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clean energy to power the world [GRAPHIC OMITTED]
COMPANY OVERVIEW
STEPHEN S. TANG, PH.D.
PRESIDENT & CEO
SEPTEMBER 9-11, 2003
SAFE HARBOR STATEMENT
THIS PRESENTATION MAY INCLUDE STATEMENTS WHICH ARE NOT HISTORICAL FACTS AND ARE
CONSIDERED "FORWARD-LOOKING" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. THESE FORWARD-LOOKING STATEMENTS REFLECT
MILLENNIUM CELL'S CURRENT VIEWS ABOUT FUTURE EVENTS AND FINANCIAL PERFORMANCE.
THESE FORWARD-LOOKING STATEMENTS ARE IDENTIFIED BY THEIR USE OF TERMS AND
PHRASES SUCH AS "BELIEVE," "EXPECT," "PLAN," "ANTICIPATE" AND SIMILAR
EXPRESSIONS IDENTIFYING FORWARD-LOOKING STATEMENTS. INVESTORS SHOULD NOT RELY ON
FORWARD-LOOKING STATEMENTS BECAUSE THEY ARE SUBJECT TO A VARIETY OF RISKS,
UNCERTAINTIES AND OTHER FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM MILLENNIUM CELL'S EXPECTATIONS, AND MILLENNIUM CELL EXPRESSLY
DOES NOT UNDERTAKE ANY DUTY TO UPDATE FORWARD-LOOKING STATEMENTS. THESE FACTORS
INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING: (I) THE COST AND TIMING OF
DEVELOPMENT AND MARKET ACCEPTANCE OF MILLENNIUM CELL'S FUEL SYSTEMS, (II)
COMPETITIVE FACTORS, SUCH AS PRICE COMPETITION AND NEW PRODUCT INTRODUCTIONS,
(III) THE COST AND AVAILABILITY OF PRODUCTS, (IV) THE COST OF COMPLYING WITH
CURRENT GOVERNMENTAL REGULATIONS, AND (V) OTHER FACTORS DETAILED FROM TIME TO
TIME IN MILLENNIUM CELL'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
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WHAT WE DO
MILLENNIUM CELL PROVIDES HYDROGEN FUEL TECHNOLOGY FOR
EMERGING PREMIUM POWER MARKETS
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HYDROGEN ON DEMAND(TM) TECHNOLOGY: SAFE--CLEAN--EASY TO USE
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MILLENNIUM CELL INC. PROFILE
o A development stage, intellectual property company that licenses enabling
technologies for the hydrogen economy
o 17 patents issued to date
o 39 patent applications submitted to date
o A NASDAQ National Market company traded as "MCEL"
o Raised $30 million in an IPO on August 8, 2000
o Raised $16 million in PIPE transaction underwritten by BAS on June 19,
2002
o 31.2 million shares outstanding
o 2002: $0.7 million revenue, $10 million total annual cash spend rate
o $13.5 million accessible cash as of June 30, 2003
o Cash breakeven and positive earnings projected by 2005
o 35 employees located in Eatontown, New Jersey
o 27 in Product Management and R&D organization, including 9 Ph.D.s
o Announced, active commercial partnerships:
[DAIMLERCHRYSLER LOGO]
[BALLARD(R) LOGO] [PSA PEUGEOT CITROEN LOGO]
[DUFFY ELECTRIC BOOT COMPANY LOGO] [SAMSUNG LOGO]
[BORAX LOGO] [AIR PRODUCTS LOGO]
[U.S. DEPARTMENT OF ENERGY LOGO] [ROHM AND HAAS LOGO]
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EXPERIENCED LEADERSHIP TEAM
Stephen S. Tang, Ph.D. - President & CEO, Acting CFO
8 years leading and growing global industry transformation practices at Cap
Gemini and A.T. Kearney
Roland E. Lefebvre - Chief Operating Officer
4 years as COO for American Superconductor; 23 years in sales, marketing,
and general management with General Electric
Adam P. Briggs - Vice President of Product Management
17 years in sales, marketing and global business management with
Duracell/Gillette
Rex E. Luzader - Vice President of Sales
16 years in sales and engineering at Exide Battery Corporation; formerly
with General Motors
Katherine M. McHale - Vice President of Marketing & Communications
15 years as marketing and public affairs consultant; formerly with Air
Product & Chemicals and 3M
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PATENTED HYDROGEN ON DEMAND(TM)
TECHNOLOGY IS "SIMPLE, YET ELEGANT"
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NaBH (aq) + 2 H O -> 4 H + NaBO (aq) + ~267 kJ
4 2 2 2
Gas/Liquid
Separator Pure Humid
-------------- HYDROGEN ON DEMAND(TM) ---------- Hydrogen
Fuel tank: CATALYST CHAMBER H ---------------------
NaBH ---------------------- 2 -->========-----------> Fuel Cell
4 ==========-----> ------====--> -- / ---------------------
solution ---------------------- \
-------------- \
Discharged /
Fuel: ==================================== < borate
NaBO ----------
2
--------------
o Hydrogen is generated in a controllable reaction..."on demand"
