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, 2004

     |_|  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 by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes |_| No
|X|

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 37,366,364 shares of
Common Stock, par value $.001, were outstanding on May 4, 2004.


<PAGE>


                              MILLENNIUM CELL INC.
                        (a development stage enterprise)
                                      Index
<TABLE>
<CAPTION>


PART I - FINANCIAL INFORMATION
<S>             <C>                                                                                             <C>
                                                                                                                 Page
Item 1.         Financial Statements (Unaudited)

                Consolidated Balance Sheet - March 31, 2004 and December 31, 2003..........................         1

                Consolidated Statements of Operations - Three Months ended March 31, 2004 and 2003.........         2

                Consolidated Statements of Cash Flows - Three Months ended March 31, 2004 and 2003.........         3

                Notes to Consolidated Financial Statements - March 31, 2004................................         4

Item 2.         Management's Discussion and Analysis of Financial Condition and Results of Operations......         7

Item 3.         Quantitative and Qualitative Disclosures About Market Risk.................................        13

Item 4.         Controls and Procedures....................................................................        13


PART II - OTHER INFORMATION

Item 2.         Changes in Securities and Use of Proceeds..................................................        14

Item 6.         Exhibits and Reports on Form 8-K...........................................................        14

</TABLE>






<PAGE>



                         PART I - FINANCIAL INFORMATION

Item 1.          Financial Statements (Unaudited).

                              MILLENNIUM CELL INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                           CONSOLIDATED BALANCE SHEET
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                          March 31,         December 31,
                                                                                            2004                2003
                                                                                            ----                ----
<S>                                                                                    <C>                 <C>

ASSETS
Current assets:
   Cash and cash equivalents.......................................................    $      9,451,039    $     6,004,173
   Accounts receivable.............................................................             272,144             41,244
   Prepaid expenses................................................................             262,763            265,459
   Deferred financing costs........................................................             182,448             22,663
                                                                                       ----------------    ---------------
Total current assets...............................................................          10,168,394          6,333,539
Property and equipment, net........................................................             972,299          1,009,514
Patents and licenses, net..........................................................             589,020            597,564
Restricted cash....................................................................           3,005,428          2,998,379
Security deposits..................................................................              45,676             45,676
                                                                                       ----------------    ---------------
                                                                                       $     14,780,817    $    10,984,672
                                                                                       ================    ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable................................................................    $        262,948    $       272,143
   Accrued expenses................................................................             929,276            389,464
   Short-term portion of capital lease obligation..................................              30,245             37,036
   Short-term portion of refundable grant obligation...............................              18,675             18,675
   Deferred compensation...........................................................              32,315             32,315
   Convertible unsecured debentures, net of discount...............................                  --            684,791
   Deferred revenue................................................................             140,000                 --
                                                                                       ----------------    ---------------
Total current liabilities..........................................................           1,413,459          1,434,424

Convertible unsecured debentures, net of discount..................................           5,284,447                 --
Convertible secured debentures, net of discount....................................           2,399,988          2,399,988
Refundable grant obligation........................................................             187,266            187,266
Capital lease obligation and other long-term liabilities...........................             349,775             31,909

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, 35,535,109 and
      35,029,052 shares issued and outstanding
      as of March 31, 2004 and December 31, 2003, respectively.....................              35,535             35,029
   Additional paid-in capital......................................................          79,324,819         77,784,952
   Deferred compensation...........................................................            (301,533)          (358,427)
   Deficit accumulated during development stage....................................         (73,912,939)       (70,530,469)
                                                                                       ----------------    ---------------
Total stockholders' equity.........................................................           5,145,882          6,931,085
                                                                                       ----------------    ---------------
                                                                                       $     14,780,817    $    10,984,672
                                                                                       ================    ===============

                       See notes to financial statements.

</TABLE>



                                       1
<PAGE>




                              MILLENNIUM CELL INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (unaudited)
<TABLE>
<CAPTION>


                                               Three Months     Three Months
                                                   Ended            Ended      Cumulative
                                                 March 31,        March 31,   Amounts From
                                                   2004             2003        Inception
                                                   ----             ----        ---------
<S>                                            <C>              <C>           <C>

Revenues.......................................  $    25,000   $      55,261   $  1,211,251
Cost of revenues...............................       25,000          55,261      1,124,508
                                                 -----------   -------------   ------------
Gross margin...................................           --              --         86,743

Product development and marketing..............      992,515       1,231,499     17,588,421
General and administrative
  (excluding non-cash charges).................    1,611,161       1,070,493     17,564,866
Restructuring expense..........................           --              --        104,982
Non-cash charges...............................      322,138       1,095,406     24,761,865
Depreciation and amortization..................      142,343         175,297      2,321,534
Research and development.......................           --         305,411      8,112,113
                                                 -----------   -------------   ------------
Total operating expenses.......................    3,068,157       3,878,106     70,453,781
                                                 -----------   -------------   ------------

Loss from operations...........................   (3,068,157)     (3,878,106)   (70,367,038)

Interest expense...............................      314,313         516,000        995,385
Equity in losses of affiliate..................           --         294,200        856,078
                                                 -----------   -------------   ------------

Net loss before income taxes...................   (3,382,470)     (4,688,306)   (72,218,501)
Benefit from income taxes......................           --              --        456,443
                                                 -----------   -------------   ------------

Net loss.......................................   (3,382,470)     (4,688,306)   (71,762,058)
Preferred stock amortization...................           --              --      2,150,881
                                                 -----------   -------------   ------------

Net loss applicable to common stockholders.....  $(3,382,470)  $  (4,688,306)  $(73,912,939)
                                                 ===========   =============   ============

Loss per share -- basic and diluted............  $      (.10)  $        (.16)  $      (2.69)
                                                 ============  ==============  ============

Weighted average number of shares outstanding..   35,398,732      29,401,836     27,449,136
                                                 ===========   =============   ============

                       See notes to financial statements.


