SecProbe.io

CORRESP
1
filename1.htm

EEI SB2A CORRESP

30 Shelter Rock Road    Danbury, CT
06810            Tel: (203)
797-2699   Fax: (203) 797-2697

    TO:
    Ms.
      Peggy Fisher, Assistant Director, Securities and Exchange
    Commission

    FROM:
    Mr. Martin G. Klein,
      CEO

    DATE:
    June 9,
    2005

    RE:
    Electro Energy
      Inc.
Form SB-2
File No. 333-121026
Filed December 6,
    2004

          Please find
below responses keyed to the comments in your correspondence dated January 5,
2005 (the January 5 Correspondence), February 24, 2005 (the February 24
Correspondence) and April 28, 2005 (the April 28 Correspondence). References
provided herein to the revised registration statement are to the pages of the
marked revised registration statement, provided
herewith.

Fee
Table

    1.
    We
      reissue comment 1. Revise the first footnote to the table to cover only
      those situations contemplated by Rule 416, including "stock splits, stock
      dividends, or similar transactions," and confirm supplementally that you
      will file another registration statement to cover shares you may need to
      issue as a result of adjustments to the conversion terms of the preferred
      stock and/or the exercise price of the
warrants.

    Response: We have revised the first footnote to the table to
      reflect only the situations contemplated by Rule 416. In the event
      additional shares are issued as a result of changes to the conversion
      terms of preferred stock or the exercise price of warrants, an additional
      registration statement will be filed for the newly issued
  shares.

Risk
Factors – Page 3
Risks Relating to Our Company – Page 3
We have
historically been dependent…

    2.
    Update to disclose the percentage of revenues attributable to
      government contracts or subcontracts for the most recently completed
      fiscal year.

    Response: The appropriate clarifications have been made in
      the second paragraph under the heading of “Risks Relating to Our
      Company.”

    3.
    We
      reissue comment 5. Revise the added disclosure to accurately describe the
      risk regarding the extent to which you rely on EaglePicher for a
      significant portion of your revenues, and quantify the percentage of
      revenues you derived from EaglePicher for fiscal year ended December 31,
      2004 and the previous fiscal year. Delete mitigating language such as
      "enjoy a significant advantage" in discussing a risk. We note in this
      regard that at the top of Page 19, you state the "supply agreement we
      entered into was deemed to have no
value."

    Response: The appropriate clarifications have been made to
      the third and fourth paragraphs under the heading “Risks Relating to Our
      Company.”

    4.
    We
      note that EaglePicher recently filed for bankruptcy protection. Add a risk
      factor discussing the potential impact of this action on your future
      operations.

    Response: The requested information has been added to the
      fourth paragraph of the section entitled “Risks Relating to Our Company”
      on Page 3.

Management’s Discussion and Analysis – Page 10

Gross
Profit – Page 11

    5.
    In
      the first paragraph you refer to a "decrease" twice when it appears that
      an increase occurred. Please advise or
revise.

    Response: The first paragraph under the “Gross Profit”
      section has been revised to change all references of a “decrease” to an
      “increase.”

Our
Business Following the Merger – Page 17

    6.
    Refer
      to prior comment 27 and your response. A balanced presentation would
      discuss risks associated with the various aspects of your business, as
      well as your successes and perceived opportunities, as an integral part of
      the business description so that the reader may understand the
      uncertainties and limitations. This objective is not met by presenting a
      separate risk factors section at the end of the business section. Please
      revise this section to provide a more balanced presentation of the
      opportunities versus competitive, technical, marketing, patent protection
      and other risks associated with your potential
market.

    Response: The discussion of “Our Business Following the
      Merger” has been revised to incorporate discussions of the risk factors
      facing the Company into the discussion of our business where appropriate
      to provide a balanced view of our opportunities versus any risks we
      face.

    7.
    Refer
      to prior comment 29 and your response. It is not clear how you answered
      the second sentence of the comment.

    Response: The requested clarifications have been made to the
      second full paragraph on Page 20.

    8.
    Refer
      to prior comment 30 and your response. Please revise to clarify the basis
      for determining the level of orders you can expect to receive from
      EaglePicher, including minimum purchase
requirements.

    Response: Page 18 has been revised to clarify the requested
      information.

    9.
    Please explain the term "striker assembly." Explain how this
      component is utilized by EaglePicher.

    Response: The term “striker assembly” has been explained on
      page 3, in the third paragraph under the heading “Risks Relating to Our
      Company.”

    Additionally, the second full paragraph on page 19 describes the
      products in which the striker assemblies we supply to EaglePicher are
      utilized.

