<PAGE>
================================================================================

                                  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 SEPTEMBER 30, 2001

[ ]     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 [ ]

        Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 27,256,006 shares of
Common Stock, par value $.001, were outstanding on November 1, 2001.


================================================================================

<PAGE>


                              MILLENNIUM CELL INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                                      INDEX


PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                                                             PAGE
                                                                                                                             ----
<S>                                                                                                                          <C>
Item 1.         Financial Statements (Unaudited)
                Condensed Balance Sheet - September 30, 2001 and December 31, 2000........................................     1

                Condensed Statements of Operations - Three months and nine months ended
                September 30, 2001 and 2000...............................................................................     2

                Condensed Statements of Cash Flows - Nine months ended September 30, 2001 and 2000........................     3

                Notes to Condensed Financial Statements - September 30, 2001..............................................     4

Item 2.         Management's Discussion and Analysis of Financial Condition and Results of Operations.....................     5

Item 3.         Quantitative and Qualitative Disclosures About Market Risk................................................     8
</TABLE>

PART II - OTHER INFORMATION

<TABLE>
<S>                                                                                                                          <C>
Item 4.         Exhibits and Reports on Form 8-K..........................................................................    10
</TABLE>


<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.         FINANCIAL STATEMENTS (UNAUDITED).

                              MILLENNIUM CELL INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                             CONDENSED BALANCE SHEET
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      SEPTEMBER 30,          DECEMBER 31,
                                                                                          2001                   2000
                                                                                          ----                   ----
<S>                                                                                 <C>                    <C>
ASSETS
Current assets:
   Cash and cash equivalents....................................................    $        5,254,140     $       30,098,701
   Prepaid expenses.............................................................               351,237                188,874
   Held-to-maturity investments.................................................            17,090,194                     --
                                                                                    ------------------     ------------------
Total current assets............................................................            22,695,571             30,287,575
Property and equipment, net.....................................................               762,773                645,852
Patents and licenses, net.......................................................               500,496                440,074
Other assets....................................................................                45,676                 22,744
                                                                                    ------------------     ------------------
                                                                                    $       24,004,516     $       31,396,245
                                                                                    ==================     ==================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable.............................................................    $          823,956     $           11,435
   Accrued expenses.............................................................             1,228,897                922,447
   Deferred royalty income......................................................             2,399,988              2,399,988
                                                                                    ------------------     ------------------
Total current liabilities.......................................................             4,452,841              3,333,870
Refundable grant obligation.....................................................               227,522                227,522

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 40,000,000 shares, 27,255,646 and
       27,167,981 shares issued and outstanding
       as of September 30, 2001 and December 31, 2000, respective...............                27,256                 27,168
   Additional paid-in capital...................................................            52,830,345             46,658,927
   Deficit accumulated during development stage.................................           (33,533,448)           (18,851,242)
                                                                                    ------------------     ------------------
Total stockholders' equity......................................................            19,324,153             27,834,853
                                                                                    ------------------     ------------------
                                                                                    $       24,004,516     $       31,396,245
                                                                                    ==================     ==================
</TABLE>

                       See notes to financial statements.


                                       1
<PAGE>


                              MILLENNIUM CELL INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                        CONDENSED STATEMENT OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                   THREE MONTHS   THREE MONTHS    NINE MONTHS    NINE MONTHS
                                                       ENDED          ENDED          ENDED          ENDED       CUMULATIVE
                                                   SEPTEMBER 30,  SEPTEMBER 30,  SEPTEMBER 30,  SEPTEMBER 30,  AMOUNTS FROM
                                                       2001           2000           2001           2000         INCEPTION
                                                       ----           ----           ----           ----         ---------
<S>                                                <C>            <C>            <C>            <C>            <C>

