UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-K
FOR
ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR
15(D)
OF
THE SECURITIES EXCHANGE ACT OF 1934
x ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For
the Fiscal Year Ended December 31, 2004
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
(State
or Other Jurisdiction of
Incorporation
or Organization) |
22-3726792
(I.R.S.
Employer Identification Number) |
|
1
Industrial Way West, Eatontown, New Jersey
(Address
Of Principal Executive Offices) |
07724
(Zip
Code) |
| |
|
(732)
542-4000
(Registrant's
Telephone Number, Including Area Code)
Securities
registered pursuant to Section 12(b) of the Act: None
Securities
registered pursuant to Section 12(g) of the Act: Common Stock, $.001 par value
per share
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 if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x
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
The
aggregate market value of the registrant's common stock held by non-affiliates
as of March 1, 2005 was $75,763,788.
The
number of shares outstanding of the registrant's common stock as of March 1,
2005 was 40,544,538.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the registrant's definitive proxy statement dated March 21, 2005 to be
delivered to stockholders in connection with the Annual Meeting of Stockholders
to be held on April 21, 2005 are incorporated by reference into Part III.
TABLE
OF CONTENTS
|
Item |
Description |
Page |
| |
|
|
| |
PART
I |
|
| |
|
|
|
Item
1. |
Business |
1 |
|
Item
2. |
Properties |
7 |
|
Item
3. |
Legal
Proceedings |
7 |
|
Item
4. |
Submission
of Matters to a Vote of Securities Holders |
7 |
| |
|
|
| |
PART
II |
|
| |
|
|
|
Item
5. |
Market
for the Registrant's Common Equity, Related Shareholder Matters and Issuer
Purchases of Equity Securities |
8 |
|
Item
6. |
Selected
Financial Data |
9 |
|
Item
7. |
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations |
9 |
|
Item
7A. |
Quantitative
and Qualitative Disclosure About Market Risk |
17 |
|
Item
8. |
Financial
Statements and Supplementary Data |
17 |
|
Item
9. |
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure |
17 |
|
Item
9A. |
Controls
and Procedures |
17 |
| |
|
|
| |
PART
III |
|
| |
|
|
|
Item
10. |
Directors
and Executive Officers of the Registrant |
17 |
|
Item
11. |
Executive
Compensation |
18 |
|
Item
12. |
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters |
18 |
|
Item
13. |
Certain
Relationships and Related Transactions |
18 |
|
Item
14. |
Principal
Accountant Fees and Services |
18 |
| |
|
|
| |
PART
IV |
|
| |
|
|
|
Item
15. |
Exhibits,
Financial Statement Schedules, and Reports on Form 8-K |
18 |
PART
I
Item
1. Business.
General
We were
formed as a Delaware limited liability company in 1998, organized and began
operations on January 1, 1999 and converted into a Delaware corporation on April
25, 2000. Upon our initial public filing, our business focus was on
commercialization of our technology in transportation and battery markets. Based
upon the delay in commercialization of fuel cells and the cost of sodium
borohydride, we re-directed our focus over the past 18 months to more
attractive, near term markets. As a result, our current business focus is to
develop hydrogen energy systems for use in portable electronic devices for the
consumer, medical, military and industrial markets. These energy systems offer
runtime, weight, safety and cost advantages versus existing battery solutions.
We are developing this technology in partnership with corporate and government
entities.
Our
Energy Systems
Our
energy systems provide a unique way to safely store and deliver hydrogen energy
in a “battery” sized package. These systems utilize Millennium Cell’s
proprietary Hydrogen
on Demand®
technology and provide what we believe to be an excellent value proposition for
a number of high performance applications. In our system, the energy is stored
in a sodium borohydride fuel blend, which in the presence of a catalyst releases
hydrogen (stored energy). The fuel blends used in our energy systems are
comprised of a combination of water, sodium borohydride and sodium hydroxide.
