1114872--3/29/2006--MILLENNIUM_CELL

related topics

{product, candidate, development}

{stock, price, share}

{control, financial, internal}

{product, market, service}

{debt, indebtedness, cash}

{product, liability, claim}

{acquisition, growth, future}

{system, service, information}

{personnel, key, retain}

{stock, price, operating}

{property, intellectual, protect}

{financial, litigation, operation}

{competitive, industry, competition}

We are a development stage company, which has only been in business for a limited time. We have incurred substantial losses and expect continued losses for the next 24 to 36 months. There can be no assurance that we can achieve profitability, and even if we do become profitable, that we can sustain profitability. We expect our future operating results to vary from 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 be subject to litigation resulting from common stock volatility, 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. If we or our collaborative partners fail to perform under our joint development and research agreements, our ability to commercialize our proposed products could be impaired. We may need future capital to complete our product development and commercialization plans. If we are able to raise additional capital, it may dilute our existing stockholders or restrict our ability to operate our business. We rely on government funding for certain research and development and technology demonstration projects. Our future plans could be adversely affected if we are unable to attract or retain key personnel. If we are unable to continue to complete prototype development and engineering of commercially viable hydrogen battery technology, we will 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. Potential purchasers of our systems may decline to purchase our technology or choose to purchase alternate technologies. Our hydrogen battery technology 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 could impede the development of our business. Our failure to obtain, maintain or protect the right to use certain intellectual property may negatively affect our business. Any accidents involving our products or the raw materials used in our products could impair their market acceptance. If we fail to comply with certain obligations in respect of our Series C Preferred Stock, we may be subject to mandatory redemption obligations at the option of certain preferred stockholders which, if exercised, could have a material adverse effect on our financial condition and our business. We may be required to issue more shares of common stock upon adjustment of the conversion price of our outstanding preferred stock and unsecured convertible debentures or the exercise price of our outstanding warrants, resulting in dilution of our existing stockholders. Sales of substantial amounts of common stock in the public market could reduce the market price of our common stock and make it more difficult for us and our stockholders to sell our equity securities in the future. Our outstanding debentures are subject to mandatory prepayments at the option of the holders thereof upon certain conditions which, if exercised, will have a material adverse effect on our financial condition and our business. We do not intend to pay any dividends on our common stock. A mass market for our products may never develop or may take longer to develop than we anticipate. We will continue to face intense competition from energy technology companies and may be unable to compete successfully.

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1114872--3/29/2006--MILLENNIUM_CELL_INC