The Danbury, Conn.-based company makes engines that generate electricity without combustion.

After the closing bell Monday, FuelCell posted a loss after paying preferred dividends, of $18.6 million, or 38 cents per share. That compares with a year-ago loss of $19.2 million, or 40 cents per share.

Revenue grew to $8.7 million from $8.1 million, driven by gains in fuel cell product sales. Research and development contract revenue, however, declined to $3.9 million from $4.4 million. Analysts polled by Thomson Financial expected a wider loss of 41 cents per share on weaker sales of $6.4 million.

Shares of FuelCell gained 62 cents, or 6.5 percent, to $10.16 in midday trading on the Nasdaq. The stock has bounced around over the past year, spiking to $13.45 last fall and dropping as low as $7.05 in May. Shares have gained 3 percent so far this year.

Looking ahead, the company noted that the recently passed Energy Policy Act of 2005 could be a boon to its future business. The law creates a 30 percent investment tax credit - up to $1,000 per kilowatt - for companies that purchase fuel cell power plants.

In a Tuesday conference call with analysts, Chief Financial Officer Joe Mahler said the company has already seen "a lot of activity in that area."

"It clearly puts some money on the table," he said.