</TABLE>



                                       2
<PAGE>



                              MILLENNIUM CELL INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>
                                               Three Months      Three Months     Cumulative
                                                  Ended             Ended        Amounts from
                                               March 31, 2004   March 31, 2003     Inception
                                               --------------   --------------     ---------
<S>                                           <C>             <C>            <C>

OPERATING ACTIVITIES
Net loss....................................   $  (3,382,470) $  (4,688,306) $ (71,762,058)
Adjustments to reconcile net loss to
   net cash used in operating activities:
Depreciation and amortization...............         142,343        175,297      2,321,534
Amortization of discount on debentures......          76,257        225,349      1,024,954
Beneficial conversion feature on debentures.         175,757         81,616      1,532,582
Amortization of deferred financing costs....          38,229        213,686        634,873
Losses on investment in affiliate...........              --        294,200        856,078
Non-cash charges............................         322,138      1,095,406     24,761,865
Changes in operating assets and liabilities:
Accounts receivable.........................        (230,900)      (217,843)      (272,144)
Prepaid expenses and other assets...........           2,696         80,258       (308,439)
Accounts payable and accrued expenses.......         685,086       (307,388)     1,776,262
Deferred revenue............................         140,000         70,000      2,539,988
                                                -------------  -------------  -------------
Net cash used in operating activities.......      (2,030,864)    (2,977,725)   (36,894,505)

INVESTING ACTIVITIES
Purchase of property and equipment..........         (86,398)        (6,050)    (2,874,259)
Patent registration costs...................         (10,186)       (21,718)      (672,410)
Investment in affiliate.....................              --       (126,788)      (856,078)
Increase in restricted cash.................          (7,049)    (8,533,892)    (3,005,428)
                                               -------------- -------------  --------------
Net cash used in investing activities.......        (103,633)    (8,688,448)    (7,408,175)

FINANCING ACTIVITIES
Proceeds from issuance of common stock......           8,289             --     35,148,139
Underwriting and other expenses of initial
   public offering..........................              --             --     (3,669,613)
Proceeds from issuance of debentures........       5,600,000      8,500,000     17,600,000
Proceeds from equity private placement......              --             --      2,736,279
Deferred financing costs....................         (20,001)            --       (639,308)
Proceeds from capital contribution..........              --             --        500,000
Payment of note payable.....................              --             --       (250,000)
Payment of capital lease obligation.........          (6,925)            --        (24,164)
Proceeds from grant.........................              --             --        205,940
Proceeds from sale of preferred stock.......              --             --      2,146,446
                                               -------------  -------------  -------------
Net cash provided by financing activities...       5,581,363      8,500,000     53,753,719
                                               -------------  -------------  -------------
Net change in cash and cash equivalents.....       3,446,866     (3,166,173)     9,451,039
Cash and cash equivalents, beginning of
   period...................................       6,004,173      7,987,127             --
                                               -------------  -------------  -------------
Cash and cash equivalents, end of period....   $   9,451,039  $   4,820,954  $   9,451,039
                                               =============  =============  =============
</TABLE>

Non-Cash Transactions:
    The Company issued 25,232 shares of common stock valued at $46,931 to
employees as 401(k) Plan employer matching contributions in the first quarter of
2003. In the first quarter of 2004, the Company issued 59,923 shares of common
stock to Board of Directors members and employees in lieu of cash compensation.
The Company also converted unsecured debentures into shares of common stock
during the first quarter of 2004 (see Note 5).



                       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 consolidated financial statements include the accounts of
Millennium Cell Inc. and its wholly owned subsidiary, MCE Ventures LLC ("MCE
Ventures"). MCE Ventures is a Delaware limited liability corporation that was
formed in 2002 to engage in limited strategic investment activities. All
significant inter-company transactions and accounts have been eliminated.

         The accompanying unaudited consolidated 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 in the United States 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, 2003. Reclassifications were
made to ensure consistency with current year presentation.

         The consolidated statement of operations for the three months ended
March 31, 2003 was adjusted to reflect a correction of an overstatement of
non-cash interest expense of $294,404.  This adjustment decreased net loss
per share by $.01 for the first quarter of 2003.  For further information,
refer to the disclosures in footnote 14 of the Company's Annual Report on
Form 10-K for the year ended December 31, 2003.


NOTE 2--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 3--STOCK BASED COMPENSATION

          Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation" and SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure" encourages, but does not
require, companies to record compensation cost for stock-based employee
compensation plans at fair value. The Company has elected to account for
stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25,"Accounting for Stock Issued to
Employees" ("APB 25").