Product development and marketing ...............  $  1,504,203   $         --   $  3,672,240   $         --   $  3,672,240
General and administrative ......................     1,278,646      1,017,346      3,495,547      1,482,475      6,833,893
Non-cash charges ................................     1,667,100      8,947,378      6,135,256      8,947,378     16,920,637
Depreciation and amortization ...................       116,027         99,151        322,350        160,227        636,177
Research and development ........................       906,541        667,511      2,029,244      1,328,490      4,981,056
                                                   ------------   ------------   ------------   ------------   ------------
Total operating expenses ........................     5,472,517     10,731,386     15,654,637     11,918,570     33,044,003
                                                   ------------   ------------   ------------   ------------   ------------
Loss from operations ............................    (5,472,517)   (10,731,386)   (15,654,637)   (11,918,570)   (33,044,003)
Interest income, net ............................       247,946        230,440        972,431        211,142      1,661,436
                                                   ------------   ------------   ------------   ------------   ------------
Net loss ........................................    (5,224,571)   (10,500,946)   (14,682,206)   (11,707,428)   (31,382,567)
Preferred stock amortization ....................            --        726,124             --      2,150,881      2,150,881
                                                   ------------   ------------   ------------   ------------   ------------
Net loss applicable to common stockholders ......  $ (5,224,571)  $(11,227,070)  $(14,682,206)  $(13,858,309)  $(33,533,448)
                                                   ============   ============   ============   ============   ============
Loss per share -- basic and diluted .............  $       (.19)  $       (.45)  $       (.54)  $       (.56)  $      (1.33)
                                                   ============   ============   ============   ============   ============
Weighted average number of shares outstanding ...    27,252,820     25,221,249     27,201,679     24,740,280     25,144,827
                                                   ============   ============   ============   ============   ============
</TABLE>

                       See notes to financial statements.


                                       2
<PAGE>


                              MILLENNIUM CELL INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                        CONDENSED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                     NINE MONTHS     NINE MONTHS
                                                       ENDED           ENDED         CUMULATIVE
                                                    SEPTEMBER 30,   SEPTEMBER 30,   AMOUNTS FROM
                                                        2001            2000          INCEPTION
                                                        ----            ----          ---------
<S>                                                 <C>             <C>             <C>
OPERATING ACTIVITIES
Net loss ........................................   $(14,682,206)   $(11,707,428)   $(31,382,567)
Adjustments to reconcile net loss to
   net cash used in operating activities:
Depreciation and amortization ...................        322,350         160,227         636,177
Non-cash charges ................................      6,135,256       8,947,378      16,920,637
Changes in operating assets and liabilities:
Prepaid expenses and other assets ...............       (185,295)       (219,627)       (396,913)
Accounts payable and accrued expenses ...........      1,118,971         403,751       2,052,853
Due to affiliate ................................             --         (30,000)             --
Deferred royalty income .........................             --              --       2,399,988
                                                    ------------    ------------    ------------
Net cash used in operating activities ...........     (7,290,924)     (2,445,699)     (9,769,825)

INVESTING ACTIVITIES
Purchase of property and equipment ..............       (405,290)       (339,132)     (1,228,949)
Patent registration costs .......................        (94,403)       (123,251)       (420,497)
Purchase of investments, net ....................    (17,090,194)             --     (17,090,194)
                                                    ------------    ------------    ------------
Net cash used in investing activities ...........    (17,589,887)       (462,383)    (18,739,640)

FINANCING ACTIVITIES
Proceeds from sale of common stock ..............         36,250      33,523,000      34,809,250
Underwriting and other expenses of initial
   public offering ..............................             --      (3,669,458)     (3,669,613)
Proceeds from capital contribution ..............             --         500,000         500,000
Payment of note payable .........................             --        (250,000)       (250,000)
Proceeds from grant .............................             --          33,900         227,522
Proceeds from sale of preferred stock ...........             --       2,146,446       2,146,446
                                                    ------------    ------------    ------------
Net cash provided by financing activities .......         36,250      32,283,888      33,763,605
                                                    ------------    ------------    ------------
Net change in cash and cash equivalents .........    (24,844,561)     29,375,806       5,254,140
Cash and cash equivalents, beginning of
   period .......................................     30,098,701          42,165              --
                                                    ------------    ------------    ------------
Cash and cash equivalents, end of period ........   $  5,254,140    $ 29,417,971    $  5,254,140
                                                    ============    ============    ============
</TABLE>

                       See notes to financial statements.


