SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[Mark One]
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended July 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)
2 Lee Mac Avenue, Danbury, Connecticut 06810
(Address of principal executive offices) (Zip code)
Issuer's telephone number including area code: (203) 825-3900
- --------------------------------------------------------------------------------
(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.
[X] Yes [_] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the issuer's common stock, par value $.01,
as of September 10, 1999, 1999, was 2,861,045.
Transitional Small Business Disclosure Format (check one):
[_] Yes [X] No
<PAGE>
EVERCEL, INC.
FORM 10-QSB
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Unaudited Condensed Financial Statements:
Condensed Balance Sheet as of July 31, 1999 2
Condensed Statements of Operations for the three
months ended July 31, 1999 and July 31, 1998 3
Condensed Statement of Operations for the nine
months ended July 31, 1999 and July 31, 1998 4
Condensed Statements of Cash Flows for the nine
months ended July 31, 1999 and July 31, 1998 5
Notes to Unaudited Condensed Financial Statements
6
Item 2. Management's Discussion and Analysis or Plan of Operation 9
PART II - OTHER INFORMATION
Item 2. Changes in Securities 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
1
<PAGE>
EVERCEL, INC.
CONDENSED BALANCE SHEET
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
July 31,
1999
----
ASSETS
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,471
Accounts receivable 23
Inventories 243
Other current assets 28
-------
Total current assets 3,765
-------
Property, plant and equipment:
Cost 2,760
Accumulated depreciation 942
-------
Net 1,818
Other assets, net 48
-------
TOTAL ASSETS $ 5,631
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued liabilities $ 409
Accounts payable 74
-------
Total current liabilities 483
SHAREHOLDERS' EQUITY:
Common Stock ($.01 par value); 10,000,000
shares authorized: 2,861,045 issued and
outstanding at July 31, 1999
29
Additional paid-in capital 7,996
Note receivable from shareholder (300)
Accumulated deficit (2,577)
-------
Total shareholders' equity 5,148
-------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,631
=======
</TABLE>
See accompanying notes to unaudited condensed 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 July 31,
---------------------------
1999 1998
---- ----
<S> <C> <C>
Revenues:
License fee income $ -- $ 201
----------- -----------
Total revenues -- 201
----------- -----------
Cost & expenses:
Cost of revenues -- 30
Depreciation & amortization 49 14
Administrative and selling expenses 677 454
Research & development 629 427
----------- -----------
Total costs and expenses 1,355 925
----------- -----------
(Loss) from operations before income tax benefit (1,355) (724)
Interest income 50 --
----------- -----------
(Loss) before income tax benefit (1,305) (724)
Income tax (benefit) -- (246)
----------- -----------
Net (loss) $ (1,305) $ (478)
=========== ===========
Basic and diluted (loss) per share $ (0.46) $ (0.34)(a)
=========== ===========
Basic and diluted shares outstanding 2,861,045 1,389,000 (a)
=========== ===========
</TABLE>
(a) Represents proforma loss per share on proforma shares outstanding
reflecting 1,388,856 shares of common stock issued in conjunction with the
spin-off from Energy Research Corporation on February 22, 1999 as if they
were outstanding as of the beginning of the period presented.
See accompanying notes to unaudited condensed financial statements.
3
<PAGE>
EVERCEL, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended July 31,
--------------------------
1999 1998
---- ----
<S> <C> <C>
Revenues:
Contracts $ -- $ 2
License fee income -- 419
----------- -----------
Total revenues -- 421
----------- -----------
Cost & expenses:
Cost of revenues -- 30
Depreciation & amortization 98 37
Administrative and selling expenses 1,637 1,076
Research & development 1,759 1,283
----------- -----------
3,494 2,426
----------- -----------
(Loss) from operations before income
tax (benefit) (3,494) (2,005)
Interest income 70 --
Interest expense (18) --
----------- -----------
(Loss) before income tax benefit (3,442) (2,005)
Income tax (benefit) (360) (682)
----------- -----------
Net (loss) $ (3,082) $ (1,323)
=========== ===========
Basic and diluted (loss) per share $ (1.54) $ (0.95)(a)
=========== ===========
Basic and diluted shares outstanding 1,998,848 1,389,000 (a)
=========== ===========
</TABLE>
(a) Represents proforma loss per share on proforma shares outstanding
reflecting 1,388,856 shares of common stock issued in conjunction with the
spin-off from Energy Research Corporation on February 22, 1999 as if they
were outstanding as of the beginning of the period presented.