o Fuel is a room-temperature, non-flammable liquid under no pressure
o Generated H is high purity, warm and humidified...what the fuel cell wants
2
o Discharged borate is environmentally-compatible, recyclable
o Recycling fuel cell water permits higher energy storage potential
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MCEL DEPLOYS A LICENSING-BASED
BUSINESS MODEL WITH PARTNERING STRATEGY
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\
- --------------------------------------------------------------------------------------------------- \
\
TECHNOLOGY DEVELOPMENT MANUFACTURING DISTRIBUTION BRAND CUSTOMER >
/
- --------------------------------------------------------------------------------------------------- /
/
^ ^ ^ ^
| | | | | | | |
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ADDRESSING THE HIGHEST PROFIT MARGIN POTENTIAL IN
THE VALUE CHAIN-- SIMILAR TO SOFTWARE BUSINESS
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MCEL IS FOCUSED ON MARKETS IN WHICH
FUEL CELL BENEFITS ECLIPSE INCUMBENTS
================================================================================
MARKET FUEL CELLS BENEFITS
- --------------------------------------------------------------------------------
Standby Power o Favorable economics to incumbent lead acid batteries
o Cleaner and quieter than engines
o Expands indoor use
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Consumer o Several times the energy density of Lithium Ion batteries
Electronics
o More commercial promise than Direct Methanol Fuel Cells
o Enables attractive OEM and retail businesses
- --------------------------------------------------------------------------------
Transportation o Independence from foreign oil
o Reduce emissions
o Tactical military advantages
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MILITARY APPLICATIONS BRING OUT THE BEST
IN HYDROGEN ON DEMAND(TM) TECHNOLOGY
o U.S. Department of Defense is the world's largest single consumer of fuel
o Every branch of service is testing fuel cells to power
o "Warrior of the future"
o Radios
o Electrical generators
o Tactical land vehicles
o Ships
o Submarines
o New dimensions to "shock and awe" operations
o Improves survivability of troops and vehicles
o Minimizes thermal and visual signatures
o Minimizes field support from fuel supply chain
o Eliminates threat of fuel interdiction
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WARRIOR OF THE FUTURE
Innovations that could show up on the battlefield during the next decade
ALL-SEEING SENSORS DISPLAY
Radar, night vision, Built into the visor, it
and video cameras would show text messages,
would probe behind map coordinates, and
walls and into the other tactical info
dark - and relay
images to commanders
[P
I
SUSTENANCE PACK C BIO SENSORS
Air filtration system T Next to the skin, they
and drinking tube U would track vital signs
would enable R and relay data to medics
soldiers to fight E
when under
biochemical attack
O
M
BODY ARMOR I 'SMART' FABRIC
A cloth-like material T Would sense and then
would allow more T seal out chemical
flexibility than the E or biological weapons,
current armor plates D] eliminating the need
for a separate biowarfare
suit
ARTIFICIAL MUSCLE
External bone-and-
muscle system would
extend endurance and
provide extra strength
- --------------------------------------------------------------------------------
[UNITED STATES OF AMERICA
DEPARTMENT OF DEFENSE
SEAL]
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MCEL'S ADDRESSABLE MARKET FOCUS GROWS WITH FUEL CELL
SYSTEM COST REDUCTION AND TECHNOLOGY BREAKTHROUGHS
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|
PRIMARY PROPULSION FOR VEHICLES |
|
------------------------------------------------- |
| |
UTILITY VEHICLES | |
| |
------------------------------------------ | |
| | |
MOBILE PHONES | | |
| | |
----------------------------------- | | |
| | | |
PERSONAL DIGITAL ASSISTANTS | | | |
| | | |
----------------------------- | | | |
| | | | |
MILITARY DEMOS | | | | |
| | | | |
----------------------- | | | | |
| | | | | |
AUXILIARY POWER UNITS | | | | | |
| | | | | |
------------ | | | | | |
PCs | | | | | | |
--------- | | | | | | |
| | | | | | | |
STANDBY | | | | | | | |
POWER | | | | | | | |
| | | | | | | |