The
hydrogen produced by our energy systems is converted into electricity by a fuel
cell. A fuel cell transforms hydrogen and oxygen directly into electrical power
and produces power as long as the hydrogen and oxygen are supplied to it. Our
energy systems utilize fuel cartridges to recharge the fuel cell instantly on
demand. Using multiple fuel cartridges, our customers’ devices can run as long
as needed without the need for battery recharging or connection to an electrical
wall outlet.
We do not
manufacture fuel cells, but we procure them from public and private fuel cell
suppliers and integrate them with our systems to develop power solutions for our
customers. We find our outsourcing of the fuel cell supply to be advantageous as
there are many potential suppliers of fuel cells to choose from, each with their
own specialties. We choose the fuel cell with the most appropriate
characteristics (i.e. size, power density, form factor) for each application to
optimize the solution for our customers.
Business
Strategy
Our
primary business model is to license our technology to OEM’s and other
product-focused entities so that they can manufacture systems to meet their
specifications. We expect we may have to manufacture some of our systems
initially at low volumes but we do not expect to continue manufacturing volume
production longer term. We will also license our fuel cartridge technology to
companies that are interested and able to distribute replacement cartridges in
sufficient quantities and locales to meet mass market users’ needs.
To
accomplish our objective of providing an attractive alternative to the batteries
generally used to power portable electronic devices, a core part of our strategy
is to partner with various fuel cell companies and to integrate our technology
to form a complete power source solution for device manufacturers and consumers.
In pursuit of this goal, we intend to partner with a number of fuel cell
companies to provide optimized solutions that best meet our customers’
requirements in different market segments.
One key
fuel cell partnership is with Protonex Technology Corporation. Millennium Cell
and Protonex have entered into a joint development and licensing agreement that
results in collaborative efforts towards military, industrial and medical market
opportunities for a Protonex fuel cell and a Millennium Cell hydrogen energy
system. In this agreement, Protonex has licensed Millennium Cell’s technology so
that they can make and sell fuel cell systems. Millennium Cell is a
sub-contractor to Protonex in the development of a 30-watt power source for the
US Air Force Research Laboratory (“USAFRL”). The USAFRL is providing funding for
our development activities through the Dual Use Science and Technology program.
Millennium Cell and Protonex publicly demonstrated the initial prototype
developed under this program at the Tactical Power Sources Symposium on January
31, 2005. We plan to continue product development towards a goal of providing
products for field-testing by the USAFRL in 2006. We are also using this fuel
cell system as a platform to enter the industrial and medical markets.
To
accelerate the path towards product commercialization, we entered into a
strategic relationship with The Dow Chemical Company (“Dow”) on February 27,
2005. Dow is a leader in science and technology, providing innovative chemical
and plastic products and services to many essential consumer markets. With
annual sales of $33 billion, Dow serves customers in more than 180 countries and
a wide range of markets. In this three-year collaboration, the two companies
will strive for the commercialization of Millennium Cell’s energy systems in key
identified markets. Dow will supply necessary product design, chemical and
material analysis, and product development resources necessary to create
products that are successful for these markets. With successful achievement of
defined milestones towards these goals, Dow will progressively increase its
human resources, cash investment and equity ownership in Millennium Cell. Dow
may also become a manufacturer and distributor of products such as fuel
cartridges to serve these markets.
We are
also working with the Peugeot Citroen and Gaz de France on a project to explore
the use of sodium borohydride for on-board auxiliary power and to study the
supply chain requirements of distributing sodium borohydride on a mass scale. In
2004, we successfully passed the gate for phase 1 of the work plan and are
continuing to work on this funded effort to advance our technology in specialty
transportation applications.
To
investigate lower cost ways to manufacture sodium borohydride, we are executing
on our multi-year program with the Department of Energy with Air Products and
Chemicals as our subcontractor. Our goal for this work is to enable longer-term,
cost-sensitive markets in parallel as we move down the path to commercialization
in portable power markets.
During
the fourth quarter of 2004, we began work with Concurrent Technologies and the
Fuel Cell Test and Evaluation Center under the Common Core Power Production
program. This program’s goal is to identify alternative power sources for use in
military standby power, portable power and specialty transportation
applications. This one-year program began in the fourth quarter of
2004.