See accompanying notes to unaudited condensed financial statements.
4
<PAGE>
EVERCEL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended July 31,
--------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $(2,577) (1,323)
Depreciation and amortization 87 37
Changes in operating assets and liabilities:
Accounts receivable (6) 13
Inventory (243) --
Other current assets (28) 42
Accounts payable 21 30
Accrued liabilities 295 19
Due to ERC -- 162
Change in deferred income tax 17 --
------- -------
Net cash(used in)operating activities (2,434) (1,020)
------- -------
Cash flows from investing activities:
Capital expenditures (1,080) (322)
Changes in other assets (216) --
------- -------
Net cash (used in)investing activities (1,296) (322)
------- -------
Cash flows from financing activities:
Sale of minority interest in joint venture -- 3,020
Contributions from ERC -- 1,422
Repayment on debt (603) --
Common stock issued 7,803 --
------- -------
Net cash provided by financing activities 7,200 4,442
------- -------
Net increase/(decrease) in cash and
cash equivalents 3,470 3,100
Cash and cash equivalents-beginning of period $ 1 $ --
Cash and cash equivalents-end of period $ 3,471 $ --
======= =======
Other non cash transactions:
Net assets transferred from ERC $ 501 $ --
</TABLE>
See accompanying notes to unaudited condensed financial statements.
5
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
EVERCEL, INC.
NOTES TO UNAUDITED CONDENSED
FINANCIAL STATEMENTS
NOTE 1: GENERAL INFORMATION
- ----------------------------
Evercel, Inc. (the "Company") is engaged in the development and
commercialization of an innovative, patented nickel-zinc rechargeable battery,
as well as the research and design of other advanced battery technologies. The
Company was recently spun-off from its former parent, Energy Research
Corporation ("ERC") by means of a tax free distribution (the "Distribution")
effected on February 22, 1999 to ERC stockholders of one share of common stock
of the Company for every three shares of ERC common stock outstanding. Prior to
the Distribution, effective February 16, 1999, ERC had transferred to the
Company the principal assets related to its battery business group and certain
liabilities related to those assets.
Immediately after the Distribution, the Company granted at no cost to holders of
its common stock as of February 22, 1999, transferable subscription rights
("Rights") to subscribe for and purchase additional shares of the Company common
stock (the "Rights Offering").
In connection with the Distribution, 1,388,856 shares of Company common stock
were issued. On April 5, 1999, 921,915 shares of common stock were issued
pursuant to the exercise of Rights. Pursuant to the Standby Underwriting
Agreement entered into in connection with the Rights Offering with Loeb Partners
Corporation and Burnham Securities Inc., an additional 466,941 shares were
issued on April 12, 1999.
NOTE 2: BASIS OF PRESENTATION
- ------------------------------
The accompanying condensed financial statements for 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 July 31, 1999 and the results of operations for
the three and nine months ended July 31, 1999 and 1998 and cash flows for such
nine month periods have been included.
The Company operates as a separate, publicly held corporation. The accompanying
financial statements are presented as if the Company had existed as a
corporation separate from ERC for the periods presented and include the
historical assets, liabilities, revenues and expenses that
6
<PAGE>
are directly related to the business that comprise the Company's operations. The
"Company" refers to Evercel, Inc. or the Battery Business Group of ERC, as
appropriate.
For all of fiscal year 1998 and for the period November 1, 1998 through February
22, 1999, in fiscal year 1999, 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 for the periods presented.
The results of operations for the three and nine months ended July 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 in connection with the
Rights Offering (File No. 333-64931) declared effective on February 19, 1999 and
the Company's previous 10-QSB Reports.