    10.
    Please revise to clarify that "replacements" refers to launching
      new satellites, not replacing batteries used in current
      satellites.

    Response: The language in the first paragraph on page 21 has
      been changed to clarify the reference to launching new
    satellites.

    11.
    Briefly explain the basis for your belief for an "anticipated
      material increase in satellite replacements..." Balance your optimistic
      expectations with a discussion of the EaglePicher recent bankruptcy filing
      and reorganization plans and the impact that may have on your future sales
      under the supply agreement, your rights under the license agreements and
      your environmental remediation agreement.

    Response: We have amended our discussion of the future
      performance of the Company and removed the phrase in question.
      Additionally, we have included an extensive discussion of the EaglePicher
      bankruptcy filing and its potential effect on the Company on pages 19 and
      20.

    12.
    Explain how you intend to increase commercial sales of the
      Ni-Cad batteries that you can manufacture at MEP. Do you have sales
      contracts?

    Response: We have amended pages 19 through 22 to discuss
      commercial sales of products manufactured by
MEP.

    13.
    Refer
      to prior comment 33 and your response. Please revise to clarify which
      parties are currently customers and the terms of any contracts EaglePicher
      or MEP currently have with these customers. For those who are not current
      customers, disclose when they were customers. Clarify whether you will
      seek to sell to those potential customers outside of your supply agreement
      with EaglePicher.

    Response: We have revised the tables and discussion on pages
      20 through
      22 to clarify the reasons for the inclusion of former customers of
      MEP in this discussion.
      We have also included a discussion of the current status of MEP contracts
      and contract procurement efforts.

    14.
    Refer
      to prior comment 34 and your response. Please include the table of current
      research contracts in the prospectus.

    Response: We have updated the discussion on pages 20 through
      22, and have included a table on page 21 to more concisely disclose
      the government contracts currently being completed by the
    Company.

    15.
    We
      note the table on page 20 and the paragraph that follows the table. Since
      these are all former customers, presumably they have already found
      other suppliers for their batteries. Expand to discuss the basis for your
      statements that you intend "to re-establish this business to at least the
      previous high of approximately $10 million" and that "it is reasonably
      likely that prior aerospace customers will become customers of EEI again."
      Discuss any efforts you have made to secure them as customers and the
      results of those efforts.

    Response: We have amended our discussion of our future
      business to remove the reference to specific revenue goals. In addition,
      we have included a discussion of the process of obtaining new contracts on
      pages 19 through 22.

The
Battery Market – Page 22

    16.
    Throughout this section, if you are relying on the Freedonia
      report as your supplemental support for industry data, clearly mark or
      give us page numbers in the report where the information appears to
      support your disclosure. Similarly, if the report substantiates the claims
      made with regard to your technology, tell us where the substantiation is
      located within the report. Ensure that you do this throughout the Business
      section.

    Response: This section has been revised to include
      references to the Freedoina report wherever it is
appropriate.

Established High Performance Markets – Page 26

    17.
    Refer
      to prior comments 27 and 40 and your responses. Please revise to explain
      how factors such as those cited in the comment could negatively impact
      your market share projections. Expand the disclosure to provide in
      reasonable detail the bases for management's analysis and projections. If
      EEI and/or its technology is discussed anywhere in the Freedoina report in
      a way that can support management's analysis, reference the section to us.
      We note there is no company profile for
EEI.

    Response: We have amended our discussion of these markets to
      include a discussion of the risk factors that could adversely impact the
      Company’s potential market share. This discussion is located on pages 29
      and 30.

    The last
      paragraph on page 27 discusses what is contained within the Freedoina
      report, together with an explanation of why EEI is not profiled by
      Freedoina.

    18.
    If
      the Freedonia report discusses your bipolar nickel-metal hydride battery
      technology, tell us where it is discussed in the report. If it does not
      discuss it, explain why.

    Response: The last paragraph on page 27 discusses what is
      contained within the Freedoina report, together with an explanation of why
      EEI is not profiled by Freedoina.

Competitive Comparison and Competitors – Page 35

    19.
    Expand the third paragraph on page 35 to identify the
      competitors who are developing new technologies and to clarify, if true,
      that those competitors are larger and have greater resources for research
      and development, greater manufacturing capability, and established
      distribution channels.

    Response: We have included a discussion of our competitors
      and their competitive advantages in the first four paragraphs on page
      38.