Market
Opportunity for Our Products
As
portable electronic devices continue to become more advanced and look to offer
greater capabilities and functionality, device manufacturers, service providers
and consumers are seeking significantly increased and longer lasting power.
Since we believe that batteries presently used in these devices are approaching
their technological limits, the power gap that already exists between
ever-increasing power demands of electronic applications and the amounts of
power in the batteries will increase. We believe that our proprietary energy
systems can bridge this gap. Rather than being an incremental improvement to
current battery technology, our energy systems should provide a major
technological leap as compared to battery technology in that our technology has
greater energy density, weighs less and in many cases is more
affordable.
Millennium
Cell's products are being designed to significantly increase device run time
compared to existing lithium-ion batteries using the same volume and less
weight. Our technology eliminates the need to stay tied to an electrical wall
outlet for recharging as well as providing for an instant recharge through the
use of disposable fuel cartridges. Upon commercial success of our products,
portable electronics devices will be "truly wireless", capable of going
anywhere, anytime with no need to plug in or wait for a recharge.
Due to
the scalability of our technology, we have the ability to address a number of
significant markets without the need to develop alternative pathways to deliver
the energy. Applications range from small (cellular phones, personal digital
assistants, notebook PCs) to large (auxiliary power units, stationary power,
automobiles), where the demands for volumetric energy density are particularly
challenging. This is a substantial advantage over many competing energy
technologies.
Target
Markets
The
initial markets we intend to address are the military and laptop computer
segment of consumer electronics. The military is well known as a proving ground
for new technologies and is facing problems for which we believe that our
technology is well suited. Frost and Sullivan report that a profound problem
facing the military today is the steady increase in energy demand driven by the
power hungry new equipment used by soldiers.1
Such
equipment includes laser-designators, chemical-biological sensors, uniform
ventilators, exoskeleton enhancements, night vision systems and communication
equipment. Considering the military’s 72-hour mission duration requirements, the
capabilities of traditional batteries have been far exceeded. In our alliance
with Protonex, we plan to offer an energy system that will have best in class
runtime, reduced weight and lower cost. Each year, the military uses more than
$150 million worth of batteries for such missions and this market is expected to
continue growing as the soldiers of the future utilize more and, as reported by
Frost and Sullivan, more high tech equipment.
1
| 1 |
Information
courtesy of Frost and Sullivan. |
We plan
to use the products developed for the military with Protonex as a platform for
entering medical and industrial markets, each of which has a diverse customer
base with unique energy storage needs and challenges. The energy demand for
portable medical and industrial equipment has also seen a sharp rise and shows
no signs of leveling off. Driven by an aging population, an increase in
decentralized care centers and a need for equipment and services closer to
patients’ required point of treatment, the total battery market for medical
equipment is approaching $500 million and continues to grow. 1
Defibrillators, vital sign monitors, infusion pumps and other portable equipment
all need extended runtime and lighter energy sources.
In the
laptop computer market, we are developing a hydrogen energy system with the goal
of enabling all day operation, without the need for any recharging. We believe
that Millennium Cell’s energy dense fuel cartridge together with a flat panel,
passive fuel cell has the potential to reach this elusive target that
traditional rechargeable batteries cannot approach. As Frost and Sullivan
project, sales of rechargeable batteries approaching $1 billion in 2005 and
annual growth of more than 10%, we believe that the laptop computer market is a
prime target for our power systems.1
Within
the next several years, laptop computer shipments are projected to overtake
desktop shipments, further intensifying the demand for extended runtime
solutions. In addition, we believe that the products being developed for the
laptop market will be able to serve as a platform for entering other segments of
the consumer electronics market such as handheld computers, personal digital
assistants, cell phones, handheld game devices and other converged devices on
the horizon.