NOTE 3: 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 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 order for ERC to transfer the Joint Venture contract and the Three Circles
License Agreement to the Company, ERC must obtain the consent of
7
<PAGE>
Xiamen 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.
In connection with the Distribution, 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.
NOTE 4: PRO FORMA LOSS PER SHARE
- --------------------------------
Represents pro forma shares outstanding to reflect shares issued in conjunction
with the Distribution on February 22, 1999 of 1,388,856 shares of common stock
as if they were outstanding as of the beginning of the periods presented.
8
<PAGE>
The computation of diluted loss per share for all periods presented follows the
basic calculation since common stock equivalents were antidilutive. The weighted
average number of options outstanding for the period ended July 31, 1999 was
176,655.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- -----------------------------------------------------------------
This Report contains forward looking statements, including statements regarding
the Company's plans and expectations regarding the development and
commercialization of its advanced battery technology. When used in this Report,
the words "expects", "plans", "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 the Company's actual results to differ
materially from those projected. Factors that could cause such a difference
include, without limitation, the risk that the ramp-up of the Xiamen and/or
Danbury manufacturing facilities will be delayed, the risk that the Company will
not initiate manufacturing or realize commercial sales as currently anticipated,
and general risks associated with doing business in China and product
development, manufacturing and introduction, 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.
Results of Operations
- ---------------------
Comparison Three Months Ended July 31, 1999 and July 31, 1998
- -------------------------------------------------------------
The Company had no revenues in the current quarter of fiscal 1999 as compared to
$201,000 for the same period in the last fiscal year. Lower revenue in the
quarter resulted from the termination of the Company's license with Corning in
May 1998.
The Company had no cost of revenues in the current quarter of fiscal 1999 as
compared to $30,000 for the same period in the last fiscal year.
Administrative and selling expense increased 49% to $677,000 in the current
quarter of fiscal 1999 from $454,000 in the same period in the last fiscal year.
The increase is the result of increased staffing to support the
commercialization effort, production and distribution of sales samples and costs
associated with the joint venture and license agreement activities. Depreciation
increased to $49,000 from $14,000 in the same quarter of the prior period
reflecting capital purchases to outfit the Danbury manufacturing facility.
9
<PAGE>
Research and development expense increased 47% to $629,000 in the second quarter
of fiscal 1999 from $427,000 in the same period in the last fiscal year. This
was a result of increased costs incurred in developing and refining the
manufacturing process for the Company's nickel-zinc battery in preparation for
the commercialization of the Company's batteries, as compared to the same period
in the last fiscal year.
The Company has recorded no tax benefit for its losses in the current quarter
pursuant to the requirements of Financial Accounting Standard No. 109
"Accounting for Income Taxes".
Results of Operations
- ---------------------
Comparison Nine Months Ended July 31, 1999 and July 31, 1998
- ------------------------------------------------------------
The Company had no revenues in the first nine months of fiscal 1999 as compared
to $421,000 for the same period in the last fiscal year. Lower revenue resulted
from the termination of the Company's license with Corning in May 1998.
The Company had no cost of revenues in the first nine months of fiscal 1999 as
compared to $30,000 for the same period in the last fiscal year.
Administrative and selling expense increased 52% to $1,637,000 in the first nine
months of fiscal 1999 from $1,076,000 in the same period last fiscal year. The
increase is the result of increased staffing to support the commercialization
effort, production and distribution of sales samples and costs associated with
the joint venture and license agreement. Depreciation increased to $98,000 from
$37,000 in the same period in the last fiscal year reflecting capital purchases
to outfit the Danbury manufacturing facility.
Research and development expense increased 37% to $1,759,000 in the first nine
months of fiscal 1999 from $1,283,000 in the same period in the last fiscal
year. The increase reflects activity relating to the commercialization of the
Company's battery technology.
The Company recognized a tax benefit of $360,000 in the first quarter of fiscal
1999 due to its inclusion in the consolidated tax return of ERC and has recorded
no benefit for the losses incurred in the second and third quarter of fiscal
1999, pursuant to the requirement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes".