                                       3
<PAGE>


                              MILLENNIUM CELL INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1--BASIS OF PRESENTATION

        The accompanying unaudited condensed financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
known adjustments (which consist primarily of normal recurring adjustments)
considered necessary for a fair presentation have been included. The interim
statements should be read in conjunction with our Annual Report on Form 10-K for
the year ended December 31, 2000.

        Certain amounts previously reported as "Product Development and
Engineering" have been reclassified and shown as "Research and Development" for
all periods presented.


NOTE 2--INVESTMENTS

        At September 30, 2001, the Company held $17.1 million of
held-to-maturity investments in U.S. government agency bonds and high-grade
certificates of deposit stated at amortized cost, with a weighted-average yield
of 4.8%. At September 30, 2001, amortized cost approximated fair value. Interest
income is recognized using the straight-line method over the lives of the
securities. The face value and maturity schedule of the securities is as
follows:

<TABLE>
        <S>                                                 <C>
        First Quarter 2002..............................    $       6,568,000
        Second Quarter 2002.............................           10,000,000
                                                            -----------------
        Total...........................................    $      16,568,000
                                                            =================
</TABLE>


NOTE 3--EARNINGS PER SHARE

        Basic earnings per share ("EPS") is computed by dividing income
available to common stockholders by the weighted average number of common shares
actually outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the Company. All such securities were
anti-dilutive for all periods presented.


NOTE 4--OPTIONS, WARRANTS AND NON-CASH CHARGES

        In the third quarter of 2001, the Company recorded a non-cash charge of
approximately $1.6 million related to options issued to employees in 2000. The
Company will incur additional non-cash charges of approximately $7.7 million for
these options over the vesting period as follows: Fourth Quarter 2001-$1.6
million, 2002-$4.1 million and 2003-$2.0 million.

        In the third quarter of 2001, the Company also incurred a non-cash
charge of $48,530 related to warrants issued to affiliates. The Company will
incur additional non-cash charges of approximately $456,454 for the warrants
over the vesting period as follows: Fourth Quarter 2001-$129,320 and
2002-$327,134.


                                       4
<PAGE>


ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS.

        The following discussion should be read in conjunction with the
accompanying Condensed Financial Statements and Notes thereto included within
this report. In addition to historical information, this Form 10-Q and the
following discussion contain forward-looking statements that reflect our plans,
estimates, intentions, expectations and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. The
discussion below should be read in conjunction with the Company's Annual Report
on Form 10-K for the year ended December 31, 2000.

GENERAL

        We were formed as a Delaware limited liability company on December 17,
1998, and organized and began operations on January 1, 1999 (inception date). We
were converted into a Delaware corporation on April 25, 2000 when all of the
outstanding equity interests of the limited liability company were converted
into shares of common stock of the corporation. Unless otherwise indicated, all
information that we present in this Form 10-Q for any date or period gives
effect to the conversion as if it had occurred on that date or as of the
beginning of that period and all references to common stock for periods before
the conversion mean our issued and outstanding membership interests.

OVERVIEW

        In December 1998, we acquired rights to exploit the sodium borohydride
technology patented by Steven Amendola, our chief scientific advisor. Our
initial business plan was to conduct research and development on sodium
borohydride with the purpose of developing an alternative energy system to
gasoline for use in automobile engines. In the course of investigating the use
of our energy system, we focused initially on the development of a sodium
borohydride fuel cell for potential commercial application. As our research
progressed, we realized that sodium borohydride not only had the potential to
produce a better fuel cell than currently exists, but that sodium borohydride
can also be used to generate hydrogen. Further research indicated that our
proprietary system could also be used to make longer lasting disposable
batteries. In May 2000, we and Mr. Amendola terminated our licensing agreement
and we acquired ownership of the existing and future patent rights relating to
the sodium borohydride technology.

        Our goal is to convert our technology from the research and development
stage to commercialization. Such potential revenue for the next several years is
likely to include up-front license fees, research contracts with various
federal, state and local agencies or through collaborations with other
companies, and royalty payments or joint venture revenue from licensees or
strategic partnerships. We have not generated any commercial revenue to date.