Our
Systems
Portable
Power Source
Together
with our fuel cell partner Protonex, we are developing a 30-watt power system
for the U.S. Air Force to provide portable soldier power for the dismounted
soldier on a 72-hour mission. According to our research, compared with the
lithium sulfur dioxide battery used today for this application, our solution is
about 1/3 the weight and 1/3 the cost when analyzed over the course of 30
missions. Today, a soldier on a 72-hour mission needs to carry 13 batteries that
weigh an aggregate of about 29 pounds. Our solution would be comprised of a fuel
cell module accompanied by 5 fuel cartridges and would collectively weigh about
10 pounds. Additionally, there are features that fuel cell systems can offer
that batteries cannot. Our system has the ability to monitor the amount of
energy (run-time) remaining in the fuel cartridge at any given time. This is
significant for a military operation as soldiers returning from missions with
partially depleted batteries will often dispose of them in favor of a fresh
battery when going on the next mission. This is a tremendous waste of energy and
adds unnecessary cost.
We
demonstrated this system at a major military conference in January 2005. We
delivered this version of the system to the Air Force in February 2005 and will
deliver the next generation system that will contain a higher amount of energy
and have increased robustness later in 2005.
We expect
that the system developed with Protonex will provide a scalable platform from
which to introduce our hydrogen energy systems in the commercial medical and
industrial markets. We believe that these solutions will provide a
lighter-weight, longer run-time power option desired by these markets as well.
Laptop
Computer Power Source
The
“power gap” between what battery technology can provide versus what portable
electronic devices require is growing rapidly in the consumer electronics market
as well. We believe our technology is the key to offering the promise of a full
day of computing time. Our hydrogen energy systems provide a major technological
leap as compared to battery technology in terms of energy density, lightweight
operation and in many cases affordability. Even more exciting, our solutions can
fit inside the compartment typically used to hold a battery. Direct methanol
fuel cells, another technology competing for this market, have been unable to
fit their systems into this space.
Our
current prototype incorporates our fuel cartridge and a partner’s fuel cell to
produce a system that has the potential to provide a full day of runtime. We are
developing our disposable, one time use hydrogen fuel cartridge to fit in the
battery cavity and the flat panel fuel cell to be integrated into the personal
computer on the back of the LCD screen. Our proof-of-concept prototype system
operates a laptop personal computer for three continuous hours at nominal and
peak loads. Later in 2005, we intend to reach over six hours of runtime in a
single hydrogen fuel cartridge. Our goal with this system is to demonstrate to
OEM’s that our systems are ready to be considered for design into their
devices.
| 1 |
Information
courtesy of Frost and Sullivan. |
We
demonstrated these energy systems at the Intel Developers Forum in September
2004 and again in March 2005 to expose our technology to OEM’s and other
interested parties and show them that we have a path to deliver a full day of
run time to their devices within the required space. We have been very
encouraged by the feedback we have received at these shows and we are working to
secure commitments from OEM’s to design-in our energy systems to power their
devices.
Fuel
Distribution and Infrastructure
We intend
to evolve the fueling and refueling supply chain for our energy systems based on
customer need and convenience. Today, consumer electronic device power
requirements are satisfied by the purchase of self-contained solid-state
disposable batteries and rechargeable battery systems. In the future, we expect
that our supply chain will be similar to that used by disposable batteries
today. This is different from the transportation market which would require more
extensive changes including retrofitting of existing service stations and
recycling of spent fuel in regional centers. Millennium Cell's energy systems
are designed to integrate well with diverse customer fueling requirements
because of the unique safety and convenience in storing, transporting,
distributing, and using the sodium borohydride fuel.
The key
to our energy systems is our sodium borohydride fuel blends. Our fuel is safe
and non-flammable when handled appropriately. Our fuel can be shipped dry or as
a liquid and we expect a number of different system options to be available
which will be suited to our customers needs. We are currently working on
obtaining the required approvals from the United Nations and related regulatory
organizations but we expect that our fuel will be compatible with everyday use
on all forms of transportation.
Research
and Development
We are
aggressively working on programs with the U.S. Department of Energy (“DOE”) and
with Air Products and Chemicals, a major producer of hydrogen, to reduce the
cost of sodium borohydride. Reducing the cost of manufacturing sodium
borohydride through a reduction in raw materials costs or process costs is
important to the Company’s longer-term vision of using our Hydrogen on Demand
technology to power larger, continuous use applications such as transportation.