----------------------------------------------------------
PHASE 1 (2003-2004) --------->
PHASE 2 (2004-2006) ----------------------------------->
PHASE 3 (BEYOND 2006) --------------------------------------------------------->
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STANDBY POWER
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MILLENNIUM CELL'S ADDRESSABLE MARKET IN STANDBY
POWER IS ALREADY LARGE AND GROWING
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DISTRIBUTED GENERATION
------------------------
|
--------------------------------------------------
| | |
------------------ ------------------ ------------------
Infrequent Usage Frequent Usage Continuous Usage
------------------ ------------------ ------------------
|
-------------------------
| |
-------------------------- -----------------------
Convenience Applications Critical Applications
-------------------------- -----------------------
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-------------------------------------------
| |
-------------- ---------------
CATV/Telecom UPS
$838MM 2002
718,000 Units
-------------- ---------------
| |
------------------------ ----------------------------------
| | | | | |
------- ---------- ---------- ------------- -------------- ---------------
CATV Wireless Wireline 2 - 4.9 kVA 5 - 10.9 kVA 11 - 20.9 kVA
$73MM $446MM $319MM 537k Units 105k Units 76k Units
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INCUMBENT
STANDBY POWER LEAD ACID LEAD ACID BATTERIES
TECHNOLOGY: BATTERIES AND GENSETS
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KEY ISSUES WITH INCUMBENT STANDBY POWER CHOICES:
EXPENSIVE LIFECYCLE COSTS, POOR RELIABILITY, DIFFICULT MAINTENANCE
================================================================================
LEAD ACID BATTERIES
-------------------
o Requires close maintenance and regular replacement
o Inclined to fail in extreme heat or cold
o Difficult to monitor or predict failure
o Cost, weight and volume increases proportionate to quantity
--no economies of scale
o Disposal regulated as hazardous material
================================================================================
================================================================================
DIESEL/GASOLINE
---------------
GENERATING SETS
---------------
o Slow start-up time
o Requires regular use
o Low power quality
o Require flammable, regulated fluids and difficult storage choices
o Requires complex maintenance
o Noisy
o Fuel spillage creates environmental liability
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HYDROGEN ON DEMAND(TM) TECHNOLOGY WITH FUEL CELLS
ARE AN ATTRACTIVE STANDBY POWER VALUE PROPOSITION
10-YEAR LIFECYCLE COST COMPARISON
FOR A 1 KW STANDBY POWER SYSTEM
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I
N
I $20,000 ----------------------------------------
T ==== Fuel Cell with "Free" Fuel
I ==== Fuel Cell with HoD(TM) Fuel
A ==== Battery
L $15,000 ----------------------------------------
C
A
P
I $10,000 ---------------------------------------- / Fuel cost is
T / insignificant in
A / standby
L \ applications
\
O $5,000 ---------------------------------------- \
U
T 1 2 3 4 5 6 7 8
L
A HOURS OF ANNUAL BACK-UP CAPACITY AND USAGE
Y
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o CLEAN, QUIET OPERATION IN BROAD TEMPERATURE RANGE
o LOWER LIFECYCLE COSTS FOR TARGETED CUSTOMERS NEEDING 8+ HOURS OF BACK-UP
o RELIABLE REMOTE MONITORING
o MINIMAL FOOTPRINT AND INFRASTRUCTURE REQUIREMENT
o EASY SERVICING AND MAINTENANCE
================================================================================
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HYDROGEN ON DEMAND(TM) PROVIDES COMPETITIVE
ADVANTAGES OVER OTHER H2 STORAGE TECHNOLOGY
----------------------------------------------------------------------------------------
STANDBY POWER FUEL HYDROGEN ON COMPRESSED HYDROCARBON
SYSTEM REQUIREMENTS DEMAND(TM) HYDROGEN REFORMER METAL HYDRIDE
- --------------------------------------------------------------------------------------------------------------
VOLUMETRIC ENERGY VERY IMPORTANT + + - - - - + +
DENSITY
- --------------------------------------------------------------------------------------------------------------
START-UP TIME VERY IMPORTANT + + + + - - +