Liquidity and Capital Resources
- -------------------------------
Prior to having received the proceeds from the Rights Offering, the Company
obtained all of its funding from ERC. ERC provided funding for all battery
research activities under its research and development expense budget. ERC has
also historically provided all of the funding
10
<PAGE>
for capital expenditures for the purchase of machinery and equipment for all
battery activities.
On January 15, 1999, the Company entered into a lease for five years with an
option to extend for an additional five years. The annual rent is $171,000 for
the first three years and increases to $178,000 in year four and $185,000 in
year five. ERC has guaranteed the performance of the lease (the "Lease
Guaranty"). 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, the Lease Guaranty terminates after the first
anniversary of the lease upon the Company's net worth exceeding $3,000,000.
On February 5, 1999, the Company entered into a Loan Agreement and Line of
Credit Note (the "Line of Credit") to borrow up to $3,450,000 (including certain
borrowings from a Bank) from ERC for working capital and proposed capital
expenditures to be secured by all of the Company's tangible and intangible
personal property. In connection with the completion of the Rights Offering, the
Line of Credit terminated and all outstanding borrowings were paid in full
pursuant to its terms.
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. The Company
estimates that the net fees to be paid to ERC pursuant to the Services Agreement
for services performed will be approximately $96,000 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.
The Company received $7,873,000 of proceeds from the Rights Offering (after
deducting underwriting discounts and fees), including funds received from the
sale of unsubscribed shares to Loeb Partners Corporation and Burnham Securities
Inc. pursuant to a Standby Underwriting Agreement. Pursuant to its loan
agreements, the Company used a portion of the proceeds to pay in full the
outstanding principal and interest on certain notes held by a Bank and the Line
of Credit from ERC. The principal amounts paid were $1,647,000 and $300,000,
respectively.
Working capital at July 31, 1999 was $3,282,000 including $3,471,000 of cash as
compared to a negative working capital $718,000 at October 31, 1998 and zero
cash.
Under the NanYa License Agreement, the Company expects to receive license fee
income upon the successful completion of two battery tests
11
<PAGE>
required by that Agreement. The Company expects to receive a portion of this
license fee income during fiscal 1999 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, respectively.
The Company believes that the remaining net proceeds received from the Rights
Offering, together with the license payments anticipated to be received under
the NanYa License Agreement in fiscal 2000, will be sufficient to support its
planned operations for at least the next twelve months.
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. The
Company expects to continue to enter into license agreements, to participate in
joint manufacturing ventures and to expand its battery manufacturing facilities.
The Company believes that it will require additional capital in order to
continue these activities.
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 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.
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
12
<PAGE>
adversely impacted by Year 2000 problems, which could cause fluctuations in the
Company's revenues and operating profitability.
PART II - OTHER INFORMATION
Item 2. Changes in Securities.
Use of Proceeds
The Company's Registration Statement on Form SB-2 (File No. 333-64931) was
declared effective on February 19, 1999.
From February 19, 1999 through July 31, 1999, the Company incurred approximately
$976,000 in expenses in connection with the issuance and distribution of the
shares of Common Stock, including $459,000 in underwriting discounts,
commissions and fees paid to underwriters and $517,000 in other expenses. The
net offering proceeds to the Company after deducting the total expenses itemized
above was $7,356,921. As stated previously the Company has used $1,967,000 of
the net offering proceeds for repayment of indebtedness. Approximately $744,000
has been used for equipping its new facility and $1,175,000 for working capital.
The remaining net proceeds are temporarily invested in the Evergreen Select
Money Market Fund.
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
- ----------------------------------------
(a) EXHIBIT DESCRIPTION
- ------------------------
EXHIBIT NO.
- -----------
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
- ------------------------
None
13
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant 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: September 14, 1999
14
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001071119
<NAME> EVERCEL, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> MAY-01-1999
<PERIOD-END> JUL-31-1999
<EXCHANGE-RATE> 1
<CASH> 3,471
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<BONDS> 0
0
0
<COMMON> 7,725
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<INCOME-PRETAX> (3,442)
<INCOME-TAX> (360)
<INCOME-CONTINUING> (3,082)
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<CHANGES> 0
<NET-INCOME> (3,082)
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</TABLE>