In order to compete with liquid fuels such as gasoline or diesel on a cost
basis, we will need to substantially lower the cost of our fuel. We have already
made progress in these programs and we continue to work with the DOE and Air
Products to complete this important work. This three-year program began in the
fourth quarter of 2003 and provides funding to Millennium Cell of $3.6
million.
Intellectual
Property Rights
Our
hydrogen energy systems are the culmination of work reflected in more than 30
patents (either granted or in application) that collectively provide us with a
leading position in the system and fuel blend technology used to convert sodium
borohydride to hydrogen energy for use in portable electronic device
applications.
We
own six U.S. and seven non-U.S. patents, which cover a wide variety of
devices, systems, uses and applications for various boron chemistries. We have
filed an additional 16 U.S. and 25 non-U.S. patent applications. We have also
filed three U.S. trademark applications. Our earliest patent expires in 2015 and
the most recently filed applications, if issued, will not expire until
2023.
Our
intellectual property strategy is to identify key intellectual property
developed by us in order to protect it appropriately. In addition, we seek to
use and assert such intellectual property to our competitive advantage. We rely
on a combination of patents, trade secrets, trademarks, and license and
nondisclosure agreements to protect our proprietary technology.
We use
patents as the frontline means of protecting our technological advances and
innovations, such as our proprietary hydrogen generators, components, materials,
operating techniques and systems and, therefore, the enforcement of our patents
is critical to our business. We have adopted a proactive approach to identifying
patentable inventions and securing patent protection through the timely filing
and aggressive prosecution of patent applications. Patent applications are filed
in the United States and internationally, in countries carefully chosen based on
the likely value and enforceability of intellectual property
rights.
There are
companies who claim to be working on the generation of hydrogen or electricity
from sodium borohydride. We believe we have a leading intellectual property
position in these areas. We actively monitor competitive activity and will
enforce our patent rights to the fullest extent.
Competition
We expect
our products to compete with power systems that utilize both direct and indirect
energy conversion methods. Direct conversion may involve fuels such as methanol,
ethanol and sodium borohydride that are converted into electrons through a
direct fuel cell system. The indirect method of energy conversion is to generate
hydrogen and convert it to electricity through a fuel cell in a two-step
process. This is the method utilized by Millennium Cell’s Hydrogen on Demand
technology. There are competing solutions which also use an indirect method
based on another fuel such as methanol. Our primary competitors are companies
developing small fuel cells for the portable electronics market such as MTI
Micro Fuel Cells and Medis Technologies.
We
believe other large electronic device companies may also be developing fuel
cells based on competing fuel sources for the portable electronics market.
Toshiba Corporation, NEC Corporation, Hitachi, Ltd., Casio Computer Co. Ltd.,
Samsung Electronics Co. Ltd. and Sony Corporation have all publicly disclosed
information about their fuel cell development programs. Toshiba, Hitachi and
other Japanese corporations have announced their intention to unify the
technical standards for micro fuel cells powered by methanol that they are each
developing, in the hope of boosting the market for such fuel cells. We believe
that there are other companies that we may not know of that are also developing
fuel cells and competing fuel sources for portable electronic
devices.
We also
expect indirect competition from companies who manufacture and design existing
battery products (both chargeable and rechargeable). Existing battery products
are the incumbent solution with the significant advantage of having commercially
available products today. These companies are continuously investing in
marketing and further research and development to improve their existing
products and explore alternative technologies.
We expect
products using our energy systems to compete on the basis of reduced volume and
weight, increased length of operating time, greater convenience and lower
cost.