        We incurred net losses in the third quarter of 2001 and 2000 of
$5,224,571 and $11,227,070, respectively. As of September 30, 2001, we had an
accumulated deficit of $33,533,448. The following table disaggregates the
Company's net operating losses from incurred non-cash charges and preferred
dividends:

<TABLE>
<CAPTION>
                                                                                                NON-CASH
                                                                             NET LOSS            CHARGES
                                                                             EXCLUDING             AND
                                                                             NON-CASH           PREFERRED         ACCUMULATED
                                                                              CHARGES           DIVIDENDS           DEFICIT
                                                                              -------           ---------           -------
<S>                                                                     <C>               <C>                 <C>
Period from January 1, 1999 (inception) to June 30, 2000........        $    (2,237,759)  $      (1,424,757)  $     (3,662,516)
Period from July 1, 2000 to December 31, 2000*..................             (3,677,221)        (11,511,505)       (15,188,726)
Period from January 1, 2001 to September 30, 2001...............             (8,546,950)         (6,135,256)       (14,682,206)
                                                                        ---------------   -----------------   ----------------
Cumulative Amount From Inception................................        $   (14,461,930)  $     (19,071,518)  $    (33,533,448)
                                                                        ===============   =================   ================
</TABLE>

----------------
*       Our initial public offering was completed on August 9, 2000.


                                       5
<PAGE>


        Our losses have resulted primarily from costs associated with research
and development activities as well as non-cash amortization of preferred stock
and non-cash charges related to the issuance of stock options and warrants to
employees and third parties. As a result of planned expenditures in the areas of
research, product development and marketing and additional non-cash charges
relating to employee stock options, we expect to incur additional operating
losses for the foreseeable future.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2000.

        Revenues. To date, we have not recognized any revenues related to the
sale or license of our technology.

        Product Development and Marketing Expenses. Product development and
marketing expenses were $1,504,203 for the three months ended September 30,
2001. These expenses include business development and marketing activities and
efforts to customize our technology in accordance with our agreements with
Ballard and DaimlerChrysler as well as for general business development. We did
not incur product development and marketing expenses in the three months ended
September 30, 2000.

        General and Administrative Expenses. General and Administrative expenses
were $1,278,646 for the three months ended September 30, 2001 compared to
$1,017,346 in the three months ended September 30, 2000, an increase of
$261,300. This was due largely to the full impact of the establishment of our
financial, administrative and investor relations' organizations during the
latter half of 2000. Occupancy costs also increased as we expanded our
facilities in 2001.

        Non-cash Charges. Non-cash charges were $1,667,100 for the three months
ended September 30, 2001 compared to $8,947,378 in the three months ended
September 30, 2001, a decrease of $7,280,278. The decrease was primarily related
to non-cash charges for company stock options granted to board of directors and
advisory board members and a one-time issuance of common stock in connection
with the termination of a royalty agreement in conjunction with our initial
public offering, which was completed in August 2000. The charges recorded during
the third quarter of 2000 included $4,210,473 for the grant of company stock
options to employees and board members below market, the fair value of options
issued to non-employees of $2,667,935 and $2,068,970 for the issuance of common
stock in connection with the termination of the royalty agreement. This compares
to non-cash charges of $1,667,100 recorded during the third quarter of 2001 for
the grant of company options below market to employees and non-employees.

        Depreciation and Amortization. Depreciation and amortization was
$116,027 for the three months ended September 30, 2001 compared to $99,151 in
the three months ended September 30, 2000, an increase of $16,876. The increase
in depreciation and amortization was primarily related to the addition of
laboratory equipment since September 30, 2000. We expect depreciation and
amortization to continue to increase as we purchase additional property, plant
and equipment to support our expansion plans.

        Research and Development Expenses. Research and development expenses
were $906,541 for the three months ended September 30, 2001 compared to $667,511
in the three months ended September 30, 2000, an increase of $239,030. The
increase was primarily attributable to increased staffing and research projects
required to further the development of our technology.

        Interest Income. Net interest income was $247,946 for the three months
ended September 30, 2001 compared to $230,440 in the three months ended
September 30, 2000, an increase of $17,506. The increase in net interest income
was the result of higher average cash balances outstanding for the three months
ended September 30, 2001. Our initial public offering was successfully completed
on August 9, 2000. As a result, the funds raised were not outstanding for the
entire quarter ended September 30, 2000.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 2000.