                                       4
<PAGE>



         The following table illustrates the effect on net income and earnings
per share if the Company had applied the fair value recognition provisions of
SFAS 123 to stock-based employee compensation:
<TABLE>
<CAPTION>

                                                                  Three Mos. Ended March 31,
                                                                  --------------------------
                                                                      2004          2003
                                                                      ----          ----
<S>                                                               <C>           <C>
Net loss attributable to common stockholders--
  As reported..........................................           $(3,382,470)  $(4,688,306)
Add: Total stock-based compensation expense
  included in Net Loss.................................               322,138     1,095,406
Deduct: Total stock-based compensation expense
  determined under fair value based method for all
  stock option awards..................................              (518,254)   (2,237,777)
Net loss attributable to common stockholders--
  Pro forma............................................           $(3,578,586)  $(5,830,677)
Net loss per share attributable to common
  stockholders-- As reported...........................                $(0.10)       $(0.16)
Net loss per share attributable to common
  stockholders-- Pro forma.............................                $(0.10)       $(0.20)
</TABLE>

         The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted average
assumptions:
<TABLE>
<CAPTION>
<S>                                                               <C>               <C>

                                                                  Three Mos. Ended March 31,
                                                                  --------------------------
                                                                     2004            2003
                                                                     ----            ----

Expected dividend yield...................................            --               --
Expected stock price volatility...........................           .57              .69
Risk-free interest rate...................................          3.48%            3.68%
Expected option term......................................          5 years          5 years
</TABLE>

          The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. The Company's options have characteristics significantly different
from those of traded options, and changes in the subjective input assumptions
can materially affect the fair value estimate. Based upon the above assumptions,
the weighted average fair value of stock options granted at market was $1.25 and
$3.10 in 2004 and 2003, respectively.

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

          In August 2003, the Company exchanged 835,500 eligible stock options
for 197,599 shares of restricted stock related to an exchange offer. This offer
allowed eligible plan participants to exchange options for restricted stock at
an exchange rate based on the calculated market value of the stock options using
a black-scholes model. For the first quarter of 2004, the Company recorded
$49,400 related to the vesting of the restricted stock. The Company will
recognize additional non-cash charges of approximately $296,000 related to the
issuance of the restricted stock over the vesting period (two years from the
exchange date or sooner based on certain events).

         There are a number of outstanding stock warrants held by certain
affiliates and third parties. The accounting methodology for these warrants
requires a re-valuing of the warrants at each period ending market price using a
Black-Scholes pricing model. In the first quarter of 2004, the Company recorded
approximately $141,000 of non-cash charges for changes in the fair value of
affiliates' warrants. Due to the variable nature of this accounting methodology,
it is difficult to predict the amount of additional non-cash charges the Company
will incur related to these warrants during future periods.

                                       5
<PAGE>

NOTE 5--CONVERTIBLE DEBENTURES

         During 2002 and 2003, the Company entered into a private placement
financing transaction with an institutional and accredited investor pursuant to
the terms of a securities purchase agreement among the Company and the
purchaser. The Company claimed the exemption from registration provided by
Section 4(2) of the Securities Act of 1933, as amended, in connection with the
private placement. Pursuant to the terms of the agreement, the investor acquired
$12.0 million of secured and unsecured convertible debentures (the "2003
Debentures") with a carrying value at issuance of $9.9 million. In 2003, the
Company converted $11.3 million of the debentures into 5,468,001 shares of the
Company's common stock. In January 2004, the Company converted the remaining
$0.7 million of debentures into 303,030 shares of the Company's common stock.

         In January 2004, the Company entered into a second private placement
financing transaction with an institutional and accredited investor pursuant to
the terms of a securities purchase agreement among the Company and the
purchaser. The Company claimed the exemption from registration under Section
4(2) of the Securities Act of 1933. Pursuant to the terms of the agreement, the
investor agreed to acquire up to $10 million of unsecured debentures,
convertible into common stock of the Company, subject to certain terms and
conditions.

         The SEC declared the registration of shares underlying the debentures
effective on February 17, 2004 and $6.0 million of unsecured debentures (the
"2004 Debentures") were issued to the investor on that date at an initial
conversion price of $3.30, subject to certain terms and conditions. The
additional $4 million of unsecured convertible debentures will be issued to the
investor at the sole option of the Company, provided that at least $4 million of
the $6 million debenture has been converted into common stock in accordance with
the terms of such debenture, and the Company is in compliance in all material
respects with the private placement documents. Under the terms of the agreement,
cash fees of $400,000 were deducted from the initial proceeds and 140,180 shares
of common stock were issued to the holder of the debentures upon closing of the
transaction. The market value of these shares and the cash fees were recorded as
a discount on the debentures and are amortized over the term of the debentures
or as they are converted, whichever happens first. The carrying value of the
2004 Debentures was $5,223,398 at the time of issuance. The 2004 Debentures will
mature in 18 months and are subject to six, 30-day extensions and will bear
interest at 6% per annum with payments due quarterly.