Raw
Materials
Sodium
borohydride is manufactured from a base material called borax. There are
approximately 600 million metric tons of borax raw materials worldwide, and the
United States is among the largest holders of borax reserves in the world. Borax
is most commonly found in dried lakes or sea beds, and it is mined at the
surface using drag lines, whereby buckets are continuously dragged across the
ground scraping borax from the surface. Currently, a limited number of
manufacturers make sodium borohydride as a specialty chemical. Despite the great
quantities of reserves and current annual production of borax, there are few
commercial applications that require sodium borohydride today. The most common
application for sodium borohydride is for use as a bleaching agent in the paper
industry. Up until now, the relatively limited commercial uses of sodium
borohydride have allowed manufacturing to continue using technology from the
early 1950s.
In as
much as we intend to focus primarily on research and development, and not on
large scale manufacturing, we do not believe that our costs to comply with
federal, state and local provisions that have been enacted or adopted regulating
the discharge of materials into the environment, or otherwise relating to the
protection of the environment, will have a material effect on our capital
expenditures, earnings or competitive position.
Human
Resources
As of
February 14, 2005, we had a total staff of 32 employees, of which 19 are
scientists, engineers and other professionals. We expect to hire a few employees
in business development and product development functions during
2005.
Investment
Considerations
Our
business, the results of operations and the trading price of our common stock
could be harmed by any of the following factors:
Company
Risk Factors
| · |
We
are a development stage company, and have only been in business for a
short time. In addition, many aspects of our business plan rest on beliefs
formed by our management and have not necessarily been supported by
independent sources. As a result, there is a limited basis of evaluation
of the Company. |
| · |
We
have incurred substantial losses and expect losses for the foreseeable
future. Accordingly, we may not be able to achieve profitability, and even
if we do become profitable, we may not be able to sustain profitability.
|
| · |
We
expect our future operating results to vary significantly quarter to
quarter, and increase the likelihood that we may fail to meet the
expectations of securities analysts and investors at any given time.
|
| · |
We
may not be able to enter into agreements with collaborators and strategic
partners and, if we do enter into agreements with collaborators and
strategic partners, we or our collaborators and strategic partners may
fail to perform under such agreements. |
| · |
We
may be unable to continue to complete prototype development and
engineering of commercially viable hydrogen generation systems and, if
not, may not be able to build our business as anticipated.
|
| · |
Failure
to meet milestones and performance goals with potential customers could
delay or impede commercialization of our technology and potential
purchasers of our systems may decline to purchase them or choose to
purchase alternate technologies. |
| · |
Our
hydrogen generation systems may only be commercially viable as a component
of other companies’ products and these companies may choose not to include
our systems in their products. |
| · |
Any
perceived problem while conducting demonstrations of our technology could
hurt our reputation and the reputation of our products, which would impede
the development of our business. |
| · |
Some
of the raw materials that the hydrogen generation systems use are
expensive and are not manufactured in large quantities and sell at high
margin. Therefore, the energy produced by our systems may cost more than
energy provided through conventional and alternative systems. Accordingly,
our systems may be less attractive to potential users.
|
| · |
If
we cannot develop and demonstrate lower cost processes for the manufacture
of sodium borohydride, our commercialization plans may be hindered.
|
| · |
If
we don’t raise additional capital into 2006, we won’t be able to fulfill
our business plan and the development of our business will be adversely
affected. |
Risks
Relating to Owning Our Securities
| · |
A
substantial number of shares of our common stock have been, and are
expected in the near future to be, registered for resale in connection
with the issuance of common stock to private investors and the issuance of
our common stock after conversion of outstanding debentures and exercise
of outstanding warrants. Resale of a significant number of shares into the
public markets could depress the trading price of our common stock and
make it more difficult for our stockholders to sell equity securities in
the future. |
| · |
Our
debentures are subject to a number of restrictive covenants, including a
requirement that our common stock remain listed on a National Exchange. If
we are unable to maintain a listing on either the NASDAQ National Market
or NASDAQ SmallCap Market, the debentures may be called by the holders.