        Revenues. To date, we have not recognized any revenues related to the
sale or license of our technology.

        Product Development and Marketing Expenses. Product development and
marketing expenses were $3,672,240 for the nine months ended September 30, 2001.
These expenses include business development and marketing activities and efforts
to


                                       6
<PAGE>


customize our technology in accordance with our agreements with Ballard and
DaimlerChrysler as well as for general business development. We did not incur
product development and marketing expenses in the nine months ended September
30, 2000.

        General and Administrative Expenses. General and Administrative expenses
were $3,495,547 for the nine months ended September 30, 2001 compared to
$1,482,475 in the nine months ended September 30, 2000, an increase of
$2,013,072. This was due largely to the full impact of the establishment of our
financial, administrative and investor relations' organizations during the
latter half of 2000. Occupancy costs also increased as we expanded our
facilities in 2001.

        Non-cash Charges. Non-cash charges were $6,135,256 for the nine months
ended September 30, 2001 compared to $8,947,378 in the nine months ended
September 30, 2000, a decrease of $2,812,122. The decrease was primarily related
to non-cash charges for company stock options granted to board of directors and
advisory board members and a one-time issuance of common stock in connection
with the termination of a royalty agreement in conjunction with our initial
public offering, which was completed in August 2000. The charges recorded during
the nine months ended September 30, 2000 included $4,210,473 for the grant of
company stock options to employees and board members below market, the fair
value of options issued to non-employees of $2,667,935 and $2,068,970 for the
issuance of common stock in connection with the termination of the royalty
agreement. This compares to non-cash charges of $6,135,256 recorded during the
nine months ended September 30, 2001 for the grant of company options below
market to employees and non-employees.

        Depreciation and Amortization. Depreciation and amortization was
$322,350 for the nine months ended September 30, 2001 compared to $160,227 in
the nine months ended September 30, 2000, an increase of $162,123. The increase
in depreciation and amortization was primarily related to the addition of
laboratory equipment since September 30, 2000. We expect depreciation and
amortization to continue to increase as we purchase additional property, plant
and equipment to support our expansion plans.

        Research and Development Expenses. Research and development expenses
were $2,029,244 for the nine months ended September 30, 2001 compared to
$1,328,490 in the nine months ended September 30, 2000, an increase of $700,754.
The increase is primarily attributable to increased staffing and research
projects as required to further the development of our technology.

        Interest Income. Net interest income was $972,431 for the nine months
ended September 30, 2001 compared to $211,142 in the nine months ended September
30, 2000, an increase of $761,289. The increase in net interest income was the
result of higher average cash balances outstanding for the nine months ended
September 30, 2001. Our initial public offering was successfully completed on
August 9, 2000. As a result, the funds raised were not outstanding for the
entire nine months ended September 30, 2000.

LIQUIDITY AND CAPITAL RESOURCES

        Since our organization, effective January 1, 1999, we have primarily
financed our operations through our initial public offering in August 2000 and
private placements of equity securities. The net proceeds from our initial
public offering totaled approximately $29.9 million. In October 2000, we
received $2.4 million in cash from Ballard Power Systems Inc. as an advance for
prospective royalties pursuant to a product development agreement between
Ballard and us. Under certain circumstances, a portion of this advance may be
refundable to Ballard.

        Also in October 2000, we granted Ballard a warrant to purchase up to
400,000 shares of our common stock, which will be recorded at its fair value on
the warrant vesting date (as defined). If the warrant vesting date occurs, we
would record the warrants at their fair value using the Black-Scholes method of
valuation. We believe that the warrant vesting date will likely occur in 2002.

        As of September 30, 2001, we had $5,254,140 million in cash and cash
equivalents and short-term investments of $17,090,194. Cash used in operations
totaled $7,290,924 and $2,445,699 in the nine months ended September 30, 2001
and 2000, respectively, and related to funding our net operating losses.