         In accordance with APB No. 14, "Accounting for Convertible Debt and
Debt Issued with Stock Purchase Warrants", the Company amortizes discounts on
its debentures as interest expense, using the effective interest method, over
the original maturity period of the debentures or ratably as they are converted,
whichever comes first. During the quarter ended March 31, 2004, the Company
recognized a non-cash charge to interest expense of $76,257 for amortization of
discount on debentures.

         In accordance with Emerging Issues Task Force ("EITF") No. 00-27,
"Application of Issue No. 98-5 to Certain Convertible Instruments", and EITF No.
98-5, "Accounting for Convertible Securities with Beneficial Conversion Features
or Contingently Adjustable Conversion Ratios", and after considering the terms
of the transaction, the Company determined that the debentures contained a
beneficial conversion feature ("BCF"). The BCF existed because of a discount of
7% that will be given to the investor in the event of a company-initiated
conversion of the debentures prior to maturity. Accordingly, at time of
conversion, the Company will record as interest expense any applicable BCF based
on the fair value of the conversion feature on that date in the event of an
early conversion of debentures into common stock. During the quarter ended March
31, 2004, the remaining $0.7 million of 2003 Debentures were converted and a BCF
of $175,757 was recorded. None of the 2004 Debentures were converted during the
quarter ended March 31, 2004.

         In November 2002, Ballard Power Systems Inc. made an investment of $2.4
million in the form of secured convertible debentures. These debentures are
still outstanding as of March 31, 2004 and are due on November 8, 2005.


NOTE 6--SUBSEQUENT EVENTS

         During April 2004, $3 million of the $6 million 2004 Debentures were
converted into 1,398,802 shares of the Company's common stock. Accordingly, the
Company will recognize a charge to interest expense for the value of the
beneficial conversion feature the investor received on these conversions.



                                       6
<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 consolidated 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. See the discussion contained
herein under the caption "Forward-Looking Statements" for more information. 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 fiscal year ended December
31, 2003.

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

         We have developed a patent-pending process called Hydrogen on
Demand(TM) that safely generates pure hydrogen or electricity from
environmentally friendly raw materials. In the process, the energy potential of
hydrogen is carried in the chemical bonds of sodium borohydride, which in the
presence of a catalyst releases hydrogen or produces electricity. The primary
input components of the reaction are water and sodium borohydride, a derivative
of borax, which is found in substantial natural reserves globally. Hydrogen from
this system can be used to power fuel cells, as well as fed directly to internal
combustion engines. We also have patents covering boron-based longer-life
batteries. Our goal is to convert our technology from the research and
development stage to commercialization.

         Our losses have resulted primarily from costs associated with product
development and 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 March 31, 2004 versus Three Months Ended March 31, 2003

         Revenues. Revenues for the three months ended March 31, 2004 were
$25,000 compared to $55,261 for the same period of 2003. In the near-term,
revenues are expected to be derived substantially from license fees, research
contracts with various federal, state and local agencies, collaborations with
other companies, management and contract services, and royalty payments or joint
venture revenue from licensees or strategic partnerships. Revenues will be
recognized in the period in which technology is delivered, licensing revenues
are earned, or as services are performed.

         Cost of Revenues. Cost of revenues for the three months ended March 31,
2004 was $25,000 compared to $55,261 for the same period of 2003.

         Product Development and Marketing Expense. Product development and
marketing expenses for the three months ended March 31, 2004 were $992,515
compared to $1,231,499 for the same period of 2003, a decrease of $238,984. This
decrease was mostly attributable to decreased headcount in the marketing
function and other active cost management initiatives.

                                       7
<PAGE>

         General and Administrative Expense. General and administrative expenses
for the three months ended March 31, 2004 were $1,611,161 compared to $1,070,493
for the same period of 2003, an increase of $540,668. The increase was driven by
the accrual of separation costs of approximately $591,000 as a result of the
resignation of the Company's previous President and Chief Executive Officer in
March 2004. The separation costs were comprised of salary, benefits and other
costs in satisfaction of his employment contract. The expected payment schedule
is as follows:

         2004 (remaining 9 months)                   $        273,000
         2005                                                 278,000
         2006                                                  32,000
         2007                                                   8,000
                                                   ------------------
         Total                                                591,000
                                                   ===================

         Non-cash Charges. Non-cash charges were $322,138 for the three months
ended March 31, 2004 compared to $1,095,406 for the same period of 2003, a
decrease of $773,268. The non-cash charges in 2003 were primarily related to
options issued below market to employees in 2000 and warrants issued to
affiliates and other third parties for services rendered.

         Depreciation and Amortization. Depreciation and amortization was
$142,343 for the three months ended March 31, 2004 compared to $175,297 for the
same period of 2003, a decrease of $32,954. The decrease reflects the impact of
assets that have recently been fully depreciated.

         Research and Development Expense. Research and development expenses
were zero for the three months ended March 31, 2004 compared to $305,411 for the
same period of 2003, a decrease of $305,411. The decrease is mainly attributable
to the reimbursement of expenses under the Department of Energy program for the
joint research of electrochemical pathways to manufacture sodium borohydride.
This program reimburses us for 80% of our qualifying costs under the program.
Although the project began during the first quarter of 2004, the Department of
Energy authorized us to bill for work that occurred up to 90 days prior to the
contract effective date.