- --------------------------------------------------------------------------------------------------------------
SYSTEM COST IMPORTANT + + - - - - -
- --------------------------------------------------------------------------------------------------------------
FUEL SAFETY IMPORTANT + + - - - -
- --------------------------------------------------------------------------------------------------------------
GRAVIMETRIC ENERGY IMPORTANT + + + - -
DENSITY - -
- --------------------------------------------------------------------------------------------------------------
EASE OF REFUELING IMPORTANT + - - + + - -
- --------------------------------------------------------------------------------------------------------------
FUEL DISTRIBUTION LESS IMPORTANT - - - + + - -
- --------------------------------------------------------------------------------------------------------------
FUEL COST LESS IMPORTANT - - - + + -
- --------------------------------------------------------------------------------------------------------------
++ STRENGTH + ADVANTAGE - DISADVANTAGE -- WEAKNESS
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STANDBY POWER STRATEGY IS TO TARGET PARTNERSHIPS
TO INFLUENCE FUEL SYSTEM DESIGN
Customer Landscape
FUEL CELL SUPPLIERS SYSTEM INTEGRATORS FUEL DISTRIBUTORS OEMS
- ------------------- ------------------ ----------------- ----
Plug Power Plug Power Airgas APC
Hydrogenics Hydrogenics Air Liquide MGE
UTC Ballard Gaz De France Invensys
Ballard Idatech Praxair
Nuvera Nuvera APCI
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CONSUMER ELECTRONICS
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MILLENNIUM CELL'S ADDRESSABLE MARKET IN
CONSUMER ELECTRONICS IS ALREADY LARGE AND GROWING
WORLDWIDE PREMIUM BATTERY MARKET TOTAL AVAILABLE MARKET
(MILLIONS OF UNITS)
[GRAPHIC OMITTED]
900 ---------------------------------------------------------------
[ ] MOBILE PHONES
800 [ ] NOTEBOOK COMPUTERS CAGR = 9.9%
[ ] PDAs
700 [ ] DIGITAL CAMERAS
[ ] CAMCORDERS
600
500
400
300
200
100
0 ---------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009
Source: Darnell Group - "Fuel Cells for Portable Power:
Markets, Manufacture and Cost"
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INCUMBENT LI ION TECHNOLOGY IS MATURE AND VULNERABLE
LI-ION CYLINDRICAL DEVELOPMENT TREND
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-------------------------------------------------------------------
E
N
E New Li-ion with next
R generation material-----> TARGET
G 550
Y
D 500
E
N
S 450
I Average annual rate of o HIGH ENERGY DENSITY ELECTRODE
T increase: 9-10% O THINNER COMPONENTS
Y 400
(Wh/I)
-------------------------------------------------------------------
'00 '01 '02 '03 '04 '05
================================================================================
Panasonic Technologies Company PANASONIC ideas for life
(c) 2003 All Rights Reserved [LOGO]
================================================================================
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HYDROGEN ON DEMAND(TM)BASED FUEL CELL SYSTEMS
WILL DELIVER ALL-DAY POWER FOR NOTEBOOK PCS
Energy Density RUNTIME IN A TYPICAL NOTEBOOK PC
Wh/l (250 CC, 20W)
-----------------------------------------------------------------
[GRAPHIC OMITTED]
-----------------------------------------------------------------
Timing for Performance Demonstration
*Panasonic - Small Fuel Cells Conference - May 8, 2003
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THE VALUE PROPOSITION FOR FUEL CELLS AND
HYDROGEN ON DEMAND(TM) FUEL CARTRIDGE TECHNOLOGY IS
COMPELLING FOR CONSUMER ELECTRONIC APPLICATIONS
o For notebook personal computers (PCs)
o 8-10 hours of continuous wireless power vs. today's 2-3 hours of
lithium ion battery life...
o In the same space and weight constraints provided for onboard
rechargeable batteries
o Without recharging
o Affordable pricing and business value throughout value chain
o Enables productivity gains through Wi Fi and wireless power
o Convenience of a disposal fuel cartridge, similar to disposable
alkaline batteries
o The option of recyclable fuel cartridges, similar to refillable
printer toner cartridges
o For mobile phones and personal digital assistants (PDAs)
o Extended operating time...