Furthermore, if the NASDAQ National Market or SmallCap listing is not
maintained, our stockholders might find it more difficult to liquidate
their investment. |
| · |
We
may be required to issue more shares of common stock to the holders of the
debentures and the warrants as a result of the anti-dilution provisions of
the debentures and the warrants. In addition, subject to the satisfaction
of numerous conditions, we have the right to force conversion of the
unsecured debentures at a discount to current market prices. Sales of
substantial amounts of common stock could reduce the market price for our
common stock and make it more difficult for our stockholders to sell their
shares. |
| · |
Failure
to comply with certain financial conditions under the terms of the
unsecured convertible debentures could result in an event of default under
the unsecured convertible debentures. |
| · |
We
do not intend to pay any dividends on our common
stock. |
| · |
We
will need future capital to complete our product development and
commercialization plans. If we are able to raise additional capital, it
may dilute the ownership of our stockholders or restrict our ability to
run our business. |
| · |
We
may be subject to litigation if our common stock price is volatile, which
may result in substantial costs and a diversion of our management's
attention and resources and could have a negative effect on our business
and results of operations. |
| · |
We
are heavily dependent on companies or governmental agencies that would
include our hydrogen generation systems in their products and to develop
the infrastructure required to use of our technologies in certain
applications or markets. |
| · |
We
are dependent on government contracts which is important to the
implementation of our commercialization
plans. |
| · |
Failure
to meet cost or performance goals with potential customers could delay or
impede commercialization of our technology.
|
| · |
Any
accidents involving our products or the raw materials used in our products
could impair their market acceptance. |
| · |
We
will continue to face intense competition from alternative power
technologies and may be unable to compete successfully.
|
| · |
We
depend on our intellectual property and may not be able to protect the
rights to that intellectual property. Our failure to protect this
intellectual property could adversely affect our future growth and
success. |
| · |
Our
future plans could be adversely affected if we are unable to attract or
retain key personnel. |
Industry
Risk Factors
| · |
A
mass market for fuel cells, hydrogen generation systems or batteries may
never develop or may take longer to develop than we anticipate.
|
| · |
Changes
in environmental policies could result in automobile manufacturers
abandoning their interest in fuel cell powered vehicles. This may lessen
the market for our products and harm the development of our business.
|
| · |
Since
zero emission vehicle requirements can be met without using fuel cells,
automobile manufacturers may use other technologies to meet regulatory
requirements. |
Available
Information
We file
annual, quarterly and current reports, proxy statements and other information
with the Securities and Exchange Commission. You may read and copy any document
we file with the Commission at the Commission’s public reference rooms at 450
Fifth Street, N.W., Washington, D.C. 20549, 233 Broadway, New York, New York
10279, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661- 2511. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms. Our Commission filings are also
available to the public from the Commission’s Website at “http://www.sec.gov.”
We make available free of charge our annual, quarterly and current reports,
proxy statements and other information upon request.
We
maintain a Website at “http://www.MillenniumCell.com” (this is not a hyperlink,
you must visit this website through an Internet browser). Our Website and the
information contained therein or connected thereto are not incorporated into
this Annual Report on Form 10-K.
Item
2. Properties.
Our
principal offices are located at 1 Industrial Way West, Eatontown, New Jersey
07724, currently occupying 32,500 square feet. Our amended lease will expire in
2008, with five and three year options to renew through 2016. We believe that
the current facilities will be sufficient for our operations in the foreseeable
future.
Item
3. Legal Proceedings.
We are
not aware of any pending or threatened legal actions other than disputes arising
in the ordinary course of our business that would, if determined adversely to
us, have a material adverse effect on our business and operations.
Item
4. Submission of Matters to a Vote of Security Holders.
No
matters were submitted to a vote of stockholders during the fourth quarter of
the fiscal year covered by this report.
PART
II
Item
5. Market For The Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.
Market
Price And Dividend Information
Price
Range of Common Stock
Our
common stock is traded on the NASDAQ SmallCap Market under the symbol "MCEL".
The following table sets forth the high and low closing bid prices for our
common stock as reported by NASDAQ.
| |
|
Common
Stock Price |
|
| |
|
High |
|
Low |
|
|
Fiscal
Year Ending December 31, 2004 |
|
|
|
|
|
|
Fourth
quarter |
|
$ |
1.39 |
|
$ |
0.81 |
|
|
Third
quarter |