         Interest Expense. Interest expense was $314,313 for the three months
ended March 31, 2004 compared to $516,000 for the same period of 2003, a
decrease of $201,687. The decrease in interest expense was mainly the result of
fewer conversions of debentures in the first quarter of 2004 than in the same
period of 2003. During the quarter ended March 31, 2004, $0.7 million of
debentures were converted compared with $1.2 million in the first quarter of
2003. When debentures are converted, amortization of original issue discounts,
issue costs and charges for beneficial conversion features are recorded as
interest expense.

Three Months Ended March 31, 2003 versus Three Months Ended March 31, 2002

         Revenues. Revenues for the quarter ended March 31, 2003 were $55,261
compared to $360,000 for the same period of 2002. Revenues for the first quarter
of 2002 included the sale of large, prototype systems which were not recurring
in the first quarter of 2003.

         In the near-term, revenues are expected to be derived substantially
from license fees, research contracts with various federal, state and local
agencies, collaborations with other companies, management services, and royalty
payments or joint venture revenue from licensees or strategic partnerships.
Revenues will be recognized in the period in which technology is delivered,
licensing revenues are earned, or as services are performed.

         Cost of Revenues. Cost of revenues for the quarter ended March 31, 2003
was $55,261 compared to $360,000 for the same period of 2002. Cost of revenues
on prototype unit sales during the development stage are allocated from the
Product Development and Marketing expense and Research and Development expense
line items on the income statement depending on the nature of the project. The
decline in cost of revenues was due to the sale in the first quarter of 2002 of
large, prototype systems that were not recurring in the first quarter of 2003.

         Product Development and Marketing Expense. Product development and
marketing expenses for the quarter ended March 31, 2003 were $1,231,499 compared
to $1,729,218 for the same period of 2002, a decrease of $497,719. This decrease
was mostly attributable to the cost reduction program implemented during the
second quarter of 2002.

         General and Administrative Expense. General and administrative expenses
for the quarter ended March 31, 2003 were $1,070,493 compared to $1,498,373 for
the same period of 2002, a decrease of $427,880. The decrease was a result of
increased efficiency of our administrative and finance organizations as well as
the cost reduction program implemented during the second quarter of 2002.

                                       8
<PAGE>

         Non-cash Charges. Non-cash charges were $1,095,406 for the quarter
ended March 31, 2003 compared to $1,117,825 for the same period of 2002, a
decrease of $22,419. The non-cash charges are related to options issued below
market to employees in 2000 and warrants issued to affiliates and other third
parties for services rendered.

         Depreciation and Amortization. Depreciation and amortization was
$175,297 for the quarter ended March 31, 2003 compared to $173,789 for the same
period of 2002, an increase of $1,508. This slight increase reflects
depreciation on our newly completed lab and facilities expansion in 2002 offset
by assets that have recently fully depreciated.

         Research and Development Expense. Research and development expenses
were $305,411 for the quarter ended March 31, 2003 compared to $363,631 for the
same period of 2002, a decrease of $58,220. The decrease was primarily
attributable to the cost reduction program implemented during the second quarter
of 2002.

         Interest Income/(Expense). Net interest expense was $516,000 for the
quarter ended March 31, 2003 compared to interest income of $157,616 for the
same period of 2002, a change of $358,384. The increase in net interest expense
was mainly the result of interest expense and amortization of original issue
discounts and issue costs on the Company's unsecured and secured debentures
issued in December 2002 and January 2003, respectively.

         Equity in losses of affiliate. In July 2002, we agreed to acquire a 50%
non-controlling interest in a European alkaline fuel cell company (the
"Affiliate"). Our investment is accounted for by the equity method. We evaluated
our Investment in Affiliate and due to the uncertainty of the recoverability of
the investment determined that the fair value of the investment was currently
zero. As a result, we wrote off the Investment in Affiliate.

Liquidity and Capital Resources

General

         Since the inception date, we have financed our operations primarily
through our initial public offering in August 2000 and private placements of
equity and debt securities. In 1999, we issued $1,250,000 of membership
interests in Millennium Cell LLC for cash, which subsequently were converted
into our common stock as of April 25, 2000. We also received a capital
contribution of $500,000 in the first quarter of 2000, and in May 2000, we sold
759,368 shares of Series A preferred stock, which automatically converted into
759,368 shares of common stock upon the completion of our initial public
offering. The net proceeds from our initial public offering totaled
approximately $29.9 million and net proceeds from private placement transactions
in 2002 and 2003 totaling $14.3 million. In February 2004, the Company received
net proceeds of approximately $5.6 million from a new private placement
transaction.

Ballard Power Systems

         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. In addition, we granted to Ballard
a warrant to purchase up to 400,000 shares of our common stock, which was
terminated as part of the strategic investment discussed below. Upon completion
of certain stages of product development, the parties agreed to negotiate in
good faith for the grant of a license of our technology to Ballard in certain
fields of use, at which time prepaid royalties may be earned and the warrants
will be issued and recorded at fair value.