o In the same space and weight constraints provided for
rechargeable batteries
o Without recharging
o Affordable pricing and business value throughout value chain
o Higher energy storage to service the convergence of wireless internet,
streaming video, digital cameras, and MP3 music applications into
these devices
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HYDROGEN ON DEMAND(TM) FUEL CARTRIDGES WILL
DELIVER BETTER PERFORMANCE THAN LI ION FOR A
LOWER PRICE THAN ALKALINE
PERFORMANCE IN A TYPICAL MOBILE PHONE
(15 CC, 2W, 12 TALK TIME HOURS/MO)
================================================================================
Energy Days of Use Consumer
Density per Price per
(Wh/l) charge/refill refill
- --------------------------------------------------------------------------------
Hydrogen On Demand(TM)
and 900 16.9 $1.43
PEM Fuel Cell
- --------------------------------------------------------------------------------
Li Ion Pack 336* 6.3 n/a
- --------------------------------------------------------------------------------
Alkaline Battery 53** 1.0 $1.50
================================================================================
* Panasonic - Small Fuel Cells Conference - May 8, 2003
** 2 x AAA from Duracell.com
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FUEL TECHNOLOGY BY MILLENNIUM CELL HAS SIGNIFICANT
ADVANTAGES OVER DIRECT METHANOL FUEL CELLS (DMFC)
===============================================================================================
NaBH /
4
Features DMFC PEM FC Implication
- -----------------------------------------------------------------------------------------------
Efficiency 25% 37.5% Less fuel for same runtime
- -----------------------------------------------------------------------------------------------
Heat 3 watts of heat per 1.7 watts of heat per Cooler devices
watt of electricity watt of electricity
- -----------------------------------------------------------------------------------------------
Cost 5 x more platinum Earlier penetration for NaBH /
than NaBH /PEM PEM FC than DMFC 4
4
- -----------------------------------------------------------------------------------------------
Power density < 0.1 W/cc Up to 1.0 W/cc PEM FC occupies 1/10th space
that DMFC requires
- -----------------------------------------------------------------------------------------------
Fuel Safety Flammable and Non-flammable in o Easier DOT approval
human toxic solution and o Less site liability
environmentally o Less end-user liability
benign
===============================================================================================
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CONSUMER ELECTRONIC STRATEGY IS TO TARGET
PARTNERSHIPS TO INFLUENCE FUEL SYSTEM DESIGN
Customer Landscape
DEVICES FUEL CELLS DISTRIBUTION
------- ---------- ------------
Samsung Samsung Duracell
Nokia Toshiba Matsushita
Motorola Matsushita Toshiba
Matsushita Sony BIC
HP/Compaq NEC Sony
Dell Sanyo H-P
IBM Lexmark
Toshiba Canon
Apple
Sony
Palm
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REVENUE PROJECTION SUMMARY: 2003-2007
=========================================================================================================================
Consumer Electronics - 1,000,000 547,957 4,425,966 17,591,959
License(2004) and Royalty (2005-2007)
Standby Power - 1,238,985 5,521,028 14,110,000 27,348,501
License and Royalty
Standby Power Catalyst Sales - 1,651,629 6,169,243 12,353,945 19,516,010
Prototype Systems/ 580,000 1,300,000 300,000 500,000 500,000
Joint Development Agreements
Public Sector Funding 620,000 2,000,000 4,000,000 6,000,000 8,000,000
------- --------- --------- --------- ---------
- -------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUE $1,200,000 $7,190,614 $16,538,228 $37,389,911 $72,956,471
---------- ---------- ----------- ----------- -----------
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================================================================================
OTHER FINANCIAL HIGHLIGHTS
o $719K REVENUE IN 2002
o COMMERCIAL PRODUCT LAUNCHES TARGETED FOR 2004 FOR STANDBY POWER AND 2005
FOR CONSUMER ELECTRONICS
o GROSS MARGINS RAMP FROM 20% (2003) TO 90% (2007) DUE TO "SOFTWARE" BUSINESS
MODEL
o PROJECT CASH FLOW POSITIVE FOR Q4 2004, EBITDA POSITIVE BY Q4 2005
================================================================================
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FOUR REASONS TO INVEST IN MCEL...NOW
1. MCEL is the only hydrogen-fuel and storage company that sells to all the
major market segments
o Near Term: Standby Power and Consumer Electronics
o Future: Transportation
2. MCEL is a bellwether company
o All small fuel cells require pure hydrogen stored safely and
conveniently
o Licenses to MCEL's technology precede fuel cell product launches
3. MCEL delivers on aggressive operating and strategic goals
o Accountability for progress documented in annual reports (see 2001 and
2002)
o Financial viability ensured through business plan execution and 2002
financing
4. MCEL's stock price appreciation has been lagging versus peer companies
in 2003
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clean energy to power the world [GRAPHIC OMITTED]