Certain
Relationships – Page 43

    20.
    Please include related party transactions with Mr. Eskra as
      noted at Pages 12-13 with others on page
F-20.

    Response: The Certain Relationships and Related Transactions
      section on pages 45-46 has been revised to include reference to the
      transactions involving Mr. Eskra’s company, as well as other related
      transactions, as listed on pages 12-13.

Selling
Security Holders – Page 45

    21.
    We
      note your response to comment 46 and reissue the comment. The definition
      of "beneficial ownership" is in Rule 13d-3 and includes any person who has
      or shares voting and/or investment power. Selling shareholders that are
      entities and are unable or unwilling to furnish this information should
      not be included in the table in the registration
  statement.

    Response: The beneficial owners of the non-public entities
      whose shares are being registered are listed in the table
  below.

    Entity
    Beneficial Owners

    AJW
      Partners, LLC
    Corey S.
      Ribotsky, Manager, SMS Group, LLC (manages fund)

    AJW
      Qualified Partners, LLC
    Corey S.
      Ribotsky, Manager, AJW Manager, LLC (manages fund)

    New
      Millennium Capital Partners II, LLC
    Corey S.
      Ribotsky, Manager, First Street Manager II, LLC (manages
fund)

    Ariel
      Fund, LP
    Michael
      and Susan Angelides

    Arrowhead Consultants Inc.
    Tim
      Ruggerio

    Glenwood
    Peter
      Chung

    Asset
      Managers International Ltd.
    David
      Chester, Jafar Omid, Ralph Crane, M. Hassanally

    Benil
      Finance Ltd.
    Jeanine
      Schnapik

    Brookshire Securities Corporation
    Peter
      Chung and Tim Ruggiero

    Crestview Capital Master LLC
    Stewart
      Fink, Robert Hoyt, Daniel Warsh, Steve Halpern

    Elm
      Street Partners
    Francis
      O'Donnell

    Extel
      Enterprises, Inc.
    Brandon
      Young, Brian Young, Byron Young

    Geduld
      Capital Management, LLC
    Irwin
      Geduld and Steven Geduld

    In-Q-Tel
      Employee Fund, LLC
    Lee
      Ault, Howard Cox, Gilman Louie 1

    In-Q-Tel, Inc.
    Norman
      Augustine, Lee Ault, James Barksdale, John Seely Brown, Howard Cox,
      Michael M. Crow, David Jeremiah, Anita K. Jones, Paul Kaminski, Richard
      Kerr, Jeong Kim, William Perry

    Interlinear Group
    Marc
      Berger

    Investrust, LLC
    Farhad
      Assari

    Merkantil 7, Inc.
    Farhad
      Assari and Fereed Mangalji

    JF Deck
      LLC
    Philip
      S. Collins and Dorothea S. Collins

    Matrix
      USA LLC
    Shari
      Popkin Fleischer, Hedy Bagatelle and Warren Bagatelle

    Meyers
      and Associates
    Bruce
      Meyers

    Murgab
      Investment Company Limited
    Abdulaziz Alshaya and Abdullatif Alshaya

    Nite
      Capital
    Keith
      Goodman

    Platinum
      Partners
    Mark
      Nordlicht

    Professional Traders Fund
    Marc
      Swickle and Howard Berger

    Rock II
      LLC
    Howard
      Chalfin and Kevin Arnone

    SCG
      Capital
    Steven
      Geduld

    Sovereign Bancorp Ltd
    Arshad
      Khan

    SRG
      Capital
    Tracy
      Gerber and Capital Preservation Trust - beneficial owners Edwin Mecabe and
      Tai May Lee have voting power

    Treeline
      Investment Partners
    Sean
      Deson

    Vision
      Capital
    Adam
      Benowitz

    Westminster Securities
    John P.
      O'Shea and Daniel Luskind

    1.
      Lee Ault, Howard Cox and Gilman Louie are the members of the Management
      Committee which maintains voting and dispositive power over shares owned
      by the In-Q-Tel Employee Fund, LLC. (the "Fund") Messrs. Ault and Cox are
      members of the Board of Trustees of In-Q-Tel, Inc. and have no ownership
      or membership interest in the Fund. Mr. Louie is the CEO of In-Q-Tel, and
      is a member of the Fund, but has donated his entire interest in the Fund
      to a non-profit entity in which he has no
interest.

    22.
    Refer
      to prior comment 47 and your response. In general, broker-dealers seeking
      to resell securities acquired in private placements are presumed to be
      acting as underwriters and should be so identified in the prospectus.
      Affiliates of broker-dealers may also be deemed to be underwriters,
      depending upon the circumstances under which they acquired the securities.
      Please advise which selling security holders are broker-dealers or
      affiliates of broker dealers.