UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
|
x |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 |
For
the quarterly period ended March 31, 2005
|
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 |
000-31083
(Commission
File Number)
MILLENNIUM
CELL INC.
(Exact
Name of Registrant as Specified in Its Charter)
|
Delaware |
22-3726792 |
|
(State
or Other Jurisdiction of |
(I.R.S.
Employer |
|
Incorporation
or Organization) |
Identification
Number) |
One
Industrial Way West,
Eatontown,
New Jersey 07724
(Address
of Principal Executive Offices) (Zip Code)
(Registrant's
telephone number, including area code) (732) 542-4000
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the 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
o
Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Securities Exchange Act of 1934). Yes o No
x
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 42,467,580 shares of Common Stock, par
value $.001, were outstanding on May 4, 2005.
MILLENNIUM
CELL INC.
(a
development stage enterprise)
Index
PART
I - FINANCIAL INFORMATION
|
Page | ||
|
Item
1. |
Financial
Statements (Unaudited) |
|
|
Consolidated
Balance Sheet - March 31, 2005 and December 31, 2004 |
1 | |
|
Consolidated
Statements of Operations - Three months ended |
||
|
March
31, 2005 and 2004 |
2 | |
|
Consolidated
Statements of Cash Flows - Three months ended March 31, 2005 and
2004 |
3 | |
|
Consolidated
Statements of Stockholders’ Equity - Three months ended |
||
|
March
31, 2005 |
4 | |
|
Notes
to Consolidated Financial Statements - March 31, 2005 |
5 | |
|
Item
2. |
Management's
Discussion and Analysis of Financial Condition and Results of
Operations |
9 |
|
Item
3. |
Quantitative
and Qualitative Disclosures About Market Risk |
14 |
|
Item
4. |
Controls
and Procedures |
15 |
|
PART
II - OTHER INFORMATION |
||
|
Item
1. |
Legal
Proceedings |
16 |
|
Item
2. |
Unregistered
Sales of Equity Securities and Use of Proceeds |
16 |
|
Item
3. |
Defaults
Upon Senior Securities |
16 |
|
Item
4. |
Submission
of Matters to a Vote of Security Holders |
17 |
|
Item
5. |
Other
Information |
17 |
|
Item
6. |
Exhibits |
17 |
Unless
the context otherwise requires, all references to “we,” “us,” “our,” and the
“Company” include Millennium Cell Inc., and its wholly-owned subsidiary, MCE
Ventures LLC.
FORWARD-LOOKING
STATEMENTS
This
report contains forward-looking statements (within the meaning of the Private
Securities Litigation Reform Act of 1995). These forward-looking statements
reflect our current view about future events and financial performance and are
subject to risks and uncertainties. Statements contained herein that are not
statements of historical fact may be deemed to be forward-looking information.
When we use words such as “plan,” “believe,” “expect,” “anticipate,” “on target”
and “intend” or similar expressions, we are making forward-looking statements.
Investors should
not rely on forward-looking statements because they are subject to a variety of
risks, uncertainties and other factors that could cause actual results to differ
materially from our expectations, and we expressly do not undertake any duty to
update forward-looking statements or to publicly announce revisions to any of
the forward-looking statements, whether as a result of new information, future
events or otherwise. These
factors include, but are not limited to, the following: (i) the cost and timing
of development and market acceptance of, and the availability of components and
raw materials required by, a hydrogen battery technology and hydrogen delivery
system, (ii) the cost and commercial availability of the quantities of raw
materials required by the hydrogen fuel storage and delivery systems, (iii)
competition from current, improving and alternate power technologies, (iv) our
ability to raise capital at the times, in the amounts and at costs and terms
that are acceptable to fund the development and commercialization of our
hydrogen battery technology and hydrogen delivery system and our business plan,
(v) our ability to protect our intellectual property, (vi) our ability to
achieve budgeted revenue and expense amounts, (vii) our ability to generate
revenues from the sale or license of, or provision of services related to, our
technology, (viii) our ability to enter into agreements with collaborators and
strategic partners and the failure of our collaborators and strategic partners
to perform under their agreements with us, (ix) our ability to generate design,
engineering or management services revenue opportunities in the hydrogen
generation or fuel cell markets, (x) our ability to secure government funding of
our research and development and technology demonstration projects and (xi)
other factors discussed under the caption “Investment Considerations”
in our
Annual Report on Form 10-K for the year ended December 31,
2004.
PART
I - FINANCIAL INFORMATION
Item
1. Financial
Statements (Unaudited).
MILLENNIUM
CELL INC.