         On November 8, 2002, we agreed with Ballard that the product
development milestones had been achieved and agreed to convert the $2.4 million
refundable royalty payment into an investment in our company in the form of
secured convertible debentures due November 8, 2005. The Ballard debentures are
secured by a standby letter of credit issued by Wachovia Bank, National
Association, with an aggregate face amount equal to the outstanding principal.
We pledged to the bank as collateral $2.4 million of funds previously reported
under cash and cash equivalents on the accompanying balance sheet. We will not
have the ability to use this cash until the bank pledges are released upon
conversion of the Ballard debentures to common stock. The debentures are
convertible at a conversion price of $4.25, subject to anti-dilution adjustments
and certain price protection in the event we initiate the conversion. As part of
the purchase agreement entered into between Ballard and us, Ballard retains the
option to license the non-exclusive right to manufacture and sell products with
our Hydrogen on Demand(TM) technology for specific portable fuel cell products
and stationary internal combustion engine generators.

                                       9
<PAGE>

Private Placement Transactions

         During 2002 and 2003, we entered into a private placement financing
transaction with an institutional and accredited investor pursuant to the terms
of a securities purchase agreement among the Company and the purchaser. We
claimed the exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended, in connection with the private placement.
Pursuant to the terms of the agreement, the investor acquired $12.0 million of
secured and unsecured convertible debentures (the "2003 Debentures") with a
carrying value at issuance of $9.9 million. In 2003, we converted $11.3 million
of the debentures into 5,468,001 shares of our common stock. In January 2004, we
converted the remaining $0.7 million of debentures into 303,030 shares of our
common stock.

         In January 2004, we entered into a second private placement financing
transaction with an institutional and accredited investor pursuant to the terms
of a securities purchase agreement between we entered into with the purchaser.
We claimed the exemption from registration under Section 4(2) of the Securities
Act of 1933. Pursuant to the terms of the agreement, the investor agreed to
acquire up to $10 million of unsecured debentures, convertible into our common
stock, subject to certain terms and conditions.

         The SEC declared the registration of shares underlying the debentures
effective on February 17, 2004 and $6.0 million of unsecured debentures (the
"2004 Debentures") were issued to the investor on that date at an initial
conversion price of $3.30, subject to certain terms and conditions. The
additional $4 million of unsecured convertible debentures will be issued to the
investor at our sole option, provided that at least $4 million of the $6 million
debenture has been converted into common stock in accordance with the terms of
such debenture, and we are in compliance in all material respects with the
private placement documents. Under the terms of the agreement, cash fees of
$400,000 were deducted from the initial proceeds and 140,180 shares of common
stock were issued to the holder of the debentures upon closing of the
transaction. The market value of these shares and the cash fees were recorded as
a discount on the debentures and are amortized over the term of the debentures
or as they are converted, whichever happens first. The carrying value of the
2004 Debentures was $5,223,398 at the time of issuance. The 2004 Debentures will
mature in 18 months and are subject to six, 30-day extensions and will bear
interest at 6% per annum with payments due quarterly.

         In accordance with APB No. 14, "Accounting for Convertible Debt and
Debt Issued with Stock Purchase Warrants", we amortize discounts on our
debentures as interest expense, using the effective interest method, over the
original maturity period of the debentures or ratably as they are converted,
whichever comes first. During the quarter ended March 31, 2004, we recognized a
non-cash charge to interest expense of $76,257 for amortization of discount on
debentures.

         In accordance with Emerging Issues Task Force ("EITF") No. 00-27,
"Application of Issue No. 98-5 to Certain Convertible Instruments", and EITF No.
98-5, "Accounting for Convertible Securities with Beneficial Conversion Features
or Contingently Adjustable Conversion Ratios", and after considering the terms
of the transaction, we determined that the debentures contained a beneficial
conversion feature ("BCF"). The BCF existed because of a discount of 7% that
will be given to the investor in the event of a conversion of the debentures
initiated by us prior to maturity. Accordingly, at time of conversion, we will
record as interest expense any applicable BCF based on the fair value of the
conversion feature on that date in the event of an early conversion of
debentures into common stock. During the quarter ended March 31, 2004, the
remaining $0.7 million of 2003 Debentures were converted and we recorded a BCF
of $175,757. None of the 2004 Debentures were converted during the quarter ended
March 31, 2004.

         During April 2004, $3 million of the $6 million 2004 Debentures were
converted into 1,398,802 shares of our common stock. Accordingly, we will
recognize a charge to interest expense for the value of the beneficial
conversion feature the investor received on these conversions.

Sources and Uses of Cash

         As of March 31, 2004, we had $9,451,039 in cash and cash equivalents
and restricted cash of $3,005,428. Cash used in operations totaled $2,030,864
and $2,977,725 in the first quarter of 2004 and 2003, respectively, and related
to funding our net operating losses. The restricted cash comprised $2.4 million
of cash used for collateral in connection with Ballard's strategic investment in
us and $0.6 million of cash used for collateral as security deposit held by our
landlord in connection with the amended lease agreement. These funds used will
not be available for use in operations until the letters of credit have been
reduced or terminated.

                                       10
<PAGE>

         Investing activities used cash of $103,633 and $8,688,448 in the first
quarter of 2004 and 2003, respectively. Investing activities in the first
quarter of 2004 consisted mainly of purchases of laboratory equipment to support
our research, while 2003 investing activities were driven by an increase in
restricted cash for the $8.5 million of secured debentures issued in January
2003 and investing activities in a former affiliate.