        Investing activities used cash of $17,589,887 and $462,383 in the nine
months ended September 30, 2001 and 2000, respectively. Investing activities in
2001 consisted primarily of purchases of U.S. government agency bonds and
commercial certificates of deposit to protect against interest rate risk.
Additionally, we purchased laboratory equipment and accessories


                                       7
<PAGE>


necessary for the continuation of our research and development activities and
incurred additional patent registration costs. We expect to continue to make
significant investments in research and development and our administrative
infrastructure, including the purchase of property, plant and equipment to
support our expansion plans. We continue to register and pursue patents on our
technology.

        Between January 1999 and April 2000, we received an aggregate of
$227,522 from a recoverable grant award from the State of New Jersey Commission
on Science and Technology. The funds were used to partially fund costs directly
related to development of our fuel cell technology. The recoverable grant is
required to be repaid when we generate net income in a fiscal year. The
repayment obligation, which began in June 2001, ranges from 1% to 5% of net
income over a ten-year period and shall not exceed 200% of the original grant.
We are obligated to repay the unpaid amount of the original grant at the end of
the ten-year period.

        In December 2000, we were granted a tax abatement rebate by the State of
New Jersey as a business incentive. Under the abatement, the State of New Jersey
will reimburse us for a portion of the state income taxes paid by up to a
maximum of 50 new employees hired after December 2000. This incentive may
provide rebates of up to $200,000 per year for ten years. No rebates have been
received to date.

        We believe that the net proceeds from our initial public offering,
together with our current cash and cash equivalents, will be sufficient to
satisfy anticipated cash needs of our operations into early 2003. It is
possible, however, that we may seek additional financing within this time frame.
We may raise additional funds through public or private financing, collaborative
relationships or other arrangements. We cannot assure you that additional
funding, if sought, will be available or, even if available, will be on terms
favorable to us. Further, any additional equity financing may be dilutive to
stockholders, and debt financing, if available, may involve restrictive
covenants. Our failure to raise capital when needed may harm our business and
operating results.

FORWARD-LOOKING STATEMENTS

        We have made forward-looking statements in this document that are
subject to risks and uncertainties. Without limitation, these forward-looking
statements include statements:

        -       regarding new products we may introduce in the future;

        -       about our business strategy and plans;

        -       about the adequacy of our working capital and other financial
                resources; and

        -       that are not of an historical nature.

        When we use words such as "plan," "believe," "expect," "anticipate,"
"intend" or similar expressions, we are making forward-looking statements. You
should note that forward-looking statements rely on a number of assumptions
concerning future events, and are subject to a number of uncertainties and other
factors, many of which are outside of our control, that could cause actual
results to differ materially from the statements made. Please note that we
disclaim any intention or obligation to update or revise any forward-looking
statements unless materially different. Other discussions regarding
forward-looking statements and risk factors can be found in our registration
statement on Form S-1 declared effective by the Securities and Exchange
Commission on January 12, 2001.

ITEM 3.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

        Market risk represents the risk of loss that may impact our financial
position, operating results or cash flows due to changes in U.S. interest rates.
This exposure is directly related to our normal operating activities. Our cash
and cash equivalents and held-to-maturity investments are invested with high
quality issuers and are generally of a short-term nature. As a result, we do not
believe that near-term changes in interest rates will have a material effect on
our future results of operations.


                                       8
<PAGE>


        Our systems' ability to produce energy depends on the availability of
sodium borohydride, which has a limited commercial use and is not manufactured
in vast quantities. There are currently only two major manufacturers of sodium
borohydride and there can be no assurance that the high cost of this specialty
chemical will be reduced. Once we commence full operations in the future, we may
need to enter into long-term supply contracts to protect against price increases
of sodium borohydride. There can be no assurance that we will be able to enter
into these agreements to protect against price increases.



                                       9
<PAGE>



                                     PART II


ITEM 6.         EXHIBITS AND REPORTS ON FORM 8-K.

        (a)     Exhibits

                None.

        (b)     Reports on Form 8-K

        The Company did not file any reports on Form 8-K during the three months
ended September 30, 2001.



                                       10
<PAGE>


                                   SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                              MILLENNIUM CELL INC.

                                              By: /s/  NORMAN R. HARPSTER, JR.
                                                  ------------------------------
                                                       Norman R. Harpster, Jr.
                                                   Vice President--Finance and
                                                     Administration and Chief
                                                         Financial Officer

November 9, 2001


                                       11