(A
DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED
BALANCE SHEET
(unaudited)
|
March
31, |
December
31, | |
|
|
2005 |
2004 |
|
ASSETS |
||
|
Current
assets: |
||
|
Cash
and cash equivalents |
$
7,016,278 |
$
8,217,840 |
|
Accounts
receivable - trade |
62,401 |
73,474 |
|
Accounts
receivable - other |
222,836 |
372,776 |
|
Prepaid
expenses |
359,600 |
261,467 |
|
Deferred
financing costs |
567,974 |
97,366 |
|
Total
current assets |
8,229,089 |
9,022,923 |
|
Property
and equipment, net |
603,802 |
663,576 |
|
Patents
and licenses, net |
554,265 |
538,802 |
|
Restricted
cash |
3,043,781 |
3,035,021 |
|
Security
deposits |
45,676 |
45,676 |
|
|
$
12,476,613 |
$
13,305,998 |
|
LIABILITIES
AND STOCKHOLDERS' EQUITY |
||
|
Current
liabilities: |
||
|
Accounts
payable |
$
86,976 |
$
282,586 |
|
Accrued
expenses |
1,162,860 |
593,698 |
|
Accrued
separation |
39,736 |
318,368 |
|
Short-term
portion of capital lease obligation |
32,018 |
37,036 |
|
Short-term
portion of refundable grant obligation |
31,163 |
28,766 |
|
Deferred
compensation |
65,037 |
65,037 |
|
Convertible
secured debentures, net of discount |
2,399,988 |
2,399,988 |
|
Convertible
unsecured debentures, net of discount |
1,921,237 |
5,137,335 |
|
Deferred
revenue |
85,000 |
85,000 |
|
Total
current liabilities |
5,824,015 |
8,947,814 |
|
Refundable
grant obligation |
174,777 |
177,174 |
|
Capital
lease obligation and other long-term liabilities |
— |
2,669 |
|
Commitments
and contingencies |
||
|
Stockholders'
equity: |
||
|
Preferred
stock, $.001 par value; 5,000,000 authorized shares, none issued and
|
||
|
Outstanding |
||
|
Common
stock, $.001 par value; authorized 70,000,000 shares, |
||
|
42,445,487
and 39,113,963 shares issued and outstanding |
||
|
as
of March 31, 2005 and December 31, 2004, respectively |
42,445 |
39,114 |
|
Additional
paid-in capital |
91,622,827 |
85,663,479 |
|
Deferred
compensation |
(734,804) |
(188,805) |
|
Deficit
accumulated during development stage |
(84,452,647) |
(81,335,447) |
|
Total
stockholders' equity |
6,477,821 |
4,178,341 |
|
|
$
12,476,613 |
$
13,305,998 |
See notes
to financial statements.
1
MILLENNIUM
CELL INC.
(A
DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited)
|
Three
Months |
Three
Months |
||
|
Ended |
Ended |
Cumulative | |
|
March
31, |
March
31, |
Amounts
From | |
|
2005 |
2004 |
Inception | |
|
Revenue |
$
79,901 |
$
25,000 |
$
1,464,626 |
|
Cost
of revenue |
79,901 |
25,000 |
1,377,883 |
|
Gross
margin |
—
|
— |
86,743
|
|
Product
development and marketing |
1,081,235 |
992,515
|
21,073,610 |
|
General
and administrative |
|||
|
(excluding
non-cash charges) |
868,758 |
1,611,161 |
21,084,529 |
|
Non-cash
compensation charges |
505,207 |
322,138 |
25,741,220 |
|
Restructuring
expense |
— |
— |
104,982 |
|
Depreciation
and amortization |
77,583 |
142,343 |
2,772,946 |
|
Research
and development |
217,742 |
— |
8,804,464 |
|
Total
operating expenses |
2,750,525 |
3,068,157 |
79,581,751 |
|
Loss
from operations |
(2,750,525) |
(3,068,157) |
(79,495,008) |
|
Other
income, net |
15,989 |
— |
15,989 |
|
Interest
expense |
382,664 |
314,313 |
2,833,838 |
|
Equity
in losses of affiliates |
— |
— |
856,078 |
|
Loss
before income taxes |
(3,117,200) |
(3,382,470) |
(83,168,935) |
|
Benefit
from income taxes |
— |
— |
867,169 |
|
Net
loss |
(3,117,200) |
(3,382,470) |
(82,301,766) |
|
Preferred
stock amortization |
— |
— |
2,150,881 |
|
Net
loss applicable to common stockholders |
$
(3,117,200) |
$
(3,382,470) |
$
(84,452,647) |
|
Loss
per share -- basic and diluted |
$
(.08) |
$
(.10) |
$
(2.89) |
|
Weighted
-- average number of shares outstanding |
40,173,960 |
35,398,732 |
29,201,615 |
See notes
to financial statements.
2
MILLENNIUM
CELL INC.
(A
DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
|
Three
months |
Three
months |
Cumulative | |
|
Ended |
Ended |
Amounts
from | |
|
March
31, 2005 |
March
31, 2004 |
Inception | |
|
OPERATING ACTIVITIES |
|||
|
Net
loss |
$
(3,117,200) |
$
(3,382,470) |
$
(82,301,766) |
|
Adjustments
to reconcile net loss to |
|||
|
net
cash used in operating activities: |
|||
|
Depreciation
and amortization |
77,583 |
142,343 |
2,772,946 |
|
Amortization of
discount on debentures |
183,903 |
76,257 |
1,906,223 |
|
Beneficial
conversion feature on debentures |
98,000 |
175,757 |
1,952,582 |
|
Amortization of
deferred financing costs |
66,151 |
38,229 |
1,030,727 |
|
Non-cash
interest charges |
65,399 |
— |
207,916 |
|
Losses
on investment in affiliate |
— |
— |
856,078 |
|
Non-cash
compensation charges |
505,207 |
322,138 |
25,741,220 |
|
Changes
in operating assets and liabilities: |
|||
|
Accounts
receivable |
161,013 |
(230,900) |
(285,237) |
|
Prepaid
expenses and other assets |