Commitments and Contingencies

         In April 2001, we amended our main operating lease to provide for
additional space for our principal operating offices and laboratories. Since
November 2001, we occupy all facilities contemplated in the lease agreement. The
amended lease will expire in 2008 and will contain options to renew for an
additional 8 years and will require us to pay its allocated share of taxes and
operating cost in addition to the annual base rent payment. Future minimum
annual lease commitments including estimated allocated taxes and maintenance
under the amended operating leases are as follows:

      2004 (remaining 9 months)                         $        363,232
      2005                                                       484,310
      2006                                                       484,310
      2007                                                       484,310
      2008                                                       443,950
                                                        ----------------
      Total                                             $      2,260,112
                                                        ================

         In connection with the amended lease agreement, we issued a letter of
credit to the landlord for $588,972 in lieu of a cash security deposit. The
letter of credit was collateralized with a portion of our cash and is classified
as Restricted Cash. The funds used for collateral will not be available for use
in operations.

         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 technology. The recoverable grant is required to
be repaid when we generate net sales in a fiscal year. The repayment obligation,
which began in June 2001, ranges from 1% to 5% of net sales over a ten-year
period. We are obligated to repay the unpaid amount of the original grant at the
end of the ten-year period. We repaid approximately $21,000 of the award during
the second quarter of 2003, which represents 3% of the 2002 net sales. Based
upon 4% of the 2003 net sales, $18,675 is due to be repaid in 2004.

         We received net proceeds from the sale of New Jersey net operating
losses (NOL's) in connection with the New Jersey Emerging Technology and
Biotechnology Financial Assistance Program of $221,480 and $234,963 in 2003 and
2002, respectively. This program allows certain companies to apply to transfer
New Jersey NOL's to other companies. This program, if continued by the State of
New Jersey in future years, may produce similar cash inflows for us.

         We believe that our current cash and cash equivalents, together with
the cash that will be available from the recent private placement financing and
projected results of operations will be sufficient to satisfy anticipated cash
needs of our operations through at least the 2005 fiscal year. We may raise
additional funds through public or private financing, collaborative
relationships or other arrangements. Additional funding, if sought, may not be
available or, if available, may be offered at terms not 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.

Critical Accounting Policies

Application of Critical Accounting Policies

         The discussion and analysis of our financial condition and results of
operations is based on our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect our reported assets and liabilities,
revenues and expenses, and other financial information. Actual results may
differ significantly from these estimates under different assumptions and
conditions. In addition, our reported financial condition and results of
operations could vary due to a change in the application of a particular
accounting standard.

         We regard an accounting estimate underlying our financial statements as
a "critical accounting estimate" if the accounting estimate requires us to make
assumptions about matters that are highly uncertain at the time of estimation
and if different estimates that reasonably could have been used in the current
period, or changes in the estimate that are reasonably likely to occur from
period to period, would have had a material effect on the presentation of
financial condition, changes in financial condition, or results of operations.

                                       11
<PAGE>

         Not all of these significant accounting policies, however, require
management to make difficult, complex or subjective judgments or estimates. Our
management has discussed our accounting policies with the audit committee of our
board of directors, and we believe that our estimates relating to revenue
recognition, convertible debt and stock options described below fit the
definition of "critical accounting estimates."

Revenue Recognition

         Our near term revenues will be derived substantially from contracts
that require us to deliver hydrogen generation technology, management services,
system design and prototype systems and licensing of technology for test and
evaluation. It is anticipated that revenues will be recognized in the period in
which the technology is delivered or licensed revenue is earned.

Convertible Debt

         We account for the issuance and conversion of convertible debt in
accordance with APB No. 14, "Accounting for Convertible Debt and Debt Issued
with Stock Purchase Warrants". As a result, we record original issue discounts
to the extent the fair value of the debt is below the face value of the
instrument and amortizes the discount over the life of the instrument. To the
extent conversions of debt into common stock are made prior to the maturity date
of the instrument, we will record as interest expense a ratable proportion of
the discount associated with the face value of the debt converted.

         We account for issuances of convertible debt in accordance with
Emerging Issues Task Force ("EITF") No. 00-27, "Application of Issue No. 98-5 to
Certain Convertible Instruments", and EITF No. 98-5, "Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios". As a result of certain conversion price discounts included
within our outstanding debt instruments, we will record interest expense
resulting from Beneficial Conversion Features as described under the caption
"Liquidity and Capital Resources" above.

Stock Options

         We have recorded non-cash charges in 2004 for the fair value of
warrants issued to certain affiliates and third parties. Certain affiliates have
the ability to earn new awards based on defined milestones and service periods.
The accounting methodology requires a re-valuing of the related earned warrants
at each reporting period using a Black-Scholes pricing model. Due to this
variable accounting methodology, it is difficult to predict the amount of
additional non-cash charges that we will incur related to these warrants. The
fair value of our options and warrants issued to affiliates and third parties
was estimated at the date of grant using a Black-Scholes option-pricing model.

