 2002 decreased as a percent of sales compared to the corresponding period in the prior year as a result of transferring our manufacturing to our joint venture in China and eliminating the costs associated with operating the Newport News, VA. facility.

          Administrative and selling expenses decreased 76 percent to $547,000 for the three months ended June 30, 2002 from $2,345,000 for the three months ended June 30, 2001. The decrease is the result of reductions of administrative, financial and sales and marketing staff and elimination of other employee and facility costs as a result of the closing of the manufacturing facility in Virginia and relocating the corporate offices from Danbury, CT. to Hingham, MA.

          Research and development expenses decreased 89 percent to $37,000 for the three months ended June 30, 2002 from $369,000 for the three months ended June 30, 2001. This reduction is a result of transferring our research and development activity to our joint venture in China as well as increased emphasis on manufacturing versus development.

          Net interest income of $67,000 for the three months ended June 30, 2002 decreased from $251,000 for three months ended June 30, 2001, as a result of lower interest rates combined with the reduced cash balance of the company.

          We had revenues of $171,000 for the six months ended June 30, 2002 compared to $688,000 for the six months ended June 30, 2001. The revenues in the 2002 and 2001 periods were from the sale of our scooter and marine batteries. The reduction in revenue is due in large part to the temporary unavailability of the trolling motor battery as we transitioned production from Newport News VA to our joint venture in China. Cost of revenues was $250,000 for the six months ended June 30, 2002 compared to $5,472,000 for the six months ended June 30, 2001. Cost of sales, as a percent of sales, decreased by 81.6 percent compared to the corresponding period in the prior year as a result of transferring our manufacturing to our joint venture in China and eliminating the costs associated with operating the Newport News, VA facility.

          Administrative and selling expenses decreased 72 percent to $1,173,000 for the six months ended June 30, 2002 from $4,180,000 for the six months ended June 30, 2001. The decrease is the result of reductions of administrative, financial and sales and marketing staff and elimination of other employee and facility costs as a result of the closing of the manufacturing facility in Virginia and relocating the corporate offices from Danbury, CT. to Hingham, MA.

          Research and development expenses decreased 88 percent to $118,000 for the six months ended June 30, 2002 from $990,000 for the six months ended June 30, 2001. This reduction is a result of transferring our research and development activity to our joint venture in China as well as increased emphasis on manufacturing versus development.

          Net interest income of $111,000 for the six months ended June 30, 2002 decreased from $448,000 for six months ended June 30, 2001, as a result of lower interest rates combined with the reduced cash balance of the company.

          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 $25.1 million.

          At June 30, 2002 we had working capital of $12.5 million, including cash and cash equivalents of $12.3 million, compared to working capital of $13.6 million, including cash and cash equivalents of $16.2 million at December 31, 2001. Included in cash and cash equivalents are $6.2 million and $7 million, as of June 30, 2002 and December 31, 2001 respectively, held by our joint venture in Xiamen, in the Peoples Republic of China.

          As part of a preferred stock offering in December 1999, investors and the underwriter, Burnham Securities Inc., were issued warrants to purchase our common stock. If our common stock trades at $16.50 per share for twenty consecutive days we can redeem the warrants. If all the warrants were exercised, we would receive approximately $4.3 million in gross proceeds.

          Our capital expenditures of $280,000 in the six months ended June 30, 2002 was for production equipment at our joint venture facility in China.

          We anticipate that our existing capital resources will be adequate to satisfy current obligations arising from existing financial requirements and agreements, as we continue to manage our cost structure and evaluate strategic alternatives.

          We have invested and expect to invest excess funds in money market accounts in U.S. and PRC financial institutions. Based upon the cash and cash equivalents balance at June 30, 2002, an increase or decrease of interest rates of 100 basis points would have an effect on the Company's results of operations and cash flows of approximately $31,000 per quarter.

Directors remaining on the Board who were not up for reelection this year are Mr. Warren Bagatelle, Mr. William Lawson, Mr. Garry Prime and Dr. Chao Huang.

(A)  EXHIBITS

None

(B)  REPORTS ON FORM 8-K

None

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.