         We also disclose pro forma information regarding net income and
earnings per share that is required by SFAS No. 148. This information is
required to be determined as if we had accounted for employee stock options
under the fair value method of that statement. The fair value of options granted
has been estimated at the date of grant using a Black-Scholes option-pricing
model.

         The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Our options have characteristics significantly different from those
of traded options, and changes in the subjective input assumptions can
materially affect the fair value estimate. Due to these highly subjective
assumptions, the non-cash charges incurred in the first three months of 2004 and
2003 for warrants issued to affiliates and the pro forma disclosures of net loss
and loss per share for those periods are not likely to be representative of
non-cash charges and the pro forma effects on net loss and loss per share,
respectively, in future periods.

                                       12
<PAGE>

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," "intend" or similar expressions, we are making
forward-looking statements. You should not rely on forward-looking statements
because they are subject to 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 those indicated. Please note that we disclaim any intention or obligation
to update or revise any 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 fuel storage and delivery system, (ii) competition from current,
improving and alternate power technologies, (iii) 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 fuel storage and delivery
technology and our business plan, (iv) our ability to protect our intellectual
property, (v) our ability to achieve budgeted revenue and expense amounts, (vi)
our ability to generate revenues from the sale or license of, or provision of
services related to, our technology , (vii) our ability to form strategic
alliances or partnerships to help promote our technology and achieve market
acceptance, (viii) our ability to generate design, engineering, or management
services revenue opportunities in the hydrogen generation or fuel cell markets,
(ix) our ability to secure government funding of our research and
development and technology demonstration projects and (x) other factors
discussed under the caption "Investment Considerations" in our Annual Report on
Form 10-K for the year ended December 31, 2003.

          You 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.

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 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.

         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.

Item 4.           Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

         Our Interim Chief Executive Officer and our Acting Chief Financial
Officerhave evaluated the effectiveness of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended) as of the end of the period
covered by this quarterly report. Based on such evaluation, our Interim Chief
Executive Officer and our Acting Chief Financial Officer have concluded that,
as of the end of the period covered by this quarterly report, including our
disclosure controls and procedures were effective to provide reasonable
assurance that materialinformation relating to us and our business is
made known to management,including our Interim Chief Executive Officer and our
Acting Chief Financial Officer, particularly during the period when our
periodic reports are being prepared.

(b) Internal Control Over Financial Reporting.

       There have not been any  changes in our  internal  control  over
financial reporting (as such term is defined in Rules  13a-15(f)  and 15d-15(f)
under the Exchange Act) during the fiscal  quarter to which this report
relates that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.


(b) Changes in Internal Controls.

         Since the evaluation date, there have not been any significant changes
in our internal controls or in other factors that could significantly affect
such controls.




                                       13
<PAGE>



                                     PART II


Item 2.  Changes in Securities and Use of Proceeds.

(a) None.

(b) None.

(c) In the first quarter of 2004, we issued the following shares of our common
stock ("Shares") to an institutional and accredited investor ("Investor") upon
conversion of our unsecured convertible debentures owned by the Investor:


                 Amount of Unsecured Convertible          Number of Shares
Date                     Debentures                     of Common Stock Issued
----                     ----------                     ----------------------

January 8, 2004          $699,999.92                          303,030

         We relied upon the exemption from registration set forth under Section
4(2) of the Securities Act in connection with the issuances of the shares of
common stock listed above. The resale of the Shares by the Investor has been
registered pursuant to a registration statement declared effective by the SEC.

(d) None.


Item 6.           Exhibits and Reports on Form 8-K.

(a)      Exhibits


     31.1 --  Certification  of Interim  Chief  Executive  Officer  Pursuant  to
Section 302 of Sarbanes-Oxley Act of 2002.

     31.2 -- Certification of Acting Chief Financial Officer Pursuant to Section
302 of Sarbanes-Oxley Act of 2002.

     32.1 -- Certification  of Interim Chief Executive  Officer and Acting Chief
Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K


        On March 18, 2004, we filed a Form 8-K under Item 5 and Item 7 to
announce the resignation of Stephen S. Tang, Ph.D. from his positions as Chief
Executive Officer, President and Director, effective as of Friday, March 19,
2004. We also announced the Board of Director's naming of H. David Ramm, a
member of our Board of Directors, as Dr. Tang's replacement until we name a
permanent successor. A copy of the press release was filed with the report.

        On February 18, 2004, we filed a Form 8-K under Item 5 to announce the
completion of a $6 million private placement financing, part of a $10 million
financing announced on January 20, 2004. On February 17, 2004, we issued a $6
million convertible debenture to an accredited investor having an initial
conversion price of $3.30 per share. A copy of the press release was filed with
the report.

        On February 17, 2004, we filed a Form 8-K under Item 12 to announce our
financial results for the fiscal quarter ended December 31, 2003. A copy of the
press release was filed with the report.

        On January 16, 2004, we filed a Form 8-K under Item 5 to announce the
signing of a securities purchase agreement for a $10 million private placement
financing with an accredited investor.



                                       14
<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.
                         (Registrant)

                         By: /s/ H. David Ramm
                         H. David Ramm
                         Interim President and Chief Executive Officer


May 14, 2004


                                       15
<PAGE>